item 14 exhibits financial statement schedules reports form 8k 1 following consolidated financial statements company independent auditors report contained annual report incorporated herein reference consolidated financial statements consolidated balance sheets march 31 1997 1996 consolidated statements operations years ended march 31 1997 1996 1995 consolidated statements shareholders equity years ended march 31 1997 1996 1995 consolidated statements cash flows years ended march 31 1997 1996 1995 notes consolidated financial statements independent auditors report 2 financial statement schedules provision made applicable accounting regulations securities exchange commission required related instructions inapplicable required information included elsewhere consolidated financial statements 3 exhibits following exhibits filed part report indicated previously filed incorporated herein reference management contract compensatory plan required filed item 14c report item 601 regulation sk securities exchange commission omitted filing substantially identical immediately preceding exhibit except parties thereto principal amount involved 4 reports form 8k recent fiscal quarter reports filed form 8k signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized world acceptance corporation alexander mclean iii alexander mclean iii senior vice president date june 27 1997 pursuant requirements securities exchange act 1934 report signed following persons behalf registrant capacities dates indicated signature charles walters charles walters chairman chief executive officer principal executive officer director date june 27 1997 alexander mclean iii alexander mclean iii executive vice president chief financial officer principal financial officer principal accounting officer director date june 27 1997 r harold owens r harold owens president chief operating officer principal operating officer director date june 27 1997 ken r bramlett jr ken r bramlett jr director date june 27 1997item 14 exhibits financial statement schedules reports form 8k 1 following consolidated financial statements company independent auditors report contained annual report incorporated herein reference consolidated financial statements consolidated balance sheets march 31 1998 1997 consolidated statements operations years ended march 31 1998 1997 1996 consolidated statements shareholders equity years ended march 31 1998 1997 1996 consolidated statements cash flows years ended march 31 1998 1997 1996 notes consolidated financial statements independent auditors report 2 financial statement schedules provision made applicable accounting regulations securities exchange commission required related instructions inapplicable required information included elsewhere consolidated financial statements 3 exhibits following exhibits filed part report indicated previously filed incorporated herein reference management contract compensatory plan required filed item 14c report item 601 regulation sk securities exchange commission omitted filing substantially identical immediately preceding exhibit except parties thereto principal amount involved 4 reports form 8k recent fiscal quarter reports filed form 8k signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized world acceptance corporation alexander mclean iii alexander mclean iii executive vice president cfo date june 29 1998 pursuant requirements securities exchange act 1934 report signed following persons behalf registrant capacities dates indicated signature charles walters charles walters chairman chief executive officer principal executive officer director date june 29 1998 alexander mclean iii alexander mclean iii executive vice president chief financial officer principal financial officer principal accounting officer director date june 29 1998 r harold owens r harold owens president chief operating officer principal operating officer director date june 29 1998 ken r bramlett jr ken r bramlett jr director date june 29 1998item 14 exhibits financial statement schedules reports form 8k 1 following consolidated financial statements company independent auditors report contained annual report incorporated herein reference consolidated financial statements consolidated balance sheets march 31 1999 1998 consolidated statements operations years ended march 31 1999 1998 1997 consolidated statements shareholders equity years ended march 31 1999 1998 1997 consolidated statements cash flows years ended march 31 1999 1998 1997 notes consolidated financial statements independent auditors report 2 financial statement schedules provision made applicable accounting regulations securities exchange commission required related instructions inapplicable required information included elsewhere consolidated financial statements 3 exhibits following exhibits filed part report indicated previously filed incorporated herein reference management contract compensatory plan required filed item 14c report item 601 regulation sk securities exchange commission omitted filing substantially identical immediately preceding exhibit except parties thereto principal amount involved 4 reports form 8k recent fiscal quarter reports filed form 8k signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized world acceptance corporation alexander mclean iii alexander mclean iii executive vice president cfo date june 28 1999 pursuant requirements securities exchange act 1934 report signed following persons behalf registrant capacities dates indicated signature charles walters charles walters chairman chief executive officer principal executive officer director date june 28 1999 alexander mclean iii alexander mclean iii executive vice president chief financial officer principal financial officer principal accounting officer director date june 28 1999 ken r bramlett jr ken r bramlett jr director date june 28 1999 william hummers iii william hummers iii director date june 28 1999item 14 exhibits financial statement schedules reports form 8k 1 following consolidated financial statements company independent auditors report contained annual report incorporated herein reference consolidated financial statements consolidated balance sheets march 31 2000 1999 consolidated statements operations years ended march 31 2000 1999 1998 consolidated statements shareholders equity years ended march 31 2000 1999 1998 consolidated statements cash flows years ended march 31 2000 1999 1998 notes consolidated financial statements independent auditors report 2 financial statement schedules provision made applicable accounting regulations securities exchange commission required related instructions inapplicable required information included elsewhere consolidated financial statements 3 exhibits following exhibits filed part report indicated previously filed incorporated herein reference management contract compensatory plan required filed item 14c report item 601 regulation sk securities exchange commission omitted filing substantially identical immediately preceding exhibit except parties thereto principal amount involved 4 reports form 8k recent fiscal quarter reports filed form 8k signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized world acceptance corporation bys alexander mclean iii alexander mclean iii executive vice president cfo date june 29 2000 pursuant requirements securities exchange act 1934 report signed following persons behalf registrant capacities dates indicated signature charles walters charles walters chairman chief executive officer principal executive officer director date june 29 2000 alexander mclean iii alexander mclean iii executive vice president chief financial officer principal financial officer principal accounting officer director date june 29 2000 charles way charles way director date june 29 2000 william hummers iii william hummers iii director date june 29 2000item 14 exhibits financial statement schedules reports form 8k 1 following consolidated financial statements company independent auditors report contained annual report incorporated herein reference consolidated financial statements consolidated balance sheets march 31 2001 2000 consolidated statements operations years ended march 31 2001 2000 1999 consolidated statements shareholders equity years ended march 31 2001 2000 1999 consolidated statements cash flows years ended march 31 2001 2000 1999 notes consolidated financial statements independent auditors report 2 financial statement schedules provision made applicable accounting regulations securities exchange commission required related instructions inapplicable required information included elsewhere consolidated financial statements 3 exhibits following exhibits filed part report indicated previously filed incorporated herein reference management contract compensatory plan required filed item 14c report item 601 regulation sk securities exchange commission omitted filing substantially identical immediately preceding exhibit except parties thereto principal amount involved 4 reports form 8k recent fiscal quarter reports filed form 8k signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized world acceptance corporation alexander mclean iii alexander mclean iii executive vice president cfo date june 29 2001 pursuant requirements securities exchange act 1934 report signed following persons behalf registrant capacities dates indicated signature charles walters charles walters chairman chief executive officer principal executive officer director date june 29 2001 alexander mclean iii alexander mclean iii executive vice president chief financial officer principal financial officer principal accounting officer director date june 29 2001 charles way douglas r jones president chief operating officer director date june 29 2001 william hummers iii william hummers iii director date june 29 2001item 14 exhibits financial statement schedules reports form 8k 1 following consolidated financial statements company independent auditors report contained annual report incorporated herein reference consolidated financial statements consolidated balance sheets march 31 2002 2001 consolidated statements operations years ended march 31 2002 2001 2000 consolidated statements shareholders equity years ended march 31 2002 2001 2000 consolidated statements cash flows years ended march 31 2002 2001 2000 notes consolidated financial statements independent auditors report 2 financial statement schedules provision made applicable accounting regulations securities exchange commission required related instructions inapplicable required information included elsewhere consolidated financial statements 3 exhibits following exhibits filed part report indicated previously filed incorporated herein reference management contract compensatory plan required filed item 14c report item 601 regulation sk securities exchange commission omitted filing substantially identical immediately preceding exhibit except parties thereto principal amount involved 4 reports form 8k recent fiscal quarter reports filed form 8k signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized world acceptance corporation alexander mclean iii alexander mclean iii executive vice president cfo date june 28 2002 pursuant requirements securities exchange act 1934 report signed following persons behalf registrant capacities dates indicated signature charles walters charles walters chairman chief executive officer principal executive officer director date june 28 2002 alexander mclean iii alexander mclean iii executive vice president chief financial officer principal financial officer principal accounting officer director date june 28 2002 douglas r jones douglas r jones president chief operating officer director date june 28 2002 william hummers iii william hummers iii director date june 28 2002item 14 principal accountant fees services information contained caption “appointment independent public accountants” except information therein subcaption “report audit committee board directors” incorporated reference herein response item 14 part iv item 15item 14 principal accountant fees services information contained caption “appointment independent public accountants” except information therein subcaption “report audit committee board directors” incorporated reference herein response item 14 part iv item 15item 14 principal accountant fees services information contained caption “appointment independent registered public accountants” proxy statement except information therein subcaption “report audit committee board directors” incorporated reference herein response item 14 part iv item 15item 14 principal accountant fees services information contained caption “appointment independent registered public accountants” proxy statement except information therein subcaption “report audit committee board directors” incorporated reference herein response item 14 part iv item 15item 14 principal accountant fees services information contained caption “ratification appointment independent registered public accountants” proxy statement except information therein subcaption “report audit committee board directors” incorporated reference herein response item 14 part iv item 15item 14 principal accountant fees services information contained caption “ratification appointment independent registered public accountants” proxy statement except information therein subcaption “report audit committee board directors” incorporated reference herein response item 14 part iv item 15item 14 principal accountant fees services information contained caption “ratification appointment independent registered public accountants” proxy statement except information therein subcaption “report audit compliance committee board directors” incorporated reference herein response item 14 part iv item 15item 14 principal accountant fees services information contained caption “ratification appointment independent registered public accountants” proxy statement except information therein subcaption “report audit compliance committee board directors” incorporated reference herein response item 14 part iv item 15item 14 principal accountant fees services information contained captions “proposal iii ratification appointment independent registered public accountsaudit fees” “audit committee preapproval policies procedures” incorporated reference response item 14 part iv item 15item 14 principal accountant fees services information contained caption “proposal 4 ratification appointment independent registered public accounting firm” incorporated reference response item 14 part iv item 15item 14 principal accountant fees services information contained caption “proposal 3 ratification appointment independent registered public accounting firm” proxy statement incorporated reference response item 14 part iv item 15item 14 controls procedures evaluation disclosure procedures world acceptance corporation’s chief executive officer chief financial office evaluated company’s disclosure controls procedures evaluation date concluded controls procedures effective b changes internal controls significant changes internal controls factors could significantly affect controls subsequent evaluation date part iv item 15item 14 principal accountanting fees services information contained caption “appointment independent registered public accountants” proxy statement except information therein subcaption “report audit committee board directors” incorporated reference herein response item 14 part iv item 15item 14 principal accountant fees services information contained caption “proposal 3 ratification appointment independent registered public accounting firm” proxy statement incorporated reference response item 14 part iv item 15item 14 principal accountant fees services information contained caption “appointment independent public accountants” proxy statement except information therein subcaption “report audit committee board directors” incorporated reference herein response item 14 part iv item 15item 14 principal accountant fees services information contained caption “appointment independent registered public accountants” proxy statement except information therein subcaption “report audit committee board directors” incorporated reference herein response item 14 part iv item 15item 14 principal accountant fees services information contained caption “ratification appointment independent registered public accountants” proxy statement except information therein subcaption “report audit compliance committee board directors” incorporated reference herein response item 14 part iv item 15item 14 principal accountant fees services information contained caption “proposal 6 ratification appointment independent registered public accounting firm” incorporated reference response item 14 part iv item 15 item 7 managements discussion analysis financial condition results operations information contained caption managements discussion analysis financial condition results operations annual report incorporated herein reference response item 7 item 8item 7 managements discussion analysis financial condition results operations information contained caption managements discussion analysis financial condition results operations annual report incorporated herein reference response item 7 item 8item 7 managements discussion analysis financial condition results operations information contained caption managements discussion analysis financial condition results operations annual report incorporated herein reference response item 7 item 7aitem 7 managements discussion analysis financial condition results operations information contained caption managements discussion analysis financial condition results operations annual report incorporated herein reference response item 7 item 7aitem 7 managements discussion analysis financial condition results operations information contained caption managements discussion analysis financial condition results operations annual report incorporated herein reference response item 7 item 7aitem 7 managements discussion analysis financial condition results operations information contained caption managements discussion analysis financial condition results operations annual report incorporated herein reference response item 7 item 7aitem 7 management’s discussion analysis financial condition results operations general company’s financial performance continues dependent large part upon growth outstanding loans receivable ongoing introduction new products services marketing customer base maintenance loan quality acceptable levels operating expenses since march 31 1999 gross loans receivable increased 157 annual compounded rate 1496 million 3101 million march 31 2004 increase reflects higher volume loans generated company’s existing offices contribution loans generated new offices opened acquired period fiveyear period company grown 379 offices 526 offices march 31 2004 company plans open acquire least 25 new offices next two fiscal years company continues identify new products services marketing customer base addition new insurancerelated products introduced selected states last several years company sells finances electronic items appliances existing customer base program called “world class buying club” total loan volume program amounted 65 million fiscal 2004 52 increase prior fiscal year represents less 1 company’s total loan volume remains profitable program company plans continue emphasize fiscal 2004 beyond company’s paradata financial systems subsidiary provides data processing systems 115 separate finance companies including company currently supports approximately 1109 individual branch offices 45 states paradata’s revenue highly dependent upon ability attract new customers often requires substantial lead time result revenue may fluctuate greatly year fiscal 2004 net revenues system sales support amounted 23 million approximately fiscal 2003 paradata’s pretax income contribution company also fluctuate greatly 288000 486000 773000 fiscal 2004 fiscal 2003 fiscal 2002 respectively paradata’s net revenue resulting net contribution company continue fluctuate year basis management believes business remain profitable long term additionally importantly paradata continues provide stateoftheart data processing support company’s inhouse integrated computer system little net costs company since fiscal 1997 company expanded product line include larger balance lower risk lower yielding individual consumer loans typically average 2500 3000 terms 18 24 months compared smaller loans average 300 500 8 12 month terms company offers larger loans states except texas profitable lending criteria strategy additionally company purchased numerous larger loan offices made several bulk purchases larger loans receivable march 31 2004 larger loan category amounted approximately 867 million gross loans receivable 151 increase balance outstanding march 31 2003 end current fiscal year portfolio 280 total loan balances slight decrease end previous year management believes loans provide lower expense loss ratios thus providing positive contributions company intend change primary lending focus smallloan business intend continue expanding larger loan product line part ongoing growth strategy fiscal 1999 company tested income tax return preparation refund anticipation loan program 40 offices based results test company expanded program fiscal 2000 substantially offices since time program grown dramatically company preparing approximately 40000 45000 50000 returns fiscal 2002 2003 2004 respectively net revenue generated company program fiscal 2004 amounted approximately 54 million company believes profitable business provides beneficial service existing customer base plans continue promote expand program future following table sets forth certain information derived company’s consolidated statements operations balance sheets well operating data ratios periods indicated 1 average gross loans receivable determined averaging monthend gross loans receivable indicated period 2 average loans receivable determined averaging monthend gross loans receivable less unearned interest deferred fees indicated period 3 operating margin computed total revenues less provision loan losses general administrative expenses percentage total revenues comparison fiscal 2004 versus fiscal 2003 net income amounted 288 million fiscal 2004 258 increase 229 million earned fiscal 2003 increase resulted increase 90 million 223 operating income revenues less provision loan losses general administrative expenses combined reduction interest expense 551000 123 offset 37 million increase income taxes interest fee income fiscal 2004 increased 182 million 137 fiscal 2003 increase resulted primarily increase 261 million 134 average loans receivable two fiscal years increase loans receivable resulted form growth existing offices new offices opened fiscal year acquisitions prior year acquisitions continued play important role overall growth strategy fiscal 2004 245 million gross loans purchased 21 separate transactions loans added 37 new offices 29 existing offices insurance commissions income amounted 277 million fiscal 2004 52 million 234 increase 224 million earned fiscal 2003 insurance commissions increased 31 million 294 income increased 21 million 181 increase insurance commissions resulted growth loan portfolio states credit insurance may sold conjunction loan transaction income consists primarily commissions sale motor club memberships add insurance revenues paradata gross profit sale items company’s world class buying club fees tax preparation business mainly increase net fees generated tax preparation electronic filing total revenues 1792 million fiscal 2004 151 increase 1557 million prior fiscal year revenues 433 offices open throughout fiscal years increased 98 provision loan losses fiscal 2004 increased 39 million 132 previous year increase resulted primarily increase loan losses two fiscal periods percentage average loans receivable net chargeoffs rose slightly 147 fiscal 2004 146 fiscal 2003 general administrative expenses increased 106 million 123 two fiscal years company’s profitability benefited improved expense ratios total general administrative expense percent total revenues decreased 551 fiscal 2003 538 fiscal 2004 ratio improved average general administrative expense per open office rose 51 two fiscal years average revenue increased 98 interest expense 39 million fiscal 2004 decrease 551000 123 45 million fiscal 2003 decrease due reductions average debt outstanding well overall interest rates comparing two fiscal years average debt outstanding decreased 48 average interest rate decreased 42 fiscal 2003 38 fiscal 2004 company’s effective income tax rate increased 362 fiscal 2003 367 fiscal 2004 primarily due increase state income taxes comparison fiscal 2003 versus fiscal net income 229 million fiscal 2003 182 increase 193 million earned fiscal 2002 increase resulted increase operating income 49 million 138 combined decrease interest expense partially offset increase income taxes interest fee income fiscal 2003 increased 161 million 137 fiscal 2002 increase resulted increase 207 million 120 average loans receivable two fiscal years increase average loans receivable especially larger loans partially due several acquisitions year company acquired approximately 167 million net loans 42 separate transactions fiscal 2003 insurance commissions income increased 31 million 158 two fiscal years insurance commissions increased 18 million 208 result increase loan volume states credit insurance may sold income increased 12 million 117 two years total revenues increased 1557 million fiscal 2003 191 million 140 increase 1366 million fiscal 2002 revenues 412 offices open throughout fiscal years increased 85 march 31 2003 company 470 offices operation increase 29 net offices march 31 2002 provision loan losses fiscal 2003 increased 39 million 151 previous year increase resulted combination increases general allowance loan losses amount loans charged net chargeoffs fiscal 2003 amounted 284 million 108 increase 257 million charged fiscal 2002 net chargeoffs percentage average loans declined slightly 148 146 comparing two annual periods general administrative expenses fiscal 2003 increased 103 million 137 previous fiscal year increase due primarily costs associated new offices opened acquired fiscal year general administrative expenses divided average open offices increased 68 comparing two fiscal years overall general administrative expenses percent total revenues decreased 552 fiscal 2002 551 fiscal 2003 interest expense decreased 922000 170 fiscal 2003 compared previous fiscal year result continued decline interest rates company’s effective income tax rate increased 362 fiscal 2003 356 previous fiscal year increase resulted primarily increased state income taxes critical accounting policies company’s accounting reporting policies accordance accounting principles generally accepted united states america conform general practices within finance company industry significant accounting policies used preparation consolidated financial statements discussed note 1 consolidated financial statements certain critical accounting policies involve significant judgment company’s management including use estimates assumptions affect reported amounts assets liabilities revenues expenses result changes estimates assumptions could significantly affect company’s financial position results operations company considers policies regarding allowance loan losses critical accounting policy due significant degree management judgment company developed policies procedures assessing adequacy allowance loan losses takes consideration various assumptions estimates respect loan portfolio company’s assumptions estimates may affected future changes economic conditions among factors additional discussion concerning allowance loan losses see “credit quality” credit quality company’s delinquency net chargeoff ratios reflect among factors changes mix loans portfolio quality receivables success collection efforts bankruptcy trends general economic conditions delinquency computed basis date last full contractual payment loan known recency method basis amount past due accordance original payment terms loan known contractual method management closely monitors portfolio delinquency using methods measure quality company’s loan portfolio probability credit losses following table classifies gross loans receivable company delinquent recency contractual basis least 60 days march 31 2004 2003 2002 loans charged earlier loans deemed uncollectible six months elapsed since date last full contractual payment company’s chargeoff policy consistently applied significant changes made policy periods reported management considers chargeoff policy evaluating appropriateness allowance loan losses end fiscal 2004 company experienced decrease contractual delinquency 42 march 31 2003 38 end current fiscal year delinquency rate also decreased 25 end fiscal 2003 23 end current fiscal year recency basis chargeoffs percent average loans increased 146 fiscal 2003 147 fiscal 2004 fiscal 2004 approximately 868 company’s loans generated renewals outstanding loans origination new loans previous customers renewal represents new loan transaction present customer portion new loan proceeds used repay balance existing loan remaining portion advanced customer fiscal 2002 2003 2004 percentages company’s loan originations renewals existing loans 790 771and 772 respectively company’s renewal policies determined based state regulations customer payment history renewal considered current renewal customer 45 days delinquent contractual basis delinquent renewals may extended customers 45 days past due contractual basis customer completes new application manager believes customer’s ability intent repay improved company’s policy renew delinquent loans amounts greater original amounts financed cases customer must complete new application every two years fiscal 2004 delinquent renewals represented less 3 company’s total loan volume chargeoffs percentage loans made category greatest loans made new borrowers less loans made former borrowers renewals expected due payment history experience available repeat borrowers however percentage total loans charged renewals represent greatest percentage due volume loans made category following table depicts chargeoffs percent loans made category percent total chargeoffs fiscal 2004 company maintains allowance loan losses amount management’s opinion adequate cover losses inherent existing loan portfolio company charges current earnings provision loan losses amounts added allowance maintain levels expected cover probable losses principal establishing allowance loan losses company takes consideration growth loan portfolio mix loan portfolio current levels chargeoffs current levels delinquencies current economic factors accordance statement accounting standards 5 “accounting contingencies” sfas 5 company accrues estimated loss probable reasonably estimated probable losses existing portfolio estimate losses company uses historical information net chargeoffs average loan life loan type methodology based fact many customers renew loans prior contractual maturity average contractual loan terms approximately nine months average life approximately four months based methodology company allowance loan losses approximated six months average net chargeoffs march 31 2004 2003 2002 therefore year end company allowance loan losses covers estimated losses existing loans based historical chargeoffs average lives addition entire loan portfolio turns approximately 35 times typical twelvemonth period therefore large percentage loans charged fiscal year company’s books beginning fiscal year company believes appropriate provide losses loans originated twelve months net chargeoffs needed allowance methodology employed accordance generally accepted accounting principles years ended march 31 2004 2003 2002 company recorded adjustments approximately 13 million 10 million 889000 respectively allowance loan losses connection acquisitions accordance generally accepted accounting principles adjustments represent allowance loan losses acquired loans company records acquired loans fair value based current interest rates less allowances uncollectibility collection costs company normally records acquired loans books however acquired loan portfolios generally include loans company deems uncollectible allowance assigned allowance loan losses estimated based review loan portfolio considering delinquency levels chargeoffs loan mix current economic factors company records acquired loans gross value records related allowance loan losses adjustment allowance loan losses reflected purchase accounting acquisitions table subsequent chargeoffs related acquired loans reflected purchase accounting acquisition adjustment year acquisition company believes allowance loan losses adequate cover losses existing portfolio march 31 2004 following summary changes allowance loan losses years ended march 31 2004 2003 2002 1 average loans receivable determined averaging monthend gross loans receivable less unearned interest deferred fees indicated period quarterly information seasonality company’s loan volume corresponding loans receivable follow seasonal trends company’s highest loan demand typically occurs october december third fiscal quarter loan demand generally lowest loan repayment highest january march fourth fiscal quarter loan volume average balances typically remain relatively level remainder year seasonal trend affects quarterly operating performance corresponding fluctuations interest fee income insurance commissions earned provision loan losses recorded well fluctuations company’s cash needs consequently operating results company’s third fiscal quarter generally significantly lower quarters operating results fourth fiscal quarter significantly higher quarters following table sets forth quarterly basis certain items included company’s unaudited consolidated financial statements shows number offices open fiscal years 2003 2004 current accounting issues accounting guarantees november 2002 fasb issued fasb interpretation 45 “guarantor’s accounting disclosure requirements guarantees including indirect guarantees indebtedness others” “fin 45” fin 45 elaborates disclosure made guarantor interim annual financial statements obligations certain guarantees issued also clarifies guarantor required recognize inception guarantee liability fair value obligation undertaken issuing guarantee fin 45 clarifies guarantor required disclose nature guarantee b maximum potential amount future payments guarantee c carrying amount liability nature extent recourse provisions available collateral would enable guarantor recover amounts paid guarantee fin 45 also clarifies guarantor required recognize inception guarantee liability obligation undertaken issuing guarantee inception initial recognition initial measurement provisions fin 45 applicable prospective basis guarantees issued modified december 31 2002 disclosure requirements fin 45 effective financial statements ending december 15 2002 company adopted initial recognition initial measurement provisions fin 45 effective january 1 2003 adopted disclosure requirements effective march 31 2003 accounting variable interest entities january 2003 fasb issued fasb interpretation 46 “fin 46” “consolidation variable interest entities” addresses consolidation business enterprises variable interest entities fin 46 enterprise holds significant variable interest variable interest entity primary beneficiary required disclose nature purpose size activities variable interest entity exposure loss result variable interest holder’s involvement entity nature involvement entity date involvement began primary beneficiary variable interest entity required disclose nature purpose size activities variable interest entity carrying amount classification consolidated assets collateral variable interest entity’s obligations lack recourse creditors beneficial interest holders consolidated variable interest entity general creditors beneficial interest holders consolidated variable entity general creditor primary beneficiary fin 46 effective first fiscal year interim period beginning june 15 2003 company interest variable interest entities impact upon adoption december 2003 fasb issued revision fin 46 “fin 46r” new fin 46r guidance application fin 46r required financial statements entities interests structures commonly referred specialpurpose entities periods ending december 15 2003 application types variable interest entities required financial statements periods ending march 15 2004 revision impact company upon adoption revenue recognition december 2003 securities exchange commission “sec” issued staff accounting bulletin 104 “revenue recognition” “sab 104” sab 104 summarizes certain sec staff’s views applying generally accepted accounting principles revenue recognition financial statements adoption sab 104 impact consolidated financial statements accounting certain financial instruments characteristics liabilities equity may 2002 financial accounting standards board “fasb” issued statement financial accounting standards “sfas” 150 “accounting certain financial instruments characteristics liabilities equity” “sfas 150” sfas 150 establishes standards classification measurement certain financial instruments characteristics liabilities equity sfas 150 effective financial instruments entered modified may 31 2003 otherwise effective beginning first interim period beginning june 15 2003 adoption sfas 150 impact consolidated financial statements amendment statement 133 derivative instruments hedging activities april 2003 fasb issued sfas 149 “amendment statement 133 derivative instruments hedging activities” “sfas 149” sfas 149 amends clarifies financial accounting reporting derivatives including instruments embedded contracts collectively referred derivatives hedging activities sfas 133 “accounting derivative instruments hedging activities” sfas 149 effective contracts entered modified june 30 2003 adoption sfas 149 impact consolidated financial statements recently issued accounting pronouncements accounting loans certain debt securities acquired transfer statement position 031 addresses accounting differences contractual cash flows cash flows expected collected investor’s initial investment loans debt securities loans acquired transfer differences attributable least part credit quality includes loans acquired purchase business combinations applies nongovernmental entities including notforprofit organizations sop apply loans originated entity sop limits yield may accreted accretable yield excess investor’s estimate undiscounted expected principal interest cash flows cash flows expected acquisition collected investor’s initial investment loan sop requires excess contractual cash flows cash flows expected collected nonaccretable difference recognized adjustment yield loss accrual valuation allowance sop prohibits “carrying over” creation valuation allowances initial accounting loans acquired transfer within scope sop prohibition valuation allowance carryover applies purchase individual loan pool loans group loans acquired purchase business combination sop effective loans acquired fiscal years beginning december 15 2004 liquidity capital resources company financed operations acquisitions office expansion combination cash flow operations borrowings institutional lenders company generally applied cash flow operations fund increasing loan volume fund acquisitions repay longterm indebtedness repurchase common stock company’s gross loans receivable increased 2109 million march 31 2001 3101 million march 31 2004 net cash provided operating activities fiscal years 2002 2003 2004 483 million 551 million 704 million respectively company’s primary ongoing cash requirements relate funding new offices acquisitions overall growth loans outstanding repayment longterm indebtedness repurchase common stock company repurchased 1986000 shares common stock repurchase program aggregate purchase price approximately 160 million february 1996 october 1996 certain loan agreement restrictions company suspended stock repurchases october 1996 stock repurchase program reinstated january 2000 144000 shares repurchased fiscal 2000 275000 shares fiscal 2001 252000 shares fiscal 2002 1623549 shares fiscal 2003 respective aggregate purchase prices 724000 1434000 2179000 12000000 company believes stock repurchases viable component company’s longterm financial strategy excellent use excess cash opportunity arises addition company plans open acquire least 25 new offices next two fiscal years expenditures company open furnish new offices generally averaged approximately 20000 per office fiscal 2004 new offices also required 100000 400000 fund outstanding loans receivable originated first 12 months operation company acquired 39 offices number loan portfolios competitors 10 states 21 separate transactions fiscal 2004 gross loans receivable purchased transactions approximately 245 million aggregate dates purchase company believes attractive opportunities acquire new offices receivables competitors acquire offices communities currently served company continue become available conditions local economies financial circumstances owners change company 1520 million base credit facility syndicate banks addition base revolving credit commitment 15 million seasonal revolving credit commitment available november 15 year march 31 immediately succeeding year cover increase loan demand period credit facility expire september 30 2005 funds borrowed revolving credit facility bear interest company’s option either agent bank’s prime rate per annum libor rate plus 200 per annum march 31 2004 interest rate borrowings revolving credit facility 320 company pays commitment fee equal 0375 per annum daily unused portion revolving credit facility amounts outstanding revolving credit facility may exceed specified percentages eligible loans receivable march 31 2004 914 million outstanding facility 606 million unused borrowing availability borrowing base limitations company currently negotiations banks extend maturity date credit facility september 30 2006 company anticipate problems getting extension approved know definitely time second quarter fiscal 2005 company 20 million senior subordinated secured notes insurance company notes mature june 30 2004 bear interest 100 payable quarterly notes issued discounted price equal 996936 may prepaid subject certain prepayment penalties borrowings revolving credit facility senior subordinated notes secured lien substantially tangible intangible assets company subsidiaries pursuant various security agreements company’s credit agreements contain number financial covenants including minimum net worth fixed charge coverage requirements credit agreements also contain certain covenants including covenants impose limitations company respect declaring paying dividends making distributions acquiring common preferred stock warrants options ii redeeming purchasing prepaying principal interest subordinated debt iii incurring additional indebtedness iv entering merger consolidation sale substantial assets subsidiaries senior subordinated notes also subject prepayment penalties company compliance agreements march 31 2004 believe agreements materially limit business expansion strategy following table summarizes company’s contractual cash obligations period thousands company believes cash flow operations borrowings revolving credit facility adequate fund expected cost opening acquiring new offices including funding initial operating losses new offices funding loans receivable originated offices company’s offices scheduled repayment senior subordinated notes management currently aware trends demands commitments events uncertainties believes result reasonably likely result company’s liquidity increasing decreasing material way time company needed obtained expects continue need periodic basis increase borrowing limits revolving credit facility company successfully obtained increases past anticipates able future need arises however assurance additional funding available reasonable terms needed quantitative qualitative disclosures market risk company’s financial instruments consist following cash loans receivable senior notes payable subordinated notes payable notes payable fair value approximates carrying value instruments loans receivable originated prevailing market rates average life approximately four months given shortterm nature loans continually repriced current market rates revolving credit facility variable rate based margin libor reprices changes libor interest rate subordinated notes 10 considered market rate type instrument company’s outstanding debt revolving credit facility one notes payable 926 million march 31 2004 interest borrowings facility based company’s option prime rate libor plus 200 based outstanding balance march 31 2004 change 1 interest rates would cause change interest expense approximately 926000 annual basis inflation company believe inflation material adverse effect financial condition results operations primary impact inflation operations company reflected increased operating costs increases operating costs would adversely affect company’s operations consumer lending laws three ten states company operates allow indexing maximum loan amounts consumer price index provisions allow company make larger loans existing interest rates states could partially offset potential increase operating costs due inflation legal matters march 31 2004 company certain subsidiaries named defendants various legal actions arising normal business activities damages various amounts claimed although amount ultimate liability respect matters cannot determined company believes liability material adverse effect company’s consolidated financial statements taken whole forwardlooking statements annual report including “management’s discussion analysis financial condition results operations” may contain various “forwardlooking statements” within meaning section 21e securities exchange act 1934 based management’s beliefs assumptions well information currently available management used document words “anticipate” “estimate” “plan” “expect” “believe” “may” “will” “should” similar expressions may identify forwardlooking statements although company believes expectations reflected forwardlooking statements reasonable give assurance expectations prove correct statements subject certain risks uncertainties assumptions one risks uncertainties materialize underlying assumptions prove incorrect company’s actual financial results performance financial condition may vary materially anticipated estimated expected among key factors could cause company’s actual financial results performance condition differ expectations expressed implied forwardlooking statements following changes interest rates risks inherent making loans including repayment risks value collateral recently enacted proposed legislation timing amount revenues may recognized company changes current revenue expense trends including trends affecting chargeoffs changes company’s markets general changes economy particularly markets served company unpredictable nature litigation matters discussed annual report company’s filings securities exchange commission company undertake obligation update forwardlooking statements may make item 7aitem 7 management’s discussion analysis financial condition results operations general company’s financial performance continues dependent large part upon growth outstanding loans receivable ongoing introduction new products services marketing customer base maintenance loan quality acceptable levels operating expenses since march 31 2000 gross loans receivable increased 152 annual compounded rate 1736 million 3515 million march 31 2005 increase reflects higher volume loans generated company’s existing offices contribution loans generated new offices opened acquired period fiveyear period company grown 410 offices 579 offices march 31 2005 company plans open acquire least 25 new offices next two fiscal years company continues identify new products services marketing customer base addition new insurancerelated products introduced selected states last several years company sells finances electronic items appliances existing customer base program called “world class buying club” total loan volume program amounted 83 million fiscal 2005 276 increase prior fiscal year represents less 1 company’s total loan volume remains profitable program company plans continue emphasize fiscal 2006 beyond company’s paradata financial systems subsidiary provides data processing systems 109 separate finance companies including company currently supports approximately 1170 individual branch offices 45 states paradata’s revenue highly dependent upon ability attract new customers often requires substantial lead time result revenue may fluctuate greatly year fiscal 2005 net revenues system sales support amounted 23 million approximately fiscal 2004 paradata’s pretax income contribution company also fluctuate greatly 332000 288000 486000 fiscal 2005 fiscal 2004 fiscal 2003 respectively paradata’s net revenue resulting net contribution company continue fluctuate year basis management believes business remain profitable long term additionally importantly paradata continues provide stateoftheart data processing support company’s inhouse integrated computer system little net cost company since fiscal 1997 company expanded product line include larger balance lower risk lower yielding individual consumer loans typically average 2500 3000 terms 18 24 months compared smaller loans average 300 500 terms 8 12 months company offers larger loans states except texas colorado profitable lending criteria strategy additionally company purchased numerous larger loan offices made several bulk purchases larger loans receivable march 31 2005 larger loan category accounted approximately 1038 million gross loans receivable 198 increase balance outstanding march 31 2004 end current fiscal year portfolio 295 total loan balances slight increase end previous year management believes loans provide lower expense loss ratios thus provide positive contributions company intend change primary lending focus smallloan business intend continue expanding larger loan product line part ongoing growth strategy fiscal 1999 company tested income tax return preparation refund anticipation loan program 40 offices based results test company expanded program fiscal 2000 substantially offices since time program grown dramatically company preparing approximately 45000 50000 55000 returns fiscal 2003 2004 2005 respectively net revenue generated company program fiscal 2005 amounted approximately 68 million company believes profitable business provides beneficial service existing customer base plans continue promote expand program future following table sets forth certain information derived company’s consolidated statements operations balance sheets well operating data ratios periods indicated 1 average gross loans receivable determined averaging monthend gross loans receivable indicated period 2 average loans receivable determined averaging monthend gross loans receivable less unearned interest deferred fees indicated period 3 operating margin computed total revenues less provision loan losses general administrative expenses percentage total revenues comparison fiscal 2005 versus fiscal 2004 net income 340 million fiscal 2005 182 increase 288 million earned fiscal 2004 increase resulted increase operating income revenues less provision loan losses general administrative expenses 91 million 185 offset increase interest expense income taxes interest fee income fiscal 2005 increased 261 million 172 fiscal 2004 increase resulted increase 399 million 181 average loans receivable two fiscal years increase average loans receivable especially larger loans partially due several acquisitions year company acquired approximately 215 million net loans 20 separate transactions fiscal 2005 insurance commissions income increased 55 million 200 two fiscal years insurance commissions increased 31 million 226 result increase loan volume states credit insurance may sold income increased 24 million 175 two years primarily due increase fees income tax return preparation total revenues increased 2108 million fiscal 2005 316 million 176 increase 1792 million fiscal 2004 revenues 462 offices open throughout fiscal years increased 86 march 31 2005 company 579 offices operation increase 53 net offices march 31 2004 provision loan losses fiscal 2005 increased 66 million 196 previous year increase resulted combination increases general allowance loan losses amount loans charged net chargeoffs fiscal 2005 amounted 380 million 167 increase 326 million charged fiscal 2004 net chargeoffs percentage average loans declined slightly 147 146 comparing two annual periods general administrative expenses fiscal 2005 increased 159 million 165 previous fiscal year increase due primarily costs associated new offices opened acquired fiscal year general administrative expenses divided average open offices increased 24 comparing two fiscal years overall general administrative expenses percent total revenues decreased 538 fiscal 2004 532 fiscal 2005 interest expense increased 698000 177 fiscal 2005 compared previous fiscal year result increase average debt outstanding 48 combined increase interest rates company’s effective income tax rate increased 369 fiscal 2005 367 previous fiscal year increase resulted primarily increased state income taxes comparison fiscal 2004 versus fiscal 2003 net income amounted 288 million fiscal 2004 258 increase 229 million earned fiscal 2003 increase resulted increase 90 million 223 operating income combined reduction interest expense 551000 123 offset 37 million increase income taxes interest fee income fiscal 2004 increased 182 million 137 fiscal 2003 increase resulted primarily increase 261 million 134 average loans receivable two fiscal years increase loans receivable resulted form growth existing offices new offices opened fiscal year acquisitions prior year acquisitions continued play important role overall growth strategy fiscal 2004 245 million gross loans purchased 21 separate transactions loans added 37 new offices 29 existing offices insurance commissions income amounted 277 million fiscal 2004 52 million 234 increase 224 million earned fiscal 2003 insurance commissions increased 31 million 294 income increased 21 million 181 increase insurance commissions resulted growth loan portfolio states credit insurance may sold conjunction loan transaction income consists primarily commissions sale motor club memberships add insurance revenues paradata gross profit sale items company’s world class buying club fees tax preparation business mainly increase net fees generated tax preparation electronic filing total revenues 1792 million fiscal 2004 151 increase 1557 million prior fiscal year revenues 433 offices open throughout fiscal years increased 98 provision loan losses fiscal 2004 increased 39 million 132 previous year increase resulted primarily increase loan losses two fiscal periods percentage average loans receivable net chargeoffs rose slightly 147 fiscal 2004 146 fiscal 2003 general administrative expenses increased 106 million 123 two fiscal years company’s profitability benefited improved expense ratios total general administrative expense percent total revenues decreased 551 fiscal 2003 538 fiscal 2004 ratio improved average general administrative expense per open office rose 51 two fiscal years average revenue increased 98 interest expense 39 million fiscal 2004 decrease 551000 123 45 million fiscal 2003 decrease due reductions average debt outstanding well overall interest rates comparing two fiscal years average debt outstanding decreased 48 average interest rate decreased 42 fiscal 2003 38 fiscal 2004 company’s effective income tax rate increased 362 fiscal 2003 367 fiscal 2004 primarily due increase state income taxes critical accounting policies company’s accounting reporting policies accordance us generally accepted accounting principles conform general practices within finance company industry significant accounting policies used preparation consolidated financial statements discussed note 1 consolidated financial statements certain critical accounting policies involve significant judgment company’s management including use estimates assumptions affect reported amounts assets liabilities revenues expenses result changes estimates assumptions could significantly affect company’s financial position results operations company considers policies regarding allowance loan losses critical accounting policy due significant degree management judgment company developed policies procedures assessing adequacy allowance loan losses take consideration various assumptions estimates respect loan portfolio company’s assumptions estimates may affected future changes economic conditions among factors additional discussion concerning allowance loan losses see “credit quality” credit quality company’s delinquency net chargeoff ratios reflect among factors changes mix loans portfolio quality receivables success collection efforts bankruptcy trends general economic conditions delinquency computed basis date last full contractual payment loan known recency method basis amount past due accordance original payment terms loan known contractual method management closely monitors portfolio delinquency using methods measure quality company’s loan portfolio probability credit losses following table classifies gross loans receivable company delinquent recency contractual basis least 60 days march 31 2005 2004 2003 loans charged earlier loans deemed uncollectible six months elapsed since date last full contractual payment company’s chargeoff policy consistently applied significant changes made policy periods reported management considers chargeoff policy evaluating appropriateness allowance loan losses end fiscal 2005 company experienced increase contractual delinquency 41 38 march 31 2004 delinquency rate recency basis also increased 23 end fiscal 2004 25 end current fiscal year chargeoffs percent average loans decreased 147 fiscal 2004 146 fiscal 2005 fiscal 2005 approximately 872 company’s loans generated renewals outstanding loans origination new loans previous customers renewal represents new loan transaction present customer portion new loan proceeds used repay balance existing loan remaining portion advanced customer fiscal 2003 2004 2005 percentages company’s loan originations renewals existing loans 771 772 776 respectively company’s renewal policies determined based state regulations customer payment history renewal considered current renewal customer 45 days delinquent contractual basis delinquent renewals may extended customers 45 days past due contractual basis customer completes new application manager believes customer’s ability intent repay improved company’s policy renew delinquent loans amounts greater original amounts financed cases customer must complete new application every two years fiscal 2005 delinquent renewals represented 24 company’s total loan volume chargeoffs percentage loans made category greatest loans made new borrowers less loans made former borrowers renewals expected due payment history experience available repeat borrowers however percentage total loans charged renewals represent greatest percentage due volume loans made category following table depicts chargeoffs percent loans made category percent total chargeoffs fiscal 2005 company maintains allowance loan losses amount management’s opinion adequate cover losses inherent existing loan portfolio company charges current earnings provision loan losses amounts added allowance maintain levels expected cover probable losses principal establishing allowance loan losses company takes consideration growth loan portfolio mix loan portfolio current levels chargeoffs current levels delinquencies current economic factors accordance statement accounting standards 5 “accounting contingencies” sfas 5 company accrues estimated loss probable reasonably estimated probable losses existing portfolio estimate losses company uses historical information net chargeoffs average loan life loan type methodology based fact many customers renew loans prior contractual maturity average contractual loan terms approximately nine months average life approximately four months based methodology company allowance loan losses approximated six months average net chargeoffs march 31 2005 2004 2003 therefore year end company allowance loan losses covered estimated losses existing loans based historical chargeoffs average lives addition entire loan portfolio turns approximately 30 times typical twelvemonth period therefore large percentage loans charged fiscal year company’s books beginning fiscal year company believes appropriate provide losses loans originated twelve months net chargeoffs needed allowance methodology employed accordance generally accepted accounting principles years ended march 31 2005 2004 2003 company recorded adjustments approximately 14 million 13 million 10 million respectively allowance loan losses connection acquisitions accordance generally accepted accounting principles adjustments represent allowance loan losses acquired loans company records acquired loans fair value based current interest rates less allowances uncollectibility collection costs acquired loan portfolios generally include loans company deems uncollectible allowance assigned acquiree allowance loan losses estimated based review loan portfolio considering delinquency levels chargeoffs loan mix current economic factors company records acquired loans gross value records related allowance loan losses reflected purchase accounting acquisitions table subsequent chargeoffs related acquired loans reflected purchase accounting acquisition adjustment year acquisition also see recently issued accounting pronouncements company believes allowance loan losses adequate cover losses existing portfolio march 31 2005 following summary changes allowance loan losses years ended march 31 2005 2004 2003 1 average loans receivable determined averaging monthend gross loans receivable less unearned interest deferred fees indicated period quarterly information seasonality company’s loan volume corresponding loans receivable follow seasonal trends company’s highest loan demand typically occurs october december third fiscal quarter loan demand generally lowest loan repayment highest january march fourth fiscal quarter loan volume average balances typically remain relatively level remainder year seasonal trend affects quarterly operating performance corresponding fluctuations interest fee income insurance commissions earned provision loan losses recorded well fluctuations company’s cash needs consequently operating results company’s third fiscal quarter generally significantly lower quarters operating results fourth fiscal quarter significantly higher quarters following table sets forth quarterly basis certain items included company’s unaudited consolidated financial statements shows number offices open fiscal years 2004 2005 recently issued accounting pronouncements accounting certain loans debt securities acquired transfer effective april 1 2005 company adopted sop 033 “sop 033” “accounting certain loans debt securities acquired transfer” prohibits carry creation valuation allowances initial accounting loans acquired transfer within scope sop prohibition valuation allowance carryover applies purchase individual loan pool loans group loans acquired purchase business combination initial adoption issue impact financial condition results operations company process evaluating impact pronouncement future acquisitions sharebased payment december 2004 fasb issued sfas 123r “sfas 123r” “sharebased payment” requires companies recognize income statement grantdate fair value stock options equitybased compensation issued employees sfas 123r amendment sfas 123 “sfas 123” “accounting stockbased compensation” related implementation guidance sfas 123r change accounting guidance sharebased payment transactions parties employees provided sfas 123 sfas 123r way award classified affect measurement compensation cost liabilityclassified awards remeasured fair value balancesheet date award settled liabilityclassified awards include following • employee awards cashbased settlement repurchase features stock appreciation right cashsettlement option • awards fixed dollar amount settleable company‘s stock • sharebased awards netsettlement feature amount excess minimum tax withholding • awards vest become exercisable based achievement condition service performance market condition equityclassified awards measured grantdate fair value amortized subsequent vesting period subsequently remeasured equityclassified awards include following • sharebased awards netsettlement features minimum tax withholdings • awards permit cashless exercise using broker unrelated employer • awards containing put feature give employees right require company repurchase shares fair value employee bears risks rewards normally associated ownership six months longer effective april 21 2005 securities exchange commission issued amendment rule 401a1 regulation sx delaying effective date public entities file small business issuers first annual period beginning june 15 2005 instead sfas 123r’s original effective date beginning first interim reporting period beginning june 15 2005 company adopt sfas april 1 2006 evaluating impact company’s fiscal 2007 results operations accounting nonmonetary transactions december 2004 fasb issued sfas 153 “sfas 153” “exchanges nonmonetary assetsan amendment apb opinion 29” eliminates exception nonmonetary exchanges similar productive assets replaces general exception exchanges nonmonetary assets commercial substance nonmonetary exchange commercial substance future cash flows entity expected change significantly result exchange sfas 153 effective nonmonetary transactions occurring fiscal years beginning june 15 2005 liquidity capital resources company financed operations acquisitions office expansion combination cash flow operations borrowings institutional lenders company generally applied cash flow operations fund increasing loan volume fund acquisitions repay longterm indebtedness repurchase common stock company’s gross loans receivable increased 2668 million march 31 2002 3515 million march 31 2005 net cash provided operating activities fiscal years 2003 2004 2005 551 million 704 million 881 million respectively company’s primary ongoing cash requirements relate funding new offices acquisitions overall growth loans outstanding repayment longterm indebtedness repurchase common stock company repurchased 1986000 shares common stock repurchase program aggregate purchase price approximately 160 million february 1996 october 1996 certain loan agreement restrictions company suspended stock repurchases october 1996 stock repurchase program reinstated january 2000 144000 shares repurchased fiscal 2000 275000 shares fiscal 2001 252000 shares fiscal 2002 1623549 shares fiscal 2003 486000 fiscal 2005 respective aggregate purchase prices 724000 1434000 2179000 12001000 8751000 company believes stock repurchases viable component company’s longterm financial strategy excellent use excess cash opportunity arises board directors may 12 2005 authorized company increase share repurchase program 20 million addition company plans open acquire least 25 new offices next two fiscal years expenditures company open furnish new offices generally averaged approximately 20000 per office fiscal 2005 new offices also required 100000 400000 fund outstanding loans receivable originated first 12 months operation company acquired 30 offices number loan portfolios competitors 8 states 20 separate transactions fiscal 2005 gross loans receivable purchased transactions approximately 274 million aggregate dates purchase company believes attractive opportunities acquire new offices receivables competitors acquire offices communities currently served company continue become available conditions local economies financial circumstances owners change march 31 2005 company’s accounts payable accrued expenses included 58 million acquisition contract signed assets transferred cash payment made payment remitted april 1 2005 company 1520 million base credit facility syndicate banks addition base revolving credit commitment 15 million seasonal revolving credit commitment available november 15 year march 31 immediately succeeding year cover increase loan demand period credit facility expire september 30 2006 funds borrowed revolving credit facility bear interest company’s option either agent bank’s prime rate per annum libor rate plus 200 per annum march 31 2005 interest rate borrowings revolving credit facility 49 company pays commitment fee equal 0375 per annum daily unused portion revolving credit facility amounts outstanding revolving credit facility may exceed specified percentages eligible loans receivable march 31 2005 829 million outstanding facility 691 million unused borrowing availability borrowing base limitations company currently negotiations banks extend maturity date credit facility september 30 2007 company currently anticipate problems getting extension approved know definitely time second quarter fiscal 2006 company’s credit agreements contain number financial covenants including minimum net worth fixed charge coverage requirements credit agreements also contain certain covenants including covenants impose limitations company respect declaring paying dividends making distributions acquiring common preferred stock warrants options ii redeeming purchasing prepaying principal interest subordinated debt iii incurring additional indebtedness iv entering merger consolidation sale substantial assets subsidiaries company compliance agreements march 31 2005 believe agreements materially limit business expansion strategy following table summarizes company’s contractual cash obligations period thousands company believes cash flow operations borrowings revolving credit facility adequate next twelve months foreseeable future thereafter fund expected cost opening acquiring new offices including funding initial operating losses new offices funding loans receivable originated offices company’s offices management currently aware trends demands commitments events uncertainties believes result reasonably likely result company’s liquidity increasing decreasing material way time company needed obtained expects continue need periodic basis increase borrowing limits revolving credit facility company successfully obtained increases past anticipates able future need arises however assurance additional funding available reasonable terms needed quantitative qualitative disclosures market risk company’s financial instruments consist following cash loans receivable senior notes payable note payable fair value approximates carrying value instruments loans receivable originated prevailing market rates average life approximately four months given shortterm nature loans continually repriced current market rates company’s revolving credit facility variable rate based margin libor reprices changes libor company’s outstanding debt revolving credit facility note payable 839 million march 31 2005 interest borrowings facility based company’s option prime rate libor plus 200 based outstanding balance march 31 2005 change 1 interest rates would cause change interest expense approximately 839000 annual basis inflation company believe inflation material adverse effect financial condition results operations primary impact inflation operations company reflected increased operating costs increases operating costs would adversely affect company’s operations consumer lending laws three twelve states company operates allow indexing maximum loan amounts consumer price index provisions allow company make larger loans existing interest rates states could partially offset potential increase operating costs due inflation legal matters march 31 2005 company certain subsidiaries named defendants various legal actions arising normal business activities damages various amounts claimed although amount ultimate liability respect matters cannot determined company believes liability material adverse effect company’s consolidated financial condition results operations taken whole forwardlooking statements annual report including “management’s discussion analysis financial condition results operations” contains various “forwardlooking statements” within meaning section 21e securities exchange act 1934 based management’s beliefs assumptions well information currently available management statements historical fact well identified use words “anticipate” “estimate” “plan” “expect” “believe” “may” “will” “should” similar expressions forwardlooking statements although company believes expectations reflected forwardlooking statements reasonable give assurance expectations prove correct statements subject certain risks uncertainties assumptions one risks uncertainties materialize underlying assumptions prove incorrect company’s actual financial results performance financial condition may vary materially anticipated estimated expected among key factors could cause company’s actual financial results performance condition differ expectations expressed implied forwardlooking statements following changes interest rates risks inherent making loans including repayment risks value collateral recently enacted proposed future legislation timing amount revenues may recognized company changes current revenue expense trends including trends affecting chargeoffs changes company’s markets general changes economy particularly markets served company unpredictable nature litigation matters discussed annual report company’s filings securities exchange commission company undertake obligation update forwardlooking statements may make item 7aitem 7 management’s discussion analysis financial condition results operations general companys financial performance continues dependent large part upon growth outstanding loans receivable ongoing introduction new products services marketing customer base maintenance loan quality acceptable levels operating expenses since march 31 2003 gross loans receivable increased 163 annual compounded rate 2668 million 5995 million march 31 2008 increase reflects higher volume loans generated companys existing offices contribution loans generated new offices opened acquired period fiveyear period company grown 470 offices 838 offices march 31 2008 fiscal 2009 company plans open acquire approximately 70 new offices united states 25 new offices mexico company attempts identify new products services marketing customer base addition new insurancerelated products introduced selected states last several years company sells finances electronic items appliances existing customer base many states operates program called “world class buying club” total loan volume program 162 million fiscal 2008 126 increase prior fiscal year represents less 1 company’s total loan volume remains profitable program company plans continue emphasize fiscal 2009 beyond companys paradata financial systems subsidiary provides data processing systems 113 separate finance companies including company currently supports approximately 1493 individual branch offices 45 states mexico paradata’s revenue highly dependent upon ability attract new customers often requires substantial lead time result revenue may fluctuate greatly year net revenues system sales support amounted 22 million 25 million 23 million fiscal 2008 2007 2006 respectively paradata’s pretax income loss company also fluctuate greatly 255000 112000 308000 fiscal 2008 fiscal 2007 fiscal 2006 respectively paradata’s net revenue resulting net income loss company continue fluctuate year basis paradata may remain profitable continue provide stateoftheart data processing support company’s inhouse integrated computer system substantially reduced cost company since fiscal 1997 company expanded product line include larger balance lower risk lower yielding individual consumer loans typically average 1000 3000 terms generally 18 24 months compared smaller loans average 300 1000 terms generally 8 12 months company offers larger loans states except texas profitable lending criteria strategy additionally company purchased years numerous larger loan offices made several bulk purchases larger loans receivable march 31 2008 larger loan category accounted approximately 1560 million gross loans receivable 170 increase balance outstanding march 31 2007 end current fiscal year portfolio 260 total loan balances slight decrease previous year mix 264 management believes loans provide lower expense loss ratios thus provide positive contributions company intend change primary lending focus smallloan business intend continue expanding larger loan product line part ongoing growth strategy fiscal 1999 company tested income tax return preparation refund anticipation loan program 40 offices based results test company expanded program fiscal 2000 substantially offices company prepared approximately 65000 60000 57000 returns fiscal years 2008 2007 2006 respectively net revenue generated company program fiscal 2008 amounted approximately 97 million company believes profitable business provides beneficial service existing customer base plans continue promote expand program future following table sets forth certain information derived companys consolidated statements operations balance sheets well operating data ratios periods indicated 1 average gross loans receivable determined averaging monthend gross loans receivable indicated period 2 average loans receivable determined averaging monthend gross loans receivable less unearned interest deferred fees indicated period 3 operating margin computed total revenues less provision loan losses general administrative expenses percentage total revenues comparison fiscal 2008 versus fiscal 2007 net income 530 million fiscal 2008 106 increase 479 million earned fiscal 2007 increase resulted increase operating income revenues less provision loan losses general administrative expenses 125 million 144 offset increase interest expense income taxes total revenues increased 3460 million fiscal 2008 537 million 184 increase 2923 million fiscal 2007 revenues 645 offices open throughout fiscal years increased 89 march 31 2008 company 838 offices operation increase 106 offices march 31 2007 interest fee income fiscal 2008 increased 455 million 184 fiscal 2007 increase resulted increase 685 million 191 average net loans receivable two fiscal years increase average loans receivable attributable company acquiring approximately 31 million net loans internal growth fiscal 2008 internal growth increased company opened 95 new offices average loan balance increased 837 877 insurance commissions income increased 83 million 183 two fiscal years insurance commissions increased 60 million 245 result increase loan volume states credit insurance sold income increased 23 million 110 two years primarily due increase fees received income tax return preparation 15 million increase motor club product sales 11 million 08 million increase world class buying club sales increase offset 18 million loss related interest rate swap provision loan losses fiscal 2008 increased 156 million 301 previous year increase resulted combination increases allowance loan losses amount loans charged net chargeoffs fiscal 2008 amounted 620 million 298 increase 477 million charged fiscal 2007 net chargeoffs percentage average loans increased 133 145 comparing two annual periods 12 percentage point increase continuation trend company seen quarters fiscal year current trend line historical losses 148 2006 146 2005 147 2004 146 2003 delinquencies recency basis increased 22 26 contractual basis increased 36 40 march 31 2007 march 31 2008 respectively general administrative expenses fiscal 2008 increased 256 million 167 previous fiscal year increase due primarily costs associated new offices opened acquired fiscal year general administrative expenses divided average open offices decreased 06 comparing two fiscal years overall general administrative expenses percent total revenues decreased 526 fiscal 2007 518 fiscal 2008 decrease resulted higher growth revenue expenses interest expense increased 20 million 206 fiscal 2008 compared previous fiscal year result increase average debt outstanding 402 average interest rates decreased 63 fiscal 2007 54 fiscal 2008 income tax expense increased 54 million 186 primarily increase pretax income charge 15 million related tax examination state jurisdiction completed examinations issued proposed assessment tax years 2001 2006 company initial process responding state taxing authority consideration proposed assessment net income year reduced charge 15 million total gross unrecognized tax benefits increased 23 million result examination time early predict outcome tax issue future recoverability charge tax issue resolved company expects accrue approximately 40000 per quarter interest penalties result company’s effective income tax rate increased 396 year ended march 31 2008 379 prior year comparison fiscal 2007 versus fiscal 2006 net income 479 million fiscal 2007 244 increase 385 million earned fiscal 2006 increase resulted increase operating income 180 million 262 offset increase interest expense income taxes total revenues increased 2923 million fiscal 2007 490 million 202 increase 2433 million fiscal 2006 revenues 566 offices open throughout fiscal years increased 125 march 31 2007 company 732 offices operation increase 112 offices march 31 2006 interest fee income fiscal 2007 increased 426 million 208 fiscal 2006 increase resulted increase 598 million 200 average net loans receivable two fiscal years increase average loans receivable attributable company acquiring approximately 161 million net loans 125 million related one acquisition internal growth fiscal 2007 internal growth increased company opened 68 new offices average loan balance increased 804 837 insurance commissions income increased 65 million 167 two fiscal years insurance commissions increased 46 million 232 result increase loan volume states credit insurance may sold income increased 19 million 99 two years primarily due increase fees received income tax return preparation 570000 increase motor club product sales 13 million 13 million increase world class buying club sales increase offset 400000 loss related interest rate swap comparative results also affected company recording 393000 gain life insurance claim fiscal 2006 similar gain recorded fiscal 2007 provision loan losses fiscal 2007 increased 59 million 128 previous year increase resulted combination increases allowance loan losses amount loans charged net chargeoffs fiscal 2007 amounted 478 million 75 increase 444 million charged fiscal 2006 however net chargeoffs percentage average loans decreased 148 133 comparing two annual periods decrease chargeoff ratio mainly attributable decrease bankruptcy related chargeoffs 88 million fiscal 2006 50 million fiscal 2007 company expect chargeoff ratio remain current levels believes bankruptcy trends begin rise fiscal 2008 delinquencies recency basis increased 21 22 contractual basis increased 34 35 march 31 2006 march 31 2007 respectively general administrative expenses fiscal 2007 increased 251 million 195 previous fiscal year increase due primarily costs associated new offices opened acquired fiscal year general administrative expenses divided average open offices increased 52 comparing two fiscal years overall general administrative expenses percent total revenues decreased 528 fiscal 2006 526 fiscal 2007 decrease resulted higher growth revenue expenses interest expense increased 25 million 345 fiscal 2007 compared previous fiscal year result increase average debt outstanding 333 average interest rates increased slightly 627 fiscal 2006 633 fiscal 2007 company’s effective income tax rate increased 379 fiscal 2007 375 previous fiscal year increase resulted primarily increased state income taxes critical accounting policies company’s accounting reporting policies accordance us generally accepted accounting principles conform general practices within finance company industry significant accounting policies used preparation consolidated financial statements discussed note 1 consolidated financial statements certain critical accounting policies involve significant judgment company’s management including use estimates assumptions affect reported amounts assets liabilities revenues expenses result changes estimates assumptions could significantly affect company’s financial position results operations company considers policies regarding allowance loan losses sharebased compensation critical accounting policies due significant degree management judgment involved allowance loan losses company developed policies procedures assessing adequacy allowance loan losses take consideration various assumptions estimates respect loan portfolio company’s assumptions estimates may affected future changes economic conditions among factors additional discussion concerning allowance loan losses see “credit quality” sharebased compensation company measures compensation cost sharebased awards fair value recognizes compensation service period awards expected vest fair value restricted stock based number shares granted quoted price common stock fair value stock options determined using blackscholes valuation model blackscholes model requires input highly subjective assumptions including expected volatility riskfree interest rate expected life changes materially affect fair value estimate addition estimation sharebased awards ultimately vest requires judgment extent actual results updated estimates differ current estimates amounts recorded cumulative adjustment period estimates revised company considers many factors estimating expected forfeitures including types awards employee class historical experience actual results future changes estimates may differ substantially current estimates credit quality company’s delinquency net chargeoff ratios reflect among factors changes mix loans portfolio quality receivables success collection efforts bankruptcy trends general economic conditions delinquency computed basis date last full contractual payment loan known recency method basis amount past due accordance original payment terms loan known contractual method management closely monitors portfolio delinquency using methods measure quality companys loan portfolio probability credit losses following table classifies gross loans receivable company delinquent recency contractual basis least 61 days march 31 2008 2007 2006 loans charged earlier loans deemed uncollectible six months elapsed since date last full contractual payment company’s chargeoff policy consistently applied significant changes made policy periods reported management considers chargeoff policy evaluating appropriateness allowance loan losses company experienced increase contractual delinquency 35 march 31 2007 40 march 31 2008 delinquency rate recency basis also increased 22 end fiscal 2007 26 end current fiscal year chargeoffs percent average loans increased 133 fiscal 2007 145 fiscal 2008 fiscal 2008 approximately 830 company’s loans generated renewals outstanding loans origination new loans previous customers renewal represents new loan transaction present customer portion new loan proceeds used repay balance existing loan remaining portion advanced customer fiscal 2008 2007 2006 percentages company’s loan originations renewals existing loans 733 743 756 respectively company’s renewal policies limited state regulations cases consider customer’s payment history require customer made least one payment loan considered renewal considered current renewal customer 45 days delinquent contractual basis delinquent renewals may extended customers 45 days past due contractual basis customer completes new application manager believes customer’s ability intent repay improved company’s policy renew delinquent loans amounts greater original amounts financed cases customer must complete new application every two years fiscal 2008 delinquent renewals represented 19 company’s total loan volume compared 19 fiscal 2007 chargeoffs percentage loans made category greatest loans made new borrowers less loans made former borrowers renewals expected due payment history experience available repeat borrowers however percentage total loans charged renewals represent greatest percentage due volume loans made category following table depicts chargeoffs percent loans made category percent total chargeoffs fiscal 2008 company maintains allowance loan losses amount management’s opinion adequate cover losses inherent existing loan portfolio company charges current earnings provision loan losses amounts added allowance maintain levels expected cover probable losses principal establishing allowance loan losses company takes consideration growth loan portfolio mix loan portfolio current levels chargeoffs current levels delinquencies current economic factors accordance statement accounting standards 5 “accounting contingencies” sfas 5 company accrues estimated loss probable reasonably estimated probable losses existing portfolio estimate losses company uses historical information net chargeoffs average loan life method based fact many customers renew loans prior contractual maturity average contractual loan terms approximately nine months average loan life approximately four months based method company allowance loan losses approximated six months average net chargeoffs march 31 2008 2007 2006 therefore year end company allowance loan losses covered estimated losses existing loans based historical chargeoffs average lives addition entire loan portfolio turns approximately 3 times typical twelvemonth period therefore large percentage loans charged fiscal year company’s books beginning fiscal year company believes appropriate provide losses loans originated twelve months net chargeoffs needed allowance method employed accordance generally accepted accounting principles company records acquired loans fair value based current interest rates less allowance uncollectibility collection costs company follows statement position 033 sop 033 “accounting certain loans debt securities acquired transfer” prohibits carryover creation valuation allowances initial accounting loans acquired transfer within scope sop management believes loan shown deterioration 60 days delinquent company believes loans acquired shown evidence deterioration credit quality since origination therefore within scope sop 033 consideration paid acquired loans 60 days delinquent years ended march 31 2008 2007 2006 company recorded adjustments approximately 01 million 09 million 04 million respectively allowance loan losses connection acquisitions accordance generally accepted accounting principles adjustments represent allowance loan losses acquired loans within scope sop 033 company believes allowance loan losses adequate cover losses existing portfolio march 31 2008 following summary changes allowance loan losses years ended march 31 2008 2007 2006 1 average loans receivable determined averaging monthend gross loans receivable less unearned interest deferred fees indicated period quarterly information seasonality companys loan volume corresponding loans receivable follow seasonal trends companys highest loan demand typically occurs october december third fiscal quarter loan demand generally lowest loan repayment highest january march fourth fiscal quarter loan volume average balances typically remain relatively level remainder year seasonal trend affects quarterly operating performance corresponding fluctuations interest fee income insurance commissions earned provision loan losses recorded well fluctuations companys cash needs consequently operating results companys third fiscal quarter generally significantly lower quarters operating results fourth fiscal quarter significantly higher quarters following table sets forth quarterly basis certain items included companys unaudited consolidated financial statements shows number offices open fiscal years 2008 2007 recently issued accounting pronouncements business combinations december 2007 financial accounting standards board issued sfas 141 revised 2007 business combinations replaces sfas 141 business combinations sfas 141r requires acquirer recognize assets acquired liabilities assumed noncontrolling interest acquiree acquisition date measured fair values date limited exceptions sfas 141r also requires acquisitionrelated costs restructuring costs acquirer expected obligated incur acquisition date recognized separately business combination addition sfas 141r amends sfas 109 accounting income taxes require acquirer recognize changes amount deferred tax benefits recognizable business combination either income continuing operations period combination directly contributed capital sfas 141r applies prospectively business combinations fiscal years beginning december 15 2008 would therefore impact accounting future acquisitions beginning fiscal 2010 fair value measurements september 2006 fasb issued statement financial accounting standards 157 fair value measurements” “sfas 157” sfas 157 provides common definition fair value framework measuring assets liabilities fair values particular standard prescribes addition statement prescribes enhanced disclosure fair value measures requires expanded disclosure nonmarket data used assess fair values provisions sfas 157 financial assets liabilities well assets liabilities carried fair value recurring basis financial statements effective first fiscal period beginning november 15 2007 provisions nonfinancial assets liabilities effective first fiscal period beginning november 15 2008 required adopt sfas 157 financial assets liabilities first quarter fiscal 2009 currently assessing impact consolidated financial statements noncontrolling interest consolidated financial statements december 2007 fasb issued sfas 160 “noncontrolling interests consolidated financial statements amendment arb 51” “sfas 160” sfas 160 clarifies accounting noncontrolling interests establishes accounting reporting standards noncontrolling interest subsidiary including classification component equity sfas 160 effective fiscal years beginning december 15 2008 fiscal 2010 company process determining effect adoption sfas 160 consolidated financial statements disclosures derivative instruments hedging activities statement 161 amends fasb statement 133 accounting derivative instruments hedging activities requires companies derivative instruments disclose information company uses derivative instruments derivative instruments related hedged items accounted statement 133 derivative instruments related hedged items affect companys financial position financial performance cash flows required disclosures include fair value derivative instruments gains losses tabular format information creditriskrelated contingent features derivative agreements counterparty credit risk companys strategies objectives using derivative instruments statement expands current disclosure framework statement 133 statement 161 effective prospectively periods beginning november 15 2008 fair value option financial assets financial liabilities february 15 2007 fasb issued sfas 159 “sfas 159” “the fair value option financial assets financial liabilities” allows entity irrevocable option elect fair value initial subsequent measurement certain financial assets liabilities contractbycontract basis subsequent changes fair value financial assets liabilities would recognized earnings occur sfas establishes certain additional disclosure requirements sfas 159 effective first fiscal period beginning november 15 2007 expect adoption standard material impact consolidated financial statements convertible debt instruments may 9 2008 fasb issued fasb staff position apb 141 “accounting convertible debt instruments may settled cash upon conversion including partial cash settlement” “fsp apb 141” fsp apb 141 applies convertible debt instrument conversion may settled wholly partly cash requires cashsettleable convertibles separated debt equity components issuance prohibits use fairvalue option instruments fsp apb 141 effective first fiscal period beginning december 15 2008 must applied retrospectively periods presented cumulative effect adjustment made earliest period presented required adopt fsp apb 141 first quarter fiscal 2010 currently assessing impact consolidated financial statements useful life intangible assets april 2008 fasb issued fasb staff position fas 1423”determination useful life intangible assets” “fsp fas 1423” fsp fas 1423 applies recognized intangible assets guidance restricted estimating useful life recognized intangible assets fsp fas 1423 effective first fiscal period beginning december 15 2008 must applied prospectively intangible assets acquired effective date required adopt fsp fas 1423 intangible assets acquired beginning first quarter fiscal 2010 liquidity capital resources company financed continues finance operations acquisitions office expansion combination cash flow operations borrowings institutional lenders company generally applied cash flow operations fund increasing loan volume fund acquisitions repay longterm indebtedness repurchase common stock companys gross loans receivable increased 2263 million march 31 2002 5995 million march 31 2008 net cash provided operating activities fiscal years 2006 2007 2008 980 million 1101 million 1360 million respectively companys primary ongoing cash requirements relate funding new offices acquisitions overall growth loans outstanding repayment longterm indebtedness repurchase common stock november february 2008 board directors authorized company increase share repurchase program additional 10 million respectively march 31 2008 6165444 shares repurchased since 2000 respective aggregate purchase price approximately 1418 million fiscal 2008 company repurchased 1375100 shares 419 million company believes stock repurchases viable component company’s longterm financial strategy excellent use excess cash opportunity arises addition company plans open acquire approximately 70 branches united states 25 branches mexico expenditures company open furnish new offices generally averaged approximately 25000 per office fiscal 2008 new offices also required 100000 400000 fund outstanding loans receivable originated first 12 months operation company acquired net 13 offices number loan portfolios competitors 5 states 11 separate transactions fiscal 2008 gross loans receivable purchased transactions approximately 45 million aggregate dates purchase company believes attractive opportunities acquire new offices receivables competitors acquire offices communities currently served company continue become available conditions local economies financial circumstances owners change company 1870 million base credit facility syndicate banks addition base revolving credit commitment 30 million seasonal revolving credit commitment available november 15 year march 31 immediately succeeding year cover increase loan demand period credit facility expire september 30 2009 funds borrowed revolving credit facility bear interest companys option either agent banks prime rate per annum libor rate plus 180 per annum march 31 2008 interest rate borrowings revolving credit facility 525 company pays commitment fee equal 0375 per annum daily unused portion revolving credit facility amounts outstanding revolving credit facility may exceed specified percentages eligible loans receivable march 31 2008 1045 million outstanding facility 825 million unused borrowing availability borrowing base limitations excluding seasonal line expires march 31 companys credit agreements contain number financial covenants including minimum net worth fixed charge coverage requirements credit agreements also contain certain covenants including covenants impose limitations company respect declaring paying dividends making distributions acquiring common preferred stock warrants options ii redeeming purchasing prepaying principal interest subordinated debt iii incurring additional indebtedness iv entering merger consolidation sale substantial assets subsidiaries company compliance agreements march 31 2008 believe agreements materially limit business expansion strategy october 2 2006 company amended senior credit facility connection issuance 110 million aggregate principal amount 3 convertible senior subordinated notes due october 1 2011 see note 7 consolidated financial statements included report information regarding transaction following table summarizes company’s contractual cash obligations period thousands april 1 2007 company adopted fin 48as march 31 2008 company’s contractual obligations relating fin 48 included unrecognized tax benefits 88 million expected settled greater one yearwhile settlement obligation expected excess one year precise timing settlement indeterminable company believes cash flow operations borrowings revolving credit facility adequate next twelve months foreseeable future thereafter fund expected cost opening acquiring new offices including funding initial operating losses new offices funding loans receivable originated offices companys offices management currently aware trends demands commitments events uncertainties believes result reasonably likely result company’s liquidity increasing decreasing material way time company needed obtained expects continue need periodic basis increase borrowing limits revolving credit facility company successfully obtained increases past anticipates able future need arises however assurance additional funding available reasonable terms needed quantitative qualitative disclosures market risk interest rate risk company’s financial instruments consist following cash loans receivable senior notes payable convertible senior subordinated notes payable note payable interest rate swap foreign currency option fair value approximates carrying value instruments except convertible senior subordinated notes payable fair value represents quoted market price loans receivable originated prevailing market rates average life approximately four months given shortterm nature loans continually repriced current market rates company’s outstanding debt revolving credit facility 1045 million march 31 2008 interest borrowings facility based company’s option prime rate libor plus 180 based outstanding balance march 31 2008 change 1 interest rates would cause change interest expense approximately 745000 annual basis october 2005 company entered interest rate swap economically hedge variable cash flows associated 30 million liborbased borrowings swap converted 30 million variable rate onemonth libor fixed rate 4755 period five years accordance sfas 133 company records derivatives fair value assets liabilities consolidated balance sheets since company utilizing hedge accounting sfas 133 changes fair value derivative instrument included income march 31 2008 fair value interest rate swap liability 17 million included liabilities change fair value beginning year recorded unrealized loss income approximately 18 million october 10 2006 company issued 110 million convertible senior subordinated notes due october 1 2011 “convertible notes” qualified institutional brokers accordance rule 144a securities act 1933 interest convertible notes fixed 3 payable semiannually arrears april 1 october 1 year commencing april 1 2007 company another note payable balance 400000 march 31 2008 carries interest rate equal libor 200 foreign currency exchange rate risk september 2005 company began opening offices mexico local businesses utilize mexican peso functional currency consolidated financial statements company denominated us dollars therefore subject fluctuation us dollar mexican peso foreign exchange rate changes international revenues less 2 total revenues year ended march 31 2008 net loans denominated mexican pesos approximately 91 million usd march 31 2008 company’s foreign currency exchange rate exposures may change time business practices evolve could material effect financial results may continue periodtoperiod fluctuations relative portions mexican revenues may 9 2007 hedged foreign exchange risk purchasing 3 million foreign exchange currency option strike rate 1118 mexican peso per us dollar option expires may 9 2008 changes fair value option recorded component earnings since company apply hedge accounting sfas 133 fair value option march 31 2008 change fair value option fiscal 2008 less 100000 earnings affected fluctuations value us dollar foreign currencies analysis performed assuming hypothetical 10 increase decrease value us dollar relative mexican peso company’s transactions mexico denominated march 31 2008 analysis indicated market movements would material effect consolidated financial statements actual effects consolidated financial statements future may differ materially results analysis year ended march 31 2008 company continue monitor assess effect currency fluctuations may institute hedging alternatives inflation company believe inflation material adverse effect financial condition results operations primary impact inflation operations company reflected increased operating costs increases operating costs would adversely affect companys operations consumer lending laws two eleven states company operates allow indexing maximum loan amounts consumer price index provisions allow company make larger loans existing interest rates states could partially offset potential increase operating costs due inflation legal matters march 31 2008 company certain subsidiaries named defendants various legal actions arising normal business activities damages various amounts claimed although amount ultimate liability respect matters cannot determined company believes liability material adverse effect company’s consolidated financial condition results operations taken whole item 7aitem 7 management’s discussion analysis financial condition results operations general companys financial performance continues dependent large part upon growth outstanding loans receivable ongoing introduction new products services marketing customer base maintenance loan quality acceptable levels operating expenses since march 31 2005 gross loans receivable increased 169 annual compounded rate 3520 million 7703 million march 31 2010 increase reflects higher volume loans generated companys existing offices contribution loans generated new offices opened acquired period fiveyear period company grown 579 offices 990 offices march 31 2010 fiscal 2011 company plans open approximately 55 new offices united states 15 new offices mexico evaluate acquisition opportunities company attempts identify new products services marketing customer base addition new insurancerelated products introduced selected states last several years company sells finances electronic items appliances existing customer base many states operates program called “world class buying club” total loan volume program 135 million fiscal 2010 compared 130 million fiscal 2009 world class buying club represents less 1 company’s total loan volume companys paradata financial systems subsidiary provides data processing systems 107 separate finance companies including company currently supports approximately 1530 individual branch offices 44 states mexico paradata’s revenue highly dependent upon ability attract new customers often requires substantial lead time result revenue may fluctuate year net revenues system sales support amounted 18 million 20 million 22 million fiscal 2010 2009 2008 respectively paradata’s net revenue company continue fluctuate year basis paradata continues provide stateoftheart data processing support company’s inhouse integrated computer system substantially reduced cost company offers income tax return preparation electronic filing program together access refund anticipation loans unaffiliated bank offices company prepared approximately 62000 61000 65000 returns fiscal years 2010 2009 2008 respectively net revenue generated company program fiscal 2010 2009 2008 amounted approximately 109 million 99 million 97 million respectively company believes profitable business provides beneficial service existing customer base plans continue promote expand program future following table sets forth certain information derived companys consolidated statements operations balance sheets well operating data ratios periods indicated 1 average gross loans receivable determined averaging monthend gross loans receivable indicated period 2 average net loans receivable determined averaging monthend gross loans receivable less unearned interest deferred fees indicated period 3 operating margin computed total revenues less provision loan losses general administrative expenses percentage total revenues described note 2 consolidated financial statements included item 8 first quarter fiscal 2010 adopted fasb asc 47020 prior authoritative literature fasb staff position apb 141 “accounting convertible debt instruments may settled cash upon conversion including partial cash settlement” applied retrospectively periods presented cumulative effect adjustment made earliest period presented adoption fasb asc 47020 affected fiscal 2010 fiscal 2009 fiscal 2008 consolidated statements operations balance sheets reported extent described note 2 summary significant accounting policies part ii item 8 report comparison fiscal 2010 versus fiscal 2009 net income 737 million fiscal 2010 304 increase 565 million earned fiscal 2009 increase resulted primarily increase operating income revenues less provision loan losses general administrative expenses 269 million 252 10 million decrease interest expense offset increase income tax expense total revenues increased 4406 million fiscal 2010 485 million 124 increase 3922 million fiscal 2009 revenues 834 offices open throughout fiscal years increased 81 march 31 2010 company 990 offices operation increase 46 offices march 31 2009 interest fee income fiscal 2010 increased 436 million 131 fiscal 2009 increase resulted increase 669 million 137 average net loans receivable two fiscal years increase average loans receivable attributable company’s internal growth fiscal 2010 internal growth increased company opened 48 new offices average loan balance increased 917 971 insurance commissions income increased 49 million 81 two fiscal years insurance commissions increased 48 million 147 result increase loan volume states credit insurance sold income increased slightly various changes within income comparing two years including · revenue tax preparation increased approximately 10 million 10 · fiscal 2010 11 million gain interest rate swaps recorded compared approximate 800000 loss fiscal 2009 · fiscal 2010 company extinguished 180 million par value convertible notes 22 million gain compared fiscal 2009 150 million par value convertible notes extinguished 40 million gain · fiscal 2009 15 million gain recognized sale foreign currency option gain recorded fiscal 2010 see note 9 consolidated financial statements discussion regarding extinguishment debt provision loan losses fiscal 2010 increased 48 million 56 previous year increase resulted combination increases allowance loan losses amount loans charged net chargeoffs fiscal 2010 amounted 856 million 56 increase 811 million charged fiscal 2009 accounts 61 days past due decreased 27 24 recency basis 42 38 contractual basis comparing march 31 2010 march 31 2009 current fiscal year also reduction yearoveryear loan losses annualized net chargeoffs percentage average net loans decreased 167 fiscal 2009 155 fiscal 2010 although represents 120 basis point decrease current year ratio slightly higher historical chargeoff ratios historically fiscal 2002 fiscal 2006 chargeoffs percent average loans ranged 146 148 fiscal 2007 company experienced temporary decline 133 attributed change bankruptcy law however fiscal 2008 ratio returned 145 line historical rates ratio fiscal 2010 slightly higher historical levels see improvements fiscal 2010 compared fiscal 2009 believe continue see slight improvement loss ratios near future however assurance return historical levels anytime soon fiscal year 2010 chargeoffs percent average net loans decreased 155 167 fiscal 2009 believe customer base highly impacted cost basic commodities food energy unemployment cost basic commodities rose steeply first several months fiscal 2009 negative impact customer’s ability repay outstanding loans turn drove chargeoff ratio significantly historical experience moderating second half fiscal 2009 costs basic commodities risen gradually fiscal 2010 allowing customers adapt costs increases better manage ability repay outstanding loans rate unemployment also stabilized believe major factors reduction chargeoff ratio fiscal 2010 general administrative expenses fiscal 2010 increased 168 million 84 previous fiscal year increase due primarily costs associated new offices opened acquired fiscal year general administrative expenses divided average open offices increased slightly comparing two fiscal years overall general administrative expenses percent total revenues decreased 511 fiscal 2009 492 fiscal 2010 decrease resulted reduction branch openings fiscal 2010 management’s ongoing monitoring control expenses management plans increase number branch openings fiscal 2011 compared fiscal 2010 therefore company may experience similar reductions general administrative expenses percent total revenues fiscal 2011 interest expense decreased 10 million 67 fiscal 2010 compared previous fiscal year result decrease average debt outstanding 45 slight decrease average interest rates average interest rates decreased 67 fiscal 2009 65 fiscal 2010 income tax expense increased 107 million 305 primarily increase pretax income effective rate remained consistent 3833 fiscal 2010 compared 3831 fiscal 2009 comparison fiscal 2009 versus fiscal 2008 net income 565 million fiscal 2009 124 increase 503 million earned fiscal 2008 increase resulted primarily increase operating income revenues less provision loan losses general administrative expenses 72 million 72 reduction income tax effective rate reduction interest expense total revenues increased 3922 million fiscal 2009 461 million 133 increase 3460 million fiscal 2008 revenues 727 offices open throughout fiscal years increased 77 march 31 2009 company 944 offices operation increase 106 offices march 31 2008 interest fee income fiscal 2009 increased 390 million 133 fiscal 2008 increase resulted increase 603 million 141 average net loans receivable two fiscal years increase average loans receivable attributable company acquiring approximately 91 million net loans internal growth fiscal 2009 internal growth increased company opened 98 new offices average loan balance increased 877 917 insurance commissions income increased 71 million 133 two fiscal years insurance commissions increased 20 million 67 result increase loan volume states credit insurance sold income increased 51 million 219 two years primarily due 15 million gain sale foreign currency option 40 million gain extinguishment 15 million par value convertible notes see note 9 consolidated financial statements discussion regarding extinguishment debt increase partially offset approximately 08 million loss related interest rate swap provision loan losses fiscal 2009 increased 179 million 266 previous year increase resulted combination increases allowance loan losses amount loans charged net chargeoffs fiscal 2009 amounted 811 million 309 increase 620 million charged fiscal 2008 net chargeoffs percentage average loans increased 145 167 comparing two annual periods believe 22 percentage point increase resulted difficult economic environment higher energy cost customers faced accounts 61 days past due recency basis increased 26 27 contractual basis increased 40 42 march 31 2008 march 31 2009 respectively general administrative expenses fiscal 2009 increased 210 million 117 previous fiscal year increase due primarily costs associated new offices opened acquired fiscal year general administrative expenses divided average open offices remained flat comparing two fiscal years overall general administrative expenses percent total revenues decreased 518 fiscal 2008 511 fiscal 2009 decrease resulted management’s ongoing monitoring control expenses interest expense decreased 11 million 66 fiscal 2009 compared previous fiscal year result decrease interest rates partially offset increase average debt outstanding 121 average interest rates decreased 83 fiscal 2008 67 fiscal 2009 income tax expense increased 20 million 60 primarily increase pretax income decrease effective rate 397 383 result prior year tax examination discussed note 14 consolidated financial statements critical accounting policies company’s accounting reporting policies accordance us generally accepted accounting principles conform general practices within finance company industry significant accounting policies used preparation consolidated financial statements discussed note 1 consolidated financial statements certain critical accounting policies involve significant judgment company’s management including use estimates assumptions affect reported amounts assets liabilities revenues expenses result changes estimates assumptions could significantly affect company’s financial position results operations company considers policies regarding allowance loan losses sharebased compensation critical accounting policies due significant degree management judgment involved allowance loan losses company developed policies procedures assessing adequacy allowance loan losses take consideration various assumptions estimates respect loan portfolio company’s assumptions estimates may affected future changes economic conditions among factors additional discussion concerning allowance loan losses see “credit quality” sharebased compensation company measures compensation cost sharebased awards fair value recognizes compensation service period awards expected vest fair value restricted stock based number shares granted quoted price common stock fair value stock options determined using blackscholes valuation model blackscholes model requires input highly subjective assumptions including expected volatility riskfree interest rate expected life changes materially affect fair value estimate addition estimation sharebased awards ultimately vest requires judgment extent actual results updated estimates differ current estimates amounts recorded cumulative adjustment period estimates revised company considers many factors estimating expected forfeitures including types awards employee class historical experience actual results future changes estimates may differ substantially current estimates income taxes management uses certain assumptions estimates determining income taxes payable refundable deferred income tax liabilities assets events recognized differently financial statements income tax returns income tax expense determining amounts requires analysis certain transactions interpretation tax laws regulations management exercises considerable judgment evaluating amount timing recognition resulting income tax liabilities assets judgments estimates reevaluated periodic basis regulatory business factors change assurance given either tax returns submitted management income tax reported consolidated financial statements adjusted either adverse rulings us tax court changes tax code assessments made internal revenue service “irs” state taxing authorities company subject potential adverse adjustments including limited increase statutory federal state income tax rates permanent nondeductibility amounts currently considered deductible either future periods dependency generation future taxable income including capital gains order ultimately realize deferred income tax assets company adopted fasb asc 740 prior authoritative literature fasb interpretation 48 “accounting uncertainty income taxes” april 1 2007 fasb asc 740 company includes current deferred tax impact tax positions financial statements likely likelihood greater 50 positions sustained taxing authorities full knowledge relevant information based technical merits tax position company supports tax positions unambiguous tax law prior experience taxing authority analysis considers relevant facts circumstances regulations management must still rely assumptions estimates determine overall likelihood success proper quantification given tax position credit quality company’s delinquency net chargeoff ratios reflect among factors changes mix loans portfolio quality receivables success collection efforts bankruptcy trends general economic conditions delinquency computed basis date last full contractual payment loan known recency method basis amount past due accordance original payment terms loan known contractual method management closely monitors portfolio delinquency using methods measure quality companys loan portfolio probability credit losses following table classifies gross loans receivable company delinquent recency contractual basis least 61 days march 31 2010 2009 2008 loans charged earlier loans deemed uncollectible six months elapsed since date last full contractual payment company’s chargeoff policy consistently applied significant changes made policy periods reported management considers chargeoff policy evaluating appropriateness allowance loan losses chargeoffs percent average net loans decreased 167 fiscal 2009 155 fiscal 2010 fiscal 2010 approximately 847 company’s loans generated refinancings outstanding loans origination new loans previous customers refinancing represents new loan transaction present customer portion new loan proceeds used repay balance existing loan remaining portion advanced customer fiscal 2010 2009 2008 percentages company’s loan originations refinancings existing loans 764 750 733 respectively company’s refinancing policies limited state regulations cases consider customer’s payment history require customer made least two payments loan considered refinancing considered current refinancing customer 45 days delinquent contractual basis delinquent refinancings may extended customers 45 days past due contractual basis customer completes new application manager believes customer’s ability intent repay improved company’s policy refinance delinquent loans amounts greater original amounts financed cases customer must complete new application every two years fiscal 2010 delinquent refinancings represented less 2 company’s total loan volume compared 21 fiscal 2009 chargeoffs percentage loans made category greatest loans made new borrowers less loans made former borrowers refinancings expected due payment history experience available repeat borrowers however percentage total loans charged refinancings represent greatest percentage due volume loans made category following table depicts chargeoffs percent loans made category percent total chargeoffs fiscal 2010 company maintains allowance loan losses amount management’s opinion adequate cover losses inherent existing loan portfolio company charges current earnings provision loan losses amounts added allowance maintain levels expected cover probable losses principal establishing allowance loan losses company takes consideration growth loan portfolio mix loan portfolio current levels chargeoffs current levels delinquencies current economic factors accordance fasb asc topic 450 prior authoritative literature statement accounting standards 5 “accounting contingencies” company accrues estimated loss probable reasonably estimated probable losses existing portfolio estimate losses company uses historical information net chargeoffs average loan life method based fact many customers refinance loans prior contractual maturity average contractual loan terms approximately nine months average loan life approximately four months based method company allowance loan losses approximated six months average net chargeoffs march 31 2010 2009 2008 therefore year end company allowance loan losses covered estimated losses existing loans based historical chargeoffs average lives addition entire loan portfolio turns approximately three times typical twelvemonth period therefore large percentage loans charged fiscal year company’s books beginning fiscal year company believes appropriate provide losses loans originated twelve months net chargeoffs needed allowance method employed accordance generally accepted accounting principles company records acquired loans fair value based current interest rates less allowance uncollectibility collection costs fasb asc topic 310 prior authoritative literature statement position 033 “accounting certain loans debt securities acquired transfer” adopted company april 1 2005 fasb asc topic 310 prohibits carryover creation valuation allowances initial accounting loans acquired transfer within scope accounting literature management believes loan shown deterioration 60 days delinquent company believes loans acquired since adoption fasb asc topic 310 shown evidence deterioration credit quality since origination therefore within scope fasb asc topic 310 consideration paid acquired loans 60 days delinquent years ended march 31 2009 2008 company recorded adjustments approximately 05 million 01 million respectively allowance loan losses connection acquisitions accordance generally accepted accounting principles adjustment recorded year ended march 31 2010 adjustments represent allowance loan losses acquired loans within scope fasb asc topic 310 company believes allowance loan losses adequate cover losses existing portfolio march 31 2010 following summary changes allowance loan losses years ended march 31 2010 2009 2008 1 average loans receivable determined averaging monthend gross loans receivable less unearned interest deferred fees indicated period quarterly information seasonality companys loan volume corresponding loans receivable follow seasonal trends companys highest loan demand typically occurs october december third fiscal quarter loan demand generally lowest loan repayment highest january march fourth fiscal quarter loan volume average balances typically remain relatively level remainder year seasonal trend affects quarterly operating performance corresponding fluctuations interest fee income insurance commissions earned provision loan losses recorded well fluctuations companys cash needs consequently operating results companys third fiscal quarter generally significantly lower quarters operating results fourth fiscal quarter significantly higher quarters following table sets forth quarterly basis certain items included companys unaudited consolidated financial statements shows number offices open fiscal years 2010 2009 recently issued accounting pronouncements see “item 8 financial statements supplementary data note 1 summary significant accounting policies” consolidated financial statements impact new accounting pronouncements liquidity capital resources company financed continues finance operations acquisitions office expansion combination cash flows operations borrowings institutional lenders company generally applied cash flows operations fund increasing loan volume fund acquisitions repay longterm indebtedness repurchase common stock companys gross loans receivable increased 3101 million march 31 2004 7703 million march 31 2010 net cash provided operating activities fiscal years 2010 2009 2008 1836 million 1539 million 1360 million respectively companys primary ongoing cash requirements relate funding new offices acquisitions overall growth loans outstanding repayment repurchase longterm indebtedness repurchase common stock march 31 2010 approximately 65 million shares repurchased since 2000 aggregate purchase price approximately 1511 million fiscal 2010 company repurchased 38500 shares 14 million may 2009 board directors authorized company repurchase 15 million company’s stock subsequent end fiscal 2010 may 11 2010 board directors authorized additional increase 20 million company’s share repurchase program june 8 2010 company repurchased shares common stock approximately 274 million see note 1 subsequent events consolidated financial statements fiscal 2010 2009 company repurchased 180 million 150 million par value convertible senior subordinated notes payable respectively company believes stock repurchases debt repurchases viable component company’s longterm financial strategy excellent use excess cash opportunity arises addition company plans open approximately 55 branches united states 15 branches mexico evaluate acquisition opportunities fiscal 2011 expenditures company open furnish new offices generally averaged approximately 25000 per office fiscal 2010 new offices also required 100000 400000 fund outstanding loans receivable originated first 12 months operation company acquired net one office number loan portfolios competitors six states nine separate transactions fiscal 2010 gross loans receivable purchased transactions approximately 39 million aggregate dates purchase company believes attractive opportunities acquire new offices receivables competitors acquire offices communities currently served company continue become available conditions local economies financial circumstances owners change company 2383 million base credit facility syndicate banks credit facility expire july 31 2011 funds borrowed revolving credit facility bear interest companys option either agent banks prime rate per annum libor rate plus 30 per annum minimum 40 interest rate march 31 2010 interest rate borrowings revolving credit facility 425 company pays commitment fee equal 0375 per annum daily unused portion revolving credit facility amounts outstanding revolving credit facility may exceed specified percentages eligible loans receivable march 31 2010 992 million outstanding facility 1391 million unused borrowing availability borrowing base limitations companys credit agreements contain number financial covenants including minimum net worth fixed charge coverage requirements credit agreements also contain certain covenants including covenants impose limitations company respect declaring paying dividends making distributions acquiring common preferred stock warrants options ii redeeming purchasing prepaying principal interest subordinated debt iii incurring additional indebtedness iv entering merger consolidation sale substantial assets subsidiaries company compliance agreements march 31 2010 believe agreements materially limit business expansion strategy october 2 2006 company amended senior credit facility connection issuance 110 million aggregate principal amount 3 convertible senior subordinated notes due october 1 2011 see note 8 consolidated financial statements included report information regarding transaction following table summarizes company’s contractual cash obligations period thousands march 31 2010 company’s contractual obligations relating fasb asc 740 included unrecognized tax benefits 26 million expected settled greater one year settlement obligation expected excess one year precise timing settlement indeterminable company believes cash flow operations borrowings revolving credit facility adequate next twelve months foreseeable future thereafter fund expected cost opening acquiring new offices including funding initial operating losses new offices funding loans receivable originated offices companys offices except otherwise discussed report including part 1 item 1a “risk factors” management currently aware trends demands commitments events uncertainties believes could result could reasonably likely result company’s liquidity increasing decreasing material way time company needed obtained expects continue need recurring basis increase borrowing limits revolving credit facility company successfully obtained increases past anticipates able future need arises however assurance additional funding available reasonable terms needed see part item 1a “risk factors” discussion risks contingencies could affect business financial condition liquidity quantitative qualitative disclosures market risk interest rate risk march 31 2010 company’s financial instruments consist following cash equivalents loans receivable senior notes payable convertible senior subordinated notes payable interest rate swaps fair value approximates carrying value instruments except convertible senior subordinated notes payable fair value 734 million represents quoted market price loans receivable originated prevailing market rates average life approximately four months given shortterm nature loans continually repriced current market rates company’s outstanding debt revolving credit facility 992 million march 31 2010 interest borrowings facility based company’s option prime rate libor plus 30 minimum rate 40 based outstanding balance march 31 2010 change 1 libor interest rate would cause change interest expense approximately 200000 annual basis october 2005 company entered interest rate swap economically hedge variable cash flows associated 30 million liborbased borrowings swap converted 30 million variable rate onemonth libor fixed rate 4755 period five years december 2008 company entered 20 million interest rate swap convert variable rate one month libor fixed rate 24 accordance fasb asc topic 8151015 prior authoritative literature sfas 133 company records derivatives fair value assets liabilities consolidated balance sheets since company utilizing hedge accounting fasb asc topic 8151015 changes fair value derivative instrument included income march 31 2010 fair value interest rate swaps liability 13 million included liabilities change fair value beginning year recorded unrealized gain income approximately 11 million october 10 2006 company issued 110 million convertible senior subordinated notes due october 1 2011 “convertible notes” qualified institutional brokers accordance rule 144a securities act 1933 coupon rate convertible notes fixed 3 payable semiannually arrears april 1 october 1 year commencing april 1 2007 fiscal 2009 fiscal 2010 company repurchased cancelled 150 million 180 million respectively convertible senior subordinated notes see note 8 consolidated financial statements information regarding repurchases foreign currency exchange rate risk september 2005 company began opening offices mexico local businesses utilize mexican peso functional currency consolidated financial statements company denominated us dollars therefore subject fluctuation us dollar mexican peso foreign exchange rate changes international revenues approximately 41 total revenues year ended march 31 2010 net loans denominated mexican pesos approximately 213 million usd march 31 2010 company’s foreign currency exchange rate exposures may change time business practices evolve could material effect financial results may continue periodtoperiod fluctuations relative portions mexican revenues earnings affected fluctuations value us dollar foreign currencies analysis performed assuming hypothetical 10 increase decrease value us dollar relative mexican peso company’s transactions mexico denominated march 31 2010 analysis indicated market movements would material effect consolidated financial statements actual effects consolidated financial statements future may differ materially results analysis year ended march 31 2010 company continue monitor assess effect currency fluctuations may institute hedging alternatives inflation company believe inflation within reasonably anticipated rates material adverse effect financial condition although inflation would increase company’s operating costs absolute terms company expects decrease value money would result increase size loans demanded customer base reasonable anticipate change customer preference would result increase total loan receivables increase absolute revenues generated larger amount loans receivable increase absolute revenues offset increase operating costs addition company’s loans relatively short contractual term average life unlikely loans made given point time repaid significantly inflated dollars legal matters march 31 2010 company certain subsidiaries named defendants various legal actions arising normal business activities damages various amounts claimed although amount ultimate liability respect matters cannot determined company believes liability material adverse effect company’s consolidated financial condition results operations taken whole item 7aitem 7 management’s discussion analysis financial condition results operations general companys financial performance continues dependent large part upon growth outstanding loans receivable maintenance loan quality acceptable levels operating expenses since march 31 2006 gross loans receivable increased 160 annual compounded rate 4163 million 8750 million march 31 2011 increase reflects higher volume loans generated companys existing offices contribution loans generated new offices opened acquired period fiveyear period company grown 620 offices 1067 offices march 31 2011 fiscal 2012 company plans open approximately 63 new offices united states 10 new offices mexico also evaluate acquisition opportunities arise companys paradata financial systems subsidiary provides data processing systems 103 separate finance companies including company currently supports approximately 1652 individual branch offices 44 states mexico paradata’s revenue highly dependent upon ability attract new customers often requires substantial lead time result revenue may fluctuate year net revenues system sales support amounted 19 million 18 million 20 million fiscal 2011 2010 2009 respectively paradata’s net revenue company continue fluctuate year basis paradata continues provide stateoftheart data processing support company’s inhouse integrated computer system substantially reduced cost company offers income tax return preparation electronic filing program offices company prepared approximately 48000 62000 61000 returns fiscal years 2011 2010 2009 respectively revenues tax preparation business decreased 30 million 293 fiscal 2011 due 24 decline number returns prepared decrease resulted primarily increase compensation tax preparers continued offer instant loan tax refunds company unable offer year next year expected refund anticipation loans available tax preparer company competitive disadvantage going forward following table sets forth certain information derived companys consolidated statements operations balance sheets well operating data ratios periods indicated 1 average gross loans receivable determined averaging monthend gross loans receivable indicated period 2 average net loans receivable determined averaging monthend gross loans receivable less unearned interest deferred fees indicated period 3 operating margin computed total revenues less provision loan losses general administrative expenses percentage total revenues comparison fiscal 2011 versus fiscal 2010 net income 912 million fiscal 2011 239 increase 737 million earned fiscal 2010 increase resulted primarily increase operating income revenues less provision loan losses general administrative expenses 247 million 185 offset 09 million increase interest expense 62 million increase income tax expense total revenues increased 4914 million fiscal 2011 508 million 115 increase 4406 million fiscal 2010 revenues 937 offices open throughout fiscal years increased 90 march 31 2011 company 1067 offices operation increase 77 offices march 31 2010 interest fee income fiscal 2011 increased 496 million 132 fiscal 2010 increase resulted increase 801 million 145 average net loans receivable two fiscal years increase average loans receivable attributable company’s internal growth fiscal 2011 internal growth increased company opened 73 new offices average loan balance increased 971 1009 insurance commissions income increased 12 million 19 two fiscal years insurance commissions increased 45 million 121 result increase loan volume states credit insurance sold income decreased 33 million 114 two years primarily due 31 million decrease tax preparation revenue decrease due 240 reduction number tax returns prepared company compared prior year primarily due increased competition tax preparers offered instant loan tax refunds consequently tax preparation revenue declined 78 million fiscal 2011 109 million fiscal 2010 provision loan losses fiscal 2011 increased 56 million 62 previous year increase resulted combination increases allowance loan losses amount loans charged net chargeoffs fiscal 2011 amounted 906 million 58 increase 856 million charged fiscal 2010 current fiscal year company also reduction yearoveryear loan loss ratios annualized net chargeoffs percentage average net loans decreased 155 fiscal 2010 143 fiscal 2011 current year chargeoff ratio 143 historical levels company expect ratio decrease meaningfully level historically fiscal 2002 fiscal 2006 chargeoffs percent average loans ranged 146 148 fiscal 2007 company experienced temporary decline 133 attributed change bankruptcy law returned 145 fiscal 2008 fiscal 2009 ratio increased 167 highest company’s history result difficult economic environment higher energy costs customers faced declining fiscal 2010 fiscal 2011 accounts 61 days past due 24 recency basis 38 contractual basis march 31 2011 march 31 2010 general administrative expenses fiscal 2011 increased 2375 million 94 previous fiscal year increase due primarily costs associated new offices opened acquired fiscal year general administrative expenses divided average open offices increased slightly comparing two fiscal years overall general administrative expenses percent total revenues decreased 492 fiscal 2010 483 fiscal 2011 decrease resulted management’s ongoing monitoring control expenses continued leveraging fixed expenses interest expense increased 09 million 64 fiscal 2011 compared previous fiscal year result increase average debt outstanding 40 slight increase average interest rates average interest rates increased 65 fiscal 2010 67 fiscal 2011 income tax expense increased 62 million 136 primarily increase pretax income effective rate decreased 363 fiscal 2011 383 fiscal 2010 due partially income tax settlement state south carolina tax years march 31 1997 march 31 2006 resulted company recognizing tax benefit approximately 900000 comparison fiscal 2010 versus fiscal 2009 net income 737 million fiscal 2010 304 increase 565 million earned fiscal 2009 increase resulted primarily increase operating income 269 million 252 10 million decrease interest expense offset increase income tax expense total revenues increased 4406 million fiscal 2010 485 million 124 increase 3922 million fiscal 2009 revenues 834 offices open throughout fiscal years increased 81 march 31 2010 company 990 offices operation increase 46 offices march 31 2009 interest fee income fiscal 2010 increased 436 million 131 fiscal 2009 increase resulted increase 669 million 137 average net loans receivable two fiscal years increase average loans receivable attributable company’s internal growth fiscal 2010 internal growth increased company opened 48 new offices average loan balance increased 917 971 insurance commissions income increased 49 million 81 two fiscal years insurance commissions increased 48 million 147 result increase loan volume states credit insurance sold income increased slightly various changes within income comparing two years including · revenue tax preparation increased approximately 10 million 10 · fiscal 2010 11 million gain interest rate swaps recorded compared approximate 800000 loss fiscal 2009 · fiscal 2010 company extinguished 180 million par value convertible notes 22 million gain compared fiscal 2009 150 million par value convertible notes extinguished 40 million gain · fiscal 2009 15 million gain recognized sale foreign currency option gain recorded fiscal 2010 see note 8 consolidated financial statements discussion regarding extinguishment debt provision loan losses fiscal 2010 increased 48 million 56 previous year increase resulted combination increases allowance loan losses amount loans charged net chargeoffs fiscal 2010 amounted 856 million 56 increase 811 million charged fiscal 2009 accounts 61 days past due decreased 27 24 recency basis 42 38 contractual basis comparing march 31 2010 march 31 2009 fiscal 2010 reduction yearoveryear loan losses annualized net chargeoffs percentage average net loans decreased 167 fiscal 2009 155 fiscal 2010 fiscal year 2010 chargeoffs percent average net loans decreased 155 167 fiscal 2009 believe customer base highly impacted cost basic commodities food energy unemployment cost basic commodities rose steeply first several months fiscal 2009 negative impact customer’s ability repay outstanding loans turn drove chargeoff ratio significantly historical experience moderating second half fiscal 2009 costs basic commodities rose gradually fiscal 2010 allowing customers adapt costs increases better manage ability repay outstanding loans rate unemployment also stabilized believe major factors reduction chargeoff ratio fiscal 2010 general administrative expenses fiscal 2010 increased 168 million 84 previous fiscal year increase due primarily costs associated new offices opened acquired fiscal year general administrative expenses divided average open offices increased slightly comparing two fiscal years overall general administrative expenses percent total revenues decreased 511 fiscal 2009 492 fiscal 2010 decrease resulted reduction branch openings fiscal 2010 management’s ongoing monitoring control expenses interest expense decreased 10 million 67 fiscal 2010 compared previous fiscal year result decrease average debt outstanding 45 slight decrease average interest rates average interest rates decreased 67 fiscal 2009 65 fiscal 2010 income tax expense increased 107 million 305 primarily increase pretax income effective rate remained consistent 383 fiscal 2010 fiscal 2009 critical accounting policies company’s accounting reporting policies accordance us generally accepted accounting principles conform general practices within finance company industry significant accounting policies used preparation consolidated financial statements discussed note 1 consolidated financial statements certain critical accounting policies involve significant judgment company’s management including use estimates assumptions affect reported amounts assets liabilities revenues expenses result changes estimates assumptions could significantly affect company’s financial position results operations company considers policies regarding allowance loan losses sharebased compensation income taxes critical accounting policies due significant degree management judgment involved allowance loan losses company developed policies procedures assessing adequacy allowance loan losses take consideration various assumptions estimates respect loan portfolio company’s assumptions estimates may affected future changes economic conditions among factors additional discussion concerning allowance loan losses see “credit quality” sharebased compensation company measures compensation cost sharebased awards fair value recognizes compensation service period awards expected vest fair value restricted stock based number shares granted quoted price common stock fair value stock options determined using blackscholes valuation model blackscholes model requires input highly subjective assumptions including expected volatility riskfree interest rate expected life changes materially affect fair value estimate addition estimation sharebased awards ultimately vest requires judgment extent actual results updated estimates differ current estimates amounts recorded cumulative adjustment period estimates revised company considers many factors estimating expected forfeitures including types awards employee class historical experience actual results future changes estimates may differ substantially current estimates income taxes management uses certain assumptions estimates determining income taxes payable refundable deferred income tax liabilities assets events recognized differently financial statements income tax returns income tax expense determining amounts requires analysis certain transactions interpretation tax laws regulations management exercises considerable judgment evaluating amount timing recognition resulting income tax liabilities assets judgments estimates reevaluated periodic basis regulatory business factors change assurance given either tax returns submitted management income tax reported consolidated financial statements adjusted either adverse rulings us tax court changes tax code assessments made internal revenue service “irs” state taxing authorities company subject potential adverse adjustments including limited increase statutory federal state income tax rates permanent nondeductibility amounts currently considered deductible either future periods dependency generation future taxable income order ultimately realize deferred income tax assets company adopted fasb asc 74010 april 1 2007 fasb asc 740 company includes current deferred tax impact tax positions financial statements likely likelihood greater 50 positions sustained taxing authorities full knowledge relevant information based technical merits tax position company supports tax positions unambiguous tax law prior experience taxing authority analysis considers relevant facts circumstances regulations management must still rely assumptions estimates determine overall likelihood success proper quantification given tax position credit quality company’s delinquency net chargeoff ratios reflect among factors changes mix loans portfolio quality receivables success collection efforts bankruptcy trends general economic conditions delinquency computed basis date last full contractual payment loan known recency method basis amount past due accordance original payment terms loan known contractual method management closely monitors portfolio delinquency using methods measure quality companys loan portfolio probability credit losses following table classifies gross loans receivable company delinquent recency contractual basis least 61 days march 31 2011 2010 2009 loans charged earlier loans deemed uncollectible six months elapsed since date last full contractual payment company’s chargeoff policy consistently applied significant changes made policy periods reported management considers chargeoff policy evaluating appropriateness allowance loan losses chargeoffs percent average net loans decreased 155 fiscal 2010 143 fiscal 2011 fiscal 2011 approximately 843 company’s loans generated refinancings outstanding loans origination new loans previous customers refinancing represents new loan transaction present customer portion new loan proceeds used repay balance existing loan remaining portion advanced customer fiscal 2011 2010 2009 percentages company’s loan originations refinancings existing loans 759 764 750 respectively company’s refinancing policies limited state regulations cases consider customer’s payment history require customer made multiple payments loan considered refinancing considered current refinancing customer 45 days delinquent contractual basis delinquent refinancings may extended customers 45 days past due contractual basis customer completes new application manager believes customer’s ability intent repay improved company’s policy refinance delinquent loans amounts greater original amounts financed cases customer must complete new application every two years fiscal 2011 delinquent refinancings represented 16 company’s total loan volume compared 20 fiscal 2010 chargeoffs percentage loans made category greatest loans made new borrowers less loans made former borrowers refinancings expected due payment history experience available repeat borrowers however percentage total loans charged refinancings represent greatest percentage due volume loans made category following table depicts chargeoffs percent loans made category percent total chargeoffs fiscal 2011 company maintains allowance loan losses amount management’s opinion adequate cover losses inherent existing loan portfolio company charges current earnings provision loan losses amounts added allowance maintain levels expected cover probable losses principal establishing allowance loan losses company takes consideration growth loan portfolio mix loan portfolio current levels chargeoffs current levels delinquencies current economic factors accordance fasb asc topic 450 company accrues estimated loss probable reasonably estimated probable losses existing portfolio estimate losses company uses historical information net chargeoffs average loan life method based fact many customers refinance loans prior contractual maturity average contractual loan terms approximately eleven months average loan life approximately four months based method company allowance loan losses approximated six months average net chargeoffs march 31 2011 2010 2009 therefore year end company allowance loan losses covered estimated losses existing loans based historical chargeoffs average lives addition entire loan portfolio turns approximately three times typical twelvemonth period therefore large percentage loans charged fiscal year company’s books beginning fiscal year company believes appropriate provide losses loans originated twelve months net chargeoffs needed allowance method employed accordance generally accepted accounting principles following summary changes allowance loan losses years ended march 31 2011 2010 2009 1 average loans receivable determined averaging monthend gross loans receivable less unearned interest deferred fees indicated period quarterly information seasonality companys loan volume corresponding loans receivable follow seasonal trends companys highest loan demand typically occurs october december third fiscal quarter loan demand generally lowest loan repayment highest january march fourth fiscal quarter loan volume average balances typically remain relatively level remainder year seasonal trend affects quarterly operating performance corresponding fluctuations interest fee income insurance commissions earned provision loan losses recorded well fluctuations companys cash needs consequently operating results companys third fiscal quarter generally significantly lower quarters operating results fourth fiscal quarter significantly higher quarters following table sets forth quarterly basis certain items included companys unaudited consolidated financial statements shows number offices open fiscal years 2011 2010 recently issued accounting pronouncements see “item 8 financial statements supplementary data note 1 summary significant accounting policies” consolidated financial statements impact new accounting pronouncements liquidity capital resources company financed continues finance operations acquisitions office expansion combination cash flows operations borrowings institutional lenders company generally applied cash flows operations fund increasing loan volume fund acquisitions repay longterm indebtedness repurchase common stock companys gross loans receivable increased 4163 million march 31 2006 8750 million march 31 2011 net cash provided operating activities fiscal years 2011 2010 2009 1998 million 1836 million 1539 million respectively companys primary ongoing cash requirements relate funding new offices acquisitions overall growth loans outstanding repayment repurchase longterm indebtedness repurchase common stock march 31 2011 approximately 78 million shares repurchased since 2000 aggregate purchase price approximately 2045 million fiscal 2011 company repurchased 13 million shares 533 million august 2010 board directors authorized company repurchase 20 million common stock addition previously announced subsequent end fiscal 2011 may 23 2011 april 26 2011 board directors authorized company repurchase 50 million additional common stock june 3 2011 including pending repurchase orders subject settlement company repurchased shares common stock approximately 342 million see note 20 subsequent events consolidated financial statements company believes stock repurchases viable component company’s longterm financial strategy excellent use excess cash opportunity arises addition company plans open approximately 63 branches united states 10 branches mexico evaluate acquisition opportunities fiscal 2012 expenditures company open furnish new offices generally averaged approximately 25000 per office fiscal 2011 new offices also required 100000 400000 fund outstanding loans receivable originated first 12 months operation company acquired six offices fourteen loan portfolios competitors eight states eleven separate transactions fiscal 2011 gross loans receivable purchased transactions approximately 39 million aggregate dates purchase company believes attractive opportunities acquire new offices receivables competitors acquire offices communities currently served company continue become available conditions local economies financial circumstances owners change company 2250 million base credit facility syndicate banks credit facility expire august 31 2012 funds borrowed revolving credit facility bear interest companys option either agent banks prime rate per annum libor rate plus 30 per annum minimum 40 interest rate fiscal 2011 effective interest rate borrowings revolving credit facility including impact interest swap 44 company pays commitment fee equal 0375 per annum daily unused portion revolving credit facility amounts outstanding revolving credit facility may exceed specified percentages eligible loans receivable march 31 2011 823 million outstanding facility 1427 million unused borrowing availability borrowing base limitations company 75 million junior subordinated note payable bank mature september 17 2015 funds borrowed junior subordinated note payable bear interest libor plus 4875 per annum march 31 2011 interest rate borrowings junior subordinated note payable 52 company required pay unused line fee rate 25 basis points 375 basis points per annum based whether usage rate month equal greater 65 less 65 average daily unused portion maximum amount commitments junior subordinated note payable amounts outstanding junior subordinated note payable may exceed specified percentages eligible loans receivable march 31 2011 300 million outstanding 450 million unused borrowing availability borrowing base limitations initial 300 million draw junior subordinated note payable used pay outstanding balance revolving credit facility beginning september 17 2011 maximum available borrowings reduced 50 million annually companys credit agreements contain number financial covenants including minimum net worth fixed charge coverage requirements credit agreements also contain certain covenants including covenants impose limitations company respect declaring paying dividends making distributions acquiring common preferred stock warrants options ii redeeming purchasing prepaying principal interest subordinated debt iii incurring additional indebtedness iv entering merger consolidation sale substantial assets subsidiaries company compliance agreements march 31 2011 believe agreements materially limit business expansion strategy october 2 2006 company amended senior credit facility connection issuance 110 million aggregate principal amount 3 convertible senior subordinated notes due october 1 2011 “convertible senior notes” march 31 2011 770 million aggregate principal amount convertible senior notes remained outstanding see note 7 consolidated financial statements included report information regarding transaction terms convertible senior notes following table summarizes company’s contractual cash obligations period thousands company believes cash flow operations borrowings revolving credit facility junior subordinated note payable adequate next twelve months foreseeable future thereafter fund expected cost opening acquiring new offices including funding initial operating losses new offices funding loans receivableoriginated offices companys offices except otherwise discussed report including part 1 item 1a “risk factors” management currently aware trends demands commitments events uncertainties believes could result could reasonably likely result company’s liquidity increasing decreasing material way time company needed obtained expects continue need recurring basis increase borrowing limits revolving credit facility company successfully obtained increases past anticipates able future need arises however assurance additional funding available reasonable terms needed see part item 1a “risk factors” discussion risks contingencies could affect business financial condition liquidity quantitative qualitative disclosures market risk interest rate risk march 31 2011 company’s financial instruments consist following cash equivalents loans receivable senior notes payable convertible senior subordinated notes payable junior subordinated note payable interest rate swaps fair value approximates carrying value instruments except convertible senior subordinated notes payable fair value 856 million represents quoted market price loans receivable originated prevailing market rates average life approximately four months given shortterm nature loans continually repriced current market rates company’s outstanding debt revolving credit facility 823 million march 31 2011 interest borrowings facility based company’s option prime rate libor plus 30 minimum rate 40 company’s outstanding debt junior subordinated note payable 300 million march 31 2011 interest borrowings facility based libor plus 4875 based outstanding balance march 31 2011 change 1 libor interest rate would cause change interest expense approximately 537000 annual basis december 2008 company entered 20 million interest rate swap convert variable rate one month libor fixed rate 24 accordance fasb asc topic 8151015 company records derivatives fair value assets liabilities consolidated balance sheets since company utilizing hedge accounting fasb asc topic 8151015 changes fair value derivative instrument included income march 31 2011 fair value interest rate swap liability 03 million included liabilities change fair value beginning year recorded unrealized gain income approximately 10 million october 10 2006 company issued 110 million convertible senior subordinated notes due october 1 2011 qualified institutional brokers accordance rule 144a securities act 1933 coupon rate convertible notes fixed 3 payable semiannually arrears april 1 october 1 year commencing april 1 2007 fiscal 2009 fiscal 2010 company repurchased cancelled 330 million respectively convertible senior subordinated notes see note 8 consolidated financial statements information regarding repurchases foreign currency exchange rate risk september 2005 company began opening offices mexico local businesses utilize mexican peso functional currency consolidated financial statements company denominated us dollars therefore subject fluctuation us dollar mexican peso foreign exchange rate changes international revenues approximately 55 total revenues year ended march 31 2011 net loans denominated mexican pesos approximately 323 million usd march 31 2011 company’s foreign currency exchange rate exposures may change time business practices evolve could material effect financial results may continue periodtoperiod fluctuations relative portions mexican revenues earnings affected fluctuations value us dollar foreign currencies analysis performed assuming hypothetical 10 increase decrease value us dollar relative mexican peso company’s transactions mexico denominated march 31 2011 analysis indicated market movements would material effect consolidated financial statements actual effects consolidated financial statements future may differ materially results analysis year ended march 31 2011 company continue monitor assess effect currency fluctuations may institute hedging alternatives inflation company believe inflation within reasonably anticipated rates material adverse effect financial condition although inflation would increase company’s operating costs absolute terms company expects decrease value money would result increase size loans demanded customer base reasonable anticipate change customer preference would result increase total loan receivables increase absolute revenues generated larger amount loans receivable increase absolute revenues offset increase operating costs addition company’s loans relatively short contractual term average life unlikely loans made given point time repaid significantly inflated dollars legal matters time company involved routine litigation relating claims arising operations normal course business see note 19 audited consolidated financial statements discussion current litigation item 7aitem 7 management’s discussion analysis financial condition results operations general companys financial performance continues dependent large part upon growth outstanding loans receivable maintenance loan quality acceptable levels operating expenses since march 31 2007 gross loans receivable increased 140 annual compounded rate 5058 million 9727 million march 31 2012 increase reflects higher volume loans generated companys existing offices contribution loans generated new offices opened acquired period fiveyear period company grown 732 offices 1137 offices march 31 2012 fiscal 2013 company plans open approximately 50 new offices united states 15 new offices mexico also evaluate acquisitions opportunities arise companys paradata financial systems subsidiary provides data processing systems 103 separate finance companies including company currently supports approximately 1730 individual branch offices 44 states mexico paradata’s revenue highly dependent upon ability attract new customers often requires substantial lead time result revenue may fluctuate year net revenues system sales support amounted 23 million 19 million 18 million fiscal 2012 2011 2010 respectively paradata’s net revenue company continue fluctuate year basis paradata continues provide data processing support company’s inhouse integrated computer system substantially reduced cost company offers income tax return preparation electronic filing program offices company prepared approximately 44000 48000 62000 returns fiscal years 2012 2011 2010 respectively revenues company’s tax preparation business amounted approximately 79 million 17 increase 78 million earned fiscal 2011 transition toward complete disappearance traditional refund anticipation loan product continues impact marketplace following table sets forth certain information derived companys consolidated statements operations balance sheets well operating data ratios periods indicated 1 average gross loans receivable determined averaging monthend gross loans receivable indicated period 2 average net loans receivable determined averaging monthend gross loans receivable less unearned interest deferred fees indicated period 3 operating margin computed total revenues less provision loan losses general administrative expenses percentage total revenues comparison fiscal 2012 versus fiscal 2011 net income 1007 million fiscal 2012 104 increase 912 million earned fiscal 2011 increase resulted primarily increase operating income revenues less provision loan losses general administrative expenses 1738 million 100 partially offset 72 million increase income tax expense total revenues increased 5402 million fiscal 2012 487 million 99 increase 4914 million fiscal 2011 revenues 988 offices open throughout fiscal years increased 68 march 31 2012 company 1137 offices operation increase 70 offices march 31 2011 interest fee income fiscal 2012 increased 419 million 99 fiscal 2011 increase resulted increase 735 million 116 average net loans receivable two fiscal years increase average loans receivable attributable company’s internal growth fiscal 2012 internal growth increased company opened 70 new offices average loan balance increased 1009 1056 insurance commissions income increased 68 million 102 two fiscal years insurance commissions increased 55 million 133 result increase loan volume states credit insurance sold income increased 13 million 52 two years primarily due 574000 increase world class buying club sales 613000 increase motor club product sales 423000 increase credit accident health increases consistent increases loan volumes year increase offset 319000 gain interest rate swap year provision loan losses fiscal 2012 increased 98 million 102 previous year increase resulted combination increases allowance loan losses amount loans charged net chargeoffs fiscal 2012 amounted 993 million 97 increase 906 million charged fiscal 2011 accounts 61 days past due 25 24 recency basis 40 38 contractual basis march 31 2012 march 31 2011 current fiscal year company also reduction yearoveryear loan loss ratios annualized net chargeoffs percentage average net loans decreased 143 fiscal 2011 140 fiscal 2012 current year chargeoff ratio 140 historical levels company expect ratio decrease meaningfully level foreseeable future historically fiscal 2002 fiscal 2006 chargeoffs percent average loans ranged 146 148 fiscal 2007 company experienced temporary decline 133 attributed change bankruptcy law returned 145 fiscal 2008 fiscal 2009 ratio increased 167 highest company’s history result difficult economic environment higher energy costs customers faced declining since general administrative expenses fiscal 2012 increased 2607 million 98 previous fiscal year increase due primarily costs associated new offices opened acquired fiscal year general administrative expenses divided average open offices increased slightly comparing two fiscal years overall general administrative expenses percent total revenues remained relatively 483 fiscal 2011 2012 interest expense decreased 874000 59 fiscal 2012 compared previous fiscal year although average debt outstanding increased 171 average interest rates decreased resulted interest expense decrease average interest rates decreased 67 fiscal 2011 54 fiscal 2012 income tax expense increased 72 million 138 primarily increase pretax income effective rate increased 370 fiscal 2012 363 fiscal 2011 due partially income tax settlement state south carolina tax years march 31 1997 march 31 2006 resulted company recognizing tax benefit approximately 900000 prior year comparison fiscal 2011 versus fiscal 2010 net income 912 million fiscal 2011 239 increase 737 million earned fiscal 2010 increase resulted primarily increase operating income 247 million 185 partially offset 09 million increase interest expense 62 million increase income tax expense total revenues increased 4914 million fiscal 2011 508 million 115 increase 4406 million fiscal 2010 revenues 937 offices open throughout fiscal years increased 90 march 31 2011 company 1067 offices operation increase 77 offices march 31 2010 interest fee income fiscal 2011 increased 496 million 132 fiscal 2010 increase resulted increase 801 million 145 average net loans receivable two fiscal years increase average loans receivable attributable company’s internal growth fiscal 2011 internal growth increased company opened 73 new offices average loan balance increased 971 1009 insurance commissions income increased 12 million 19 two fiscal years insurance commissions increased 45 million 121 result increase loan volume states credit insurance sold income decreased 33 million 114 two years primarily due 31 million decrease tax preparation revenue decrease due 240 reduction number tax returns prepared company compared prior year primarily due increased competition tax preparers offered instant loan tax refunds consequently tax preparation revenue declined 78 million fiscal 2011 109 million fiscal 2010 provision loan losses fiscal 2011 increased 56 million 62 previous year increase resulted combination increases allowance loan losses amount loans charged net chargeoffs fiscal 2011 amounted 906 million 58 increase 856 million charged fiscal 2010 accounts 61 days past due 24 recency basis 38 contractual basis march 31 2011 march 31 2010 general administrative expenses fiscal 2011 increased 2375 million 94 previous fiscal year increase due primarily costs associated new offices opened acquired fiscal 2011 general administrative expenses divided average open offices increased slightly comparing two fiscal years overall general administrative expenses percent total revenues decreased 492 fiscal 2010 483 fiscal 2011 decrease resulted management’s ongoing monitoring control expenses continued leveraging fixed expenses interest expense increased 09 million 64 fiscal 2011 compared previous fiscal year result increase average debt outstanding 40 slight increase average interest rates average interest rates increased 65 fiscal 2010 67 fiscal 2011 income tax expense increased 62 million 136 primarily increase pretax income effective rate decreased 363 fiscal 2011 383 fiscal 2010 due partially income tax settlement state south carolina tax years march 31 1997 march 31 2006 resulted company recognizing tax benefit approximately 900000 critical accounting policies company’s accounting reporting policies accordance us generally accepted accounting principles conform general practices within finance company industry significant accounting policies used preparation consolidated financial statements discussed note 1 consolidated financial statements certain critical accounting policies involve significant judgment company’s management including use estimates assumptions affect reported amounts assets liabilities revenues expenses result changes estimates assumptions could significantly affect company’s financial position results operations company considers policies regarding allowance loan losses sharebased compensation income taxes critical accounting policies due significant degree management judgment involved allowance loan losses company developed policies procedures assessing adequacy allowance loan losses take consideration various assumptions estimates respect loan portfolio company’s assumptions estimates may affected future changes economic conditions among factors additional discussion concerning allowance loan losses see “credit quality” sharebased compensation company measures compensation cost sharebased awards fair value recognizes compensation service period awards expected vest fair value restricted stock based number shares granted quoted price common stock fair value stock options determined using blackscholes valuation model blackscholes model requires input highly subjective assumptions including expected volatility riskfree interest rate expected life changes materially affect fair value estimate addition estimation sharebased awards ultimately vest requires judgment extent actual results updated estimates differ current estimates amounts recorded cumulative adjustment period estimates revised company considers many factors estimating expected forfeitures including types awards employee class historical experience actual results future changes estimates may differ substantially current estimates income taxes management uses certain assumptions estimates determining income taxes payable refundable deferred income tax liabilities assets events recognized differently financial statements income tax returns income tax expense determining amounts requires analysis certain transactions interpretation tax laws regulations management exercises considerable judgment evaluating amount timing recognition resulting income tax liabilities assets judgments estimates reevaluated periodic basis regulatory business factors change assurance given either tax returns submitted management income tax reported consolidated financial statements adjusted either adverse rulings us tax court changes tax code assessments made internal revenue service “irs” state taxing authorities company subject potential adverse adjustments including limited increase statutory federal state income tax rates permanent nondeductibility amounts currently considered deductible either future periods dependency generation future taxable income order ultimately realize deferred income tax assets company adopted fasb asc 74010 april 1 2007 fasb asc 740 company includes current deferred tax impact tax positions financial statements likely likelihood greater 50 positions sustained taxing authorities full knowledge relevant information based technical merits tax position company supports tax positions unambiguous tax law prior experience taxing authority analysis considers relevant facts circumstances regulations management must still rely assumptions estimates determine overall likelihood success proper quantification given tax position credit quality company’s delinquency net chargeoff ratios reflect among factors changes mix loans portfolio quality receivables success collection efforts bankruptcy trends general economic conditions delinquency computed basis date last full contractual payment loan known recency method basis amount past due accordance original payment terms loan known contractual method management closely monitors portfolio delinquency using methods measure quality companys loan portfolio probability credit losses following table classifies gross loans receivable company delinquent recency contractual basis least 61 days march 31 2012 2011 2010 loans charged earlier loans deemed uncollectible six months elapsed since date last full contractual payment company’s chargeoff policy consistently applied significant changes made policy periods reported management considers chargeoff policy evaluating appropriateness allowance loan losses chargeoffs percent average net loans decreased 143 fiscal 2011 140 fiscal 2012 fiscal 2012 approximately 847 company’s loans generated refinancings outstanding loans origination new loans previous customers refinancing represents new loan transaction present customer portion new loan proceeds used repay balance existing loan remaining portion advanced customer fiscal 2012 2011 2010 percentages company’s loan originations refinancings existing loans 759 764 respectively company’s refinancing policies limited state regulations cases consider customer’s payment history require customer made multiple payments loan considered refinancing considered current refinancing customer 45 days delinquent contractual basis delinquent refinancings may extended customers 45 days past due contractual basis customer completes new application manager believes customer’s ability intent repay improved company’s policy refinance delinquent loans amounts greater original amounts financed cases customer must complete new application every two years fiscal 2012 2011 delinquent refinancings represented 16 company’s total loan volume chargeoffs percentage loans made category greatest loans made new borrowers less loans made former borrowers refinancings expected due payment history experience available repeat borrowers however percentage total loans charged refinancings represent greatest percentage due volume loans made category following table depicts chargeoffs percent loans made category percent total chargeoffs fiscal 2012 company maintains allowance loan losses amount management’s opinion adequate cover losses inherent existing loan portfolio company charges current earnings provision loan losses amounts added allowance maintain levels expected cover probable losses principal establishing allowance loan losses company takes consideration growth loan portfolio mix loan portfolio current levels chargeoffs current levels delinquencies current economic factors accordance fasb asc topic 450 company accrues estimated loss probable reasonably estimated probable losses existing portfolio estimate losses company uses historical information net chargeoffs average loan life method based fact many customers refinance loans prior contractual maturity average contractual loan terms approximately eleven months average loan life approximately four months based method company allowance loan losses approximated six months average net chargeoffs march 31 2012 2011 2010 therefore year end company allowance loan losses covered estimated losses existing loans based historical chargeoffs average lives addition entire loan portfolio turns approximately three times typical twelvemonth period therefore large percentage loans charged fiscal year company’s books beginning fiscal year company believes appropriate provide losses loans originated twelve months net chargeoffs needed allowance method employed accordance generally accepted accounting principles following summary changes allowance loan losses years ended march 31 2012 2011 2010 1 average loans receivable determined averaging monthend gross loans receivable less unearned interest deferred fees indicated period quarterly information seasonality companys loan volume corresponding loans receivable follow seasonal trends companys highest loan demand typically occurs october december third fiscal quarter loan demand generally lowest loan repayment highest january march fourth fiscal quarter loan volume average balances typically remain relatively level remainder year seasonal trend affects quarterly operating performance corresponding fluctuations interest fee income insurance commissions earned provision loan losses recorded well fluctuations companys cash needs consequently operating results companys third fiscal quarter generally significantly lower quarters operating results fourth fiscal quarter significantly higher quarters following table sets forth quarterly basis certain items included companys unaudited consolidated financial statements shows number offices open fiscal years 2012 2011 recently issued accounting pronouncements see “item 8 financial statements supplementary data note 1 summary significant accounting policies” consolidated financial statements impact new accounting pronouncements liquidity capital resources company financed continues finance operations acquisitions office expansion combination cash flows operations borrowings institutional lenders company generally applied cash flows operations fund increasing loan volume fund acquisitions repay longterm indebtedness repurchase common stock companys gross loans receivable increased 5058 million march 31 2007 9727 million march 31 2012 net cash provided operating activities fiscal years 2012 2011 2010 2194 million 1998 million 1836 million respectively companys primary ongoing cash requirements relate funding new offices acquisitions overall growth loans outstanding repayment repurchase longterm indebtedness repurchase common stock march 31 2012 approximately 120 million shares repurchased since 1996 aggregate purchase price approximately 3603 million fiscal 2012 company repurchased 22 million shares 1398 million may 1 2012 board directors authorized company repurchase 50 million company’s common stock repurchase authorization follows addition similar repurchase authorizations 20 million announced february 29 2012 25 million announced february 14 2012 taking account shares repurchased may 29 2012 company 179 million aggregate remaining repurchase capacity company’s outstanding repurchase authorizations see note 20 subsequent events consolidated financial statements company believes stock repurchases viable component company’s longterm financial strategy excellent use excess cash opportunity arises addition company plans open approximately 50 branches united states 15 branches mexico evaluate acquisition opportunities fiscal 2013 expenditures company open furnish new offices generally averaged approximately 25000 per office fiscal 2012 new offices also required 100000 400000 fund outstanding loans receivable originated first 12 months operation company acquired two offices 23 loan portfolios competitors seven states 21 separate transactions fiscal 2012 gross loans receivable purchased transactions approximately 42 million aggregate dates purchase company believes attractive opportunities acquire new offices receivables competitors acquire offices communities currently served company continue become available conditions local economies financial circumstances owners change effective may 1 2012 company amended existing senior revolving credit facility amended facility provides maximum 4830 million borrowings syndicate banks credit facility expire august 31 2014 funds borrowed revolving credit facility bear interest libor rate plus 30 per annum minimum 40 interest rate march 31 2012 effective interest rate borrowings revolving credit facility 40 company pays commitment fee equal 040 per annum daily unused portion revolving credit facility amounts outstanding revolving credit facility may exceed specified percentages eligible loans receivable march 31 2012 2293 million outstanding facility 707 million unused borrowing availability borrowing base limitations connection amendment revolving credit facility company drew 500 million prepay satisfy full terminate junior subordinated note payable bank scheduled mature september 17 2015 funds borrowed junior subordinated note payable bore interest libor plus 4875 per annum march 31 2012 interest rate borrowings junior subordinated note payable 51 march 31 2012 500 million outstanding junior subordinated note payable companys revolving credit agreement contain number financial covenants including minimum net worth fixed charge coverage requirements credit agreement also contain certain covenants including covenants impose limitations company respect declaring paying dividends making distributions acquiring common preferred stock warrants options ii redeeming purchasing prepaying principal interest subordinated debt iii incurring additional indebtedness iv entering merger consolidation sale substantial assets subsidiaries company compliance covenants march 31 2012 believe covenants materially limit business expansion strategy following table summarizes company’s contractual cash obligations period thousands company believes cash flow operations borrowings revolving credit facility adequate next twelve months foreseeable future thereafter fund expected cost opening acquiring new offices including funding initial operating losses new offices funding loans receivable originated offices companys offices except otherwise discussed report including part 1 item 1a “risk factors” management currently aware trends demands commitments events uncertainties believes could result could reasonably likely result company’s liquidity increasing decreasing material way time company needed obtained expects continue need recurring basis increase borrowing limits revolving credit facility company successfully obtained increases past anticipates able future need arises however assurance additional funding available reasonable terms needed see part item 1a “risk factors” discussion risks contingencies could affect business financial condition liquidity quantitative qualitative disclosures market risk interest rate risk march 31 2012 company’s financial instruments consisted following cash equivalents loans receivable senior notes payable junior subordinated note payable fair value approximates carrying value instruments loans receivable originated prevailing market rates average life approximately four months given shortterm nature loans continually repriced current market rates company’s outstanding debt revolving credit facility 2293 million march 31 2012 interest borrowings facility based company’s option prime rate libor plus 30 minimum rate 40 company’s outstanding debt junior subordinated note payable 500 million march 31 2012 interest borrowings facility based libor plus 4875 based outstanding balance march 31 2012 change 1 libor interest rate would cause change interest expense approximately 12 million annual basis foreign currency exchange rate risk september 2005 company began opening offices mexico local businesses utilize mexican peso functional currency consolidated financial statements company denominated us dollars therefore subject fluctuation us dollar mexican peso foreign exchange rates change international revenues nonus operations accounted approximately 66 55 total revenues twelve month periods ended march 31 2012 2011 respectively may continue periodtoperiod fluctuations relative portions international revenues total consolidated revenues international operations subject risks including limited differing economic conditions changes political climate differing tax structures regulations restrictions foreign exchange rate volatility compared united states accordingly future consolidated financial position well consolidated results operations results could adversely affected changes factors foreign exchange rate fluctuations may adversely impact financial position assets liabilities foreign operations translated us dollars preparing consolidated balance sheet exposure foreign exchange rate fluctuations arises part balances intercompany accounts included subsidiary balance sheets intercompany accounts denominated functional currency foreign subsidiaries translated us dollars reporting period end additionally foreign exchange rate fluctuations may impact consolidated results operations exchange rate fluctuations impact amounts reported consolidated statement income effect foreign exchange rate fluctuations consolidated financial position recognized within shareholders’ equity accumulated comprehensive income loss net translation adjustment twelve months ended march 31 2012 loss approximately 29 million company’s foreign currency exchange rate exposures may change time business practices evolve could material effect company’s financial results company continue monitor assess effect foreign currency fluctuations may institute hedging strategies company performs foreign exchange sensitivity analysis quarterly basis assumes hypothetical 10 increase decrease value us dollar relative mexican peso foreign exchange risk sensitivity net loans receivable consolidated net income assessed using hypothetical scenarios assumes earnings mexican pesos recognized evenly throughout period actual results may differ results noted tables particularly due assumptions utilized events occur included method used foreign exchange risk sensitivity net loans denominated mexican pesos translated usdollars approximately 375 million 323 million march 31 2012 2011 respectively reported net loans receivable amount summarized following table following table summarizes results foreign exchange risk sensitivity analysis reported net income dates indicated inflation company believe inflation within reasonably anticipated rates material adverse effect financial condition although inflation would increase company’s operating costs absolute terms company expects decrease value money would result increase size loans demanded customer base reasonable anticipate change customer preference would result increase total loan receivables increase absolute revenues generated larger amount loans receivable company believes increase absolute revenues offset increase operating costs addition company’s loans relatively short contractual term average life unlikely loans made given point time repaid significantly inflated dollars legal matters time company involved routine litigation relating claims arising operations normal course business see part item 3 “legal proceedings” note 19 audited consolidated financial statements discussion legal matters item 7ananitem 7 management’s discussion analysis financial condition results operations general companys financial performance continues dependent large part upon growth outstanding loans receivable maintenance loan quality acceptable levels operating expenses since march 31 2010 gross loans receivable increased 76 annual compounded rate 7703 million 11 billion march 31 2015 increase period reflects higher volume loans generated companys existing branches contribution loans generated new branches opened acquired period fiveyear period company grown 990 branches 1320 branches march 31 2015 fiscal 2016 company currently plans open approximately 30 new branches united states open 10 new branches mexico also evaluate acquisitions opportunities arise companys paradata financial systems subsidiary provides data processing systems 102 separate finance companies including company currently supports 1986 individual branches 44 states mexico paradata’s revenue highly dependent upon ability attract new customers often requires substantial lead time result revenue may fluctuate year net revenues system sales support amounted 21 million 24 million 21 million fiscal 2015 2014 2013 respectively paradata’s net revenue company continue fluctuate year basis paradata continues provide data processing support company’s inhouse integrated computer system substantially reduced cost company offers income tax return preparation electronic filing program us branches company prepared approximately 56000 55000 53000 returns fiscal years 2015 2014 2013 respectively revenues company’s tax preparation business amounted approximately 99 million 85 increase 91 million earned fiscal 2014 following table sets forth certain information derived companys consolidated statements operations balance sheets well operating data ratios periods indicated 1 average gross loans receivable determined averaging monthend gross loans receivable indicated period 2 average net loans receivable determined averaging monthend gross loans receivable less unearned interest deferred fees indicated period 3 operating margin computed total revenues less provision loan losses general administrative expenses percentage total revenues comparison fiscal 2015 versus fiscal 2014 net income 1108 million fiscal 2015 40 increase 1066 million earned fiscal 2014 increase net income largely due 100 million aftertax gain realized year sale previously chargedoff accounts operating income revenues less provision loan losses general administrative expenses excluding impact chargeoff sale decreased 76 million net income also impacted 21 million 16 million increase interest expense income tax expense respectively total revenues increased 6102 million fiscal 2015 109 million 18 increase 5993 million fiscal 2014 revenues 1179 branches open throughout fiscal years increased 08 march 31 2015 company 1320 branches operation increase 49 branches march 31 2014 interest fee income fiscal 2015 increased 05 million 01 fiscal 2014 increase resulted increase 198 million 24 average net loans receivable two fiscal years revenue increase partially offset reduction loan volume year resulted implementation system change ensured customers encouraged refinance existing loans proceeds transaction less 10 loan refinanced increase also partially offset shift portfolio mix larger loans increase amount accounts 60 days past due longer accruing revenue percentage loans outstanding represent larger loans increased 392 march 31 2014 405 march 31 2015 insurance commissions income increased 104 million 138 two fiscal years insurance commissions decreased 26 million 51 comparing two fiscal periods due decrease loan volume mentioned income increased 130 million 518 comparing two fiscal periods increase resulted primarily sale approximately 160 million charged accounts partially offset decrease sales world class buying club wcbc 14 million decrease sales motor club 915000 decreased revenue paradata 309000 disclosed second quarter company decided wind wcbc product march 31 2015 company longer financing purchase products program company continue service outstanding retail installment sales contracts wcbc product contributed 24 million income year 39 million year ended march 31 2014 wcbc loans contributed 20 million interest fees resulted net chargeoffs 32 million year ended march 31 2015 23 million 41 million respectively year ended march 31 2014 provision loan losses fiscal 2015 decreased 77 million 61 previous year decrease resulted decrease amount loans charged decrease general reserve associated slower growth current fiscal year partially offset increase accounts 90 days past due net chargeoffs fiscal 2015 amounted 1106 million 101 decrease 1230 million charged fiscal 2014 accounts 60 days past due 43 30 recency basis 70 53 contractual basis march 31 2015 march 31 2014 increase accounts contractually delinquent primarily due change branch level incentives discussed second quarter excluding impact payroll deduct loans mexico accounts contractually delinquent 60 days past due 61 march 31 2015 current fiscal year company also decrease yearoveryear loan loss ratios net chargeoffs percentage average net loans decreased 147 fiscal 2014 129 fiscal 2015 net chargeoff ratio benefited change branch level incentives mentioned estimate net chargeoff ratio would approximately 141 year excluding impact change prior year chargeoff ratio 147 estimated current year chargeoff ratio 141 line historical levels fiscal 2002 fiscal 2006 chargeoffs percent average loans ranged 146 148 fiscal 2007 company experienced temporary decline 133 attributed change bankruptcy law returned 145 fiscal 2008 fiscal 2009 ratio increased 167 highest company’s history result difficult economic environment higher energy costs customers faced ratio steadily declined 155 fiscal 2010 139 fiscal 2013 general administrative expenses fiscal 2015 increased 108 million 38 previous fiscal year total increase approximately 50 million related personnel expense majority attributable yearoveryear increase branch network normal merit increases employees increased health insurance costs incentive costs general administrative expenses divided average open branches decreased slightly comparing two fiscal years overall general administrative expenses percent total revenues increased 479 fiscal 2015 469 fiscal 2014 respectively interest expense increased 21 million 99 fiscal 2015 compared previous fiscal year result increase average debt outstanding 120 income tax expense increased 16 million 25 primarily increase pretax income effective tax rate decreased 370 fiscal 2015 compared 374 fiscal 2014 decrease primarily due reduction state taxes resulting change corporate structure comparison fiscal 2014 versus fiscal 2013 net income 1066 million fiscal 2014 24 increase 1041 million earned fiscal 2013 increase resulted primarily increase operating income revenues less provision loan losses general administrative expenses 78 million 42 partially offset 38 million 14 million increase interest expense income tax expense respectively total revenues increased 5993 million fiscal 2014 356 million 63 increase 5636 million fiscal 2013 revenues 1131 branches open throughout fiscal years increased 37 march 31 2014 company 1271 branches operation increase 68 branches march 31 2013 interest fee income fiscal 2014 increased 384 million 79 fiscal 2013 increase resulted increase 547 million 70 average net loans receivable two fiscal years increase average loans receivable attributable company’s internal growth increase average loan balance increased 1115 1163 increase income less expected given increased fees texas georgia due law changes two states revenue increase offset reduction loan volume year resulted implementation system change ensured customers encouraged refinance existing loans proceeds transaction less 10 loan refinanced increase also offset shift portfolio mix larger loans percentage loans outstanding represent larger loans increased 331 march 31 2013 380 march 31 2014 insurance commissions income decreased 27 million 35 two fiscal years insurance commissions decreased 10 million 19 comparing two fiscal periods insurance commissions tennessee decreased approximately 890000 primarily due state tennessees change maximum loan size alternative rate loans 1000 2000 lenders tennessee permitted offer insurance products alternative rate loans income decreased 18 million 66 comparing two fiscal periods decrease resulted primarily decrease sales motor club 908000 decrease sales wcbc 880000 partially offset increased revenue companys tax preparation business 422000 paradata 230000 provision loan losses fiscal 2014 increased 123 million 107 previous year increase resulted increase amount loans charged increase general reserve associated increase gross loans comparing two periods net chargeoffs fiscal 2014 amounted 1230 million 128 increase 1090 million charged fiscal 2013 accounts 60 days past due 30 27 recency basis 53 44 contractual basis march 31 2014 march 31 2013 excluding impact payroll deduct loans mexico accounts contractually delinquent 60 days 48 march 31 2014 current fiscal year company also increase yearoveryear loan loss ratios annualized net chargeoffs percentage average net loans increased 139 fiscal 2013 147 fiscal 2014 prior year chargeoff ratio 139 current year chargeoff ratio 147 line historical levels fiscal 2002 fiscal 2006 chargeoffs percent average loans ranged 146 148 fiscal 2007 company experienced temporary decline 133 attributed change bankruptcy law returned 145 fiscal 2008 fiscal 2009 ratio increased 167 highest company’s history result difficult economic environment higher energy costs customers faced ratio steadily declined 155 fiscal 2010 143 fiscal 2012 general administrative expenses fiscal 2014 increased 156 million 59 previous fiscal year total increase approximately 94 million related personnel expense majority attributable yearoveryear increase branch network normal merit increases employees increased health insurance costs incentive costs including stock compensation expense increased approximately 65 million increases personnel expense offset reversal 29 million compensation expense related resignation retirement executive officers current fiscal year general administrative expenses divided average open branches decreased slightly comparing two fiscal years overall general administrative expenses percent total revenues decreased 469 fiscal 2014 471 fiscal 2013 respectively interest expense increased 38 million 219 fiscal 2014 compared previous fiscal year result increase average debt outstanding 266 income tax expense increased 14 million 23 primarily increase pretax income effective tax rate remained relatively consistent 374 fiscal 2014 2013 regulatory matters cfpb investigation previously disclosed march 12 2014 company received civil investigative demand “cid” consumer financial protection bureau “cfpb” stated purpose cid determine whether company “engaging unlawful acts practices connection marketing offering extension credit violation sections 1031 1036 consumer financial protection act 12 usc §§ 5531 5536 truth lending act 15 usc §§ 1601 et seq regulation z 12 cfr pt 1026 federal consumer financial law” “also determine whether bureau action obtain legal equitable relief would public interest” company responded within deadlines specified cid broad requests production documents answers interrogatories written reports related loans made company numerous aspects company’s business subsequent march 2014 cid company received responded actively process responding additional broad requests demands information cfpb expects continue additional requests demands information cfpb ongoing interactions cfpb company counsel part investigation currently unable predict ultimate timing outcome cfpb investigation company believes marketing lending practices lawful assurance cfpbs ongoing investigation future exercise enforcement regulatory discretionary powers result findings alleged violations federal consumer financial protection laws could lead enforcement actions proceedings litigation imposition damages fines penalties restitution monetary liabilities sanctions settlements changes company’s business practices operations could material adverse effect company’s business financial condition results operations eliminate altogether companys ability operate business profitably terms substantially similar currently operates see “business government regulation federal legislation” discussion matters federal regulations company’s operations subject “risk factors” information regarding regulations related risks cfpb proposed rulemaking initiative march 26 2015 cfpb announced considering proposing rules unfair deceptive abusive acts practices rulemaking authority relating payday vehicle title similar loans proposal would cover shortterm loans contractual term 45 days less well “longerterm loans” term longer 45 days allin annualized percentage rate interest “apr” excess 36 lender either nonpurchase money security interest consumer’s vehicle right collect repayment consumer’s bank account paycheck believe cfpb’s “longerterm” credit proposals seek address concern consumers suffer harm lenders fail underwrite loans take security interest consumer’s vehicle access repayment consumer’s account wages although company make loans terms 45 days less obtain access customer’s bank account paycheck repayment loans make vehiclesecured loans apr within scope proposal company currently estimates amount vehiclesecured loans loan portfolio march 31 2015 approximately 13 total number loans approximately 20 portfolio gross loan volume proposals would require lender condition making covered longerterm loan first make goodfaith reasonable determination consumer ability repay covered longerterm loan without reborrowing defaulting proposals would require lenders verify income “major financial obligations” borrowing history lenders would also required determine consumer able make projected payments covered longerterm loan payments due still fulfilling major financial obligations meeting living expenses ability repay assessment would apply initial longerterm loan subsequent refinancing addition proposals would include rebuttable presumption customers seeking refinance covered longerterm loan lack “ability repay” time refinancing borrower delinquent recently delinquent outstanding loan ii stated indicated inability make scheduled payment loan causing financial distress iii allowed skip payment pays smaller amount payment would due loan unless refinancing provides substantial amount cash consumer iv default outstanding loan overcome presumption inability repay lender would verify change borrower’s circumstances indicate ability repay additional extension credit proposals subject several procedural requirements possible change final rules would issued implemented cannot predict ultimate rulemaking provide company believe proposals currently described cfpb would material impact company’s existing lending procedures company currently underwrites loans including secured vehicle title would fall within scope proposals reviewing customer’s ability repay based company’s standards however assurance proposals longerterm loans implemented final rulemaking would require changes company’s practices procedures loans could materially adversely affect company’s ability make loans cost making loans company’s ability frequency could refinance loans profitability loans final rulemaking also could effects beyond contemplated initial proposal could materially adversely impact business operations part cfpb’s outline proposed rulemaking initiative described cfpb also stated expects conduct separate rulemaking identify larger participants installment lending market purposes supervision program though timing rulemaking uncertain company believes implementation rules would likely bring company’s business cfpb’s supervisory authority among things would subject company reporting obligations onsite compliance examinations cfpb see part item 1 “business government regulation federal legislation” discussion matters federal regulations company’s operations subject part item 1a “risk factors” information regarding regulatory related risks new mexico rate cap bills february 4 2015 members new mexico house regulatory public affairs subcommittee tabled measures would led introduction house bill 36 house bill 24 propose 36 rate cap financial lending products company state federal trade associations working opposition pending legislation however uncertain whether efforts successful preventing passage legislation discussed elsewhere report company’s operations subject extensive state federal laws regulations changes laws regulations application could material adverse effect company’s business results operations prospects ability continue operations jurisdictions affected changes see part item 1 “business government regulation state legislation” “ federal legislation” part item 1a“risk factors” information regarding legislation related risks critical accounting policies company’s accounting reporting policies accordance us generally accepted accounting principles conform general practices within finance company industry significant accounting policies used preparation consolidated financial statements discussed note 1 consolidated financial statements certain critical accounting policies involve significant judgment company’s management including use estimates assumptions affect reported amounts assets liabilities revenues expenses result changes estimates assumptions could significantly affect company’s financial position results operations company considers policies regarding allowance loan losses sharebased compensation income taxes critical accounting policies due significant degree management judgment involved allowance loan losses company developed policies procedures assessing adequacy allowance loan losses take consideration various assumptions estimates respect loan portfolio company’s assumptions estimates may affected future changes economic conditions among factors additional discussion concerning allowance loan losses see “credit quality” sharebased compensation company measures compensation cost sharebased awards fair value recognizes compensation service period awards expected vest fair value restricted stock based number shares granted quoted price common stock time grant fair value stock options determined using blackscholes valuation model blackscholes model requires input highly subjective assumptions including expected volatility riskfree interest rate expected life changes materially affect fair value estimate addition estimation sharebased awards ultimately vest requires judgment extent actual results updated estimates differ current estimates amounts recorded cumulative adjustment period estimates revised company considers many factors estimating expected forfeitures including types awards employee class historical experience actual results future changes estimates may differ substantially current estimates income taxes management uses certain assumptions estimates determining income taxes payable refundable deferred income tax liabilities assets events recognized differently financial statements income tax returns income tax expense determining amounts requires analysis certain transactions interpretation tax laws regulations management exercises considerable judgment evaluating amount timing recognition resulting income tax liabilities assets judgments estimates reevaluated periodic basis regulatory business factors change assurance given either tax returns submitted management income tax reported consolidated financial statements adjusted either adverse rulings us tax court changes tax code assessments made internal revenue service state foreign taxing authorities company subject potential adverse adjustments including limited increase statutory federal state income tax rates permanent nondeductibility amounts currently considered deductible either future periods dependency generation future taxable income order ultimately realize deferred income tax assets fasb asc 740 company includes current deferred tax impact tax positions financial statements likely likelihood greater 50 positions sustained taxing authorities full knowledge relevant information based technical merits tax position company supports tax positions unambiguous tax law prior experience taxing authority analysis considers relevant facts circumstances regulations management must still rely assumptions estimates determine overall likelihood success proper quantification given tax position credit quality company’s delinquency net chargeoff ratios reflect among factors changes mix loans portfolio quality receivables success collection efforts bankruptcy trends general economic conditions delinquency computed basis date last full contractual payment loan known recency method basis amount past due accordance original payment terms loan known contractual method upon refinancings contractual delinquency loan measured based upon terms new agreement impacted refinanced loans classification new loan modification existing loan management closely monitors portfolio delinquency using methods measure quality companys loan portfolio probability credit losses following table classifies gross loans receivable company delinquent contractual basis least 61 days march 31 2015 2014 2013 excluding impact payroll deduct loans mexico accounts contractually delinquent 60 days 61 march 31 2015 payroll deduct loans mexico installment loans union members agreement union deduct loan payment members payroll remit members behalf company additional administrative process unique payroll deduct product often results higher level contractual delinquencies however historical net chargeoffs average net loans lower overall company ratio payroll deduct loans increased 379 mexican portfolio march 31 2014 448 march 31 2015 fiscal 2015 approximately 831 company’s loans generated refinancings outstanding loans origination new loans previous customers refinancing represents new loan transaction present customer portion new loan proceeds used repay balance existing loan remaining portion advanced customer fiscal 2015 2014 2013 percentages company’s loan originations refinancings existing loans 715 735 753 respectively company’s refinancing policies limited state regulations cases consider customer’s payment history require customer made multiple payments loan considered refinancing considered current refinancing customer 45 days delinquent contractual basis delinquent refinancings may extended customers 45 days past due contractual basis customer completes new application manager believes customer’s ability intent repay improved company’s policy refinance delinquent loans amounts greater original amounts financed cases customer must complete new application every two years fiscal 2015 2014 delinquent refinancings represented 16 15 respectively company’s total loan volume chargeoffs percentage loans made category greatest loans made new borrowers less loans made former borrowers refinancings percentage total loans charged refinancings represent greatest percentage due volume loans made category following table depicts chargeoffs percent loans made category percent total chargeoffs fiscal 2015 company maintains allowance loan losses amount managements opinion adequate provide losses inherent existing loan portfolio company charges current earnings provision loan losses amounts added allowance maintain levels expected cover probable losses principal establishing allowance loan losses company takes consideration growth loan portfolio current levels chargeoffs current levels delinquencies current economic factors company uses mathematical calculation determine initial allowance end reporting period calculation originated managements estimate future chargeoffs used allocate expenses branch level two components calculating allowance loan losses company refers general reserve specific reserve calculation starting point time needed additional provisions added determined management ensure allowance adequate general reserve 425 gross loan portfolio specific reserve generally represents 100 loans 91 days past due recency basis including bankrupt accounts category methodology based historical data showing collection loans 91 days past due bankrupt accounts remote process performed determine adequacy allowance loan losses well considering trends current levels delinquencies chargeoff levels economic trends energy food prices primary tool used movement model contractual recency basis considers rolling twelve months delinquency determine expected chargeoffs sum expected chargeoffs determined movement model contractual recency basis plus amount related delinquent refinancings compared allowance resulting mathematical calculation determine adjustments required make allowance adequate management would also determine adjustments needed consolidated annual provision loan losses less total chargeoffs management uses precision level 5 allowance loan losses compared aforementioned movement model determining adjustments needed companys policy charge earlier loans deemed uncollectible six months elapsed since date last full contractual payment companys chargeoff policy consistently applied changes made periods reported companys delinquencies net chargeoff ratios significantly impacted year change branch level incentive plan became effective july 1 2014 change allows managers continue collection efforts accounts 91 days past due without monthly bonus negatively impacted expected resulted increase accounts 91 days past due lower chargeoffs year companys historical annual chargeoff rate past 10 years ranged 129 167 net loans management considers chargeoff policy evaluating appropriateness allowance loan losses estimate losses company uses historical information net chargeoffs average loan life method based fact many customers refinance loans prior contractual maturity average contractual loan terms approximately 13 months average loan life approximately 8 months company allowance loan losses approximated 8 months average net chargeoffs march 31 2015 management believes allowance sufficient cover estimated losses existing loans based historical chargeoffs average loan life large percentage loans charged fiscal year companys books beginning fiscal year company believes appropriate provide losses loans originated twelve months net chargeoffs needed allowance due average life loan portfolio less twelve months method employed accordance generally accepted accounting principles following summary changes allowance loan losses years ended march 31 2015 2014 2013 1 average loans receivable determined averaging monthend gross loans receivable less unearned interest deferred fees indicated period quarterly information seasonality companys loan volume corresponding loans receivable follow seasonal trends companys highest loan demand typically occurs october december third fiscal quarter loan demand generally lowest loan repayment highest january march fourth fiscal quarter loan volume average balances typically remain relatively level remainder year seasonal trend affects quarterly operating performance corresponding fluctuations interest fee income insurance commissions earned provision loan losses recorded well fluctuations companys cash needs consequently operating results companys third fiscal quarter generally significantly lower quarters operating results fourth fiscal quarter significantly higher quarters following table sets forth quarterly basis certain items included companys unaudited consolidated financial statements shows number branches open fiscal years 2015 2014 recently issued accounting pronouncements see part ii item 8 financial statements supplementary data note 1 summary significant accounting policies consolidated financial statements impact new accounting pronouncements liquidity capital resources company financed continues finance operations acquisitions branch expansion combination cash flows operations borrowings institutional lenders company generally applied cash flows operations fund increasing loan volume fund acquisitions repay longterm indebtedness repurchase common stock companys gross loans receivable increased 7703 million march 31 2010 11 billion march 31 2015 net cash provided operating activities fiscal years 2015 2014 2013 2419 million 2460 million 2320 million respectively companys primary ongoing cash requirements relate funding new branches acquisitions overall growth loans outstanding repayment longterm indebtedness repurchase common stock march 31 2015 approximately 181 million shares repurchased since 1996 aggregate purchase price approximately 8492 million fiscal 2015 company repurchased 14 million shares 1153 million march 10 2015 board directors authorized company repurchase 250 million company’s common stock repurchase authorization follows addition similar repurchase authorizations 250 million announced february 19 2015 250 million announced july 23 2014 taking account shares repurchased may 29 2015 including pending repurchase orders subject settlement company 115 million aggregate remaining repurchase capacity company’s outstanding repurchase authorizations company believes stock repurchases viable component company’s longterm financial strategy excellent use excess cash opportunity arises addition company currently plans open approximately 30 branches united states 10 branches mexico evaluate acquisition opportunities fiscal 2016 expenditures company open furnish new branches generally averaged approximately 30000 per branch fiscal 2015 new branches also required 100000 400000 fund outstanding loans receivable originated first 12 months operation company acquired two branches three loan portfolios competitors three states five separate transactions fiscal 2015 gross loans receivable purchased transactions approximately 20 million aggregate dates purchase company believes attractive opportunities acquire new branches receivables competitors acquire branches communities currently served company continue become available conditions local economies financial circumstances owners change company currently 6800 million revolving credit facility syndicate banks revolving credit facility provides revolving borrowings lesser 1 aggregate commitments facility 2 borrowing base includes 15 million letter credit subfacility current aggregate commitments 6800 million reduced 6300 million june 15 2015 facility mature june 15 2016 borrowing base limitation equal product company’s eligible finance receivables less unearned finance charges insurance premiums insurance commissions b advance rate percentage ranges 79 85 based collateral performance indicator completely described march 31 2015 5012 million outstanding facility 816 million unused borrowing availability borrowing base limitations company also 966 million may become available revolving credit facility grows net eligible finance receivables borrowings company’s revolving credit facility bear interest per annum rate equal 40 greater 30 plus onemonth libor revolving credit facility requires payment commitment fee equal 040 per annum average daily unused portion aggregate commitments facility unless average daily unused portion equals exceeds 55 aggregate commitments case commitment fee increases 050 per annum twelve months ended march 31 2015 effective interest rate including commitment fee borrowings revolving credit facility 43 amounts applied repay borrowings revolving credit facility may reborrowed subject terms facility time total credit utilization revolving credit facility exceeds borrowing base limitation company must immediately repay outstanding revolving loans facility amount equal excess company’s obligations revolving credit facility together treasury management hedging obligations owing lender revolving credit facility affiliate lender required guaranteed company’s whollyowned domestic subsidiaries obligations company subsidiary guarantors revolving credit facility together treasury management hedging obligations secured firstpriority security interest substantially assets company subsidiary guarantors including without limitation accounts receivable equipment inventory goods intellectual property contract rights general intangibles cash deposit accounts equity interests subsidiaries joint ventures investment property documents instruments proceeds foregoing excluding interests real property agreement governing company’s revolving credit facility contains affirmative negative covenants including covenants restrict ability company subsidiaries among things incur guarantee indebtedness incur liens pay dividends repurchase redeem capital stock dispose assets engage mergers consolidations make acquisitions investments redeem prepay subordinated debt amend subordinated debt documents make changes nature business engage transactions affiliates agreement also contains financial covenants including minimum consolidated net worth 2650 million minimum fixed charge coverage ratio 25 10 maximum ratio total debt consolidated adjusted net worth 325 10 maximum ratio subordinated debt consolidated adjusted net worth 10 agreement allows company incur subordinated debt matures termination date revolving credit facility contains specified subordination terms subject limitations amount imposed financial covenants agreement addition agreement establishes maximum specified level collateral performance indicator collateral performance indicator equal sum 1 threemonth rolling average rate receivables least sixty days past due 2 eightmonth rolling average net chargeoff rate company compliance covenants march 31 2015 believe covenants materially limit business expansion strategy agreement contains events default including without limitation nonpayment principal interest obligations violation covenants misrepresentation crossdefault debt bankruptcy insolvency events judgments certain erisa events actual asserted invalidity loan documentation invalidity subordination provisions subordinated debt certain changes control company previously disclosed company entered additional amendment revolving credit facility may 8 2015 would made certain additional changes revolving credit facility conditioned upon consummation company’s proposed private offering 250 million aggregate principal amount senior notes due 2020 june 1 2015 however based company’s decision postpone proposed offering changes revolving credit agreement described amendment never became effective following table summarizes company’s contractual cash obligations period thousands company believes cash flow operations borrowings revolving credit facility adequate next twelve months foreseeable future thereafter fund expected cost opening acquiring new branches including funding initial operating losses new branches funding loans receivable originated branches companys branches except otherwise discussed report including part 1 item 1a “risk factors” management currently aware trends demands commitments events uncertainties believes could result could reasonably likely result material adverse effect companys liquidity time company needed obtained expects continue need recurring basis either increase borrowing limits revolving credit facility additional sources financing company successfully obtained additional capacity past anticipates able future need arises however assurance additional funding available reasonable terms needed see part item 1a “risk factors” discussion risks contingencies could affect business financial condition liquidity share repurchase program companys historical longterm profitability demonstrated many years ability grow loan portfolio companys earning asset generate excess cash flow intend continue use cash flow excess capital repurchase shares assuming repurchased shares accretive earnings per share provide better returns shareholders future prefer share repurchases dividends several reasons first repurchasing shares increase value remaining shares second repurchasing shares opposed dividends provides shareholders option defer taxes electing sell holdings finally repurchasing shares provides shareholders maximum flexibility increase maintain decrease ownership depending view value companys shares whereas dividend provide flexibility since 1996 company repurchased approximately 181 million shares aggregate purchase price approximately 8492 million march 31 2015 debt outstanding 5012 million shareholders equity 3156 million resulting debttoequity ratio 1610 first priority ensure enough capital fund loan growth extent excess capital capacity terms debt agreements intend continue repurchasing stock authorized board directors consistent past practice continue monitor debttoequity ratio committed maintaining debt level allow us continue execute business objectives putting undue stress balance sheet historically management filed form 8k securities exchange commission announce new authorization board directors given regarding stock repurchases management plans continue make filings securities exchange commission otherwise publicly announce future stock repurchase authorizations board authorization repurchase shares historically repurchased shares open market accordance applicable regulations regarding company repurchase programs selfimposed trading policies subject guidelines conditions described anticipate continue repurchase shares inflation company believe inflation within reasonably anticipated rates material adverse effect financial condition although inflation would increase company’s operating costs absolute terms company expects decrease value money would result increase size loans demanded customer base reasonable anticipate change customer preference would result increase total loan receivables increase absolute revenues generated larger amount loans receivable company believes increase absolute revenues offset increase operating costs addition company’s loans relatively short contractual term average life unlikely loans made given point time repaid significantly inflated dollars legal matters time company involved routine litigation relating claims arising operations normal course business see part item 3 “legal proceedings” note 16 audited consolidated financial statements discussion legal matters item 7aitem 7 management’s discussion analysis financial condition results operations general companys financial performance continues dependent large part upon growth outstanding loans receivable maintenance loan quality acceptable levels operating expenses since march 31 2015 gross loans receivable decreased 08 annual compounded rate 111 billion 107 billion march 31 2016 decrease period reflects lower volume loans generated companys existing branches partially offset contribution loans generated new branches opened period believe lower volume loans generated companys existing branches result increased competition smallloan consumer finance industry well improving financial situation average customers household due lower gasoline prices lower unemployment five year period beginning march 31 2011 company grown 1067 branches 1339 branches march 31 2016 fiscal 2017 company currently plans open approximately 15 new branches united states open 10 new branches mexico also evaluate acquisitions opportunities arise company offers income tax return preparation electronic filing program us branches company prepared approximately 63000 56000 55000 returns fiscal years 2016 2015 2014 respectively revenues company’s tax preparation business amounted approximately 119 million 205 increase 99 million earned fiscal 2015 following table sets forth certain information derived companys consolidated statements operations balance sheets well operating data ratios periods indicated 1 average gross loans receivable determined averaging monthend gross loans receivable indicated period 2 average net loans receivable determined averaging monthend gross loans receivable less unearned interest deferred fees indicated period 3 operating margin computed total revenues less provision loan losses general administrative expenses percentage total revenues comparison fiscal 2016 versus fiscal 2015 net income 874 million fiscal 2016 211 decrease 1108 million earned fiscal 2015 decrease net income significantly impacted 100 million aftertax gain realized prior year sale previously chargedoff accounts repeated current year operating income revenues less provision loan losses general administrative expenses excluding impact chargeoff sale decreased 186 million due 291 million decrease interest fee income 48 million increase provision expense offset 229 million decrease general administrative expenses net income also impacted 147 million decrease income tax expense 35 million increase interest expense total revenues decreased 5575 million fiscal 2016 527 million 86 decrease 6102 million fiscal 2015 revenues 1233 branches open throughout fiscal years decreased 69 march 31 2016 company 1339 branches operation increase 19 branches march 31 2015 interest fee income fiscal 2016 decreased 291 million 56 fiscal 2015 experienced 33 decrease average net loans receivable less loans 60 days contractually past due comparing two corresponding periods us traditional mexican loans accrual interest discontinued loan becomes 60 days past contractual due date unpaid accrued interest reversed interest income interest fee income year also negatively impacted continued decrease volumes revenues mexican operations negatively impacted move exchange rate year move exchange rate negative impact approximately 89 million current year’s revenue compared prior year percentage loans outstanding represent larger loans including sales finance loans decreased 405 march 31 2015 402 march 31 2016 insurance commissions income decreased 236 million 275 two fiscal years insurance commissions decreased 45 million 94 comparing two fiscal years due decrease loan volume states insurance product available customers income decreased 191 million 502 comparing two fiscal years decrease resulted primarily inclusion income sale approximately 160 million charged accounts sold fiscal 2015 company also repurchased portion accounts sold fiscal 2015 fiscal 2016 resulting 16 million loss repurchase fiscal 2016 income also impacted decrease world class buying club wcbc sales revenue 24 million decrease revenue motor club product 12 million decreases partially offset increase tax preparation revenue 20 million increase revenue paradata 10 million provision loan losses fiscal 2016 increased 48 million 40 previous year increase resulted increase amount loans charged offset decrease general reserve associated slower growth current fiscal year net chargeoffs fiscal 2016 amounted 1236 million 117 increase 1106 million charged fiscal 2015 believe increase chargeoffs result ceasing inperson visits delinquent borrowers december 2015 accounts 60 days past due 47 43 recency basis 71 70 contractual basis march 31 2016 march 31 2015 excluding impact payroll deduct loans mexico accounts contractually delinquent 60 days past due 64 march 31 2016 compared 61 march 31 2015 current fiscal year company also increase yearoveryear loan loss ratios net chargeoffs percentage average net loans increased 129 fiscal 2015 148 fiscal 2016 net chargeoff ratio fiscal 2015 benefited change branch level incentives year change allows managers continue collection efforts accounts 91 days past due without monthly bonus negatively impacted expected resulted increase accounts 91 days past due lower chargeoffs fiscal 2015 estimate net chargeoff ratio would approximately 141 fiscal 2015 excluding impact change current year chargeoff ratio 148 estimated fiscal 2015 chargeoff ratio 141 line historical levels fiscal 2002 fiscal 2006 chargeoffs percent average loans ranged 146 148 fiscal 2007 company experienced temporary decline 133 attributed change bankruptcy law returned 145 fiscal 2008 fiscal 2009 ratio increased 167 highest company’s history result difficult economic environment higher energy costs customers faced ratio steadily declined 155 fiscal 2010 139 fiscal 2013 increased 147 fiscal 2014 current year changeoff rate benefit sale 32 million previously charged accounts currently plan continue sale chargedoff accounts however may consider selling charged accounts point future general administrative expenses fiscal 2016 decreased 229 million 78 previous fiscal year general administrative expenses impacted current period overall decrease share based compensation well release expense previously accrued group b performance based restricted stock awards company determined earnings per share targets associated group b stock awards achievable measurement period ends march 31 2017 fourth quarter compensation committee board directors amended awards allowing 25 group b awards vest certain officers required forfeit remaining group b shares part amendment net release resulted decrease personnel expense approximately 77 million ga also decreased approximately 12 million due reversal longterm equity incentive accruals resulting resignation former senior vice president year partially offset accrual approximately 400000 severancerelated expenses company also reversed approximately 25 million certain longterm equity incentive accruals related retirement former ceo september 30 2015 company recorded additional 12 million expense related planned bond offering completed 13 million loss taken result sale corporate jet general administrative expenses divided average open branches decreased 110 comparing two fiscal years overall general administrative expenses percent total revenues increased 483 fiscal 2016 479 fiscal 2015 interest expense increased 35 million 152 fiscal 2016 compared previous fiscal year result 316 increase effective rate partially offset decrease average debt outstanding 120 income tax expense decreased 147 million 226 primarily decrease pretax income effective tax rate decreased 366 fiscal 2016 compared 370 fiscal 2015 decrease primarily due cumulative adjustment deferred state tax expense related companys change automated tax provision system current year comparison fiscal 2015 versus fiscal 2014 net income 1108 million fiscal 2015 40 increase 1066 million earned fiscal 2014 increase net income largely due 100 million aftertax gain realized year sale previously chargedoff accounts operating income revenues less provision loan losses general administrative expenses excluding impact chargeoff sale decreased 76 million net income also negatively impacted 21 million 16 million increase interest expense income tax expense respectively total revenues increased 6102 million fiscal 2015 109 million 18 increase 5993 million fiscal 2014 revenues 1179 branches open throughout fiscal years increased 08 march 31 2015 company 1320 branches operation increase 49 branches march 31 2014 interest fee income fiscal 2015 increased 05 million 01 fiscal 2014 increase resulted increase 198 million 24 average net loans receivable two fiscal years revenue increase partially offset reduction loan volume year resulted implementation system change ensured customers encouraged refinance existing loans proceeds transaction less 10 loan refinanced increase also partially offset shift portfolio mix larger loans increase amount accounts 60 days past due longer accruing revenue percentage loans outstanding represent larger loans including sales finance loans increased 392 march 31 2014 405 march 31 2015 insurance commissions income increased 104 million 138 two fiscal years insurance commissions decreased 26 million 51 comparing two fiscal periods due decrease loan volume mentioned income increased 130 million 518 comparing two fiscal periods increase resulted primarily sale approximately 160 million charged accounts partially offset decrease sales wcbc 14 million decrease sales motor club 915000 decreased revenue paradata 309000 company decided second quarter fiscal 2015 wind wcbc product march 31 2015 company longer financing purchase products program company continue service outstanding retail installment sales contracts wcbc product contributed 24 million income fiscal 2015 39 million fiscal 2014 wcbc loans contributed 20 million interest fees resulted net chargeoffs 32 million year ended march 31 2015 23 million 41 million respectively year ended march 31 2014 provision loan losses fiscal 2015 decreased 77 million 61 previous year decrease resulted decrease amount loans charged decrease general reserve associated slower growth fiscal 2015 partially offset increase accounts 91 days past due net chargeoffs fiscal 2015 amounted 1106 million 101 decrease 1230 million charged fiscal 2014 accounts 60 days past due 43 30 recency basis 70 53 contractual basis march 31 2015 march 31 2014 increase accounts contractually delinquent primarily due change branch level incentives discussed second quarter fiscal 2015 excluding impact payroll deduct loans mexico accounts contractually delinquent 60 days past due 61 march 31 2015 fiscal 2015 company also decrease yearoveryear loan loss ratios net chargeoffs percentage average net loans decreased 147 fiscal 2014 129 fiscal 2015 net chargeoff ratio benefited change branch level incentives mentioned estimate net chargeoff ratio would approximately 141 2015 excluding impact change fiscal 2014 chargeoff ratio 147 estimated fiscal 2015 chargeoff ratio 141 line historical levels general administrative expenses fiscal 2015 increased 108 million 38 fiscal 2014 total increase approximately 50 million related personnel expense majority attributable yearoveryear increase branch network normal merit increases employees increased health insurance costs incentive costs general administrative expenses divided average open branches decreased slightly comparing two fiscal years overall general administrative expenses percent total revenues increased 479 fiscal 2015 469 fiscal 2014 respectively interest expense increased 21 million 99 fiscal 2015 compared previous fiscal year result increase average debt outstanding 120 income tax expense increased 16 million 25 primarily increase pretax income effective tax rate decreased 370 fiscal 2015 compared 374 fiscal 2014 decrease primarily due reduction state taxes resulting change corporate structure regulatory matters cfpb investigation previously disclosed march 12 2014 company received civil investigative demand “cid” consumer financial protection bureau “cfpb” stated purpose cid determine whether company “engaging unlawful acts practices connection marketing offering extension credit violation sections 1031 1036 consumer financial protection act 12 usc §§ 5531 5536 truth lending act 15 usc §§ 1601 et seq regulation z 12 cfr pt 1026 federal consumer financial law” “also determine whether bureau action obtain legal equitable relief would public interest” company responded within deadlines specified cid broad requests production documents answers interrogatories written reports related loans made company numerous aspects company’s business also previously disclosed august 7 2015 company received letter cfpb’s enforcement office notifying company accordance cfpb’s discretionary notice opportunity respond advise “nora” process staff cfpb’s enforcement office considering recommending cfpb take legal action company “nora letter” nora letter states staff cfpb’s enforcement office expects allege company violated consumer financial protection act 2010 12 usc §5536 nora letter confirms company opportunity make nora submission written statement setting forth reasons law policy company believes cfpb take legal action company understands nora letter intended ensure potential subjects enforcement actions opportunity present positions cfpb enforcement action recommended commenced company made nora submissions cfpb’s enforcement office company expects continue additional requests demands information cfpb ongoing interactions cfpb company counsel part investigation currently unable predict ultimate timing outcome cfpb investigation company believes marketing lending practices lawful assurance cfpbs ongoing investigation future exercise enforcement regulatory discretionary powers result findings alleged violations federal consumer financial protection laws could lead enforcement actions proceedings litigation imposition damages fines penalties restitution monetary liabilities sanctions settlements changes company’s business practices operations could material adverse effect company’s business financial condition results operations eliminate altogether companys ability operate business profitably terms substantially similar currently operates see “business government regulation federal legislation” discussion matters federal regulations company’s operations subject “risk factors” information regarding regulations related risks cfpb proposed rulemaking initiative march 26 2015 cfpb announced considering proposing rules unfair deceptive abusive acts practices rulemaking authority relating payday vehicle title similar loans proposal would cover shortterm loans contractual term 45 days less well “longerterm loans” term longer 45 days allin annualized percentage rate interest “apr” excess 36 lender either nonpurchase money security interest consumer’s vehicle right collect repayment consumer’s bank account paycheck believe cfpb’s “longerterm” credit proposals seek address concern consumers suffer harm lenders fail underwrite loans take security interest consumer’s vehicle access repayment consumer’s account wages although company make loans terms 45 days less obtain access customer’s bank account paycheck repayment loans make vehiclesecured loans apr within scope proposal company currently estimates amount vehiclesecured loans loan portfolio march 31 2016 approximately 13 total number loans approximately 20 portfolio gross loan balance proposals would require lender condition making covered longerterm loan first make goodfaith reasonable determination consumer ability repay covered longerterm loan without reborrowing defaulting proposals would require lenders verify income “major financial obligations” borrowing history lenders would also required determine consumer able make projected payments covered longerterm loan payments due still fulfilling major financial obligations meeting living expenses ability repay assessment would apply initial longerterm loan subsequent refinancing addition proposals would include rebuttable presumption customers seeking refinance covered longerterm loan lack “ability repay” time refinancing borrower delinquent recently delinquent outstanding loan ii stated indicated inability make scheduled payment loan causing financial distress iii allowed skip payment pays smaller amount payment would due loan unless refinancing provides substantial amount cash consumer iv default outstanding loan overcome presumption inability repay lender would verify change borrower’s circumstances indicate ability repay additional extension credit proposals subject several procedural requirements possible change final rules would issued implemented cannot predict ultimate rulemaking provide company believe proposals currently described cfpb would material impact company’s existing lending procedures company currently underwrites loans including secured vehicle title would fall within scope proposals reviewing customer’s ability repay based company’s standards however assurance proposals longerterm loans implemented final rulemaking would require changes company’s practices procedures loans could materially adversely affect company’s ability make loans cost making loans company’s ability frequency could refinance loans profitability loans final rulemaking also could effects beyond contemplated initial proposal could materially adversely impact business operations part cfpb’s outline proposed rulemaking initiative described cfpb also stated expects conduct separate rulemaking identify larger participants installment lending market purposes supervision program though timing rulemaking uncertain company believes implementation rules would likely bring company’s business cfpb’s supervisory authority among things would subject company reporting obligations onsite compliance examinations cfpb see part item 1 “business government regulation federal legislation” discussion matters federal regulations company’s operations subject part item 1a “risk factors” information regarding regulatory related risks military lending act july 2015 department defense “dod” amended existing regulation implements military lending act “mla” final rule prohibits creditors extending consumer credit military annual percentage rate mapr exceeds 36 rule covers members armed forces dependents “covered borrowers” addition creditors must check database maintained dod entering agreement covered borrower provide oral written disclosures including mapr must require arbitration agreements covered borrowers see part item 1a“risk factors” information regarding regulatory related risks company considering impact mla requirements decide military lending feasible profitable continue future new mexico rate cap bills february 4 2015 members new mexico house regulatory public affairs subcommittee tabled measures would led introduction house bill 36 house bill 24 propose 36 rate cap financial lending products company state federal trade associations working opposition pending legislation however uncertain whether efforts successful preventing passage legislation discussed elsewhere report company’s operations subject extensive state federal laws regulations changes laws regulations application could material adverse effect company’s business results operations prospects ability continue operations jurisdictions affected changes see part item 1 “business government regulation state legislation” “ federal legislation” part item 1a“risk factors” information regarding legislation related risks critical accounting policies company’s accounting reporting policies accordance us generally accepted accounting principles conform general practices within finance company industry significant accounting policies used preparation consolidated financial statements discussed note 1 consolidated financial statements certain critical accounting policies involve significant judgment company’s management including use estimates assumptions affect reported amounts assets liabilities revenues expenses result changes estimates assumptions could significantly affect company’s financial position results operations company considers policies regarding allowance loan losses sharebased compensation income taxes critical accounting policies due significant degree management judgment involved allowance loan losses company developed policies procedures assessing adequacy allowance loan losses take consideration various assumptions estimates respect loan portfolio company’s assumptions estimates may affected future changes economic conditions among factors additional discussion concerning allowance loan losses see “credit quality” sharebased compensation company measures compensation cost sharebased awards fair value recognizes compensation service period awards expected vest fair value restricted stock based number shares granted quoted price common stock time grant fair value stock options determined using blackscholes valuation model blackscholes model requires input highly subjective assumptions including expected volatility riskfree interest rate expected life changes materially affect fair value estimate addition estimation sharebased awards ultimately vest requires judgment extent actual results updated estimates differ current estimates amounts recorded cumulative adjustment period estimates revised company considers many factors estimating expected forfeitures including types awards employee class historical experience actual results future changes estimates may differ substantially current estimates income taxes management uses certain assumptions estimates determining income taxes payable refundable deferred income tax liabilities assets events recognized differently financial statements income tax returns income tax expense determining amounts requires analysis certain transactions interpretation tax laws regulations management exercises considerable judgment evaluating amount timing recognition resulting income tax liabilities assets judgments estimates reevaluated periodic basis regulatory business factors change assurance given either tax returns submitted management income tax reported consolidated financial statements adjusted either adverse rulings changes tax code assessments made internal revenue service state foreign taxing authorities company subject potential adverse adjustments including limited increase statutory federal state income tax rates permanent nondeductibility amounts currently considered deductible either future periods dependency generation future taxable income order ultimately realize deferred income tax assets fasb asc 740 company includes current deferred tax impact tax positions financial statements likely likelihood greater 50 positions sustained taxing authorities full knowledge relevant information based technical merits tax position company supports tax positions unambiguous tax law prior experience taxing authority analysis considers relevant facts circumstances regulations management must still rely assumptions estimates determine overall likelihood success proper quantification given tax position credit quality company’s delinquency net chargeoff ratios reflect among factors changes mix loans portfolio quality receivables success collection efforts bankruptcy trends general economic conditions delinquency computed basis date last full contractual payment loan known recency method basis amount past due accordance original payment terms loan known contractual method upon refinancings contractual delinquency loan measured based upon terms new agreement impacted refinanced loans classification new loan modification existing loan management closely monitors portfolio delinquency using methods measure quality companys loan portfolio probability credit losses following table classifies gross loans receivable company delinquent contractual basis least 61 days march 31 2016 2015 2014 excluding impact payroll deduct loans mexico accounts contractually delinquent 60 days 64 march 31 2016 payroll deduct loans mexico installment loans union members agreement union deduct loan payment members payroll remit members behalf company additional administrative process unique payroll deduct product often results higher level contractual delinquencies however historical net chargeoffs average net loans lower overall company ratio payroll deduct loans increased 448 mexican portfolio march 31 2015 540 march 31 2016 fiscal 2016 approximately 815 company’s loans based accounts generated refinancings outstanding loans origination new loans previous customers refinancing represents new loan transaction present customer portion new loan proceeds used repay balance existing loan remaining portion advanced customer fiscal 2016 2015 2014 percentages company’s loan originations refinancings existing loans 694 715 735 respectively company’s refinancing policies limited state regulations cases consider customer’s payment history require customer made multiple payments loan considered refinancing considered current refinancing customer 45 days delinquent contractual basis delinquent refinancings may extended customers 45 days past due contractual basis customer completes new application manager believes customer’s ability intent repay improved company’s policy refinance delinquent loans amounts greater original amounts financed cases customer must complete new application every two years fiscal 2016 2015 delinquent refinancings represented 14 16 respectively company’s total loan volume chargeoffs percentage loans made category greatest loans made new borrowers less loans made former borrowers refinancings percentage total loans charged refinancings represent greatest percentage due volume loans made category following table depicts chargeoffs percent loans made category percent total chargeoffs fiscal 2016 company maintains allowance loan losses amount managements opinion adequate provide losses inherent existing loan portfolio company charges current earnings provision loan losses amounts added allowance maintain levels expected cover probable losses principal establishing allowance loan losses company takes consideration growth loan portfolio current levels chargeoffs current levels delinquencies current economic factors company uses mathematical calculation determine initial allowance end reporting period calculation originated managements estimate future chargeoffs used allocate expenses branch level two components calculating allowance loan losses company refers general reserve specific reserve calculation starting point time needed additional provisions added determined management ensure allowance adequate general reserve 425 gross loan portfolio specific reserve generally represents 100 loans 91 days past due recency basis including bankrupt accounts category methodology based historical data showing collection loans 91 days past due bankrupt loans remote process performed determine adequacy allowance loan losses well considering trends current levels delinquencies chargeoff levels economic trends energy food prices primary tool used movement model contractual recency basis considers rolling twelve months delinquency determine expected chargeoffs sum expected chargeoffs determined movement model contractual recency basis plus amount related delinquent refinancings compared allowance resulting mathematical calculation determine adjustments required make allowance adequate management would also determine adjustments needed consolidated annual provision loan losses less total chargeoffs management uses precision level 5 allowance loan losses compared aforementioned movement model determining adjustments needed companys policy charge earlier loans deemed uncollectible six months elapsed since date last full contractual payment companys chargeoff policy consistently applied changes made periods reported companys delinquencies net chargeoff ratios significantly impacted fiscal 2015 change branch level incentive plan became effective july 1 2014 change allows managers continue collection efforts accounts 91 days past due without monthly bonus negatively impacted expected resulted increase accounts 91 days past due lower chargeoffs fiscal 2016 also believe chargeoffs fiscal 2016 negatively impacted ceasing inperson visits delinquent borrowers december 2015 companys historical annual chargeoff rate past 10 years ranged 129 167 net loans management considers chargeoff policy evaluating appropriateness allowance loan losses estimate losses company uses historical information net chargeoffs average loan life method based fact many customers refinance loans prior contractual maturity average contractual loan terms approximately 13 months average loan life approximately 8 months company allowance loan losses approximated 8 months average net chargeoffs march 31 2016 management believes allowance sufficient cover estimated losses existing loans based historical chargeoffs average loan life large percentage loans charged fiscal year companys books beginning fiscal year company believes appropriate provide losses loans originated twelve months net chargeoffs needed allowance due average life loan portfolio less twelve months method employed accordance generally accepted accounting principles following summary changes allowance loan losses years ended march 31 2016 2015 2014 1 average loans receivable determined averaging monthend gross loans receivable less unearned interest deferred fees indicated period quarterly information seasonality companys loan volume corresponding loans receivable follow seasonal trends companys highest loan demand typically occurs october december third fiscal quarter loan demand generally lowest loan repayment highest january march fourth fiscal quarter loan volume average balances typically remain relatively level remainder year seasonal trend affects quarterly operating performance corresponding fluctuations interest fee income insurance commissions earned provision loan losses recorded well fluctuations companys cash needs consequently operating results companys third fiscal quarter generally significantly lower quarters operating results fourth fiscal quarter significantly higher quarters following table sets forth quarterly basis certain items included companys unaudited consolidated financial statements shows number branches open fiscal years 2016 2015 recently issued accounting pronouncements see part ii item 8 financial statements supplementary data note 1 summary significant accounting policies consolidated financial statements impact new accounting pronouncements liquidity capital resources company financed continues finance operations acquisitions branch expansion combination cash flows operations borrowings institutional lenders company generally applied cash flows operations fund loan volume fund acquisitions repay longterm indebtedness repurchase common stock companys gross loans receivable increased 8750 million march 31 2011 10670 million march 31 2016 net cash provided operating activities fiscal years 2016 2015 2014 2061 million 2419 million 2460 million respectively company continues believe stock repurchases viable component company’s longterm financial strategy excellent use excess cash opportunity arises however amended credit facility requires company obtain prior written consent lenders holding least 6623 aggregate commitments repurchasing additional shares company plans open acquire least 15 branches united states 10 branches mexico fiscal 2017 expenditures company open furnish new branches averaged approximately 27000 per branch fiscal 2016 new branches also required 100000 400000 fund outstanding loans receivable originated first 12 months operation fiscal 2016 company opened 37 new branches merged 18 branches existing ones company completed one acquisition receivables fiscal 2016 company believes attractive opportunities acquire new branches receivables competitors acquire branches communities currently served company continue become available conditions local economies financial circumstances owners change company currently 5000 million revolving credit facility syndicate banks revolving credit facility provides revolving borrowings lesser 1 aggregate commitments facility 2 borrowing base includes 15 million letter credit subfacility credit facility amended june 2015 extend term june 15 2017 amended current aggregate commitments reduce 500 million 400 million march 31 2017 borrowing base limitation equal product company’s eligible finance receivables less unearned finance charges insurance premiums insurance commissions b advance rate percentage ranges 79 85 based collateral performance indicator completely described administrative agent revolving credit facility right time permitted discretion without obligation set aside reasonable reserves borrowing base amounts may deem appropriate including without limitation reserves respect regulatory events increased operational legal regulatory risk funds borrowed revolving credit facility bear interest libor rate plus 40 per annum minimum rate 50 year ended march 31 2016 effective interest rate including commitment fee borrowings revolving credit facility 56 company pays commitment fee equal 050 per annum daily unused portion commitments march 31 2016 3747 million outstanding facility 1238 million unused borrowing availability borrowing base limitations company’s obligations revolving credit facility together treasury management hedging obligations owing lender revolving credit facility affiliate lender required guaranteed company’s whollyowned domestic subsidiaries obligations company subsidiary guarantors revolving credit facility together treasury management hedging obligations secured firstpriority security interest substantially assets company subsidiary guarantors agreement governing company’s revolving credit facility contains affirmative negative covenants including covenants restrict ability company subsidiaries among things incur guarantee indebtedness incur liens pay dividends repurchase redeem capital stock dispose assets engage mergers consolidations make acquisitions investments redeem prepay subordinated debt amend subordinated debt documents make changes nature business engage transactions affiliates agreement also contains financial covenants including minimum consolidated net worth 2650 million minimum fixed charge coverage ratio 25 10 maximum ratio total debt consolidated adjusted net worth 275 10 maximum ratio subordinated debt consolidated adjusted net worth 10 agreement allows company incur subordinated debt matures termination date revolving credit facility contains specified subordination terms subject limitations amount imposed financial covenants agreement addition agreement establishes maximum specified level collateral performance indicator collateral performance indicator equal sum 1 threemonth rolling average rate receivables least sixty days past due 2 eightmonth rolling average net chargeoff rate company compliance covenants march 31 2016 believe covenants materially limit business expansion strategy agreement contains events default including without limitation nonpayment principal interest obligations violation covenants misrepresentation crossdefault debt bankruptcy insolvency events judgments certain erisa events actual asserted invalidity loan documentation invalidity subordination provisions subordinated debt certain changes control company occurrence certain regulatory events including entry stay order judgment ruling similar event related company’s subsidiaries’ originating holding pledging collecting enforcing eligible finance receivables material company subsidiary remains unvacated undischarged unbonded unstayed appeal otherwise period 60 days date entry reasonably likely cause material adverse change company believes cash flow operations borrowings revolving credit facility sources adequate fund expected cost opening acquiring new branches including funding initial operating losses new branches funding loans receivable originated branches companys branches next 12 months foreseeable future beyond except otherwise discussed report including limited discussions part 1 item 1a risk factors supplemented subsequent disclosures information company files furnishes sec time management currently aware trends demands commitments events uncertainties believes could result could reasonably likely result material adverse effect company’s liquidity following table summarizes company’s contractual cash obligations period thousands share repurchase program companys historical longterm profitability demonstrated many years ability grow loan portfolio companys earning asset generate excess cash flow intend continue use cash flow excess capital repurchase shares assuming able obtain required consent lenders repurchased shares accretive earnings per share since 1996 company repurchased approximately 181 million shares aggregate purchase price approximately 8492 million march 31 2016 company 115 million aggregate boardapproved outstanding stock repurchase authorizations march 31 2016 debt outstanding 3747 million shareholders equity 3919 million resulting debttoequity ratio 1010 first priority ensure enough capital fund loan growth extent excess capital lenders revolving credit facility provide consent intend continue repurchasing stock authorized board directors consistent past practice continue monitor debttoequity ratio committed maintaining debt level allow us continue execute business objectives putting undue stress consolidated balance sheet inflation company believe inflation within reasonably anticipated rates material adverse effect financial condition although inflation would increase company’s operating costs absolute terms company expects decrease value money would result increase size loans demanded customer base reasonable anticipate change customer preference would result increase total loan receivables increase absolute revenues generated larger amount loans receivable company believes increase absolute revenues offset increase operating costs addition company’s loans relatively short contractual term average life unlikely loans made given point time repaid significantly inflated dollars legal matters time company involved routine litigation relating claims arising operations normal course business see part item 3 “legal proceedings” note 16 audited consolidated financial statements discussion legal matters item 7aitem 7 management’s discussion analysis financial condition results operations general companys financial performance continues dependent large part upon growth outstanding loans receivable maintenance loan quality acceptable levels operating expenses since march 31 2015 gross loans receivable decreased 015 annual compounded rate 1110 billion 1105 billion march 31 2018 gross loans receivable decreased march 31 2015 experienced loan growth 43 fiscal 2018 decrease 07 fiscal 2017 decrease 39 fiscal 2016 believe able improve gross loans receivable growth rates improved marketing processes analytics threeyear period beginning march 31 2015 company decreased size 1320 branches 1308 branches march 31 2018 us operations expanded size 1172 branches 1177 branches period fiscal 2019 company currently plans open acquire approximately 25 new branches united states evaluate acquisitions opportunities arise company offers income tax return preparation electronic filing program us branches company prepared approximately 77000 72000 63000 returns fiscal years 2018 2017 2016 respectively revenues company’s tax preparation business amounted approximately 168 million 143 increase 147 million earned fiscal 2017 following table sets forth certain information derived companys consolidated statements operations balance sheets well operating data ratios periods indicated 1 average gross loans receivable determined averaging monthend gross loans receivable indicated period 2 average net loans receivable determined averaging monthend gross loans receivable less unearned interest deferred fees indicated period 3 operating income computed total revenue less provision loan losses general administrative expenses comparison fiscal 2018 versus fiscal 2017 net income fiscal 2018 537 million 271 decrease 736 million earned fiscal 2017 operating income revenues less provision loan losses general administrative expenses decreased 152 million decreases net income operating income primarily driven increases personnel expense 110 million advertising expense 44 million expense 125 million partially offset increase total revenues 170 million net income also impacted 154 million increase income tax expense related tax cuts jobs act tcja 24 million decrease interest expense total revenues increased 5487 million fiscal 2018 170 million 32 increase 5317 million fiscal 2017 revenues 1127 us branches open throughout fiscal years increased 21 march 31 2018 company 1308 branches operation decrease 19 branches march 31 2017 decrease result merging 21 branches existing branches well closing 33 branches associated payroll deduct business mexico partially offset opening 30 new branches acquiring 5 branches interest fee income fiscal 2018 increased 130 million 28 fiscal 2017 increase primarily due corresponding increase average earning loans net loans outstanding march 31 2018 increased 50 compared march 31 2017 average net loans outstanding increased 34 fiscal 2018 compared fiscal 2017 interest fee income year also benefited increase loan volumes approximately 32 insurance commissions income increased 40 million 63 two fiscal years insurance commissions increased 11 million 27 comparing two fiscal years due increase loan volume states offer insurance product income increased 29 million 130 comparing two fiscal years due mainly increase tax return preparation income 21 million provision loan losses fiscal 2018 increased 24 million 19 previous year increase resulted increase amount loans fully reserved year net chargeoffs fiscal 2018 amounted 1228 million 21 decrease 1254 million charged fiscal 2017 accounts 60 days past due represented 63 55 loan portfolio recency basis 88 78 portfolio contractual basis march 31 2018 march 31 2017 respectively excluding impact payroll deduct loans mexico accounts 60 days past due contractual basis represented 73 69 loan portfolio march 31 2018 march 31 2017 respectively companys yearoveryear chargeoff ratio net chargeoffs percentage average net loans receivable decreased 157 year ended march 31 2017 149 year ended march 31 2018 companys fiscal 2018 chargeoff ratio 149 consistent historical chargeoff ratios chargeoff ratios past ten fiscal years averaged 145 high 167 fiscal 2009 low 129 fiscal 2015 following table presents companys chargeoff ratios since 2002 2009 fiscal 2009 companys net chargeoff rate increased 167 highest company’s history due difficult economic environment put substantial pressure customers ability repay loans 2015 fiscal 2015 companys net chargeoff rate decreased 129 net chargeoff rate benefited change branch level incentives year allows managers continue collection efforts accounts 90 days past due without monthly bonus negatively impacted expected change resulted increase accounts 90 days past due fewer chargeoffs fiscal 2015 estimate net chargeoff rate would approximately 141 fiscal 2015 excluding impact change general administrative expenses fiscal 2018 increased 298 million 111 previous fiscal year general administrative expenses divided average open branches increased 108 comparing two fiscal years overall general administrative expenses percent total revenues increased 542 fiscal 2018 503 fiscal 2017 change general administrative expense explained greater detail personnel expense totaled 1829 million fiscal 2018 110 million 64 increase fiscal 2017 increase primarily driven increase regular payroll related annual pay increases changes headcount well increased incentive payments us due improved performance 25 million severancerelated expense stemming separation agreement company’s former ceo 18 million expense related change company’s paid time policy accelerated accrual timeoff within calendar year policy change became effective january 1 2018 occupancy equipment expense totaled 438 million fiscal 2018 13 million 31 increase fiscal 2017 occupancy equipment expense generally function number branches company open throughout year fiscal 2018 average expense per branch increased slightly 329 thousand 320 thousand fiscal 2017 advertising expense totaled 223 million fiscal 2018 44 million 248 increase fiscal 2017 company identified opportunities customer acquisition key time frames effort capitalize opportunities increased advertising resulted advertising campaigns funded current year compared prior year fiscal 2018 average expense per branch increased 168 thousand compared 135 thousand fiscal 2017 amortization intangible assets totaled 10 million fiscal 2018 05 million 1022 increase fiscal 2017 primarily relates corresponding increase total intangible assets comparative periods due acquisitions current prior year expense totaled 474 million fiscal 2018 125 million 359 increase fiscal 2017 increase primarily due approximately 72 million expense related companys mexico investigation began march 2017 23 million increase debit card fees prior year debit card fees continued increase customers take advantage companys paybyphone online payment options also increased investment information technology interest expense decreased 24 million 112 fiscal 2018 compared previous fiscal year result decrease average debt outstanding 137 partially offset increase effective interest rate 58 60 income tax expense increased 71 million 176 fiscal 2018 compared prior fiscal year effective tax rate increased 469 fiscal 2018 compared 354 fiscal 2017 increase primarily due 105 million charge tax expense related net impact revaluing us deferred tax assets liabilities 48 million charge tax expense related foreign transition tax current fiscal year increase partially offset 34 million reduction tax expense due reduction companys us federal statutory income tax rate 35 3155 fiscal 2018 comparison fiscal 2017 versus fiscal 2016 net income 736 million fiscal 2017 158 decrease 874 million earned fiscal 2016 operating income revenues less provision loan losses general administrative expenses decreased 292 million due 264 million decrease interest fee income 50 million increase provision expense offset 15 million decrease general administrative expenses net income also impacted 101 million decrease income tax expense 53 million decrease interest expense total revenues decreased 5317 million fiscal 2017 257 million 46 decrease 5575 million fiscal 2016 revenues 1258 branches open throughout fiscal years decreased 338 march 31 2017 company 1327 branches operation decrease 12 branches march 31 2016 decrease result merging 44 branches existing branches partially offset opening 18 new branches acquiring 14 branches interest fee income fiscal 2017 decreased 264 million 53 fiscal 2016 experienced 46 decrease average net loans receivable interest fee income year also negatively impacted decrease loan volumes however origination volume improved throughout year increased comparing fourth quarter 2017 fourth quarter 2016 revenues operations mexico negatively impacted fluctuation exchange rate year fluctuation exchange rate negative impact approximately 64 million fiscal 2017’s revenue compared prior year insurance commissions income increased 06 million 10 two fiscal years insurance commissions decreased 25 million 58 comparing two fiscal years due decrease loan volume states insurance product available customers income increased 31 million 165 comparing two fiscal years due mainly increase tax return income 28 million provision loan losses fiscal 2017 increased 50 million 40 previous year increase resulted increase amount loans charged well increase amount loans fully reserved year net chargeoffs fiscal 2017 amounted 1254 million 15 increase 1236 million charged fiscal 2016 believe increase chargeoffs result ceasing inperson visits delinquent borrowers december 2015 accounts 60 days past due 55 47 recency basis 78 71 contractual basis march 31 2017 march 31 2016 respectively excluding impact payroll deduct loans mexico accounts contractually delinquent 60 days past due 69 march 31 2017 compared 64 march 31 2016 fiscal 2017 company also increase yearoveryear loan loss ratios net chargeoffs percentage average net loans increased 148 fiscal 2016 157 fiscal 2017 fiscal 2017 company chargeoff ratio 157 elevated compared historical levels fiscal 2002 fiscal 2006 chargeoffs percent average loans ranged 146 148 fiscal 2007 company experienced temporary decline 133 attributed change bankruptcy law returned 145 fiscal 2008 fiscal 2009 ratio increased 167 highest company’s history result difficult economic environment higher energy costs customers faced ratio steadily declined 155 fiscal 2010 139 fiscal 2013 increased 147 fiscal 2014 general administrative expenses fiscal 2017 decreased 15 million 05 previous fiscal year personnel expense increased 24 million despite prior year benefiting release 114 million expense previously accrued longterm equity incentive awards expense decreased due 12 million expense related planned bond offering completed recorded fiscal 2016 well 15 million decrease mileage expense occupancy equipment expense decreased due 13 million loss taken result sale corporate jet fiscal 2016 general administrative expenses divided average open branches increased 04 comparing two fiscal years overall general administrative expenses percent total revenues increased 503 fiscal 2017 483 fiscal 2016 interest expense decreased 53 million 199 fiscal 2017 compared previous fiscal year result 36 decrease effective rate decrease average debt outstanding 241 income tax expense decreased 101 million 200 primarily decrease pretax income effective tax rate decreased 354 fiscal 2017 compared 366 fiscal 2016 decrease primarily due reduction state tax expense related companys settlement state taxing authority current year regulatory matters mexico investigation disclosed part item 3 “legal proceedingsmexico investigation” company retained outside counsel forensic accountants conduct investigation operations mexico focusing legality fcpa certain local laws certain payments related loans maintenance company’s books records associated payments treatment compensation matters certain employees investigation continues address whether extent improper payments may violate fcpa local laws made approximately 2010 2017 behalf wac de méxico sofom subsidiary company government officials mexico relating loans made unionized employees company voluntarily contacted sec doj advise agencies investigation underway company intends cooperate agencies sec issued formal order investigation conclusion cannot drawn time potential remedies agencies may seek addition company cannot determine time ultimate effect investigation remedial measures operations mexico decisions respect thereto violations fcpa local laws occurred company could subject fines civil criminal penalties equitable remedies including profit disgorgement related interest injunctive relief addition disposition matters could adversely impact ability collect outstanding loans result modifications business practices compliance programs including significant restructuring curtailment effects operations mexico disposition could also potentially require monitor appointed review future business practices goal ensuring compliance fcpa applicable laws company could also face fines sanctions penalties authorities mexico well thirdparty claims shareholders andor stakeholders company addition disclosure investigation could adversely affect company’s reputation ability obtain new business retain existing business current customers potential customers attract retain employees access capital markets determined violation fcpa occurred violation may give rise event default company’s credit agreement violation material adverse effect company’s business operations properties assets condition financial otherwise amount settlement penalties fines payments resulted company failing satisfy financial covenants additional potential fcpa violations laws regulations may uncovered investigation see part item 1a “risk factorswe may exposed liabilities fcpa determination company subsidiaries violated fcpa could material adverse effect business liquidity” “our internal investigation operations mexico may expose company potential liabilities addition potential liabilities fcpa cause company incur substantial expenses” “we depend substantial extent borrowings revolving credit agreement fund liquidity needs” “the terms debt limit conduct business” annual report form 10k additional information cfpb investigation previously disclosed march 12 2014 company received civil investigative demand “cid” consumer financial protection bureau “cfpb” stated purpose cid determine whether company “engaging unlawful acts practices connection marketing offering extension credit violation sections 1031 1036 consumer financial protection act 12 usc §§ 5531 5536 truth lending act 15 usc §§ 1601 et seq regulation z 12 cfr pt 1026 federal consumer financial law” “also determine whether bureau action obtain legal equitable relief would public interest” company responded within deadlines specified cid broad requests production documents answers interrogatories written reports related loans made company numerous aspects company’s business letter dated january 18 2018 cfpb informed company concluded investigation would proceeding enforcement action company see part item 1 “business government regulation federal legislation” part item 1a “risk factors” annual report form 10k discussion matters federal regulations company’s operations subject cfpb rulemaking initiative october 5 2017 cfpb issued final rule “rule” imposing limitations shortterm consumer loans ii longerterm consumer installment loans balloon payments iii higherrate consumer installment loans repayable payment authorization rule requires lenders originating shortterm loans longerterm balloon payment loans evaluate whether consumer ability repay loan along current obligations expenses “ability repay requirements” rule also curtails repeated unsuccessful attempts debit consumers’ accounts shortterm loans balloon payment loans installment loans involve payment authorization annual percentage rate 36 “payment requirements” final rule significant differences cfpb’s proposed rules announced june 2 2016 relating payday vehicle title similar loans company believe cfpb’s final rule material impact company’s existing lending procedures company currently make shortterm consumer loans longerterm consumer installment loans balloon payments would subject company rule’s ability repay requirements extent rule’s payment requirements would apply company’s loans company believe requirements would material impact company’s lending procedures cfpb stated expects conduct separate rulemaking identify larger participants installment lending market purposes supervision program though timing rulemaking uncertain company believes implementation rules would likely bring company’s business cfpb’s supervisory authority among things would subject company reporting obligations onsite compliance examinations cfpb see part item 1 “business government regulation federal legislation” discussion matters federal regulations company’s operations subject part item 1a “risk factors” information regarding regulatory related risks critical accounting policies company’s accounting reporting policies accordance gaap conform general practices within finance company industry significant accounting policies used preparation consolidated financial statements discussed note 1 consolidated financial statements certain critical accounting policies involve significant judgment company’s management including use estimates assumptions affect reported amounts assets liabilities revenues expenses result changes estimates assumptions could significantly affect company’s financial position results operations company considers policies regarding allowance loan losses sharebased compensation income taxes critical accounting policies due significant degree management judgment involved allowance loan losses company developed policies procedures assessing adequacy allowance loan losses take consideration various assumptions estimates respect loan portfolio company’s assumptions estimates may affected future changes economic conditions among factors additional discussion concerning allowance loan losses see “credit quality” sharebased compensation company measures compensation cost sharebased awards fair value recognizes compensation service period awards expected vest fair value restricted stock based number shares granted quoted price common stock time grant fair value stock options determined using blackscholes valuation model blackscholes model requires input highly subjective assumptions including expected volatility riskfree interest rate expected life changes materially affect fair value estimate addition estimation sharebased awards ultimately vest requires judgment extent actual results updated estimates differ current estimates amounts recorded cumulative adjustment period estimates revised company considers many factors estimating expected forfeitures including types awards employee class historical experience actual results future changes estimates may differ substantially current estimates income taxes management uses certain assumptions estimates determining income taxes payable refundable deferred income tax liabilities assets events recognized differently financial statements income tax returns income tax expense determining amounts requires analysis certain transactions interpretation tax laws regulations management exercises considerable judgment evaluating amount timing recognition resulting income tax liabilities assets judgments estimates reevaluated periodic basis regulatory business factors change assurance given either tax returns submitted management income tax reported consolidated financial statements adjusted either adverse rulings changes tax code assessments made internal revenue service state foreign taxing authorities company subject potential adverse adjustments including limited increase statutory federal state income tax rates permanent nondeductibility amounts currently considered deductible either future periods dependency generation future taxable income order ultimately realize deferred income tax assets fasb asc 740 company includes current deferred tax impact tax positions financial statements likely likelihood greater 50 positions sustained taxing authorities full knowledge relevant information based technical merits tax position company supports tax positions unambiguous tax law prior experience taxing authority analysis considers relevant facts circumstances regulations management must still rely assumptions estimates determine overall likelihood success proper quantification given tax position credit quality company’s delinquency net chargeoff ratios reflect among factors changes mix loans portfolio quality receivables success collection efforts bankruptcy trends general economic conditions delinquency computed basis date last full contractual payment loan known recency method basis amount past due accordance original payment terms loan known contractual method upon refinancings contractual delinquency loan measured based upon terms new agreement impacted refinanced loans classification new loan modification existing loan management closely monitors portfolio delinquency using methods measure quality companys loan portfolio probability credit losses following table classifies gross loans receivable company delinquent contractual basis least 61 days march 31 2018 2017 2016 fiscal 2018 approximately 790 company’s loans based accounts generated refinancings outstanding loans origination new loans previous customers refinancing represents new loan transaction present customer portion new loan proceeds used repay balance existing loan remaining portion advanced customer fiscal 2018 2017 2016 percentages company’s loan originations refinancings existing loans 659 668 694 respectively company’s refinancing policies limited state regulations cases consider customer’s payment history require customer made multiple payments loan considered refinancing considered current refinancing customer 45 days delinquent contractual basis delinquent refinancings may extended customers 45 days past due contractual basis customer completes new application manager believes customer’s ability intent repay improved company’s policy refinance delinquent loans amounts greater original amounts financed cases customer must complete new application every two years fiscal 2018 2017 delinquent refinancings represented 11 12 respectively company’s total loan volume chargeoffs percentage loans made category greatest loans made new borrowers least loans made former borrowers refinancings percentage total loans charged refinancings represent greatest percentage due volume loans made category following table depicts chargeoffs percent loans made category percent total chargeoffs fiscal 2018 company maintains allowance loan losses amount managements opinion adequate provide losses inherent existing loan portfolio company charges current earnings provision loan losses amounts added allowance maintain levels expected cover probable losses principal establishing allowance loan losses company takes consideration growth loan portfolio current levels chargeoffs current levels delinquencies current economic factors company uses mathematical calculation determine initial allowance end reporting period calculation originated managements estimate future chargeoffs used allocate expenses branch level two components calculating allowance loan losses company refers general reserve specific reserve calculation starting point time needed additional provisions added determined management ensure allowance adequate general reserve 425 gross loan portfolio specific reserve generally represents 100 loans 91 days past due recency basis including bankrupt accounts category methodology based historical data showing collection loans 91 days past due bankrupt loans remote process performed determine adequacy allowance loan losses well considering trends current levels delinquencies chargeoff levels economic trends energy food prices primary tool used movement model contractual recency basis considers rolling twelve months delinquency determine expected chargeoffs sum expected chargeoffs determined movement model contractual recency basis plus amount related delinquent refinancings compared allowance resulting mathematical calculation determine adjustments required make allowance adequate management also determines adjustments needed event consolidated annual provision loan losses less total chargeoffs management uses precision level 5 allowance loan losses compared aforementioned movement model determining adjustments needed companys policy charge earlier loans deemed uncollectible six months elapsed since date last full contractual payment companys chargeoff policy consistently applied changes made periods reported believe chargeoffs fiscal 2016 2017 negatively impacted ceasing inperson visits delinquent borrowers december 2015 companys historical annual chargeoff rate past 10 years ranged 129 167 net loans management considers chargeoff policy evaluating appropriateness allowance loan losses estimate losses company uses historical information net chargeoffs average loan life method based fact many customers refinance loans prior contractual maturity average contractual loan terms approximately 13 months average loan life approximately 8 months company allowance loan losses approximated 9 months average net chargeoffs march 31 2018 management believes allowance sufficient cover estimated losses existing loans based historical chargeoffs average loan life large percentage loans charged fiscal year companys books beginning fiscal year company believes appropriate provide losses loans originated twelve months net chargeoffs needed allowance due average life loan portfolio less twelve months method employed accordance gaap following summary changes allowance loan losses years ended march 31 2018 2017 2016 1 average net loans receivable determined averaging monthend gross loans receivable less unearned interest deferred fees indicated period quarterly information seasonality companys loan volume corresponding loans receivable follow seasonal trends companys highest loan demand typically occurs october december third fiscal quarter loan demand generally lowest loan repayment highest january march fourth fiscal quarter loan volume average balances typically remain relatively level remainder year seasonal trend affects quarterly operating performance corresponding fluctuations interest fee income insurance commissions earned provision loan losses recorded well fluctuations companys cash needs consequently operating results companys third fiscal quarter generally significantly lower quarters operating results fourth fiscal quarter significantly higher quarters following table sets forth quarterly basis certain items included companys unaudited consolidated financial statements shows number branches open fiscal years 2018 2017 recently issued accounting pronouncements see part ii item 8 financial statements supplementary data note 1summary significant accounting policies consolidated financial statements impact new accounting pronouncements liquidity capital resources company financed continues finance operations acquisitions branch expansion combination cash flows operations borrowings institutional lenders company generally applied cash flows operations fund loan volume fund acquisitions repay longterm indebtedness repurchase common stock companys gross loans receivable decreased slightly 11101 million march 31 2015 11051 million march 31 2018 net cash provided operating activities fiscal years 2018 2017 2016 2180 million 2194 million 2061 million respectively company continues believe stock repurchases viable component company’s longterm financial strategy excellent use excess cash opportunity arises however amended credit facility limits share repurchases 50 consolidated adjusted net income fiscal year commencing fiscal year ending march 31 2017 company plans open acquire approximately 25 branches united states fiscal 2019 expenditures company open furnish new branches averaged approximately 41000 per branch fiscal 2018 new branches generally required 100000 400000 fund outstanding loans receivable originated first 12 months operation fiscal 2018 company opened 30 new branches merged closed 54 branches existing ones company acquired 5 branches fiscal 2018 company believes attractive opportunities acquire new branches receivables competitors acquire branches communities currently served company continue become available conditions local economies financial circumstances owners change company revolving credit facility syndicate banks revolving credit facility provides revolving borrowings lesser aggregate commitments facility b borrowing base includes 300000 letter credit subfacility march 31 2018 aggregate commitments credit facility 4800 million borrowing base limitation equal product company’s eligible finance receivables less unearned finance charges insurance premiums insurance commissions b advance rate percentage ranges 79 85 based collateral performance indicator completely described administrative agent revolving credit facility right time permitted discretion without obligation set aside reasonable reserves borrowing base amounts may deem appropriate including without limitation reserves respect regulatory events increased operational legal regulatory risk may 2017 credit facility amended among things extend term june 15 2019 funds borrowed revolving credit facility bear interest libor rate plus 40 per annum minimum rate 50 year ended march 31 2018 effective interest rate including commitment fee borrowings revolving credit facility 60 company pays commitment fee equal 050 per annum daily unused portion commitments march 31 2018 2449 million outstanding facility 2348 million unused borrowing availability borrowing base limitations company’s obligations revolving credit facility together treasury management hedging obligations owing lender revolving credit facility affiliate lender required guaranteed company’s whollyowned domestic subsidiaries obligations company subsidiary guarantors revolving credit facility together treasury management hedging obligations secured firstpriority security interest substantially assets company subsidiary guarantors agreement governing company’s revolving credit facility contains affirmative negative covenants including covenants restrict ability company subsidiaries among things incur guarantee indebtedness incur liens pay dividends repurchase redeem capital stock dispose assets engage mergers consolidations make acquisitions investments redeem prepay subordinated debt amend subordinated debt documents make changes nature business engage transactions affiliates agreement also contains financial covenants including minimum consolidated net worth 3300 million plus 50 borrowers consolidated net income fiscal year beginning 2017 minimum fixed charge coverage ratio 25 10 maximum ratio total debt consolidated adjusted net worth 20 10 maximum ratio subordinated debt consolidated adjusted net worth 10 agreement allows company incur subordinated debt matures termination date revolving credit facility contains specified subordination terms subject limitations amount imposed financial covenants agreement addition agreement establishes maximum specified level collateral performance indicator collateral performance indicator equal sum threemonth rolling average rate receivables least sixty days past due b eightmonth rolling average net chargeoff rate company compliance covenants march 31 2018 believe covenants materially limit business expansion strategy agreement contains events default including without limitation nonpayment principal interest obligations violation covenants misrepresentation crossdefault debt bankruptcy insolvency events judgments certain erisa events actual asserted invalidity loan documentation invalidity subordination provisions subordinated debt certain changes control company occurrence certain regulatory events including entry stay order judgment ruling similar event related company’s subsidiaries’ originating holding pledging collecting enforcing eligible finance receivables material company subsidiary remains unvacated undischarged unbonded unstayed appeal otherwise period 60 days date entry reasonably likely cause material adverse change determined violation fcpa occurred described part item 3 “legal proceedingsmexico investigation” violation may give rise event default credit agreement violation material adverse effect business operations properties assets condition financial otherwise amount settlement penalties fines payments resulted company failing satisfy financial covenants company believes cash flow operations borrowings revolving credit facility sources adequate fund expected cost opening acquiring new branches including funding initial operating losses new branches funding loans receivable originated branches companys branches next 12 months foreseeable future beyond except otherwise discussed report including limited discussions part 1 item 1a risk factors supplemented subsequent disclosures information company files furnishes sec time management currently aware trends demands commitments events uncertainties believes could result could reasonably likely result material adverse effect company’s liquidity following table summarizes company’s contractual obligations period thousands share repurchase program march 10 2015 board directors authorized company repurchase 250 million company’s common stock march 31 2018 company 19 million aggregate remaining repurchase capacity march 10 2015 repurchase authorization timing actual number shares repurchased depend variety factors including stock price corporate regulatory requirements market economic conditions although repurchase authorization stated expiration date company’s stock repurchase program may suspended discontinued time company repurchased shares common stock since first quarter fiscal 2018 time filing uncertain company recommence share repurchases company continues believe stock repurchases viable component company’s longterm financial strategy excellent use excess cash opportunity arises however amended credit facility limits share repurchases 50 consolidated adjusted net income fiscal year commencing fiscal year ending march 31 2017 first priority ensure enough capital fund loan growth extent excess capital may resume repurchasing stock appropriate authorized board directors march 31 2018 debt outstanding 2449 million shareholders equity 5411 million resulting debttoequity ratio 0510 continue monitor debttoequity ratio committed maintaining debt level allow us continue execute business objectives putting undue stress consolidated balance sheet inflation company believe inflation within reasonably anticipated rates materially adverse effect financial condition although inflation would increase company’s operating costs absolute terms company expects decrease value money would result increase size loans demanded customer base reasonable anticipate change customer preference would result increase total loan receivables increase absolute revenues generated larger amount loans receivable company believes increase absolute revenues offset increase operating costs addition company’s loans relatively short contractual term average life unlikely loans made given point time repaid significantly inflated dollars legal matters time company involved routine litigation relating claims arising operations normal course business see part item 3 “legal proceedings” note 16 audited consolidated financial statements discussion legal matters item 7aitem 7 management’s discussion analysis financial condition results operations general companys financial performance continues dependent large part upon growth outstanding loans receivable maintenance loan quality acceptable levels operating expenses since march 31 2016 gross loans receivable increased 583 annual compounded rate 9646 million 121 billion march 31 2020 believe able improve gross loans receivable growth rates acquisitions improved marketing processes analytics fouryear period beginning march 31 2016 company expanded size 1186 branches 1243 branches march 31 2020 fiscal 2021 company currently plans open acquire approximately 25 new branches evaluate acquisitions opportunities arise company offers income tax return preparation electronic filing program branches company prepared approximately 84000 91000 77000 returns fiscal years 2020 2019 2018 respectively revenues company’s tax preparation business amounted approximately 209 million 24 decrease 215 million earned fiscal 2019 following table sets forth certain information derived companys consolidated statements operations balance sheets well operating data ratios periods indicated 1 average gross loans receivable determined averaging monthend gross loans receivable indicated period excluding tax advances 2 net loans receivable defined gross loans receivable less unearned interest deferred fees 3 average net loans receivable determined averaging monthend gross loans receivable less unearned interest deferred fees indicated period excluding tax advances 4 operating income computed total revenue less provision loan losses general administrative expenses covid19 pandemic response impact covid19 pandemic caused significant economic disruption united states many state local governments including states company operates ordered nonessential businesses close residents shelter place home majority states operate considered essential business thus nearly branches remained open date however impact covid19 rapidly evolving future effects uncertain may difficult assess predict extent impacts pandemic us many factors beyond control knowledge response spread covid19 modified business practices order reduce personal interactions provide additional support associates customers measures include reducing branch hours limiting employee travel implementing workfromhome initiatives employees possible cancelling physical participation meetings training sessions providing additional leave directly impacted closing lobbies offering curbside service encouraging customers service accounts digitally rather person result company seen significant increases online phone activity related account access payments refinances company expedited projects related digital presence online lending currently piloting remote applications signatures funding select customers nonessential businesses schools began close proactively halted marketing efforts updated underwriting criteria light tremendous uncertainty rapid increases unemployment federal stimulus packages company experiencing expected declines customer demand due combination reduced marketing stayathome orders reducing customer mobility assist customers impacted covid19 company’s typical 30day wait period unemployment insurance claims waived payment deferrals offered impacted customers may 15 2020 3205 million available revolving credit facility believe sufficient liquidity support fundamental operations business throughout covid19 pandemic however unable estimate longterm impact covid19 business continue assess liquidity needs situation evolves experience sustained adverse effects may fail satisfy minimum capital ratios requirements revolving credit facility extent pandemic ultimately impact business financial condition depend future events impossible predict including limited duration severity pandemic success actions taken contain treat prevent spread virus effectiveness borrower assistance initiatives government economic stimulus measures speed normal economic operating conditions return see part item 1a “risk factors” additional information adjustments subsequent release earnings may 7 2020 company made certain adjustments treatment historic tax credits purchased fiscal 2020 since company’s earnings release furnished may 7 2020 adjustments correctly present company’s election account historic tax credits purchased using income statement method conjunction flowthrough method approach deferred tax liability related difference book tax basis underlying historic tax credit investment recorded tax provision reversed period amortization historic tax credit investment result corrections line items adjusted follows 1 operating income computed total revenues less provision loan losses general administrative expenses comparison fiscal 2020 versus fiscal 2019 net income continuing operations fiscal 2020 282 million 619 decrease 739 million earned fiscal 2019 decrease net income continuing operations primarily due 217 million accrual estimated losses related investigation former mexican business 333 million increase provision loan losses net income fiscal 2020 282 million 244 decrease 372 million earned fiscal 2019 decrease net income primarily due 217 million accrual estimated losses related investigation former mexican business 333 million increase provision loan losses partially offset impairment loss prior period fiscal 2019 recognized 390 million impairment loss investment mexico operations first quarter fiscal 2019 accordance gaap testing subsequent recognition impairment triggered change classification mexico operations continuing operations held sale total impairment loss 313 million directly attributable cumulative translation loss investment stemming devaluation mexican peso relative us dollar since date investment operating income revenues less provision loan losses general administrative expenses continuing operations decreased 470 million total revenues continuing operations increased 455 million 84 5900 million fiscal 2020 5445 million fiscal 2019 revenues continuing operations 1148 branches open throughout fiscal years increased 64 march 31 2020 company 1243 branches operation increase 50 branches march 31 2019 increase result opening 19 new branches acquiring 38 branches partially offset merging 7 branches existing branches interest fee income continuing operations fiscal 2020 increased 392 million 83 fiscal 2019 increase primarily due corresponding increase average earning loans net loans outstanding march 31 2020 increased 76 compared march 31 2019 average net loans outstanding increased 126 fiscal 2020 compared fiscal 2019 insurance commissions income continuing operations increased 63 million 84 two fiscal years insurance commissions continuing operations increased 52 million 115 comparing two fiscal years due increase loan volume states offer insurance products income continuing operations increased 11 million 38 comparing two fiscal years primarily due increase demand companys motor club product 18 million partially offset reduction tax preparation income 05 million provision loan losses continuing operations fiscal 2020 increased 333 million 224 previous year increase mostly attributed increase chargeoff delinquency rates year accounts 91 days past due represented 42 38 loan portfolio recency basis march 31 2020 march 31 2019 respectively companys yearoveryear chargeoff ratio net chargeoffs percentage average net loans receivable increased 161 year ended march 31 2019 180 year ended march 31 2020 customers new borrowers world finance less 6 months since first origination time current loan percentage yearend portfolio grown 394 year new world customers account 17 portfolio increase 137 last year average 125 prior 5 fiscal years 20132017 customers less 1 year tenure percentage yearend portfolio grown 332 year account 23 portfolio increased weighting new borrowers riskiest customer type portfolio contributed increase delinquency chargeoff rates overall portfolio experienced increase portfolio weighting towards less tenured customers last 18 months seen significant increase chargeoff rates comparing less tenured customer segment prior years chargeoff ratios past ten fiscal years averaged 149 high 180 fiscal 2020 low 128 fiscal 2015the following table presents companys chargeoff ratios since 2003 2009 fiscal 2009 companys net chargeoff rate increased 167 due difficult economic environment put substantial pressure customers ability repay loans 2015 fiscal 2015 companys net chargeoff rate decreased 128 net chargeoff rate benefited change branch level incentives year allows managers continue collection efforts accounts 91 days past due without monthly bonus negatively impacted expected change resulted increase accounts 91 days past due fewer chargeoffs fiscal 2015 estimate net chargeoff rate would approximately 140 fiscal 2015 excluding impact change general administrative expenses continuing operations fiscal 2020 increased 592 million 205 previous fiscal year general administrative expenses continuing operations divided average open branches increased 166 comparing two fiscal years overall general administrative expenses continuing operations percent total revenues continuing operations increased 589 fiscal 2020 529 fiscal 2019 change general administrative expense continuing operations explained greater detail personnel expense continuing operations totaled 2038 million fiscal 2020 232 million 129 increase fiscal 2019 increase largely due 113 million increase sharebased compensation driven longterm incentive plan director equity awards granted prior year benefits increased 58 million mostly due increase healthcare costs increases headcount regular payroll expense increased 84 million year primarily due increases headcount occupancy equipment expense continuing operations totaled 542 million fiscal 2020 55 million 113 increase fiscal 2019 occupancy equipment expense generally function number branches company open throughout year fiscal 2020 expense per average open branch increased 442 thousand 410 thousand fiscal 2019 advertising expense continuing operations totaled 243 million fiscal 2020 18 million 81 increase fiscal 2019 increase primarily due increased spending direct mail digital campaigns amortization intangible assets continuing operations totaled 50 million fiscal 2020 35 million 2280 increase fiscal 2019 primarily relates corresponding increase total intangible assets comparative periods due acquisition activity current prior year expense continuing operations totaled 602 million fiscal 2020 252 million 720 increase fiscal 2019 increase primarily due 217 million accrual related potential resolution companys mexico investigation began march 2017 interest expense continuing operations increased 80 million 444 fiscal 2020 compared previous fiscal year result increase average debt outstanding 675 partially offset decrease effective interest rate 67 58 income tax expense continuing operations decreased 92 million 578 fiscal 2020 compared prior fiscal year effective tax rate increased 193 fiscal 2020 compared 178 fiscal 2019 increase primarily due recognition nondeductible penalties totaling 217 million current fiscal year partially offset recognition net federal state tax credits 81 million fiscal year 2020 compared 37 million fiscal year 2019 comparison fiscal 2019 versus fiscal 2018 disclosed sold mexico operations effective july 1 2018 result sale classified mexico business discontinued operations statements operations balance sheets applicable periods net income continuing operations fiscal 2019 739 million 505 increase 491 million earned fiscal 2018 increase net income continuing operations primarily due 154 million decrease income tax expense related implementation tax cuts jobs act tcja prior year well increase average net loans receivable current period net income fiscal 2019 372 million 306 decrease 537 million earned fiscal 2018 recognized 390 million impairment loss investment mexico operations first quarter fiscal 2019 accordance gaap testing subsequent recognition impairment triggered change classification mexico operations continuing operations held sale total impairment loss 313 million directly attributable cumulative translation loss investment stemming devaluation mexican peso relative us dollar since date investment operating income revenues less provision loan losses general administrative expenses continuing operations decreased 81 million total revenues continuing operations increased 419 million 83 5445 million fiscal 2019 5027 million fiscal 2018 revenues continuing operations 1125 branches open throughout fiscal years increased 77 march 31 2019 company 1193 branches operation increase 16 branches march 31 2018 increase result opening 25 new branches acquiring 17 branches partially offset merging 26 branches existing branches interest fee income continuing operations fiscal 2019 increased 335 million 77 fiscal 2018 increase primarily due corresponding increase average earning loans net loans outstanding march 31 2019 increased 123 compared march 31 2018 average net loans outstanding increased 95 fiscal 2019 compared fiscal 2018 insurance commissions income continuing operations increased 84 million 126 two fiscal years insurance commissions continuing operations increased 32 million 77 comparing two fiscal years due increase loan volume states offer insurance products income continuing operations increased 52 million 208 comparing two fiscal years primarily due increase tax return preparation income 47 million provision loan losses continuing operations fiscal 2019 increased 308 million 262 previous year approximately 174 million increase attributed growth portfolio year approximately 134 million attributed increase chargeoff delinquency rates year accounts 91 days past due represented 38 34 loan portfolio recency basis march 31 2019 march 31 2018 respectively companys yearoveryear chargeoff ratio net chargeoffs percentage average net loans receivable increased 149 year ended march 31 2018 161 year ended march 31 2019 customers new borrowers world finance less 6 months since first origination time current loan percentage yearend portfolio grown 394 year new world customers account 17 portfolio increase 137 last year average 125 prior 5 fiscal years 20132017 customers less 1 year tenure percentage yearend portfolio grown 332 year account 23 portfolio increased weighting new borrowers riskiest customer type portfolio contributed increase delinquency chargeoff rates overall portfolio experienced increase portfolio weighting towards less tenured customers last 18 months seen increase chargeoff rates comparing less tenured customer segment prior years chargeoff ratios past ten fiscal years averaged 147 high 162 fiscal 2017 low 128 fiscal 2015 following table presents companys chargeoff ratios 2002 2019 2009 fiscal 2009 companys net chargeoff rate increased 167 due difficult economic environment put substantial pressure customers ability repay loans 2015 fiscal 2015 companys net chargeoff rate decreased 128 net chargeoff rate benefited change branch level incentives year allows managers continue collection efforts accounts 91 days past due without monthly bonus negatively impacted expected change resulted increase accounts 91 days past due fewer chargeoffs fiscal 2015 estimate net chargeoff rate would approximately 140 fiscal 2015 excluding impact change general administrative continuing operations expenses fiscal 2019 increased 192 million 71 previous fiscal year general administrative expenses continuing operations divided average open branches increased 54 comparing two fiscal years overall general administrative expenses continuing operations percent total revenues continuing operations decreased 529 fiscal 2019 535 fiscal 2018 change general administrative expense continuing operations explained greater detail personnel expense continuing operations totaled 1806 million fiscal 2019 161 million 98 increase fiscal 2018 increase largely due 117 million increase sharebased compensation driven longterm incentive plan director equity awards granted year prior year included 25 million severancerelated expense stemming separation agreement company’s former president chief executive officer company also recorded 18 million expense related change company’s paid time policy prior year regular payroll expense increased 46 million 41 year occupancy equipment expense continuing operations totaled 488 million fiscal 2019 96 million 246 increase fiscal 2018 occupancy equipment expense generally function number branches company open throughout year fiscal 2019 average expense per branch increased 410 thousand 334 thousand fiscal 2018 advertising expense continuing operations totaled 225 million fiscal 2019 13 million 61 increase fiscal 2018 increase primarily due consulting fees related brand research well increased spending direct mail digital campaigns amortization intangible assets continuing operations totaled 15 million fiscal 2019 05 million 542 increase fiscal 2018 primarily relates corresponding increase total intangible assets comparative periods due acquisition activity current prior year expense continuing operations totaled 350 million fiscal 2019 83 million 192 decrease fiscal 2018 decrease primarily due decrease expense related companys mexico investigation began march 2017 interest expense continuing operations decreased 12 million 61 fiscal 2019 compared previous fiscal year result decrease average debt outstanding 160 partially offset increase effective interest rate 60 67 income tax expense continuing operations decreased 318 million 665 fiscal 2019 compared prior fiscal year effective tax rate decreased 178 fiscal 2019 compared 493 fiscal 2018 decrease primarily due 105 million charge tax expense related net impact revaluing us deferred tax assets liabilities 49 million charge tax expense related foreign transition tax occurred fiscal year 2018 combined 103 million decrease tax expense due reduction companys us federal statutory income tax rate 3155 21 8500 thousand decrease tax expense related adjustment revaluing us deferred tax assets liabilities due additional analysis change estimate recognition state tax credits 37 million fiscal 2019 mexico exit previously disclosed company sold issued outstanding capital stock equity interest two mexico subsidiaries wac de mexico swac purchase price mxn 826795050 effective july 1 2018 company subsequently converted purchase price approximately usd 4436 million using applicable exchange rates company subsidiaries longer operate mexico thus company expects revenues gross loans receivables negatively impacted future yearscompared historical levels terms stock purchase agreement obligated indemnify purchasers claims liabilities relating certain investigations former mexico operating segment company affiliates doj sec commenced prior july 1 2018 indemnification claims could material adverse effect financial condition including liquidity results operations regulatory matters mexico investigation disclosed part item 3 “legal proceedingsmexico investigation” previously disclosed company retained outside legal counsel forensic accountants conduct investigation operations mexico focusing legality fcpa certain local laws certain payments related loans maintenance company’s books records associated payments treatment compensation matters certain employees investigation addressed whether extent improper payments may violate fcpa local laws made approximately 2010 2017 behalf wac de mexico government officials mexico relating loans made unionized employees company voluntarily contacted sec doj june 2017 advise agencies internal investigation underway company intended cooperate agencies company continue cooperate agencies sec issued formal order investigation ongoing discussions sec regarding possible resolution matters discussions sec progressed point company reasonably estimate probable loss recorded aggregate accrual 217 million respect sec matters march 31 2020 discussions sec continuing assurance companys efforts reach final resolution sec successful timing terms resolution company offer settlement resolution doj time total amount company’s loss incurred connection investigation resolution thereof including amounts remain subject approval sec may higher amount accrual violations fcpa local laws occurred company could subject fines civil criminal penalties equitable remedies including profit disgorgement related interest injunctive relief addition disposition matters could result modifications business practices compliance programs disposition could also potentially require monitor appointed review future business practices goal ensuring compliance fcpa applicable laws company could also face fines sanctions penalties authorities mexico well thirdparty claims shareholders andor stakeholders company addition disclosure investigation ultimate disposition could adversely affect company’s reputation ability obtain new business retain existing business current customers potential customers attract retain employees access capital markets determined violation fcpa laws occurred violation may give rise event default company’s credit agreement violation material adverse effect company’s business operations properties assets condition financial otherwise amount settlement penalties fines payments resulted company failing satisfy financial covenants additional potential fcpa violations laws regulations may uncovered investigation see part item 1a “risk factorswe may exposed liabilities fcpa determination company subsidiaries violated fcpa could material adverse effect business liquidity” “our investigation previous operations mexico may expose company potential liabilities addition potential liabilities fcpa cause company incur substantial expenses” “we depend substantial extent borrowings revolving credit agreement fund liquidity needs” “the terms debt limit conduct business” additional information addition ultimate liability disgorgement related interest company believes could liable fines penalties company continuing discussions sec regarding matters investigation ultimate resolution could higher accrual event settlement reached assurance timing terms settlement cfpb rulemaking initiative october 5 2017 cfpb issued final rule imposing limitations shortterm consumer loans ii longerterm consumer installment loans balloon payments iii higherrate consumer installment loans repayable payment authorization rule requires lenders originating shortterm loans longerterm balloon payment loans evaluate whether consumer ability repay loan along current obligations expenses “ability repay requirements” rule also curtails repeated unsuccessful attempts debit consumers’ accounts shortterm loans balloon payment loans installment loans involve payment authorization annual percentage rate 36 “payment requirements” company believe rule material impact company’s existing lending procedures company currently make shortterm consumer loans longerterm consumer installment loans balloon payments would subject company rule’s ability repay requirements company also currently underwrites loans including secured vehicle title would fall within scope proposals reviewing customer’s ability repay based company’s standards however implementation rule’s payment requirements may require changes company’s practices procedures loans could materially adversely affect company’s ability make loans cost making loans company’s ability frequency could refinance loans profitability loans june 6 2019 cfpb amended rule delay august 19 2019 compliance date part rule’s provisions including ability repay requirements new compliance date ability repay requirements november 19 2020 addition february 6 2019 cfpb issued notice proposed rulemaking proposing rescind provisions rule governing ability repay requirements comment period proposed rulemaking closed may 2019 according cfpb’s fall 2019 rulemaking agenda cfpb reviewing approximately 190000 comments received expected take final action april 2020 respect proposal however final action taken yet regulatory changes could effects beyond currently contemplated could materially adversely impact business operations unless rescinded otherwise amended company comply rule’s payment requirements continues allow consumers set future recurring payments online certain covered loans meets definition “leveraged payment mechanism” rule payment provisions rule apply company modify loan payment procedures comply required notices mandated timeframes set forth final rule cfpb also stated expects conduct separate rulemaking identify larger participants installment lending market purposes supervision program initiative classified “inactive” cfpb’s spring 2018 rulemaking agenda remained inactive since cfpb indicated action decision merits though likelihood timing rulemaking uncertain company believes implementation rules would likely bring company’s business cfpb’s supervisory authority among things would subject company reporting obligations onsite compliance examinations cfpb see part item 1 “business government regulation federal legislation” discussion matters federal regulations company’s operations subject part item 1a “risk factors” information regarding regulatory related risks critical accounting policies company’s accounting reporting policies accordance gaap conform general practices within finance company industry significant accounting policies used preparation consolidated financial statements discussed note 1 consolidated financial statements certain critical accounting policies involve significant judgment company’s management including use estimates assumptions affect reported amounts assets liabilities revenues expenses result changes estimates assumptions could significantly affect company’s financial position results operations company considers policies regarding allowance loan losses sharebased compensation income taxes critical accounting policies due significant degree management judgment involved allowance loan losses company developed policies procedures assessing adequacy allowance loan losses take consideration various assumptions estimates respect loan portfolio company’s assumptions estimates may affected future changes economic conditions among factors additional discussion concerning allowance loan losses see “credit quality” sharebased compensation company measures compensation cost sharebased awards fair value recognizes compensation service period awards expected vest fair value restricted stock based number shares granted quoted price common stock time grant fair value stock options determined using blackscholes valuation model blackscholes model requires input highly subjective assumptions including expected volatility riskfree interest rate expected life changes materially affect fair value estimate actual results future changes estimates may differ substantially current estimates income taxes management uses certain assumptions estimates determining income taxes payable refundable deferred income tax liabilities assets events recognized differently financial statements income tax returns income tax expense determining amounts requires analysis certain transactions interpretation tax laws regulations management exercises considerable judgment evaluating amount timing recognition resulting income tax liabilities assets judgments estimates reevaluated periodic basis regulatory business factors change assurance given either tax returns submitted management income tax reported consolidated financial statements adjusted either adverse rulings changes tax code assessments made internal revenue service state foreign taxing authorities company subject potential adverse adjustments including limited increase statutory federal state income tax rates permanent nondeductibility amounts currently considered deductible either future periods dependency generation future taxable income order ultimately realize deferred income tax assets fasb asc 740 company includes current deferred tax impact tax positions financial statements likely likelihood greater 50 positions sustained taxing authorities full knowledge relevant information based technical merits tax position company supports tax positions unambiguous tax law prior experience taxing authority analysis considers relevant facts circumstances regulations management must still rely assumptions estimates determine overall likelihood success proper quantification given tax position credit quality company’s delinquency net chargeoff ratios reflect among factors changes mix loans portfolio quality receivables success collection efforts bankruptcy trends general economic conditions delinquency computed basis date last full contractual payment loan known recency method basis amount past due accordance original payment terms loan known contractual method upon refinancings contractual delinquency loan measured based upon terms new agreement impacted refinanced loans classification new loan modification existing loan management closely monitors portfolio delinquency using methods measure quality companys loan portfolio probability credit losses following table classifies gross loans receivable company delinquent contractual recency basis least 61 days march 31 2020 2019 2018 approximately 796 787 790 companys loans generated refinancings outstanding loans origination new loans previous customers fiscal 2020 2019 2018 respectively refinancing represents new loan transaction present customer portion new loan proceeds used repay balance existing loan remaining portion advanced customer fiscal 2020 2019 2018 percentages company’s loan originations refinancings existing loans 669 662 659 respectively company’s refinancing policies limited state regulations cases consider customer’s payment history require customer made multiple payments loan considered refinancing considered current refinancing customer 45 days delinquent contractual basis delinquent refinancings may extended customers 45 days past due contractual basis customer completes new application manager believes customer’s ability intent repay improved company’s policy refinance delinquent loans amounts greater original amounts financed cases customer must complete new application every two years refinancings delinquent loans represented 13 11 12 company’s loan volume fiscal 2020 2019 2018 respectively chargeoffs percentage loans made category greatest loans made new borrowers least loans made former borrowers refinancings percentage total loans charged refinancings represent greatest percentage due volume loans made category following table depicts chargeoffs percent loans made category percent total chargeoffs fiscal 2020 company maintains allowance loan losses amount managements opinion adequate provide incurred losses inherent existing loan portfolio company charges current earnings provision loan losses amounts added allowance maintain levels expected cover probable incurred losses principal establishing allowance loan losses company takes consideration growth loan portfolio current levels chargeoffs current levels delinquencies current economic factors company uses mathematical calculation determine initial allowance end reporting period calculation originated managements estimate future chargeoffs used allocate expenses branch level two components calculating allowance loan losses company refers general reserve specific reserve calculation starting point time needed additional provisions added determined management ensure allowance adequate general reserve 425 gross loan portfolio specific reserve generally represents 100 loans 91 days past due recency basis including bankrupt accounts category methodology based historical data showing collection loans 91 days past due remote process performed determine adequacy allowance loan losses well considering trends current levels delinquencies chargeoff levels economic trends energy food prices primary tool used movement model recency basis considers rolling twelve months delinquency determine expected chargeoffs sum expected chargeoffs determined movement model recency basis plus amount related delinquent refinancings compared allowance resulting mathematical calculation determine adjustments required make allowance adequate management also determines adjustments needed event consolidated annual provision loan losses less total net chargeoffs management uses precision level 5 allowance loan losses compared aforementioned recency movement model determining adjustments needed companys policy charge earlier loans deemed uncollectible six months elapsed since date last full contractual payment companys chargeoff policy consistently applied changes made periods reported believe chargeoffs fiscal 2017 negatively impacted ceasing inperson visits delinquent borrowers december 2015 companys historical annual chargeoff rate past 10 years ranged 128 180 net loans management considers chargeoff policy evaluating appropriateness allowance loan losses estimate losses company uses historical information net chargeoffs average loan life method based fact many customers refinance loans prior contractual maturity average contractual loan terms approximately 12 months average loan life approximately 8 months company allowance loan losses approximated 7 months average net chargeoffs march 31 2020 management believes allowance sufficient cover estimated losses existing loans based historical chargeoffs average loan life large percentage loans charged fiscal year companys books beginning fiscal year company believes appropriate provide losses loans originated twelve months net chargeoffs needed allowance due average life loan portfolio less twelve months method employed accordance gaap following summary changes allowance loan losses years ended march 31 2020 2019 2018 1 average net loans receivable determined averaging monthend gross loans receivable less unearned interest deferred fees indicated period excluding tax advances quarterly information seasonality companys loan volume corresponding loans receivable follow seasonal trends companys highest loan demand typically occurs october december third fiscal quarter loan demand generally lowest loan repayment highest january march fourth fiscal quarter loan volume average balances typically remain relatively level remainder year seasonal trend affects quarterly operating performance corresponding fluctuations interest fee income insurance commissions earned provision loan losses recorded well fluctuations companys cash needs consequently operating results companys third fiscal quarter generally significantly lower quarters operating results fourth fiscal quarter significantly higher quarters however effects covid19 could impact typical seasonal trends following table sets forth quarterly basis certain items included companys unaudited consolidated financial statements shows number branches open fiscal years 2020 2019 recently issued accounting pronouncements see part ii item 8 financial statements supplementary data note 1summary significant accounting policies consolidated financial statements impact new accounting pronouncements liquidity capital resources company financed continues finance operations acquisitions branch expansion combination cash flows operations borrowings institutional lenders company generally applied cash flows operations fund loan volume fund acquisitions repay longterm indebtedness repurchase common stock companys gross loans receivable increased 9433 million march 31 2017 12099 million march 31 2020 net cash provided operating activities fiscal years 2020 2019 2018 2574 million 2447 million 2180 million respectively company continues believe stock repurchases viable component company’s longterm financial strategy excellent use excess cash opportunity arises however revolving credit facility limits share repurchases 50 consolidated adjusted net income fiscal year commencing fiscal year ending march 31 2017 company repurchase additional amounts shares prior written consent lenders company plans open acquire approximately 25 branches fiscal 2021 expenditures company open furnish new branches averaged approximately 41000 per branch fiscal 2020 new branches generally required 66000 673000 fund outstanding loans receivable originated first 12 months operation fiscal 2020 company opened 19 new branches merged closed 7 branches existing ones company acquired 38 branches fiscal 2020 company believes attractive opportunities acquire new branches receivables competitors acquire branches communities currently served company continue become available conditions local economies financial circumstances owners change company revolving credit facility syndicate banks revolving credit facility provides revolving borrowings lesser aggregate commitments facility b borrowing base includes 300000 letter credit 15 million subfacility june 2019 credit facility amended restated among things increase aggregate commitments 6850 million increased 4800 million provided certain conditions met ii permit company purchase equity securities make distributions respect equity securities amount 200 million june 7 2019 june 1 2020 plus 50 consolidated adjusted net income period commencing january 1 2019 subject certain restrictions iii provide process transition new benchmark interest rate libor necessary iv extend maturity date amended restated revolving credit agreement june 7 2022 v clarity convenience restate prior credit agreement amended since 2010 subject borrowing base formula company may borrow rate libor plus applicable margin 30 40 based certain ebitda related metrics set forth revolving credit agreement determined adjusted monthly basis minimum rate 40 company’s amended restated revolving credit agreement provides procedures determining replacement alternative rate event libor unavailable discontinued administrative agent elects replace libor prior discontinuation assurances whether replacement alternative rate less favorable libor intend monitor developments respect potential phasing libor work limit negative impacts could result transition away libor march 31 2020 aggregate commitments revolving credit facility 6850 million 300000 letter credit outstanding subfacility expires december 31 2020 however automatically extends one year expiration date borrowing base limitation equal product company’s eligible finance receivables less unearned finance charges insurance premiums insurance commissions b advance rate percentage ranges 79 85 based collateral performance indicator completely described amended restated revolving credit agreement administrative agent right set aside reasonable reserves available borrowing base amounts may deem appropriate including without limitation reserves respect certain regulatory events increased operational legal regulatory risk company subsidiaries year ended march 31 2020 effective interest rate including commitment fee borrowings revolving credit facility 58 company pays commitment fee equal 050 per annum daily unused portion commitments march 31 2020 4511 million outstanding facility 1802 million unused borrowing availability borrowing base limitations company’s obligations revolving credit facility together treasury management hedging obligations owing lender revolving credit facility affiliate lender required guaranteed company’s whollyowned domestic subsidiaries obligations company subsidiary guarantors revolving credit facility together treasury management hedging obligations secured firstpriority security interest substantially assets company subsidiary guarantors agreement governing company’s revolving credit facility contains affirmative negative covenants including covenants restrict ability company subsidiaries among things incur guarantee indebtedness incur liens pay dividends repurchase redeem capital stock dispose assets engage mergers consolidations make acquisitions investments redeem prepay subordinated debt amend subordinated debt documents make changes nature business engage transactions affiliates agreement also contains financial covenants including minimum consolidated net worth 3650 million december 30 2020 b 3750 million december 31 2020 ii minimum fixed charge coverage ratio 225 10 fiscal quarters ending march 31 2020 june 30 2020 september 30 2020 b 275 10 fiscal quarter thereafter iii maximum ratio total debt consolidated adjusted net worth 20 10 iv end fiscal quarter provision loan losses four fiscal quarters ending shall equal exceed net loan charge corresponding period shortfalls required deducted determination net income consolidated net worth v maximum collateral performance indicator 24 end calendar month agreement allows company incur subordinated debt matures termination date revolving credit facility contains specified subordination terms subject limitations amount imposed financial covenants agreement collateral performance indicator equal sum threemonth rolling average rate receivables least sixty days past due b eightmonth rolling average net chargeoff rate company compliance covenants march 31 2020 believe covenants materially limit business expansion strategy agreement contains events default including without limitation nonpayment principal interest obligations violation covenants misrepresentation crossdefault debt bankruptcy insolvency events judgments certain erisa events actual asserted invalidity loan documentation invalidity subordination provisions subordinated debt certain changes control company occurrence certain regulatory events including entry stay order judgment ruling similar event related company’s subsidiaries’ originating holding pledging collecting enforcing eligible finance receivables material company subsidiary remains unvacated undischarged unbonded unstayed appeal otherwise period 60 days date entry reasonably likely cause material adverse change determined violation fcpa occurred described part item 3 “legal proceedingsmexico investigation” violation may give rise event default credit agreement violation material adverse effect business operations properties assets condition financial otherwise amount settlement penalties fines payments resulted company failing satisfy financial covenants company believes cash flow operations borrowings revolving credit facility sources adequate fund expected cost opening acquiring new branches including funding initial operating losses new branches funding loans receivable originated branches companys branches next 12 months foreseeable future beyond except otherwise discussed report including limited discussions part 1 item 1a risk factors supplemented subsequent disclosures information company files furnishes sec time management currently aware trends demands commitments events uncertainties believes could result could reasonably likely result material adverse effect company’s liquidity following table summarizes company’s contractual obligations period share repurchase program march 12 2020 board directors authorized company repurchase 300 million company’s outstanding common stock inclusive amount remains available repurchase prior repurchase authorizations march 31 2020 company 226 million aggregate remaining repurchase capacity timing actual number shares common stock repurchased depend variety factors including stock price corporate regulatory requirements restrictions revolving credit facility market economic conditions company continues believe stock repurchases viable component company’s longterm financial strategy excellent use excess cash opportunity arises however revolving credit facility limits share repurchases 200 million june 7 2019 june 1 2020 plus 50 consolidated adjusted net income period commencing january 1 2019 subject certain restrictions first priority ensure enough capital fund loan growth extent excess capital may repurchase stock appropriate authorized board directors march 31 2020 companys debt outstanding 4511 million shareholders equity 4120 million resulting debttoequity ratio 1110 management continue monitor companys debttoequity ratio committed maintaining debt level allow company continue execute business objectives putting undue stress consolidated balance sheet inflation company believe inflation within reasonably anticipated rates materially adverse effect financial condition although inflation would increase company’s operating costs absolute terms company expects decrease value money would result increase size loans demanded customer base reasonable anticipate change customer preference would result increase total loan receivables increase absolute revenues generated larger amount loans receivable company believes increase absolute revenues offset increase operating costs addition company’s loans relatively short contractual term average life unlikely loans made given point time repaid significantly inflated dollars legal matters time company involved litigation relating claims arising operations normal course business see part item 3 “legal proceedings” note 16 audited consolidated financial statements discussion legal matters item 7aitem 7 management’s discussion analysis financial condition results operations information contained caption “management’s discussion analysis financial condition results operations” annual report incorporated herein reference response item 7 item 7aitem 7 management’s discussion analysis financial condition results operations general companys financial performance continues dependent large part upon growth outstanding loans receivable ongoing introduction new products services marketing customer base maintenance loan quality acceptable levels operating expenses since march 31 2004 gross loans receivable increased 167 annual compounded rate 3101 million 6712 million march 31 2009 increase reflects higher volume loans generated companys existing offices contribution loans generated new offices opened acquired period fiveyear period company grown 470 offices 944 offices march 31 2009 fiscal 2010 company plans open acquire approximately 30 new offices united states 15 new offices mexico company attempts identify new products services marketing customer base addition new insurancerelated products introduced selected states last several years company sells finances electronic items appliances existing customer base many states operates program called “world class buying club” total loan volume program 130 million fiscal 2009 compared 162 million fiscal 2008 world class buying club represents less 2 company’s total loan volume companys paradata financial systems subsidiary provides data processing systems 107 separate finance companies including company currently supports approximately 1465 individual branch offices 44 states mexico paradata’s revenue highly dependent upon ability attract new customers often requires substantial lead time result revenue may fluctuate greatly year net revenues system sales support amounted 20 million 22 million 25 million fiscal 2009 2008 2007 respectively paradata’s net revenue company continue fluctuate year basis paradata continues provide stateoftheart data processing support company’s inhouse integrated computer system substantially reduced cost company also includes product line larger balance lower risk lower yielding individual consumer loans typically average 1000 3000 terms generally 18 24 months compared smaller loans average 300 1000 terms generally 8 12 months company offers larger loans states except texas profitable lending criteria strategy additionally company purchased years numerous larger loan offices made several bulk purchases larger loans receivable march 31 2009 larger loan category accounted approximately 1914 million gross loans receivable 227 increase balance outstanding march 31 2008 end current fiscal year portfolio 285 total loan balances slight increase previous year mix 260 management believes loans provide lower expense loss ratios thus provide positive contributions company offers income tax return preparation access refund anticipation loan program offices based results test company expanded program fiscal 2000 substantially offices company prepared approximately 63000 65000 60000 returns fiscal years 2009 2008 2007 respectively net revenue generated company program fiscal 2009 amounted approximately 99 million company believes profitable business provides beneficial service existing customer base plans continue promote expand program future following table sets forth certain information derived companys consolidated statements operations balance sheets well operating data ratios periods indicated 1 average gross loans receivable determined averaging monthend gross loans receivable indicated period 2 average loans receivable determined averaging monthend gross loans receivable less unearned interest deferred fees indicated period 3 operating margin computed total revenues less provision loan losses general administrative expenses percentage total revenues described “ recently issued accounting pronouncements convertible debt instruments” first quarter fiscal 2010 required adopt fasb staff position apb 141 “accounting convertible debt instruments may settled cash upon conversion including partial cash settlement” “fsp apb 141” apply retrospectively periods presented cumulative effect adjustment made earliest period presented adoption fsp apb 141 affect fiscal 2009 fiscal 2008 consolidated statements operations balance sheets reported future periods extent described note 1 summary significant accounting policies part ii item 8 report comparison fiscal 2009 versus fiscal 2008 net income 607 million fiscal 2009 145 increase 530 million earned fiscal 2008 increase resulted increase operating income revenues less provision loan losses general administrative expenses 87 million 88 reduction income tax effective rate reduction interest expense total revenues increased 3937 million fiscal 2009 477 million 138 increase 3460 million fiscal 2008 revenues 727 offices open throughout fiscal years increased 77 march 31 2009 company 944 offices operation increase 106 offices march 31 2008 interest fee income fiscal 2009 increased 390 million 133 fiscal 2008 increase resulted increase 603 million 141 average net loans receivable two fiscal years increase average loans receivable attributable company acquiring approximately 91 million net loans internal growth fiscal 2009 internal growth increased company opened 98 new offices average loan balance increased 877 917 insurance commissions income increased 87 million 162 two fiscal years insurance commissions increased 20 million 67 result increase loan volume states credit insurance sold income increased 66 million 286 two years primarily due 15 million gain sale foreign currency option 55 million gain extinguishment 15 million par value convertible notes see note 8 discussion regarding extinguishment debt increase partially offset approximately 08 million loss related interest rate swap provision loan losses fiscal 2009 increased 179 million 266 previous year increase resulted combination increases allowance loan losses amount loans charged net chargeoffs fiscal 2009 amounted 811 million 309 increase 620 million charged fiscal 2008 net chargeoffs percentage average loans increased 145 167 comparing two annual periods believe 22 percentage point increase resulted difficult economic environment higher energy cost customers faced delinquencies recency basis increased 26 27 contractual basis increased 40 42 march 31 2008 march 31 2009 respectively general administrative expenses fiscal 2009 increased 210 million 117 previous fiscal year increase due primarily costs associated new offices opened acquired fiscal year general administrative expenses divided average open offices remained flat comparing two fiscal years overall general administrative expenses percent total revenues decreased 518 fiscal 2008 509 fiscal 2009 decrease resulted management’s ongoing monitoring control expenses interest expense decreased 12 million 102 fiscal 2009 compared previous fiscal year result decrease interest rates partially offset increase average debt outstanding 121 average interest rates decreased 54 fiscal 2008 44 fiscal 2009 income tax expense increased 22 million 63 primarily increase pretax income decrease effective rate 396 378 result prior year tax examination discussed note 13 consolidated financial statements time early predict outcome tax issue future recoverability charge tax issue resolved company expects accrue approximately 40000 per quarter interest penalties comparison fiscal 2008 versus fiscal 2007 net income 530 million fiscal 2008 106 increase 479 million earned fiscal 2007 increase resulted increase operating income 125 million 144 partially offset increase interest expense income taxes total revenues increased 3460 million fiscal 2008 537 million 184 increase 2923 million fiscal 2007 revenues 645 offices open throughout fiscal years increased 89 march 31 2008 company 838 offices operation increase 106 offices march 31 2007 interest fee income fiscal 2008 increased 455 million 184 fiscal 2007 increase resulted increase 685 million 191 average net loans receivable two fiscal years increase average loans receivable attributable company acquiring approximately 31 million net loans internal growth fiscal 2008 internal growth increased company opened 95 new offices average loan balance increased 837 877 insurance commissions income increased 83 million 183 two fiscal years insurance commissions increased 60 million 245 result increase loan volume states credit insurance sold income increased 23 million 110 two years primarily due increase fees received income tax return preparation 15 million increase motor club product sales 11 million 08 million increase world class buying club sales increase partially offset 18 million loss related interest rate swap provision loan losses fiscal 2008 increased 156 million 301 previous year increase resulted combination increases allowance loan losses amount loans charged net chargeoffs fiscal 2008 amounted 620 million 298 increase 477 million charged fiscal 2007 net chargeoffs percentage average loans increased 133 145 comparing two annual periods increase mainly attributed change bankruptcy laws decreased number bankruptcy filings fiscal 2007 however fiscal 2008 bankruptcy chargeoffs returned historical levels resulted fiscal 2008 net chargeoffs line historical losses 148 2006 146 2005 147 2004 146 2003 delinquencies recency basis increased 22 26 contractual basis increased 36 40 march 31 2007 march 31 2008 respectively general administrative expenses fiscal 2008 increased 256 million 167 previous fiscal year increase due primarily costs associated new offices opened acquired fiscal year general administrative expenses divided average open offices decreased 06 comparing two fiscal years overall general administrative expenses percent total revenues decreased 526 fiscal 2007 518 fiscal 2008 interest expense increased 20 million 206 fiscal 2008 compared previous fiscal year result increase average debt outstanding 402 offset decrease average interest rates 63 fiscal 2007 54 fiscal 2008 income tax expense increased 54 million 186 primarily increase pretax income charge 15 million related tax examination state jurisdiction completed examinations issued proposed assessment tax years 2001 2006 consideration proposed assessment net income fiscal 2008 reduced charge 15 million total gross unrecognized tax benefits increased 23 million fiscal 2008 result examination result company’s effective income tax rate increased 396 year ended march 31 2008 379 year ended march 31 2007 critical accounting policies company’s accounting reporting policies accordance us generally accepted accounting principles conform general practices within finance company industry significant accounting policies used preparation consolidated financial statements discussed note 1 consolidated financial statements certain critical accounting policies involve significant judgment company’s management including use estimates assumptions affect reported amounts assets liabilities revenues expenses result changes estimates assumptions could significantly affect company’s financial position results operations company considers policies regarding allowance loan losses sharebased compensation critical accounting policies due significant degree management judgment involved allowance loan losses company developed policies procedures assessing adequacy allowance loan losses take consideration various assumptions estimates respect loan portfolio company’s assumptions estimates may affected future changes economic conditions among factors additional discussion concerning allowance loan losses see “credit quality” sharebased compensation company measures compensation cost sharebased awards fair value recognizes compensation service period awards expected vest fair value restricted stock based number shares granted quoted price common stock fair value stock options determined using blackscholes valuation model blackscholes model requires input highly subjective assumptions including expected volatility riskfree interest rate expected life changes materially affect fair value estimate addition estimation sharebased awards ultimately vest requires judgment extent actual results updated estimates differ current estimates amounts recorded cumulative adjustment period estimates revised company considers many factors estimating expected forfeitures including types awards employee class historical experience actual results future changes estimates may differ substantially current estimates credit quality company’s delinquency net chargeoff ratios reflect among factors changes mix loans portfolio quality receivables success collection efforts bankruptcy trends general economic conditions delinquency computed basis date last full contractual payment loan known recency method basis amount past due accordance original payment terms loan known contractual method management closely monitors portfolio delinquency using methods measure quality companys loan portfolio probability credit losses following table classifies gross loans receivable company delinquent recency contractual basis least 61 days march 31 2009 2008 2007 loans charged earlier loans deemed uncollectible six months elapsed since date last full contractual payment company’s chargeoff policy consistently applied significant changes made policy periods reported management considers chargeoff policy evaluating appropriateness allowance loan losses company experienced increase contractual delinquency 40 march 31 2008 42 march 31 2009 delinquency rate recency basis also increased 26 end fiscal 2008 27 end current fiscal year chargeoffs percent average loans increased 145 fiscal 2008 167 fiscal 2009 fiscal 2009 approximately 840 company’s loans generated refinancings outstanding loans origination new loans previous customers refinancing represents new loan transaction present customer portion new loan proceeds used repay balance existing loan remaining portion advanced customer fiscal 2009 2008 2007 percentages company’s loan originations refinancings existing loans 750 733 743 respectively company’s refinancing policies limited state regulations cases consider customer’s payment history require customer made least two payments loan considered refinancing considered current refinancing customer 45 days delinquent contractual basis delinquent refinancings may extended customers 45 days past due contractual basis customer completes new application manager believes customer’s ability intent repay improved company’s policy refinance delinquent loans amounts greater original amounts financed cases customer must complete new application every two years fiscal 2009 delinquent refinancings represented 21 company’s total loan volume compared 19 fiscal 2008 chargeoffs percentage loans made category greatest loans made new borrowers less loans made former borrowers refinancings expected due payment history experience available repeat borrowers however percentage total loans charged refinancings represent greatest percentage due volume loans made category following table depicts chargeoffs percent loans made category percent total chargeoffs fiscal 2009 company maintains allowance loan losses amount management’s opinion adequate cover losses inherent existing loan portfolio company charges current earnings provision loan losses amounts added allowance maintain levels expected cover probable losses principal establishing allowance loan losses company takes consideration growth loan portfolio mix loan portfolio current levels chargeoffs current levels delinquencies current economic factors accordance statement accounting standards 5 “accounting contingencies” sfas 5 company accrues estimated loss probable reasonably estimated probable losses existing portfolio estimate losses company uses historical information net chargeoffs average loan life method based fact many customers refinance loans prior contractual maturity average contractual loan terms approximately nine months average loan life approximately four months based method company allowance loan losses approximated six months average net chargeoffs march 31 2009 2008 2007 therefore year end company allowance loan losses covered estimated losses existing loans based historical chargeoffs average lives addition entire loan portfolio turns approximately 3 times typical twelvemonth period therefore large percentage loans charged fiscal year company’s books beginning fiscal year company believes appropriate provide losses loans originated twelve months net chargeoffs needed allowance method employed accordance generally accepted accounting principles company records acquired loans fair value based current interest rates less allowance uncollectibility collection costs statement position 033 sop 033 “accounting certain loans debt securities acquired transfer” adopted company april 1 2005 sop 033 prohibits carryover creation valuation allowances initial accounting loans acquired transfer within scope sop management believes loan shown deterioration 60 days delinquent company believes loans acquired since adoption sop 033 shown evidence deterioration credit quality since origination therefore within scope sop 033 consideration paid acquired loans 60 days delinquent years ended march 31 2009 2008 2007 company recorded adjustments approximately 05 million 01 million 09 million respectively allowance loan losses connection acquisitions accordance generally accepted accounting principles adjustments represent allowance loan losses acquired loans within scope sop 033 company believes allowance loan losses adequate cover losses existing portfolio march 31 2009 following summary changes allowance loan losses years ended march 31 2009 2008 2007 1 average loans receivable determined averaging monthend gross loans receivable less unearned interest deferred fees indicated period quarterly information seasonality companys loan volume corresponding loans receivable follow seasonal trends companys highest loan demand typically occurs october december third fiscal quarter loan demand generally lowest loan repayment highest january march fourth fiscal quarter loan volume average balances typically remain relatively level remainder year seasonal trend affects quarterly operating performance corresponding fluctuations interest fee income insurance commissions earned provision loan losses recorded well fluctuations companys cash needs consequently operating results companys third fiscal quarter generally significantly lower quarters operating results fourth fiscal quarter significantly higher quarters following table sets forth quarterly basis certain items included companys unaudited consolidated financial statements shows number offices open fiscal years 2009 2008 recently issued accounting pronouncements business combinations december 2007 financial accounting standards board issued sfas 141 revised 2007 business combinations “sfas 141r” replaces sfas 141 business combinations sfas 141r requires acquirer recognize assets acquired liabilities assumed noncontrolling interest acquiree acquisition date measured fair values date limited exceptions sfas 141r also requires acquisitionrelated costs restructuring costs acquirer expected obligated incur acquisition date recognized separately business combination addition sfas 141r amends sfas 109 accounting income taxes require acquirer recognize changes amount deferred tax benefits recognizable business combination either income continuing operations period combination directly contributed capital sfas 141r applies prospectively business combinations fiscal years beginning december 15 2008 would therefore impact accounting future acquisitions beginning fiscal 2010 disclosures derivative instruments hedging activities statement 161 amends fasb statement 133 “accounting derivative instruments hedging activities“ requires companies derivative instruments disclose information company uses derivative instruments derivative instruments related hedged items accounted statement 133 derivative instruments related hedged items affect companys financial position financial performance cash flows required disclosures include fair value derivative instruments gains losses tabular format information creditriskrelated contingent features derivative agreements counterparty credit risk companys strategies objectives using derivative instruments statement expands current disclosure framework statement 133 statement 161 effective prospectively periods beginning november 15 2008 see note 9 consolidated financial statements fair value option financial assets financial liabilities february 15 2007 fasb issued sfas 159 “sfas 159” “the fair value option financial assets financial liabilities” allows entity irrevocable option elect fair value initial subsequent measurement certain financial assets liabilities contractbycontract basis subsequent changes fair value financial assets liabilities would recognized earnings occur sfas 159 establishes certain additional disclosure requirements sfas 159 effective first fiscal period beginning november 15 2007 adoption standard material impact consolidated financial statements convertible debt instruments may 9 2008 fasb issued fasb staff position apb 141 “accounting convertible debt instruments may settled cash upon conversion including partial cash settlement” “fsp apb 141” fsp apb 141 applies convertible debt instrument conversion may settled wholly partly cash requires cashsettleable convertibles separated debt equity components issuance prohibits use fairvalue option instruments fsp apb 141 effective first fiscal period beginning december 15 2008 must applied retrospectively periods presented cumulative effect adjustment made earliest period presented required adopt fsp apb 141 first quarter fiscal 2010 see item 8 financial statements supplementary data note 1 summary significant accounting policies description impact consolidated financial statements instruments indexed entity’s stock june 2008 fasb ratified eitf issue 075 “determining whether instrument embedded feature indexed entity’s stock” “eitf 075” eitf 075 provides new twostep model applied freestanding financial instrument embedded feature characteristics derivative paragraphs 69 statement 133 “accounting derivative instruments hedging activities” “sfas 133” determining whether financial instrument embedded feature indexed issuer’s stock thus able qualify sfas 133 paragraph 11a scope exception also clarifies impact foreign currency denominated strike prices marketbased employee stock option valuation instruments evaluation eitf 075 also applies freestanding financial instrument potentially settled entity’s stock regardless whether instrument characteristics derivative paragraphs 69 sfas 133 purposes determining whether instrument within scope eitf 0019 “accounting derivative financial instruments indexed potentially settled company’s stock” eitf 075 effective financial statements issued fiscal years beginning december 15 2008 interim periods within fiscal years early adoption prohibited company process assessing effect adoption eitf 075 consolidated financial statements useful life intangible assets april 2008 fasb issued fasb staff position fas 1423”determination useful life intangible assets” “fsp fas 1423” fsp fas 1423 applies recognized intangible assets guidance restricted estimating useful life recognized intangible assets fsp fas 1423 effective first fiscal period beginning december 15 2008 must applied prospectively intangible assets acquired effective date required adopt fsp fas 1423 intangible assets acquired beginning first quarter fiscal 2010 liquidity capital resources company financed continues finance operations acquisitions office expansion combination cash flow operations borrowings institutional lenders company generally applied cash flow operations fund increasing loan volume fund acquisitions repay longterm indebtedness repurchase common stock companys gross loans receivable increased 3101 million march 31 2004 6712 million march 31 2009 net cash provided operating activities fiscal years 2009 2008 2007 1539 million 1360 million 1101 million respectively companys primary ongoing cash requirements relate funding new offices acquisitions overall growth loans outstanding repayment repurchase longterm indebtedness repurchase common stock november 2007 february 2008 board directors authorized company increase share repurchase program additional 10 million respectively march 31 2009 6454144 shares repurchased since 2000 respective aggregate purchase price approximately 1497 million fiscal 2009 company repurchased 288700 shares 78 million fiscal 2009 company repurchased 150 million par value convertible senior subordinated notes payable company believes stock repurchases debt repurchases viable component company’s longterm financial strategy excellent use excess cash opportunity arises addition company plans open acquire approximately 30 branches united states 15 branches mexico fiscal 2010 expenditures company open furnish new offices generally averaged approximately 25000 per office fiscal 2009 new offices also required 100000 400000 fund outstanding loans receivable originated first 12 months operation company acquired net 11 offices number loan portfolios competitors 7 states 14 separate transactions fiscal 2009 gross loans receivable purchased transactions approximately 109 million aggregate dates purchase company believes attractive opportunities acquire new offices receivables competitors acquire offices communities currently served company continue become available conditions local economies financial circumstances owners change company 1870 million base credit facility syndicate banks addition base revolving credit commitment 30 million seasonal revolving credit commitment available november 15 year march 31 immediately succeeding year cover increase loan demand period credit facility expire september 30 2010 funds borrowed revolving credit facility bear interest companys option either agent banks prime rate per annum libor rate plus 180 per annum march 31 2009 interest rate borrowings revolving credit facility 325 company pays commitment fee equal 0375 per annum daily unused portion revolving credit facility amounts outstanding revolving credit facility may exceed specified percentages eligible loans receivable march 31 2009 1133 million outstanding facility 737 million unused borrowing availability borrowing base limitations excluding seasonal line expires march 31 companys credit agreements contain number financial covenants including minimum net worth fixed charge coverage requirements credit agreements also contain certain covenants including covenants impose limitations company respect declaring paying dividends making distributions acquiring common preferred stock warrants options ii redeeming purchasing prepaying principal interest subordinated debt iii incurring additional indebtedness iv entering merger consolidation sale substantial assets subsidiaries company compliance agreements march 31 2009 believe agreements materially limit business expansion strategy october 2 2006 company amended senior credit facility connection issuance 110 million aggregate principal amount 3 convertible senior subordinated notes due october 1 2011 see note 7 consolidated financial statements included report information regarding transaction following table summarizes company’s contractual cash obligations period thousands march 31 2009 company’s contractual obligations relating fin 48 included unrecognized tax benefits 39 million expected settled greater one year settlement obligation expected excess one year precise timing settlement indeterminable company believes cash flow operations borrowings revolving credit facility adequate next twelve months foreseeable future thereafter fund expected cost opening acquiring new offices including funding initial operating losses new offices funding loans receivable originated offices companys offices except otherwise discussed report including part 1 item 1a “risk factors” management currently aware trends demands commitments events uncertainties believes could result could reasonably likely result company’s liquidity increasing decreasing material way time company needed obtained expects continue need periodic basis increase borrowing limits revolving credit facility company successfully obtained increases past anticipates able future need arises however assurance additional funding available reasonable terms needed see part item 1a “risk factors” discussion risks contingencies could affect business financial condition liquidity quantitative qualitative disclosures market risk interest rate risk march 31 2009 company’s financial instruments consist following cash loans receivable senior notes payable convertible senior subordinated notes payable interest rate swap fair value approximates carrying value instruments except convertible senior subordinated notes payable fair value 61701550 represents quoted market price loans receivable originated prevailing market rates average life approximately four months given shortterm nature loans continually repriced current market rates company’s outstanding debt revolving credit facility 1133 million march 31 2009 interest borrowings facility based company’s option prime rate libor plus 180 based outstanding balance march 31 2009 change 1 libor interest rate would cause change interest expense approximately 633000 annual basis october 2005 company entered interest rate swap economically hedge variable cash flows associated 30 million liborbased borrowings swap converted 30 million variable rate onemonth libor fixed rate 4755 period five years december 2008 company entered 20 million interest rate swap convert variable rate one month libor fixed rate 24 accordance sfas 133 company records derivatives fair value assets liabilities consolidated balance sheets since company utilizing hedge accounting sfas 133 changes fair value derivative instrument included income march 31 2009 fair value interest rate swap liability 24 million included liabilities change fair value beginning year recorded unrealized loss income approximately 773000 october 10 2006 company issued 110 million convertible senior subordinated notes due october 1 2011 “convertible notes” qualified institutional brokers accordance rule 144a securities act 1933 interest convertible notes fixed 3 payable semiannually arrears april 1 october 1 year commencing april 1 2007 fiscal 2009 company repurchased cancelled 150 million convertible senior subordinated notes see note 8 consolidated financial statements included report information regarding repurchases foreign currency exchange rate risk september 2005 company began opening offices mexico local businesses utilize mexican peso functional currency consolidated financial statements company denominated us dollars therefore subject fluctuation us dollar mexican peso foreign exchange rate changes international revenues approximately 31 total revenues year ended march 31 2009 net loans denominated mexican pesos approximately 120 million usd march 31 2009 company’s foreign currency exchange rate exposures may change time business practices evolve could material effect financial results may continue periodtoperiod fluctuations relative portions mexican revenues earnings affected fluctuations value us dollar foreign currencies analysis performed assuming hypothetical 10 increase decrease value us dollar relative mexican peso company’s transactions mexico denominated march 31 2009 analysis indicated market movements would material effect consolidated financial statements actual effects consolidated financial statements future may differ materially results analysis year ended march 31 2009 company continue monitor assess effect currency fluctuations may institute hedging alternatives inflation company believe inflation material adverse effect financial condition results operations primary impact inflation operations company reflected increased operating costs increases operating costs would adversely affect companys operations consumer lending laws two eleven states company operates allow indexing maximum loan amounts consumer price index provisions allow company make larger loans existing interest rates states could partially offset potential increase operating costs due inflation legal matters march 31 2009 company certain subsidiaries named defendants various legal actions arising normal business activities damages various amounts claimed although amount ultimate liability respect matters cannot determined company believes liability material adverse effect company’s consolidated financial condition results operations taken whole item 7aitem 7 management’s discussion analysis financial condition results operations general companys financial performance continues dependent large part upon growth outstanding loans receivable maintenance loan quality acceptable levels operating expenses since march 31 2015 gross loans receivable increased 265 annual compounded rate 1016 billion 1128 billion march 31 2019 believe able improve gross loans receivable growth rates improved marketing processes analytics fouryear period beginning march 31 2015 company expanded size 1172 branches 1193 branches march 31 2019 fiscal 2020 company currently plans open acquire approximately 50 new branches evaluate acquisitions opportunities arise company offers income tax return preparation electronic filing program branches company prepared approximately 91000 77000 72000 returns fiscal years 2019 2018 2017 respectively revenues company’s tax preparation business amounted approximately 215 million 277 increase 168 million earned fiscal 2018 following table sets forth certain information derived companys consolidated statements operations balance sheets well operating data ratios periods indicated 1 average gross loans receivable determined averaging monthend gross loans receivable indicated period excluding tax advances 2 net loans receivable defined gross loans receivable less unearned interest deferred fees 3 average net loans receivable determined averaging monthend gross loans receivable less unearned interest deferred fees indicated period excluding tax advances 4 operating income computed total revenue less provision loan losses general administrative expenses comparison fiscal 2019 versus fiscal 2018 disclosed sold mexico operations effective july 1 2018 result sale classified mexico business discontinued operations statements operations balance sheets applicable periods net income continuing operations fiscal 2019 739 million 505 increase 491 million earned fiscal 2018 increase net income continuing operations primarily due 154 million decrease income tax expense related implementation tax cuts jobs act tcja prior year well increase average net loans receivable current period net income fiscal 2019 372 million 306 decrease 537 million earned fiscal 2018 recognized 390 million impairment loss investment mexico operations first quarter fiscal 2019 accordance gaap testing subsequent recognition impairment triggered change classification mexico operations continuing operations held sale total impairment loss 313 million directly attributable cumulative translation loss investment stemming devaluation mexican peso relative us dollar since date investment operating income revenues less provision loan losses general administrative expenses continuing operations decreased 81 million total revenues continuing operations increased 419 million 83 5445 million fiscal 2019 5027 million fiscal 2018 revenues continuing operations 1125 branches open throughout fiscal years increased 77 march 31 2019 company 1193 branches operation increase 16 branches march 31 2018 increase result opening 25 new branches acquiring 17 branches partially offset merging 26 branches existing branches interest fee income continuing operations fiscal 2019 increased 335 million 77 fiscal 2018 increase primarily due corresponding increase average earning loans net loans outstanding march 31 2019 increased 123 compared march 31 2018 average net loans outstanding increased 95 fiscal 2019 compared fiscal 2018 insurance commissions income continuing operations increased 84 million 126 two fiscal years insurance commissions continuing operations increased 32 million 77 comparing two fiscal years due increase loan volume states offer insurance products income continuing operations increased 52 million 208 comparing two fiscal years primarily due increase tax return preparation income 47 million provision loan losses continuing operations fiscal 2019 increased 308 million 262 previous year approximately 174 million increase attributed growth portfolio year approximately 134 million attributed increase chargeoff delinquency rates year accounts 91 days past due represented 38 34 loan portfolio recency basis march 31 2019 march 31 2018 respectively companys yearoveryear chargeoff ratio net chargeoffs percentage average net loans receivable increased 149 year ended march 31 2018 161 year ended march 31 2019 customers new borrowers world finance less 6 months since first origination time current loan percentage yearend portfolio grown 394 year new world customers account 17 portfolio increase 137 last year average 125 prior 5 fiscal years 20132017 customers less 1 year tenure percentage yearend portfolio grown 332 year account 23 portfolio increased weighting new borrowers riskiest customer type portfolio contributed increase delinquency chargeoff rates overall portfolio experienced increase portfolio weighting towards less tenured customers last 18 months seen increase chargeoff rates comparing less tenured customer segment prior years chargeoff ratios past ten fiscal years averaged 147 high 162 fiscal 2017 low 128 fiscal 2015the following table presents companys chargeoff ratios since 2002 2009 fiscal 2009 companys net chargeoff rate increased 167 highest company’s history due difficult economic environment put substantial pressure customers ability repay loans 2015 fiscal 2015 companys net chargeoff rate decreased 128 net chargeoff rate benefited change branch level incentives year allows managers continue collection efforts accounts 91 days past due without monthly bonus negatively impacted expected change resulted increase accounts 91 days past due fewer chargeoffs fiscal 2015 estimate net chargeoff rate would approximately 140 fiscal 2015 excluding impact change general administrative continuing operations expenses fiscal 2019 increased 192 million 71 previous fiscal year general administrative expenses continuing operations divided average open branches increased 54 comparing two fiscal years overall general administrative expenses continuing operations percent total revenues continuing operations decreased 529 fiscal 2019 535 fiscal 2018 change general administrative expense continuing operations explained greater detail personnel expense continuing operations totaled 1808 million fiscal 2019 163 million 99 increase fiscal 2018 increase largely due 117 million increase sharebased compensation driven longterm incentive plan director equity awards granted year prior year included 25 million severancerelated expense stemming separation agreement company’s former president chief executive officer company also recorded 18 million expense related change company’s paid time policy prior year regular payroll expense increased 46 million 41 year occupancy equipment expense continuing operations totaled 413 million fiscal 2019 22 million 56 increase fiscal 2018 occupancy equipment expense generally function number branches company open throughout year fiscal 2019 average expense per branch increased 347 thousand 334 thousand fiscal 2018 advertising expense continuing operations totaled 225 million fiscal 2019 13 million 61 increase fiscal 2018 increase primarily due consulting fees related brand research well increased spending direct mail digital campaigns amortization intangible assets continuing operations totaled 15 million fiscal 2019 05 million 542 increase fiscal 2018 primarily relates corresponding increase total intangible assets comparative periods due acquisition activity current prior year expense continuing operations totaled 422 million fiscal 2019 12 million 27 decrease fiscal 2018 decrease primarily due decrease expense related companys mexico investigation began march 2017 interest expense continuing operations decreased 12 million 61 fiscal 2019 compared previous fiscal year result decrease average debt outstanding 160 partially offset increase effective interest rate 60 67 income tax expense continuing operations decreased 318 million 665 fiscal 2019 compared prior fiscal year effective tax rate decreased 178 fiscal 2019 compared 493 fiscal 2018 decrease primarily due 105 million charge tax expense related net impact revaluing us deferred tax assets liabilities 49 million charge tax expense related foreign transition tax prior fiscal year combined 103 million decrease tax expense due reduction companys us federal statutory income tax rate 3155 21 8500 thousand decrease tax expense related adjustment revaluing us deferred tax assets liabilities due additional analysis change estimate recognition state tax credits 37 million fiscal 2019 comparison fiscal 2018 versus fiscal 2017 net income fiscal 2018 537 million 271 decrease 736 million earned fiscal 2017 operating income revenues less provision loan losses general administrative expenses continuing operations decreased 115 million decreases net income operating income continuing operations primarily driven increases personnel expense 59 million advertising expense 46 million expense 128 million partially offset increase total revenues 118 million net income also impacted 154 million increase income tax expense related tcja 24 million decrease interest expense total revenues continuing operations increased 118 million 24 5027 million fiscal 2018 4908 million fiscal 2017 revenues continuing operations 1127 branches open throughout fiscal years increased 21 march 31 2018 company 1177 branches operation increase 8 branches march 31 2017 increase result opening 21 new branches acquiring 5 branches partially offset merging 18 branches existing branches interest fee income continuing operations fiscal 2018 increased 78 million 18 fiscal 2017 increase primarily due corresponding increase average earning loans net loans outstanding march 31 2018 increased 62 compared march 31 2017 average net loans outstanding increased 22 fiscal 2018 compared fiscal 2017 interest fee income year also benefited increase loan volumes approximately 53 insurance commissions income continuing operations increased 40 million 64 two fiscal years insurance commissions continuing operations increased 11 million 27 comparing two fiscal years due increase loan volume states offer insurance product income continuing operations increased 29 million 131 comparing two fiscal years due mainly increase tax return preparation income 21 million provision loan losses continuing operations fiscal 2018 decreased 15 million 12 previous year decrease resulted decrease amount loans fully reserved year net chargeoffs fiscal 2018 amounted 1122 million 60 decrease 1194 million charged fiscal 2017 accounts 61 days past due represented 58 53 loan portfolio recency basis 75 70 portfolio contractual basis march 31 2018 march 31 2017 respectively companys chargeoff ratio net chargeoffs percentage average net loans receivable decreased 162 year ended march 31 2017 148 year ended march 31 2018 companys fiscal 2018 chargeoff ratio 148 consistent historical chargeoff ratios chargeoff ratios past ten fiscal years averaged 147 high 167 fiscal 2009 low 128 fiscal 2015 general administrative expenses continuing operations fiscal 2018 increased 248 million 102 previous fiscal year general administrative expenses divided average open branches increased 103 comparing two fiscal years overall general administrative expenses percent total revenues increased 535 fiscal 2018 498 fiscal 2017 change general administrative expense explained greater detail personnel expense continuing operations totaled 1645 million fiscal 2018 59 million 37 increase fiscal 2017 increase primarily driven increase regular payroll related annual pay increases changes headcount well increased incentive payments due improved performance 25 million severancerelated expense stemming separation agreement company’s former ceo 18 million expense related change company’s paid time policy accelerated accrual timeoff within calendar year policy change became effective january 1 2018 occupancy equipment expense continuing operations totaled 391 million fiscal 2018 10 million 27 increase fiscal 2017 occupancy equipment expense generally function number branches company open throughout year fiscal 2018 average expense per branch increased slightly 332 thousand 326 thousand fiscal 2017 advertising expense continuing operations totaled 212 million fiscal 2018 46 million 280 increase fiscal 2017 company identified opportunities customer acquisition key time frames effort capitalize opportunities increased advertising resulted advertising campaigns funded fiscal 2018 compared prior year amortization intangible assets continuing operations totaled 10 million fiscal 2018 05 million 1022 increase fiscal 2017 primarily relates corresponding increase total intangible assets comparative periods due acquisitions fiscal 2017 fiscal 2018 expense continuing operations totaled 433 million fiscal 2018 128 million 417 increase fiscal 2017 increase primarily due approximately 72 million expense related companys mexico investigation began march 2017 23 million increase debit card fees prior year debit card fees continued increase customers take advantage companys paybyphone online payment options also increased investment information technology interest expense continuing operations decreased 24 million 112 fiscal 2018 compared previous fiscal year result decrease average debt outstanding 137 partially offset increase effective interest rate 58 60 income tax expense continuing operations increased 94 million 244 fiscal 2018 compared fiscal 2017 effective tax rate increased 493 fiscal 2018 compared 362 fiscal 2017 increase primarily due 105 million charge tax expense related net impact revaluing us deferred tax assets liabilities 49 million charge tax expense related foreign transition tax fiscal 2018 increase partially offset 34 million decrease tax expense due reduction companys us federal statutory income tax rate 35 3155 fiscal 2018 mexico exit previously disclosed company sold issued outstanding capital stock equity interest two mexico subsidiaries wac de mexico swac purchase price mxn826795050 effective july 1 2018 company subsequently converted purchase price approximately usd4436 million using applicable exchange rates company subsidiaries longer operate mexico thus company expects revenues gross loans receivables negatively impacted future yearscompared historical levels terms stock purchase agreement obligated indemnify purchasers claims liabilities relating certain investigations former mexico operating segment company affiliates doj sec commenced prior july 1 2018 indemnification claims could material adverse effect financial condition including liquidity results operations regulatory matters mexico investigation disclosed part item 3 “legal proceedingsmexico investigation” previously disclosed company retained outside legal counsel forensic accountants conduct investigation operations mexico focusing legality fcpa certain local laws certain payments related loans maintenance company’s books records associated payments treatment compensation matters certain employees investigation continues address whether extent improper payments may violate fcpa local laws made approximately 2010 2017 behalf wac de mexico government officials mexico relating loans made unionized employees company voluntarily contacted sec doj june 2017 advise agencies internal investigation underway company intended cooperate agencies company continue cooperate agencies sec issued formal order investigation conclusion cannot drawn time potential remedies agencies may seek company cannot determine time ultimate effect investigation remedial measures financial condition results operations violations fcpa local laws occurred company could subject fines civil criminal penalties equitable remedies including profit disgorgement related interest injunctive relief addition disposition matters could result modifications business practices compliance programs disposition could also potentially require monitor appointed review future business practices goal ensuring compliance fcpa applicable laws company could also face fines sanctions penalties authorities mexico well thirdparty claims shareholders andor stakeholders company addition disclosure investigation ultimate disposition could adversely affect company’s reputation ability obtain new business retain existing business current customers potential customers attract retain employees access capital markets determined violation fcpa occurred violation may give rise event default company’s credit agreement violation material adverse effect company’s business operations properties assets condition financial otherwise amount settlement penalties fines payments resulted company failing satisfy financial covenants additional potential fcpa violations laws regulations may uncovered investigation see part item 1a “risk factorswe may exposed liabilities fcpa determination company subsidiaries violated fcpa could material adverse effect business liquidity” “our investigation previous operations mexico may expose company potential liabilities addition potential liabilities fcpa cause company incur substantial expenses” “we depend substantial extent borrowings revolving credit agreement fund liquidity needs” “the terms debt limit conduct business” additional information addition ultimate liability disgorgement related interest company believes could liable fines penalties company continuing discussions doj sec regarding matters investigation company cannot reasonably estimate amount fine penalty may pay part possible settlement assess potential liability might incurred settlement reached government litigate matter based information available time additional liability related matter reasonably estimable company continue evaluate amount liability pending final resolution investigation related discussions government cfpb rulemaking initiative october 5 2017 cfpb issued final rule “rule” imposing limitations shortterm consumer loans ii longerterm consumer installment loans balloon payments iii higherrate consumer installment loans repayable payment authorization rule requires lenders originating shortterm loans longerterm balloon payment loans evaluate whether consumer ability repay loan along current obligations expenses “ability repay requirements” rule also curtails repeated unsuccessful attempts debit consumers’ accounts shortterm loans balloon payment loans installment loans involve payment authorization annual percentage rate 36 “payment requirements” rule significant differences cfpb’s proposed rules announced june 2 2016 relating payday vehicle title similar loans february 6 2019 cfpb issued two notices proposed rulemaking regarding potential amendments rule first cfpb proposing rescind provisions rule including ability repay requirements second cfpb proposing delay august 19 2019 compliance date part rule including ability repay requirements proposed amendments yet final company believe rule material impact company’s existing lending procedures company currently make shortterm consumer loans longerterm consumer installment loans balloon payments would subject company rule’s ability repay requirements however company likely comply rule’s payment requirements allows consumers set future recurring payments online certain covered loans meets definition “leveraged payment mechanism” rule payment provisions rule expected go effect august 19 2019 payment provisions rule apply company modify loan payment procedures comply required notices within mandated timeframes set forth rule cfpb stated expects conduct separate rulemaking identify larger participants installment lending market purposes supervision program though timing rulemaking uncertain company believes implementation rules would likely bring company’s business cfpb’s supervisory authority among things would subject company reporting obligations onsite compliance examinations cfpb see part item 1 “business government regulation federal legislation” discussion matters federal regulations company’s operations subject part item 1a “risk factors” information regarding regulatory related risks critical accounting policies company’s accounting reporting policies accordance gaap conform general practices within finance company industry significant accounting policies used preparation consolidated financial statements discussed note 1 consolidated financial statements certain critical accounting policies involve significant judgment company’s management including use estimates assumptions affect reported amounts assets liabilities revenues expenses result changes estimates assumptions could significantly affect company’s financial position results operations company considers policies regarding allowance loan losses sharebased compensation income taxes critical accounting policies due significant degree management judgment involved allowance loan losses company developed policies procedures assessing adequacy allowance loan losses take consideration various assumptions estimates respect loan portfolio company’s assumptions estimates may affected future changes economic conditions among factors additional discussion concerning allowance loan losses see “credit quality” sharebased compensation company measures compensation cost sharebased awards fair value recognizes compensation service period awards expected vest fair value restricted stock based number shares granted quoted price common stock time grant fair value stock options determined using blackscholes valuation model blackscholes model requires input highly subjective assumptions including expected volatility riskfree interest rate expected life changes materially affect fair value estimate actual results future changes estimates may differ substantially current estimates income taxes management uses certain assumptions estimates determining income taxes payable refundable deferred income tax liabilities assets events recognized differently financial statements income tax returns income tax expense determining amounts requires analysis certain transactions interpretation tax laws regulations management exercises considerable judgment evaluating amount timing recognition resulting income tax liabilities assets judgments estimates reevaluated periodic basis regulatory business factors change assurance given either tax returns submitted management income tax reported consolidated financial statements adjusted either adverse rulings changes tax code assessments made internal revenue service state foreign taxing authorities company subject potential adverse adjustments including limited increase statutory federal state income tax rates permanent nondeductibility amounts currently considered deductible either future periods dependency generation future taxable income order ultimately realize deferred income tax assets fasb asc 740 company includes current deferred tax impact tax positions financial statements likely likelihood greater 50 positions sustained taxing authorities full knowledge relevant information based technical merits tax position company supports tax positions unambiguous tax law prior experience taxing authority analysis considers relevant facts circumstances regulations management must still rely assumptions estimates determine overall likelihood success proper quantification given tax position credit quality company’s delinquency net chargeoff ratios reflect among factors changes mix loans portfolio quality receivables success collection efforts bankruptcy trends general economic conditions delinquency computed basis date last full contractual payment loan known recency method basis amount past due accordance original payment terms loan known contractual method upon refinancings contractual delinquency loan measured based upon terms new agreement impacted refinanced loans classification new loan modification existing loan management closely monitors portfolio delinquency using methods measure quality companys loan portfolio probability credit losses following table classifies gross loans receivable company delinquent contractual recency basis least 61 days march 31 2019 2018 2017 approximately 787 790 797 companys loans generated refinancings outstanding loans origination new loans previous customers fiscal 2019 2018 2017 respectively refinancing represents new loan transaction present customer portion new loan proceeds used repay balance existing loan remaining portion advanced customer fiscal 2019 2018 2017 percentages company’s loan originations refinancings existing loans 662 659 668 respectively company’s refinancing policies limited state regulations cases consider customer’s payment history require customer made multiple payments loan considered refinancing considered current refinancing customer 45 days delinquent contractual basis delinquent refinancings may extended customers 45 days past due contractual basis customer completes new application manager believes customer’s ability intent repay improved company’s policy refinance delinquent loans amounts greater original amounts financed cases customer must complete new application every two years refinancings delinquent loans represented 11 12 company’s loan volume fiscal 2019 2018 2017 respectively chargeoffs percentage loans made category greatest loans made new borrowers least loans made former borrowers refinancings percentage total loans charged refinancings represent greatest percentage due volume loans made category following table depicts chargeoffs percent loans made category percent total chargeoffs fiscal 2019 company maintains allowance loan losses amount managements opinion adequate provide incurred losses inherent existing loan portfolio company charges current earnings provision loan losses amounts added allowance maintain levels expected cover probable incurred losses principal establishing allowance loan losses company takes consideration growth loan portfolio current levels chargeoffs current levels delinquencies current economic factors company uses mathematical calculation determine initial allowance end reporting period calculation originated managements estimate future chargeoffs used allocate expenses branch level two components calculating allowance loan losses company refers general reserve specific reserve calculation starting point time needed additional provisions added determined management ensure allowance adequate general reserve 425 gross loan portfolio specific reserve generally represents 100 loans 91 days past due recency basis including bankrupt accounts category methodology based historical data showing collection loans 91 days past due remote process performed determine adequacy allowance loan losses well considering trends current levels delinquencies chargeoff levels economic trends energy food prices primary tool used movement model recency basis considers rolling twelve months delinquency determine expected chargeoffs sum expected chargeoffs determined movement model recency basis plus amount related delinquent refinancings compared allowance resulting mathematical calculation determine adjustments required make allowance adequate management also determines adjustments needed event consolidated annual provision loan losses less total net chargeoffs management uses precision level 5 allowance loan losses compared aforementioned recency movement model determining adjustments needed companys policy charge earlier loans deemed uncollectible six months elapsed since date last full contractual payment companys chargeoff policy consistently applied changes made periods reported believe chargeoffs fiscal 2017 negatively impacted ceasing inperson visits delinquent borrowers december 2015 companys historical annual chargeoff rate past 10 years ranged 128 162 net loans management considers chargeoff policy evaluating appropriateness allowance loan losses estimate losses company uses historical information net chargeoffs average loan life method based fact many customers refinance loans prior contractual maturity average contractual loan terms approximately 12 months average loan life approximately 8 months company allowance loan losses approximated 7 months average net chargeoffs march 31 2019 management believes allowance sufficient cover estimated losses existing loans based historical chargeoffs average loan life large percentage loans charged fiscal year companys books beginning fiscal year company believes appropriate provide losses loans originated twelve months net chargeoffs needed allowance due average life loan portfolio less twelve months method employed accordance gaap following summary changes allowance loan losses years ended march 31 2019 2018 2017 1 average net loans receivable determined averaging monthend gross loans receivable less unearned interest deferred fees indicated period excluding tax advances quarterly information seasonality companys loan volume corresponding loans receivable follow seasonal trends companys highest loan demand typically occurs october december third fiscal quarter loan demand generally lowest loan repayment highest january march fourth fiscal quarter loan volume average balances typically remain relatively level remainder year seasonal trend affects quarterly operating performance corresponding fluctuations interest fee income insurance commissions earned provision loan losses recorded well fluctuations companys cash needs consequently operating results companys third fiscal quarter generally significantly lower quarters operating results fourth fiscal quarter significantly higher quarters following table sets forth quarterly basis certain items included companys unaudited consolidated financial statements shows number branches open fiscal years 2019 2018 recently issued accounting pronouncements see part ii item 8 financial statements supplementary data note 1summary significant accounting policies consolidated financial statements impact new accounting pronouncements liquidity capital resources company financed continues finance operations acquisitions branch expansion combination cash flows operations borrowings institutional lenders company generally applied cash flows operations fund loan volume fund acquisitions repay longterm indebtedness repurchase common stock companys gross loans receivable increased 9646 million march 31 2016 11280 million march 31 2019 net cash provided operating activities fiscal years 2019 2018 2017 2447 million 2180 million 2194 million respectively company continues believe stock repurchases viable component company’s longterm financial strategy excellent use excess cash opportunity arises however revolving credit facility limits share repurchases 50 consolidated adjusted net income fiscal year commencing fiscal year ending march 31 2017 company repurchase additional amounts shares prior written consent lenders company plans open acquire approximately 50 branches fiscal 2020 expenditures company open furnish new branches averaged approximately 44000 per branch fiscal 2019 new branches generally required 150000 500000 fund outstanding loans receivable originated first 12 months operation fiscal 2019 company opened 25 new branches merged closed 26 branches existing ones company acquired 17 branches fiscal 2019 company believes attractive opportunities acquire new branches receivables competitors acquire branches communities currently served company continue become available conditions local economies financial circumstances owners change company revolving credit facility syndicate banks revolving credit facility provides revolving borrowings lesser aggregate commitments facility b borrowing base includes 300000 letter credit subfacility june 2018 credit facility amended among things extend term june 15 2020 december 2018 credit facility amended among things amend accordion feature permit maximum aggregate commitments 6000 million increased 4800 million provided certain conditions met b modify per annum interest rate borrowings revolving credit agreement 40 initial fixed rate 40 subsequent rate libor plus applicable margin 30 40 based certain ebitda related metrics set forth revolving credit agreement determined adjusted monthly basis minimum rate 40 march 31 2019 aggregate commitments revolving credit facility 4800 million letter credit subfacility expires december 31 2019 however automatically extends one year expiration date borrowing base limitation equal product company’s eligible finance receivables less unearned finance charges insurance premiums insurance commissions b advance rate percentage ranges 79 85 based collateral performance indicator completely described administrative agent revolving credit facility right time permitted discretion without obligation set aside reasonable reserves borrowing base amounts may deem appropriate including without limitation reserves respect regulatory events increased operational legal regulatory risk year ended march 31 2019 effective interest rate including commitment fee borrowings revolving credit facility 67 company pays commitment fee equal 050 per annum daily unused portion commitments march 31 2019 2519 million outstanding facility 2278 million unused borrowing availability borrowing base limitations company’s obligations revolving credit facility together treasury management hedging obligations owing lender revolving credit facility affiliate lender required guaranteed company’s whollyowned domestic subsidiaries obligations company subsidiary guarantors revolving credit facility together treasury management hedging obligations secured firstpriority security interest substantially assets company subsidiary guarantors agreement governing company’s revolving credit facility contains affirmative negative covenants including covenants restrict ability company subsidiaries among things incur guarantee indebtedness incur liens pay dividends repurchase redeem capital stock dispose assets engage mergers consolidations make acquisitions investments redeem prepay subordinated debt amend subordinated debt documents make changes nature business engage transactions affiliates agreement also contains financial covenants including minimum consolidated net worth 3300 million plus 50 borrowers consolidated net income fiscal year beginning 2017 minimum fixed charge coverage ratio 25 10 maximum ratio total debt consolidated adjusted net worth 20 10 maximum ratio subordinated debt consolidated adjusted net worth 10 agreement allows company incur subordinated debt matures termination date revolving credit facility contains specified subordination terms subject limitations amount imposed financial covenants agreement addition agreement establishes maximum specified level collateral performance indicator collateral performance indicator equal sum threemonth rolling average rate receivables least sixty days past due b eightmonth rolling average net chargeoff rate company compliance covenants march 31 2019 believe covenants materially limit business expansion strategy agreement contains events default including without limitation nonpayment principal interest obligations violation covenants misrepresentation crossdefault debt bankruptcy insolvency events judgments certain erisa events actual asserted invalidity loan documentation invalidity subordination provisions subordinated debt certain changes control company occurrence certain regulatory events including entry stay order judgment ruling similar event related company’s subsidiaries’ originating holding pledging collecting enforcing eligible finance receivables material company subsidiary remains unvacated undischarged unbonded unstayed appeal otherwise period 60 days date entry reasonably likely cause material adverse change determined violation fcpa occurred described part item 3 “legal proceedingsmexico investigation” violation may give rise event default credit agreement violation material adverse effect business operations properties assets condition financial otherwise amount settlement penalties fines payments resulted company failing satisfy financial covenants company believes cash flow operations borrowings revolving credit facility sources adequate fund expected cost opening acquiring new branches including funding initial operating losses new branches funding loans receivable originated branches companys branches next 12 months foreseeable future beyond except otherwise discussed report including limited discussions part 1 item 1a risk factors supplemented subsequent disclosures information company files furnishes sec time management currently aware trends demands commitments events uncertainties believes could result could reasonably likely result material adverse effect company’s liquidity following table summarizes company’s contractual obligations period share repurchase program december 16 2018 board directors authorized company repurchase 750 million company’s common stock inclusive amount remains available repurchases prior repurchase authorization 250 million announced march 11 2015 march 31 2019 company 05 million aggregate remaining repurchase capacity timing actual number shares common stock repurchased depend variety factors including stock price corporate regulatory requirements restrictions revolving credit facility market economic conditions company continues believe stock repurchases viable component company’s longterm financial strategy excellent use excess cash opportunity arises however revolving credit facility limits share repurchases 50 consolidated adjusted net income fiscal year commencing fiscal year ending march 31 2017 without prior written consent lenders first priority ensure enough capital fund loan growth extent excess capital may repurchase stock appropriate authorized board directors march 31 2019 companys debt outstanding 2519 million shareholders equity 5521 million resulting debttoequity ratio 0510 management continue monitor companys debttoequity ratio committed maintaining debt level allow company continue execute business objectives putting undue stress consolidated balance sheet inflation company believe inflation within reasonably anticipated rates materially adverse effect financial condition although inflation would increase company’s operating costs absolute terms company expects decrease value money would result increase size loans demanded customer base reasonable anticipate change customer preference would result increase total loan receivables increase absolute revenues generated larger amount loans receivable company believes increase absolute revenues offset increase operating costs addition company’s loans relatively short contractual term average life unlikely loans made given point time repaid significantly inflated dollars legal matters time company involved litigation relating claims arising operations normal course business see part item 3 “legal proceedings” note 16 audited consolidated financial statements discussion legal matters item 7aitem 7 management’s discussion analysis financial condition results operations general companys financial performance continues dependent large part upon growth outstanding loans receivable ongoing introduction new products services marketing customer base maintenance loan quality acceptable levels operating expenses since march 31 2001 gross loans receivable increased 146 annual compounded rate 2109 million 4163 million march 31 2006 increase reflects higher volume loans generated companys existing offices contribution loans generated new offices opened acquired period fiveyear period company grown 420 offices 620 offices march 31 2006 company plans open acquire least 50 new offices next two years company continues identify new products services marketing customer base addition new insurancerelated products introduced selected states last several years company sells finances electronic items appliances existing customer base many states operates program called “world class buying club” total loan volume program 86 million fiscal 2006 37 increase prior fiscal year represents less 1 company’s total loan volume remains profitable program company plans continue emphasize fiscal 2007 beyond companys paradata financial systems subsidiary provides data processing systems 114 separate finance companies including company currently supports approximately 1234 individual branch offices 45 states mexico paradata’s revenue highly dependent upon ability attract new customers often requires substantial lead time result revenue may fluctuate greatly year fiscal 2006 net revenues system sales support amounted 23 million approximately fiscal 2005 paradata’s pretax income contribution company also fluctuate greatly 308000 332000 288000 fiscal 2006 fiscal 2005 fiscal 2004 respectively paradata’s net revenue resulting net contribution company continue fluctuate year basis management believes business remain profitable long term additionally importantly paradata continues provide stateoftheart data processing support company’s inhouse integrated computer system little net cost company since fiscal 1997 company expanded product line include larger balance lower risk lower yielding individual consumer loans typically average 2500 3000 terms 18 24 months compared smaller loans average 300 500 terms 8 12 months company offers larger loans states except texas profitable lending criteria strategy additionally company purchased years numerous larger loan offices made several bulk purchases larger loans receivable march 31 2006 larger loan category accounted approximately 1127 million gross loans receivable 85 increase balance outstanding march 31 2005 end current fiscal year portfolio 271 total loan balances decrease previous year mix 295 management believes loans provide lower expense loss ratios thus provide positive contributions company intend change primary lending focus smallloan business intend continue expanding larger loan product line part ongoing growth strategy fiscal 1999 company tested income tax return preparation refund anticipation loan program 40 offices based results test company expanded program fiscal 2000 substantially offices company prepared approximately 55000 57000 returns fiscal years 2005 2006 respectively net revenue generated company program fiscal 2006 amounted approximately 76 million company believes profitable business provides beneficial service existing customer base plans continue promote expand program future following table sets forth certain information derived companys consolidated statements operations balance sheets well operating data ratios periods indicated 1 average gross loans receivable determined averaging monthend gross loans receivable indicated period 2 average loans receivable determined averaging monthend gross loans receivable less unearned interest deferred fees indicated period 3 operating margin computed total revenues less provision loan losses general administrative expenses percentage total revenues comparison fiscal 2006 versus fiscal 2005 net income 385 million fiscal 2006 133 increase 340 million earned fiscal 2005 increase resulted increase operating income revenues less provision loan losses general administrative expenses 102 million 175 offset increase interest expense income taxes interest fee income fiscal 2006 increased 269 million 151 fiscal 2005 increase resulted increase 371 million 142 average loans receivable two fiscal years increase average loans receivable largely attributed internal growth significant portion internal growth resulted law change state texas increased maximum amount lend customers 540 1080 year gross loans texas grew 412 fiscal 2005 addition internal growth company acquired approximately 67 million net loans 25 separate transactions fiscal 2006 insurance commissions income increased 56 million 170 two fiscal years insurance commissions increased 31 million 187 result increase loan volume states credit insurance may sold income increased 25 million 153 two years primarily due increase fees received income tax return preparation 717000 increase roadguard product sales 704000 492000 gain related interest rate swap total revenues increased 2433 million fiscal 2006 325 million 154 increase 2108 million fiscal 2005 revenues 516 offices open throughout fiscal years increased 101 march 31 2006 company 620 offices operation increase 41 offices march 31 2005 provision loan losses fiscal 2006 increased 60 million 15 previous year increase resulted combination increases allowance loan losses amount loans charged net chargeoffs fiscal 2006 amounted 442 million 162 increase 380 million charged fiscal 2005 net chargeoffs percentage average loans increased slightly 146 148 comparing two annual periods although chargeoff ratio increased slightly encouraged reduction delinquencies period delinquencies recency basis decreased 25 21 contractual basis decreased 41 34 march 31 2005 march 31 2006 respectively general administrative expenses fiscal 2006 increased 163 million 145 previous fiscal year increase due primarily costs associated new offices opened acquired fiscal year general administrative expenses divided average open offices increased 67 comparing two fiscal years overall general administrative expenses percent total revenues decreased 532 fiscal 2005 528 fiscal 2006 interest expense increased 25 million 538 fiscal 2006 compared previous fiscal year result increase average debt outstanding 54 combined 465 increase average interest rates 43 fiscal 2005 63 fiscal 2006 company’s effective income tax rate increased 375 fiscal 2006 369 previous fiscal year increase resulted primarily increased state income taxes comparison fiscal 2005 versus fiscal 2004 net income 340 million fiscal 2005 182 increase 288 million earned fiscal 2004 increase resulted increase operating income 91 million 185 offset increase interest expense income taxes interest fee income fiscal 2005 increased 261 million 172 fiscal 2004 increase resulted increase 399 million 181 average loans receivable two fiscal years increase average loans receivable especially larger loans partially due several acquisitions year company acquired approximately 215 million net loans 20 separate transactions fiscal 2005 insurance commissions income increased 55 million 200 two fiscal years insurance commissions increased 31 million 226 result increase loan volume states credit insurance may sold income increased 24 million 175 two years primarily due increase fees received income tax return preparation total revenues increased 2108 million fiscal 2005 316 million 176 increase 1792 million fiscal 2004 revenues 462 offices open throughout fiscal years increased 86 march 31 2005 company 579 offices operation increase 53 net offices march 31 2004 provision loan losses fiscal 2005 increased 66 million 196 previous year increase resulted combination increases allowance loan losses amount loans charged net chargeoffs fiscal 2005 amounted 380 million 167 increase 326 million charged fiscal 2004 net chargeoffs percentage average loans declined slightly 147 146 comparing two annual periods general administrative expenses fiscal 2005 increased 159 million 165 previous fiscal year increase due primarily costs associated new offices opened acquired fiscal year general administrative expenses divided average open offices increased 24 comparing two fiscal years overall general administrative expenses percent total revenues decreased 538 fiscal 2004 532 fiscal 2005 interest expense increased 698000 177 fiscal 2005 compared previous fiscal year result increase average debt outstanding 48 combined increase interest rates company’s effective income tax rate increased 369 fiscal 2005 367 previous fiscal year increase resulted primarily increased state income taxes critical accounting policies company’s accounting reporting policies accordance us generally accepted accounting principles conform general practices within finance company industry significant accounting policies used preparation consolidated financial statements discussed note 1 consolidated financial statements certain critical accounting policies involve significant judgment company’s management including use estimates assumptions affect reported amounts assets liabilities revenues expenses result changes estimates assumptions could significantly affect company’s financial position results operations company considers policies regarding allowance loan losses critical accounting policy due significant degree management judgment company developed policies procedures assessing adequacy allowance loan losses take consideration various assumptions estimates respect loan portfolio company’s assumptions estimates may affected future changes economic conditions among factors additional discussion concerning allowance loan losses see “credit quality” credit quality company’s delinquency net chargeoff ratios reflect among factors changes mix loans portfolio quality receivables success collection efforts bankruptcy trends general economic conditions delinquency computed basis date last full contractual payment loan known recency method basis amount past due accordance original payment terms loan known contractual method management closely monitors portfolio delinquency using methods measure quality companys loan portfolio probability credit losses following table classifies gross loans receivable company delinquent recency contractual basis least 61 days march 31 2006 2005 2004 loans charged earlier loans deemed uncollectible six months elapsed since date last full contractual payment company’s chargeoff policy consistently applied significant changes made policy periods reported management considers chargeoff policy evaluating appropriateness allowance loan losses end fiscal 2006 company experienced decrease contractual delinquency 34 41 march 31 2005 delinquency rate recency basis also decreased 25 end fiscal 2005 21 end current fiscal year chargeoffs percent average loans increased 146 fiscal 2005 148 fiscal 2006 fiscal 2006 approximately 855 company’s loans generated renewals outstanding loans origination new loans previous customers renewal represents new loan transaction present customer portion new loan proceeds used repay balance existing loan remaining portion advanced customer fiscal 2006 2005 2004 percentages company’s loan originations renewals existing loans 756 776 772 respectively company’s renewal policies limited state regulations cases considers customer’s payment history require customer made least one payment loan considered renewal considered current renewal customer 45 days delinquent contractual basis delinquent renewals may extended customers 45 days past due contractual basis customer completes new application manager believes customer’s ability intent repay improved company’s policy renew delinquent loans amounts greater original amounts financed cases customer must complete new application every two years fiscal 2006 delinquent renewals represented 21 company’s total loan volume compared 24 fiscal 2005 chargeoffs percentage loans made category greatest loans made new borrowers less loans made former borrowers renewals expected due payment history experience available repeat borrowers however percentage total loans charged renewals represent greatest percentage due volume loans made category following table depicts chargeoffs percent loans made category percent total chargeoffs fiscal 2006 company maintains allowance loan losses amount management’s opinion adequate cover losses inherent existing loan portfolio company charges current earnings provision loan losses amounts added allowance maintain levels expected cover probable losses principal establishing allowance loan losses company takes consideration growth loan portfolio mix loan portfolio current levels chargeoffs current levels delinquencies current economic factors accordance statement accounting standards 5 “accounting contingencies” sfas 5 company accrues estimated loss probable reasonably estimated probable losses existing portfolio estimate losses company uses historical information net chargeoffs average loan life methodology based fact many customers renew loans prior contractual maturity average contractual loan terms approximately nine months average loan life approximately four months based methodology company allowance loan losses approximated six months average net chargeoffs march 31 2006 2005 2004 therefore year end company allowance loan losses covered estimated losses existing loans based historical chargeoffs average lives addition entire loan portfolio turns approximately 3 times typical twelvemonth period therefore large percentage loans charged fiscal year company’s books beginning fiscal year company believes appropriate provide losses loans originated twelve months net chargeoffs needed allowance methodology employed accordance generally accepted accounting principles company records acquired loans fair value based current interest rates less allowance uncollectibility collection costs statement position 033 sop 033 “accounting certain loans debt securities acquired transfer” adopted company april 1 2005 sop 033 prohibits carryover creation valuation allowances initial accounting loans acquired transfer within scope sop management believes loan shown deterioration days delinquent company believes loans acquired since adoption sop 033 shown evidence deterioration credit quality since origination therefore within scope sop 033 pay consideration record acquired loans 60 days delinquent years ended march 31 2006 2005 2004 company recorded adjustments approximately 04 million 14 million 13 million respectively allowance loan losses connection acquisitions accordance generally accepted accounting principles adjustments represent allowance loan losses acquired loans within scope sop 033 company believes allowance loan losses adequate cover losses existing portfolio march 31 2006 following summary changes allowance loan losses years ended march 31 2006 2005 2004 1 average loans receivable determined averaging monthend gross loans receivable less unearned interest deferred fees indicated period quarterly information seasonality companys loan volume corresponding loans receivable follow seasonal trends companys highest loan demand typically occurs october december third fiscal quarter loan demand generally lowest loan repayment highest january march fourth fiscal quarter loan volume average balances typically remain relatively level remainder year seasonal trend affects quarterly operating performance corresponding fluctuations interest fee income insurance commissions earned provision loan losses recorded well fluctuations companys cash needs consequently operating results companys third fiscal quarter generally significantly lower quarters operating results fourth fiscal quarter significantly higher quarters following table sets forth quarterly basis certain items included companys unaudited consolidated financial statements shows number offices open fiscal years 2005 2006 recently issued accounting pronouncements accounting certain loans debt securities acquired transfer effective april 1 2005 company adopted statement position 033 sop 033 “accounting certain loans debt securities acquired transfer” sop prohibits carryover creation valuation allowances initial accounting loans acquired transfer within scope sop management believes loan shown evidence deterioration 60 days delinquent company believes loans acquired since adoption sop 033 shown evidence deterioration credit quality since origination therefore within scope sop 033 pay consideration record acquired loans 60 days delinquent accordingly adoption sop 033 april 1 2005 material impact consolidated financial statements sharebased payment december 2004 fasb issued sfas 123r sfas 123r sharebased payment requires companies recognize income statement grantdate fair value stock options equitybased compensation issued employees sfas 123r amendment sfas 123 sfas 123 accounting stockbased compensation related implementation guidance sfas 123r change accounting guidance sharebased payment transactions parties employees provided sfas 123 sfas 123r way award classified affect measurement compensation cost liabilityclassified awards remeasured fair value balancesheet date award settled equityclassified awards measured grantdate fair value amortized subsequent vesting period subsequently remeasured company adopt sfas 123r using modified prospective transition method april 1 2006 based current analysis information believe adoption sfas 123r result pretax expense 3 million 4 million fiscal 2006 estimating value stock option awards grant date requires judgment including estimating stock price volatility forfeiture rates expected option life accounting nonmonetary transactions december 2004 fasb issued sfas 153 sfas 153 exchanges nonmonetary assetsan amendment apb opinion 29 eliminates exception nonmonetary exchanges similar productive assets replaces general exception exchanges nonmonetary assets commercial substance nonmonetary exchange commercial substance future cash flows entity expected change significantly result exchange sfas 153 effective nonmonetary transactions occurring fiscal years beginning june 15 2005 adoption statement material impact company’s financial position results operations accounting changes error corrections may 2005 fasb issued sfas 154 “sfas 154” “accounting changes error corrections replacement apb opinion 20 fasb statement 3” eliminates requirement reflect changes accounting principles cumulative adjustments net income period change requires retrospective application prior periods’ financial statements voluntary changes accounting principle unless impracticable determine either periodspecific effects cumulative effect change impracticable determine cumulative effect change prior periods sfas 154 requires new accounting principle adopted prospectively new accounting pronouncements transition guidance pronouncement followed retrospective application refers application different accounting principle previously issued financial statements principle always used sfas change guidance reporting corrections errors changes estimates justification change accounting principle basis preferability sfas 154 effective accounting changes made fiscal years beginning december 15 2005 company adopted provisions sfas 154 april 1 2006 adoption statement impact company’s financial position results operations accounting conditional asset retirement obligations march 2005 fasb issued fasb interpretation 47 fin 47 “accounting conditional asset retirement obligations” interpretation clarifies term “conditional asset retirement obligations” used sfas 143 “accounting asset retirement obligations” refers legal obligation perform asset retirement activity timing andor method settlement conditional future event may within control entity accordingly interpretation requires recognition liability fair value conditional asset retirement obligation incurred fair value liability reasonably estimated interpretation also clarifies sufficient information available reasonable estimated fair value asset retirement obligation company began applying interpretation fourth quarter fiscal year 2006 application interpretation significant impact results operations financial position liquidity capital resources company financed continues finance operations acquisitions office expansion combination cash flow operations borrowings institutional lenders company generally applied cash flow operations fund increasing loan volume fund acquisitions repay longterm indebtedness repurchase common stock companys gross loans receivable increased 2668 million march 31 2002 4163 million march 31 2006 net cash provided operating activities fiscal years 2004 2005 2006 704 million 881 million 989 million respectively companys primary ongoing cash requirements relate funding new offices acquisitions overall growth loans outstanding repayment longterm indebtedness repurchase common stock company repurchased 1986000 shares common stock repurchase program aggregate purchase price approximately 160 million february 1996 october 1996 certain loan agreement restrictions company suspended stock repurchases october 1996 stock repurchase program reinstated january 2000 board directors may 12 2005 authorized company increase share repurchase program 20 million march 31 2006 3580949 shares repurchased since respective aggregate purchase price approximately 45880000 company believes stock repurchases viable component company’s longterm financial strategy excellent use excess cash opportunity arises addition company plans open acquire least 50 branches next two years expenditures company open furnish new offices generally averaged approximately 20000 per office fiscal 2006 new offices also required 100000 400000 fund outstanding loans receivable originated first 12 months operation company acquired net three offices number loan portfolios competitors 8 states 28 separate transactions fiscal 2006 gross loans receivable purchased transactions approximately 91 million aggregate dates purchase company believes attractive opportunities acquire new offices receivables competitors acquire offices communities currently served company continue become available conditions local economies financial circumstances owners change company 1670 million base credit facility syndicate banks addition base revolving credit commitment 15 million seasonal revolving credit commitment available november 15 year march 31 immediately succeeding year cover increase loan demand period credit facility expire september 30 2007 funds borrowed revolving credit facility bear interest companys option either agent banks prime rate per annum libor rate plus 19 per annum march 31 2006 interest rate borrowings revolving credit facility 67 company pays commitment fee equal 0375 per annum daily unused portion revolving credit facility amounts outstanding revolving credit facility may exceed specified percentages eligible loans receivable march 31 2006 998 million outstanding facility 672 million unused borrowing availability borrowing base limitations company currently negotiations banks extend maturity date credit facility september 30 2008 company currently anticipate problems getting extension approved know definitely time second quarter fiscal 2007 companys credit agreements contain number financial covenants including minimum net worth fixed charge coverage requirements credit agreements also contain certain covenants including covenants impose limitations company respect declaring paying dividends making distributions acquiring common preferred stock warrants options ii redeeming purchasing prepaying principal interest subordinated debt iii incurring additional indebtedness iv entering merger consolidation sale substantial assets subsidiaries company compliance agreements march 31 2006 believe agreements materially limit business expansion strategy following table summarizes company’s contractual cash obligations period thousands company believes cash flow operations borrowings revolving credit facility adequate next twelve months foreseeable future thereafter fund expected cost opening acquiring new offices including funding initial operating losses new offices funding loans receivable originated offices companys offices management currently aware trends demands commitments events uncertainties believes result reasonably likely result company’s liquidity increasing decreasing material way time company needed obtained expects continue need periodic basis increase borrowing limits revolving credit facility company successfully obtained increases past anticipates able future need arises however assurance additional funding available reasonable terms needed quantitative qualitative disclosures market risk interest rate risk company’s financial instruments consist following cash loans receivable senior notes payable note payable interest rate swap fair value approximates carrying value instruments loans receivable originated prevailing market rates average life approximately four months given shortterm nature loans continually repriced current market rates company’s outstanding debt revolving credit facility 998 million march 31 2006 interest borrowings facility based company’s option prime rate libor plus 19 based outstanding balance march 31 2006 change 1 interest rates would cause change interest expense approximately 706000 annual basis october 2005 company entered interest rate swap economically hedge variable cash flows associated 30 million liborbased borrowings swap converted 30 million variable rate onemonth libor fixed rate 4755 period five years accordance sfas 133 company records derivatives fair value assets liabilities consolidated balance sheets since company utilizing hedge accounting sfas 133 changes fair value derivative instrument included income march 31 2006 fair value interest rate swap 492000 included assets change fair value beginning year recorded unrealized gain income 492000 company another note payable balance 800000 march 31 2006 carries interest rate equal libor 200 foreign currency exchange rate risk september 2005 began opening offices mexico local businesses utilize mexican peso functional currency consolidated financial statements company denominated us dollars therefore subject fluctuation us dollar mexican peso foreign exchange rates change international revenues less 1 total revenues year ended march 31 2006 net loans denominated mexican pesos approximately 1 million usd march 31 2006 foreign currency exchange rate exposures may change time business practices evolve could material effect financial results may continue periodtoperiod fluctuations relative portions mexican revenues april 28 2006 hedged foreign exchange risk purchasing 1 million foreign exchange currency option strike rate 1136 mexican peso per us dollar option expires april 30 2007 changes fair value option recorded component earnings since company intend apply hedge accounting earnings affected fluctuations value us dollar foreign currencies performed analysis assuming hypothetical 10 increase decrease value us dollar relative mexican peso transactions mexico denominated march 31 2006 analysis indicated market movements would material effect consolidated financial statements actual effects consolidated financial statements future may differ materially results analysis year ended march 31 2006 continue monitor assess effect currency fluctuations may institute hedging alternatives inflation company believe inflation material adverse effect financial condition results operations primary impact inflation operations company reflected increased operating costs increases operating costs would adversely affect companys operations consumer lending laws two eleven states company operates allow indexing maximum loan amounts consumer price index provisions allow company make larger loans existing interest rates states could partially offset potential increase operating costs due inflation legal matters march 31 2006 company certain subsidiaries named defendants various legal actions arising normal business activities damages various amounts claimed although amount ultimate liability respect matters cannot determined company believes liability material adverse effect company’s consolidated financial condition results operations taken whole item 7aitem 7 management’s discussion analysis financial condition results operations general companys financial performance continues dependent large part upon growth outstanding loans receivable ongoing introduction new products services marketing customer base maintenance loan quality acceptable levels operating expenses since march 31 2002 gross loans receivable increased 175 annual compounded rate 2263 million 5058 million march 31 2007 increase reflects higher volume loans generated companys existing offices contribution loans generated new offices opened acquired period fiveyear period company grown 441 offices 732 offices march 31 2007 company plans open acquire least 50 new offices next two years company continues identify new products services marketing customer base addition new insurancerelated products introduced selected states last several years company sells finances electronic items appliances existing customer base many states operates program called “world class buying club” total loan volume program 144 million fiscal 2007 678 increase prior fiscal year represents less 1 company’s total loan volume remains profitable program company plans continue emphasize fiscal 2008 beyond companys paradata financial systems subsidiary provides data processing systems 117 separate finance companies including company currently supports approximately 1330 individual branch offices 45 states mexico paradata’s revenue highly dependent upon ability attract new customers often requires substantial lead time result revenue may fluctuate greatly year net revenues system sales support amounted 25 million 23 million 23 million fiscal 2007 2005 respectively paradata’s pretax income contribution company also fluctuate greatly 112000 308000 332000 fiscal 2007 fiscal 2006 fiscal 2005 respectively paradata’s net revenue resulting net contribution company continue fluctuate year basis paradata may remain profitable continue provide stateoftheart data processing support company’s inhouse integrated computer system substantially reduced cost company since fiscal 1997 company expanded product line include larger balance lower risk lower yielding individual consumer loans typically average 1000 3000 terms 18 24 months compared smaller loans average 300 1000 terms 8 12 months company offers larger loans states except texas profitable lending criteria strategy additionally company purchased years numerous larger loan offices made several bulk purchases larger loans receivable march 31 2007 larger loan category accounted approximately 1333 million gross loans receivable 183 increase balance outstanding march 31 2006 end current fiscal year portfolio 264 total loan balances decrease previous year mix 271 management believes loans provide lower expense loss ratios thus provide positive contributions company intend change primary lending focus smallloan business intend continue expanding larger loan product line part ongoing growth strategy fiscal 1999 company tested income tax return preparation refund anticipation loan program 40 offices based results test company expanded program fiscal 2000 substantially offices company prepared approximately 55000 57000 60000 returns fiscal years 2005 2006 2007 respectively net revenue generated company program fiscal 2007 amounted approximately 81 million company believes profitable business provides beneficial service existing customer base plans continue promote expand program future following table sets forth certain information derived companys consolidated statements operations balance sheets well operating data ratios periods indicated 1 average gross loans receivable determined averaging monthend gross loans receivable indicated period 2 average loans receivable determined averaging monthend gross loans receivable less unearned interest deferred fees indicated period 3 operating margin computed total revenues less provision loan losses general administrative expenses percentage total revenues comparison fiscal 2007 versus fiscal 2006 net income 479 million fiscal 2007 244 increase 385 million earned fiscal 2006 increase resulted increase operating income revenues less provision loan losses general administrative expenses 180 million 262 offset increase interest expense income taxes interest fee income fiscal 2007 increased 426 million 208 fiscal 2006 increase resulted increase 604 million 202 average net loans receivable two fiscal years increase average loans receivable attributable company acquiring approximately 161 million net loans 125 million related one acquisition internal growth fiscal 2007 internal growth increased company opened 68 new offices average loan balance increased 804 837 insurance commissions income increased 65 million 167 two fiscal years insurance commissions increased 46 million 232 result increase loan volume states credit insurance may sold income increased 19 million 99 two years primarily due increase fees received income tax return preparation 570000 increase motor club product sales 13 million 13 million increase world class buying club sales increase offset 400000 loss related interest rate swap comparative results also affected company recording 393000 gain life insurance claim fiscal 2006 similar gain recorded fiscal 2007 total revenues increased 2923 million fiscal 2007 490 million 202 increase 2433 million fiscal 2006 revenues 566 offices open throughout fiscal years increased 125 march 31 2007 company 732 offices operation increase 112 offices march 31 2006 provision loan losses fiscal 2007 increased 59 million 128 previous year increase resulted combination increases allowance loan losses amount loans charged net chargeoffs fiscal 2007 amounted 478 million 75 increase 444 million charged fiscal 2006 however net chargeoffs percentage average loans decreased 148 133 comparing two annual periods decrease chargeoff ratio mainly attributable decrease bankruptcy related chargeoffs 88 million fiscal 2006 50 million fiscal 2007 company expect chargeoff ratios remain it’s current levels believes bankruptcy trends begin rise fiscal 2008 delinquencies recency basis increased 21 22 contractual basis increased 34 35 march 31 2006 march 31 2007 respectively general administrative expenses fiscal 2007 increased 251 million 195 previous fiscal year increase due primarily costs associated new offices opened acquired fiscal year general administrative expenses divided average open offices increased 52 comparing two fiscal years overall general administrative expenses percent total revenues decreased 528 fiscal 2006 526 fiscal 2007 decrease resulted higher growth revenue expenses interest expense increased 25 million 345 fiscal 2007 compared previous fiscal year result increase average debt outstanding 333 average interest rates increased slightly 627 fiscal 2006 633 fiscal 2007 company’s effective income tax rate increased 379 fiscal 2007 375 previous fiscal year increase resulted primarily increased state income taxes comparison fiscal 2006 versus fiscal 2005 net income 385 million fiscal 2006 133 increase 340 million earned fiscal 2005 increase resulted increase operating 102 million 175 offset increase interest expense income taxes interest fee income fiscal 2006 increased 269 million 151 fiscal 2005 increase resulted increase 371 million 142 average loans receivable two fiscal years increase average loans receivable largely attributable internal growth significant portion internal growth resulted change texas law increased maximum amount could loaned texas customers 540 1080 year gross loans texas grew 412 fiscal 2005 addition internal growth company acquired approximately 67 million net loans 25 separate transactions fiscal 2006 insurance commissions income increased 56 million 170 two fiscal years insurance commissions increased 31 million 187 result increase loan volume states credit insurance may sold income increased 25 million 153 two years primarily due increase fees received income tax return preparation 717000 increase motor club product sales 704000 492000 gain related interest rate swap total revenues increased 2433 million fiscal 2006 325 million 154 increase 2108 million fiscal 2005 revenues 516 offices open throughout fiscal years increased 101 march 31 2006 company 620 offices operation increase 41 offices march 31 2005 provision loan losses fiscal 2006 increased 60 million 15 previous year increase resulted combination increases allowance loan losses amount loans charged net chargeoffs fiscal 2006 amounted 444 million 168 increase 380 million charged fiscal 2005 net chargeoffs percentage average loans increased slightly 146 148 comparing two annual periods although chargeoff ratio increased slightly encouraged reduction delinquencies period delinquencies recency basis decreased 25 21 contractual basis decreased 41 34 march 31 2005 march 31 2006 respectively general administrative expenses fiscal 2006 increased 163 million 145 previous fiscal year increase due primarily costs associated new offices opened acquired fiscal year general administrative expenses divided average open offices increased 67 comparing two fiscal years overall general administrative expenses percent total revenues decreased 532 fiscal 2005 528 fiscal 2006 interest expense increased 25 million 538 fiscal 2006 compared previous fiscal year result increase average debt outstanding 54 combined 465 increase average interest rates 43 fiscal 2005 63 fiscal 2006 company’s effective income tax rate increased 375 fiscal 2006 369 previous fiscal year increase resulted primarily increased state income taxes critical accounting policies company’s accounting reporting policies accordance us generally accepted accounting principles conform general practices within finance company industry significant accounting policies used preparation consolidated financial statements discussed note 1 consolidated financial statements certain critical accounting policies involve significant judgment company’s management including use estimates assumptions affect reported amounts assets liabilities revenues expenses result changes estimates assumptions could significantly affect company’s financial position results operations company considers policies regarding allowance loan losses sharebased compensation critical accounting policies due significant degree management judgment involved allowance loan losses company developed policies procedures assessing adequacy allowance loan losses take consideration various assumptions estimates respect loan portfolio company’s assumptions estimates may affected future changes economic conditions among factors additional discussion concerning allowance loan losses see “credit quality” sharebased compensation company measures compensation cost sharebased awards fair value recognizes compensation service period awards expected vest fair value restricted stock based number shares granted quoted price common stock fair value stock options determined using blackscholes valuation model blackscholes model requires input highly subjective assumptions including expected volatility riskfree interest rate expected life changes materially affect fair value estimate addition estimation sharebased awards ultimately vest requires judgment extent actual results updated estimates differ current estimates amounts recorded cumulative adjustment period estimates revised company considers many factors estimating expected forfeitures including types awards employee class historical experience actual results future changes estimates may differ substantially current estimates credit quality company’s delinquency net chargeoff ratios reflect among factors changes mix loans portfolio quality receivables success collection efforts bankruptcy trends general economic conditions delinquency computed basis date last full contractual payment loan known recency method basis amount past due accordance original payment terms loan known contractual method management closely monitors portfolio delinquency using methods measure quality companys loan portfolio probability credit losses following table classifies gross loans receivable company delinquent recency contractual basis least 61 days march 31 2007 2006 2005 loans charged earlier loans deemed uncollectible six months elapsed since date last full contractual payment company’s chargeoff policy consistently applied significant changes made policy periods reported management considers chargeoff policy evaluating appropriateness allowance loan losses end fiscal 2007 company experienced increase contractual delinquency 35 34 march 31 2006 delinquency rate recency basis also increased 21 end fiscal 2006 22 end current fiscal year chargeoffs percent average loans decreased 148 fiscal 2006 133 fiscal 2007 fiscal 2007 approximately 846 company’s loans generated renewals outstanding loans origination new loans previous customers renewal represents new loan transaction present customer portion new loan proceeds used repay balance existing loan remaining portion advanced customer fiscal 2007 2006 2005 percentages company’s loan originations renewals existing loans 748 756 776 respectively company’s renewal policies limited state regulations cases consider customer’s payment history require customer made least one payment loan considered renewal considered current renewal customer 45 days delinquent contractual basis delinquent renewals may extended customers 45 days past due contractual basis customer completes new application manager believes customer’s ability intent repay improved company’s policy renew delinquent loans amounts greater original amounts financed cases customer must complete new application every two years fiscal 2007 delinquent renewals represented 19 company’s total loan volume compared 21 fiscal 2006 chargeoffs percentage loans made category greatest loans made new borrowers less loans made former borrowers renewals expected due payment history experience available repeat borrowers however percentage total loans charged renewals represent greatest percentage due volume loans made category following table depicts chargeoffs percent loans made category percent total chargeoffs fiscal 2007 company maintains allowance loan losses amount management’s opinion adequate cover losses inherent existing loan portfolio company charges current earnings provision loan losses amounts added allowance maintain levels expected cover probable losses principal establishing allowance loan losses company takes consideration growth loan portfolio mix loan portfolio current levels chargeoffs current levels delinquencies current economic factors accordance statement accounting standards 5 “accounting contingencies” sfas 5 company accrues estimated loss probable reasonably estimated probable losses existing portfolio estimate losses company uses historical information net chargeoffs average loan life methodology based fact many customers renew loans prior contractual maturity average contractual loan terms approximately nine months average loan life approximately four months based methodology company allowance loan losses approximated six months average net chargeoffs march 31 2007 2006 2005 therefore year end company allowance loan losses covered estimated losses existing loans based historical chargeoffs average lives addition entire loan portfolio turns approximately 3 times typical twelvemonth period therefore large percentage loans charged fiscal year company’s books beginning fiscal year company believes appropriate provide losses loans originated twelve months net chargeoffs needed allowance methodology employed accordance generally accepted accounting principles company records acquired loans fair value based current interest rates less allowance uncollectibility collection costs statement position 033 sop 033 “accounting certain loans debt securities acquired transfer” adopted company april 1 2005 sop 033 prohibits carryover creation valuation allowances initial accounting loans acquired transfer within scope sop management believes loan shown deterioration days delinquent company believes loans acquired since adoption sop 033 shown evidence deterioration credit quality since origination therefore within scope sop 033 consideration paid acquired loans 60 days delinquent years ended march 31 2007 2006 2005 company recorded adjustments approximately 09 million 04 million 14 million respectively allowance loan losses connection acquisitions accordance generally accepted accounting principles adjustments represent allowance loan losses acquired loans within scope sop 033 company believes allowance loan losses adequate cover losses existing portfolio march 31 2007 following summary changes allowance loan losses years ended march 31 2007 2006 2005 1 average loans receivable determined averaging monthend gross loans receivable less unearned interest deferred fees indicated period quarterly information seasonality companys loan volume corresponding loans receivable follow seasonal trends companys highest loan demand typically occurs october december third fiscal quarter loan demand generally lowest loan repayment highest january march fourth fiscal quarter loan volume average balances typically remain relatively level remainder year seasonal trend affects quarterly operating performance corresponding fluctuations interest fee income insurance commissions earned provision loan losses recorded well fluctuations companys cash needs consequently operating results companys third fiscal quarter generally significantly lower quarters operating results fourth fiscal quarter significantly higher quarters following table sets forth quarterly basis certain items included companys unaudited consolidated financial statements shows number offices open fiscal years 2007 2006 recently issued accounting pronouncements accounting certain hybrid financial instruments february 2006 financial accounting standards board “fasb” issued statement financial accounting standards 155 “accounting certain hybrid financial instruments amendment fasb statements 133 140” “sfas 155” sfas 155 permits entity measure fair value financial instrument contains embedded derivative otherwise would required bifurcated accounted separately sfas 133 sfas 155 effective fiscal years beginning september 15 2006 company expect impact adoption sfas 155 material consolidated financial statements accounting uncertainty income taxes july 2006 fasb interpretation 48 “accounting uncertainty income taxes interpretation fasb statement 109” “fin 48” issued clarifies accounting uncertainty income taxes recognized entity’s financial statements accordance statement financial accounting standards 109 “accounting income taxes” prescribing minimum recognition threshold measurement attribute tax position taken expected taken tax return required meet recognized financial statements fin 48 also provides guidance derecognition measurement classification interest penalties accounting interim periods disclosure transition management expect impact fin 48 material must implemented effective april 1 2007 may 2007 fasb issued fsp fin 481 “definition settlement fasb interpretation 48” fsp fin 481 provides guidance company determine whether tax position effectively settled purpose recognizing previously unrecognized tax benefits fsp fin 481 effective upon initial adoption fin 48 company adopt first quarter fiscal 2008 indicated fair value measurements september 2006 fasb issued statement financial accounting standards 157 fair value measurements sfas 157” sfas 157 provides common definition fair value framework measuring assets liabilities fair values particular standard prescribes addition statement prescribes enhanced disclosure fair value measures requires expanded disclosure nonmarket data used assess fair values required sfas 157 adopt new accounting standard effective april 1 2008 management currently reviewing impact sfas 157 financial statements considering effects prior year misstatements quantifying misstatements current year financial statements september 2006 securities exchange commission issued staff accounting bulletin 108 “sab 108” “considering effects prior year misstatements quantifying misstatements current year financial statements” provides interpretive guidance consideration effects prior year misstatements quantifying current year misstatements purpose materially assessment sab 108 requires registrants quantify misstatements using balance sheet income statement approaches evaluate whether either approach results quantifying error material based relevant quantitative qualitative factors guidance effective first fiscal period ending november 15 2006 company required adopt fourth quarter fiscal 2007 impact adopting sab 108 consolidated financial statements fair value option financial assets financial liabilities february 15 2007 fasb issued sfas 159 “sfas 159” “the fair value option financial assets financial liabilities” allows entity irrevocable option elect fair value initial subsequent measurement certain financial assets liabilities contractbycontract basis subsequent changes fair value financial assets liabilities would recognized earnings occur sfas 159 establishes certain additional disclosure requirements sfas 159 effective company’s financial statements year beginning april 1 2008 company expect effect adopting standard material consolidated financial statements accounting purchases life insurance september 2006 fasb ratified consensus reached eitf issue 065 “accounting purchases life insurance determining amount could realized accordance fasb technical bulletin 854 accounting purchases life insurance” fasb technical bulletin 854 requires amount could realized insurance contract date statement financial position reported asset since issuance fasb technical bulletin 854 diversity practice calculation amount could realized insurance contracts issue 065 concludes company consider additional amounts eg cash stabilization reserves deferred acquisition cost taxes included contractual terms insurance policy cash surrender value determining amount could realized accordance fasb technical bulletin 854 company adopt interpretation first quarter fiscal 2008 expect adoption interpretation significant impact shareholders’ equity results operations liquidity capital resources company financed continues finance operations acquisitions office expansion combination cash flow operations borrowings institutional lenders company generally applied cash flow operations fund increasing loan volume fund acquisitions repay longterm indebtedness repurchase common stock companys gross loans receivable increased 2263 million march 31 2002 5058 million march 31 2007 net cash provided operating activities fiscal years 2005 2006 2007 877 million 980 million 1101 million respectively companys primary ongoing cash requirements relate funding new offices acquisitions overall growth loans outstanding repayment longterm indebtedness repurchase common stock company repurchased 1986000 shares common stock repurchase program aggregate purchase price approximately 160 million february 1996 october 1996 certain loan agreement restrictions company suspended stock repurchases october 1996 stock repurchase program reinstated january 2000 october 2006 board directors authorized company increase share repurchase program 55 million march 31 2007 4790344 shares repurchased since respective aggregate purchase price approximately 99976000 company believes stock repurchases viable component company’s longterm financial strategy excellent use excess cash opportunity arises addition company plans open acquire least 50 branches next two years expenditures company open furnish new offices generally averaged approximately 20000 per office fiscal 2007 new offices also required 100000 400000 fund outstanding loans receivable originated first 12 months operation company acquired net 50 offices number loan portfolios competitors 7 states 13 separate transactions fiscal 2007 gross loans receivable purchased transactions approximately 205 million aggregate dates purchase company believes attractive opportunities acquire new offices receivables competitors acquire offices communities currently served company continue become available conditions local economies financial circumstances owners change company 1670 million base credit facility syndicate banks addition base revolving credit commitment 15 million seasonal revolving credit commitment available november 15 year march 31 immediately succeeding year cover increase loan demand period credit facility expire september 30 2008 funds borrowed revolving credit facility bear interest companys option either agent banks prime rate per annum libor rate plus 185 per annum march 31 2007 interest rate borrowings revolving credit facility 825 company pays commitment fee equal 0375 per annum daily unused portion revolving credit facility amounts outstanding revolving credit facility may exceed specified percentages eligible loans receivable march 31 2007 606 million outstanding facility 1064 million unused borrowing availability borrowing base limitations companys credit agreements contain number financial covenants including minimum net worth fixed charge coverage requirements credit agreements also contain certain covenants including covenants impose limitations company respect declaring paying dividends making distributions acquiring common preferred stock warrants options ii redeeming purchasing prepaying principal interest subordinated debt iii incurring additional indebtedness iv entering merger consolidation sale substantial assets subsidiaries company compliance agreements march 31 2007 believe agreements materially limit business expansion strategy october 2 2006 company amended senior credit facility connection issuance 110 million aggregate principal amount 3 convertible senior subordinated notes due october 1 2011 see note 7 consolidated financial statements included report information regarding transaction following table summarizes company’s contractual cash obligations period thousands company believes cash flow operations borrowings revolving credit facility adequate next twelve months foreseeable future thereafter fund expected cost opening acquiring new offices including funding initial operating losses new offices funding loans receivable originated offices companys offices management currently aware trends demands commitments events uncertainties believes result reasonably likely result company’s liquidity increasing decreasing material way time company needed obtained expects continue need periodic basis increase borrowing limits revolving credit facility company successfully obtained increases past anticipates able future need arises however assurance additional funding available reasonable terms needed quantitative qualitative disclosures market risk interest rate risk company’s financial instruments consist following cash loans receivable senior notes payable convertible senior subordinated notes payable note payable interest rate swap foreign currency option fair value approximates carrying value instruments except convertible senior subordinated notes payable fair value represents quoted market price loans receivable originated prevailing market rates average life approximately four months given shortterm nature loans continually repriced current market rates company’s outstanding debt revolving credit facility 606 million march 31 2007 interest borrowings facility based company’s option prime rate libor plus 185 based outstanding balance march 31 2007 change 1 interest rates would cause change interest expense approximately 312000 annual basis october 2005 company entered interest rate swap economically hedge variable cash flows associated 30 million liborbased borrowings swap converted 30 million variable rate onemonth libor fixed rate 4755 period five years accordance sfas 133 company records derivatives fair value assets liabilities consolidated balance sheets since company utilizing hedge accounting sfas 133 changes fair value derivative instrument included income march 31 2007 fair value interest rate swap 92000 included assets change fair value beginning year recorded unrealized loss income approximately 400000 october 10 2006 company issued 110 million convertible senior subordinated notes due october 1 2011 “convertible notes” qualified institutional brokers accordance rule 144a securities act 1933 interest convertible notes fixed 3 payable semiannually arrears april 1 october 1 year commencing april 1 2007 company another note payable balance 600000 march 31 2007 carries interest rate equal libor 200 foreign currency exchange rate risk september 2005 company began opening offices mexico local businesses utilize mexican peso functional currency consolidated financial statements company denominated us dollars therefore subject fluctuation us dollar mexican peso foreign exchange rate changes international revenues less 1 total revenues year ended march 31 2007 net loans denominated mexican pesos approximately 33 million usd march 31 2007 company’s foreign currency exchange rate exposures may change time business practices evolve could material effect financial results may continue periodtoperiod fluctuations relative portions mexican revenues april 28 2006 hedged foreign exchange risk purchasing 1 million foreign exchange currency option strike rate 1136 mexican peso per us dollar option expires april 30 2007 changes fair value option recorded component earnings since company apply hedge accounting earnings affected fluctuations value us dollar foreign currencies analysis performed assuming hypothetical 10 increase decrease value us dollar relative mexican peso company’s transactions mexico denominated march 31 2007 analysis indicated market movements would material effect consolidated financial statements actual effects consolidated financial statements future may differ materially results analysis year ended march 31 2007 company continue monitor assess effect currency fluctuations may institute hedging alternatives inflation company believe inflation material adverse effect financial condition results operations primary impact inflation operations company reflected increased operating costs increases operating costs would adversely affect companys operations consumer lending laws two eleven states company operates allow indexing maximum loan amounts consumer price index provisions allow company make larger loans existing interest rates states could partially offset potential increase operating costs due inflation legal matters march 31 2007 company certain subsidiaries named defendants various legal actions arising normal business activities damages various amounts claimed although amount ultimate liability respect matters cannot determined company believes liability material adverse effect company’s consolidated financial condition results operations taken whole item 7aitem 7 management’s discussion analysis financial condition results operations general companys financial performance continues dependent large part upon growth outstanding loans receivable maintenance loan quality acceptable levels operating expenses since march 31 2009 gross loans receivable increased 106 annual compounded rate 6712 million 11 billion march 31 2014 increase period reflects higher volume loans generated companys existing offices contribution loans generated new offices opened acquired period fiveyear period company grown 944 offices 1271 offices march 31 2014 fiscal 2015 company plans enter least one new state open approximately 50 new offices united states open 20 new offices mexico also evaluate acquisitions opportunities arise companys paradata financial systems subsidiary provides data processing systems 102 separate finance companies including company currently supports 1965 individual branch offices 44 states mexico paradata’s revenue highly dependent upon ability attract new customers often requires substantial lead time result revenue may fluctuate year net revenues system sales support amounted 24 million 21 million 23 million fiscal 2014 2013 2012 respectively paradata’s net revenue company continue fluctuate year basis paradata continues provide data processing support company’s inhouse integrated computer system substantially reduced cost company offers income tax return preparation electronic filing program us offices company prepared approximately 55000 53000 48000 returns fiscal years 2014 2013 2012 respectively revenues company’s tax preparation business amounted approximately 91 million 48 increase 87 million earned fiscal 2013 following table sets forth certain information derived companys consolidated statements operations balance sheets well operating data ratios periods indicated 1 average gross loans receivable determined averaging monthend gross loans receivable indicated period 2 average net loans receivable determined averaging monthend gross loans receivable less unearned interest deferred fees indicated period 3 operating margin computed total revenues less provision loan losses general administrative expenses percentage total revenues comparison fiscal 2014 versus fiscal 2013 net income 1066 million fiscal 2014 24 increase 1041 million earned fiscal 2013 increase resulted primarily increase operating income revenues less provision loan losses general administrative expenses 78 million 42 partially offset 38 million 14 million increase interest expense income tax expense respectively total revenues increased 6176 million fiscal 2014 339 million 58 increase 5837 million fiscal 2013 revenues 1131 offices open throughout fiscal years increased 37 march 31 2014 company 1271 offices operation increase 68 offices march 31 2013 interest fee income fiscal 2014 increased 367 million 73 fiscal 2013 increase resulted increase 547 million 70 average net loans receivable two fiscal years increase average loans receivable attributable company’s internal growth increase average loan balance increased 1115 1163 increase income less expected given increased fees texas georgia due law changes two states revenue increase offset reduction loan volume year resulted implementation system change ensured customers encouraged refinance existing loans proceeds transaction less 10 loan refinanced increase also offset shift portfolio mix larger loans percentage loans outstanding represent larger loans increased 331 march 31 2013 380 march 31 2014 insurance commissions income decreased 27 million 35 two fiscal years insurance commissions decreased 10 million 19 comparing two fiscal periods insurance commissions tennessee decreased approximately 890000 primarily due state tennessees change maximum loan size alternative rate loans 1000 2000 lenders tennessee permitted offer insurance products alternative rate loans income decreased 18 million 66 comparing two fiscal periods decrease resulted primarily decrease sales motor club 908000 decrease sales world class buying club 880000 partially offset increased revenue companys tax preparation business 422000 paradata 230000 provision loan losses fiscal 2014 increased 123 million 107 previous year increase resulted increase amount loans charged increase general reserve associated increase gross loans comparing two periods net chargeoffs fiscal 2014 amounted 1230 million 128 increase 1090 million charged fiscal 2013 accounts 61 days past due 30 27 recency basis 53 44 contractual basis march 31 2014 march 31 2013 excluding impact payroll deduct loans mexico accounts contractually delinquent 61 days 48 march 31 2014 current fiscal year company also increase yearoveryear loan loss ratios annualized net chargeoffs percentage average net loans increased 139 fiscal 2013 147 fiscal 2014 prior year chargeoff ratio 139 current year chargeoff ratio 147 line historical levels fiscal 2002 fiscal 2006 chargeoffs percent average loans ranged 146 148 fiscal 2007 company experienced temporary decline 133 attributed change bankruptcy law returned 145 fiscal 2008 fiscal 2009 ratio increased 167 highest company’s history result difficult economic environment higher energy costs customers faced ratio steadily declined 155 fiscal 2010 143 fiscal 2012 general administrative expenses fiscal 2014 increased 139 million 49 previous fiscal year total increase approximately 84 million related personnel expense majority attributable yearoveryear increase branch network normal merit increases employees increased health insurance costs incentive costs including stock compensation expense increased approximately 65 million increases personnel expense offset reversal 29 million compensation expense related resignation retirement executive officers current fiscal year general administrative expenses divided average open offices decreased slightly comparing two fiscal years overall general administrative expenses percent total revenues decreased 485 fiscal 2014 489 fiscal 2013 respectively interest expense increased 38 million 219 fiscal 2014 compared previous fiscal year result increase average debt outstanding 266 income tax expense increased 14 million 23 primarily increase pretax income effective tax rate remained relatively consistent 374 fiscal 2014 2013 comparison fiscal 2013 versus fiscal 2012 net income 1041 million fiscal 2013 34 increase 1007 million earned fiscal 2012 increase resulted primarily increase operating income revenues less provision loan losses general administrative expenses 99 million 57 partially offset 30 million increase income tax expense total revenues increased 5837 million fiscal 2013 436 million 81 increase 5402 million fiscal 2012 revenues 1062 offices open throughout fiscal years increased 55 march 31 2013 company 1203 offices operation increase 66 offices march 31 2012 interest fee income fiscal 2013 increased 390 million 84 fiscal 2012 increase resulted increase 750 million 106 receivables two fiscal years increase average loans receivable attributable company’s internal growth fiscal 2013 internal growth increased company opened 66 new offices average loan balance increased 1056 1115 addition company completed change interest recognition cashrule 78s method accrualactuarial method end fiscal 2013 also expected change resulted increase interest fees approximately 22 million quarterly period increase revenue material difference expected annual earnings two methods resulted timing month end sunday amount approximately amount recognized interest fee income shift company experienced end second quarter fiscal 2013 insurance commissions income increased 45 million 62 two fiscal years insurance commissions increased 41 million 87 result increase loan volume states credit insurance sold income increased 04 million 16 comparing two fiscal periods provision loan losses fiscal 2013 increased 86 million 82 previous year increase resulted combination increases allowance loan losses amount loans charged net chargeoffs fiscal 2013 amounted 1090 million 98 increase 993 million charged fiscal 2012 accounts 61 days past due 27 25 recency basis 44 40 contractual basis march 31 2013 march 31 2012 fiscal 2013 company also reduction yearoveryear loan loss ratios annualized net chargeoffs percentage average net loans decreased 140 fiscal 2012 139 fiscal 2013 general administrative expenses fiscal 2013 increased 2857 million 96 previous fiscal year equitybased compensation increased approximately 44 million fiscal 2013 compared fiscal 2012 increase 38 million due compensation committees decision make larger normal equity grant officers directors cover period five years rather awarding annual grants remaining increase due primarily costs associated new offices opened acquired fiscal year general administrative expenses divided average open offices increased slightly comparing two fiscal years overall general administrative expenses percent total revenues increased 489 fiscal 2013 483 fiscal 2012 respectively interest expense increased 35 million 251 fiscal 2013 compared previous fiscal year result increase average debt outstanding 464 income tax expense increased 30 million 51 primarily increase pretax income effective rate increased 374 fiscal 2013 370 fiscal 2012 due recognition benefit state refund claims resulted tax benefit prior year regulatory matterscfpb investigation previously disclosed march 12 2014 company received civil investigative demand “cid” consumer financial protection bureau “cfpb” cid states “the purpose investigation determine whether finance companies unnamed persons engaging unlawful acts practices connection marketing offering extension credit violation sections 1031 1036 consumer financial protection act 12 usc §§ 5531 5536 truth lending act 15 usc §§ 1601 et seq regulation z 12 cfr pt 1026 federal consumer financial law” “also determine whether bureau action obtain legal equitable relief would public interest” cid contains broad requests production documents answers interrogatories written reports related loans made company numerous aspects company’s business company provided information believes requested cid within deadlines specified cid company currently received response cfpb information provided company believes marketing lending practices lawful assurance cfpbs ongoing investigation future exercise enforcement regulatory discretionary powers result findings alleged violations federal consumer financial protection laws could lead enforcement actions proceedings litigation imposition damages fines penalties restitution monetary liabilities sanctions settlements changes company’s business practices operations could material adverse effect company’s business financial condition results operations eliminate altogether companys ability operate business profitably terms substantially similar currently operates see part item 1 “businessgovernment regulationfederal regulation” discussion matters federal regulations company’s operations subject critical accounting policies company’s accounting reporting policies accordance us generally accepted accounting principles conform general practices within finance company industry significant accounting policies used preparation consolidated financial statements discussed note 1 consolidated financial statements certain critical accounting policies involve significant judgment company’s management including use estimates assumptions affect reported amounts assets liabilities revenues expenses result changes estimates assumptions could significantly affect company’s financial position results operations company considers policies regarding allowance loan losses sharebased compensation income taxes critical accounting policies due significant degree management judgment involved allowance loan losses company developed policies procedures assessing adequacy allowance loan losses take consideration various assumptions estimates respect loan portfolio company’s assumptions estimates may affected future changes economic conditions among factors additional discussion concerning allowance loan losses see “credit quality” sharebased compensation company measures compensation cost sharebased awards fair value recognizes compensation service period awards expected vest fair value restricted stock based number shares granted quoted price common stock time grant fair value stock options determined using blackscholes valuation model blackscholes model requires input highly subjective assumptions including expected volatility riskfree interest rate expected life changes materially affect fair value estimate addition estimation sharebased awards ultimately vest requires judgment extent actual results updated estimates differ current estimates amounts recorded cumulative adjustment period estimates revised company considers many factors estimating expected forfeitures including types awards employee class historical experience actual results future changes estimates may differ substantially current estimates income taxes management uses certain assumptions estimates determining income taxes payable refundable deferred income tax liabilities assets events recognized differently financial statements income tax returns income tax expense determining amounts requires analysis certain transactions interpretation tax laws regulations management exercises considerable judgment evaluating amount timing recognition resulting income tax liabilities assets judgments estimates reevaluated periodic basis regulatory business factors change assurance given either tax returns submitted management income tax reported consolidated financial statements adjusted either adverse rulings us tax court changes tax code assessments made internal revenue service “irs” state foreign taxing authorities company subject potential adverse adjustments including limited increase statutory federal state income tax rates permanent nondeductibility amounts currently considered deductible either future periods dependency generation future taxable income order ultimately realize deferred income tax assets fasb asc 740 company includes current deferred tax impact tax positions financial statements likely likelihood greater 50 positions sustained taxing authorities full knowledge relevant information based technical merits tax position company supports tax positions unambiguous tax law prior experience taxing authority analysis considers relevant facts circumstances regulations management must still rely assumptions estimates determine overall likelihood success proper quantification given tax position credit quality company’s delinquency net chargeoff ratios reflect among factors changes mix loans portfolio quality receivables success collection efforts bankruptcy trends general economic conditions delinquency computed basis date last full contractual payment loan known recency method basis amount past due accordance original payment terms loan known contractual method upon refinancings contractual delinquency loan measured based upon terms new agreement impacted refinanced loans classification new loan modification existing loan management closely monitors portfolio delinquency using methods measure quality companys loan portfolio probability credit losses following table classifies gross loans receivable company delinquent contractual basis least 61 days march 31 2014 2013 2012 excluding impact payroll deduct loans mexico accounts contractually delinquent 61 days 48 march 31 2014 payroll deduct loans mexico installment loans union members agreement union deduct loan payment members payroll remit members behalf company additional administrative process unique payroll deduct product often results higher level contractual delinquencies however historical net chargeoffs average net loans lower overall company ratio payroll deduct loans increased 253 mexican portfolio march 31 2013 379 march 31 2014 fiscal 2014 approximately 839 company’s loans generated refinancings outstanding loans origination new loans previous customers refinancing represents new loan transaction present customer portion new loan proceeds used repay balance existing loan remaining portion advanced customer fiscal 2014 2013 2012 percentages company’s loan originations refinancings existing loans 735 753 759 respectively company’s refinancing policies limited state regulations cases consider customer’s payment history require customer made multiple payments loan considered refinancing considered current refinancing customer 45 days delinquent contractual basis delinquent refinancings may extended customers 45 days past due contractual basis customer completes new application manager believes customer’s ability intent repay improved company’s policy refinance delinquent loans amounts greater original amounts financed cases customer must complete new application every two years fiscal 2014 2013 delinquent refinancings represented 15 14 respectively company’s total loan volume chargeoffs percentage loans made category greatest loans made new borrowers less loans made former borrowers refinancings expected due payment history experience available repeat borrowers however percentage total loans charged refinancings represent greatest percentage due volume loans made category following table depicts chargeoffs percent loans made category percent total chargeoffs fiscal 2014 company maintains allowance loan losses amount managements opinion adequate provide losses inherent existing loan portfolio company charges current earnings provision loan losses amounts added allowance maintain levels expected cover probable losses principal establishing allowance loan losses company takes consideration growth loan portfolio current levels chargeoffs current levels delinquencies current economic factors company uses mathematical calculation determine initial allowance end reporting period calculation originated managements estimate future chargeoffs used allocate expenses branch level two components calculating allowance loan losses company refers general reserve specific reserve calculation starting point time needed additional provisions added determined management ensure allowance adequate general reserve 425 gross loan portfolio specific reserve generally represents 100 loans 91 days past due recency basis including bankrupt accounts category methodology based historical data showing collection loans 91 days past due bankrupt accounts remote process performed determine adequacy allowance loan losses well considering trends current levels delinquencies chargeoff levels economic trends energy food prices primary tool used movement model contractual recency basis considers rolling twelve months delinquency determine expected chargeoffs sum expected chargeoffs determined movement model contractual recency basis plus amount related delinquent refinancings compared allowance resulting mathematical calculation determine adjustments required make allowance adequate management would also determine adjustments needed consolidated annual provision loan losses less total chargeoffs management uses precision level 5 allowance loan losses compared aforementioned movement model determining adjustments needed companys policy charge earlier loans deemed uncollectible six months elapsed since date last full contractual payment however companys practice charge account earlier account deemed uncollectible 120 days past due recency basis march 31 2014 approximately 42 million 120 days past due companys chargeoff policy practice consistently applied changes made periods reported companys historical annual chargeoff rate past 11 years ranged 133 167 net loans management considers chargeoff policy evaluating appropriateness allowance loan losses estimate losses company uses historical information net chargeoffs average loan life method based fact many customers refinance loans prior contractual maturity average contractual loan terms approximately twelve months average loan life approximately eight months company allowance loan losses approximated six months average net chargeoffs march 31 2014 2013 2012 management believes allowance sufficient cover estimated losses existing loans based historical chargeoffs average loan life large percentage loans charged fiscal year companys books beginning fiscal year company believes appropriate provide losses loans originated twelve months net chargeoffs needed allowance due average life loan portfolio less twelve months method employed accordance generally accepted accounting principles following summary changes allowance loan losses years ended march 31 2014 2013 2012 1 average loans receivable determined averaging monthend gross loans receivable less unearned interest deferred fees indicated period quarterly information seasonality companys loan volume corresponding loans receivable follow seasonal trends companys highest loan demand typically occurs october december third fiscal quarter loan demand generally lowest loan repayment highest january march fourth fiscal quarter loan volume average balances typically remain relatively level remainder year seasonal trend affects quarterly operating performance corresponding fluctuations interest fee income insurance commissions earned provision loan losses recorded well fluctuations companys cash needs consequently operating results companys third fiscal quarter generally significantly lower quarters operating results fourth fiscal quarter significantly higher quarters following table sets forth quarterly basis certain items included companys unaudited consolidated financial statements shows number offices open fiscal years 2014 2013 recently issued accounting pronouncements see part ii item 8 financial statements supplementary data note 1 summary significant accounting policies common stock repurchases consolidated financial statements impact new accounting pronouncements liquidity capital resources company financed continues finance operations acquisitions office expansion combination cash flows operations borrowings institutional lenders company generally applied cash flows operations fund increasing loan volume fund acquisitions repay longterm indebtedness repurchase common stock companys gross loans receivable increased 6712 million march 31 2009 11 billion march 31 2014 net cash provided operating activities fiscal years 2014 2013 2012 2460 million 2320 million 2194 million respectively companys primary ongoing cash requirements relate funding new offices acquisitions overall growth loans outstanding repayment longterm indebtedness repurchase common stock march 31 2014 approximately 166 million shares repurchased since 1996 aggregate purchase price approximately 7339 million fiscal 2014 company repurchased 21 million shares 1905 million march 17 2014 board directors authorized company repurchase 500 million company’s common stock repurchase authorization follows addition similar repurchase authorization 500 million announced february 6 2014 250 million announced november 27 2013 taking account shares repurchased may 28 2014 including pending repurchase orders subject settlement company 130 million aggregate remaining repurchase capacity company’s outstanding repurchase authorizations company believes stock repurchases viable component company’s longterm financial strategy excellent use excess cash opportunity arises addition company plans open approximately 50 branches united states 20 branches mexico evaluate acquisition opportunities fiscal 2015 expenditures company open furnish new offices generally averaged approximately 25000 per office fiscal 2014 new offices also required 100000 400000 fund outstanding loans receivable originated first 12 months operation company acquired one office six loan portfolios competitors four states seven separate transactions fiscal 2014 gross loans receivable purchased transactions approximately 10 million aggregate dates purchase company believes attractive opportunities acquire new offices receivables competitors acquire offices communities currently served company continue become available conditions local economies financial circumstances owners change company 6800 million base credit facility syndicate banks credit facility expire november 19 2015 funds borrowed revolving credit facility bear interest libor rate plus 30 per annum minimum 40 interest rate twelve months ended march 31 2014 effective interest rate including commitment fee borrowings revolving credit facility 44 company pays commitment fee equal 040 per annum daily unused portion commitments unless unused portion equals exceeds 55 commitments case fee increases 050 per annum amounts outstanding revolving credit facility may exceed specified percentages eligible loans receivable march 31 2014 5055 million outstanding facility 889 million unused borrowing availability borrowing base limitations company also 856 million may become available revolving credit facility grows net eligible finance receivables companys revolving credit agreement contains number financial covenants including minimum net worth fixed charge coverage requirements credit agreement also contains certain covenants including covenants impose limitations company respect declaring paying dividends making distributions acquiring common preferred stock warrants options ii redeeming purchasing prepaying principal interest subordinated debt iii incurring additional indebtedness iv entering merger consolidation sale substantial assets subsidiaries company compliance covenants march 31 2014 believe covenants materially limit business expansion strategy following table summarizes company’s contractual cash obligations period thousands company believes cash flow operations borrowings revolving credit facility adequate next twelve months foreseeable future thereafter fund expected cost opening acquiring new offices including funding initial operating losses new offices funding loans receivable originated offices companys offices except otherwise discussed report including part 1 item 1a “risk factors” management currently aware trends demands commitments events uncertainties believes could result could reasonably likely result company’s liquidity increasing decreasing material way time company needed obtained expects continue need recurring basis increase borrowing limits revolving credit facility company successfully obtained increases past anticipates able future need arises however assurance additional funding available reasonable terms needed see part item 1a “risk factors” discussion risks contingencies could affect business financial condition liquidity share repurchase program companys historical longterm profitability demonstrated many years ability grow loan portfolio companys earning asset generate excess cash flow intend continue use cash flow excess capital repurchase shares assuming repurchased shares accretive earnings per share provide better returns shareholders future prefer share repurchases dividends several reasons first repurchasing shares increase value remaining shares second repurchasing shares opposed dividends provides shareholders option defer taxes electing sell holdings finally repurchasing shares provides shareholders maximum flexibility increase maintain decrease ownership depending view value companys shares whereas dividend provide flexibility since 1996 company repurchased approximately 166 million shares aggregate purchase price approximately 7339 million march 31 2014 debt outstanding 5055 million shareholders equity 3074 million resulting debttoequity ratio 1610 first priority ensure enough capital fund loan growth extent excess capital intend continue repurchasing stock authorized board directors consistent past practice continue monitor debttoequity ratio committed maintaining debt level allow us continue execute business objectives putting undue stress balance sheet historically management filed form 8k securities exchange commission announce new authorization board directors given regarding stock repurchases management plans continue make filings securities exchange commission otherwise publicly announce future stock repurchase authorizations board authorization repurchase shares historically repurchased shares open market accordance applicable regulations regarding company repurchase programs selfimposed trading policies mentioned excess capital market price stock trading level accretive earnings per share anticipate continue repurchase shares inflation company believe inflation within reasonably anticipated rates material adverse effect financial condition although inflation would increase company’s operating costs absolute terms company expects decrease value money would result increase size loans demanded customer base reasonable anticipate change customer preference would result increase total loan receivables increase absolute revenues generated larger amount loans receivable company believes increase absolute revenues offset increase operating costs addition company’s loans relatively short contractual term average life unlikely loans made given point time repaid significantly inflated dollars legal matters time company involved routine litigation relating claims arising operations normal course business see part item 3 “legal proceedings” note 17 audited consolidated financial statements discussion legal matters item 7aitem 7 management’s discussion analysis financial condition results operations general companys financial performance continues dependent large part upon growth outstanding loans receivable maintenance loan quality acceptable levels operating expenses since march 31 2015 gross loans receivable decreased 229 annual compounded rate 111 billion 106 billion march 31 2017 decrease period reflects lower volume loans generated companys existing branches partially offset contribution loans generated new branches opened period believe lower volume loans generated companys existing branches result increased competition smallloan consumer finance industry well improving financial situation average customers household due lower gasoline prices lower unemployment twoyear period beginning march 31 2015 company grown 1320 branches 1327 branches march 31 2017 fiscal 2018 company currently plans open acquire approximately 25 new branches united states evaluate acquisitions opportunities arise company offers income tax return preparation electronic filing program us branches company prepared approximately 72000 63000 56000 returns fiscal years 2017 2016 2015 respectively revenues company’s tax preparation business amounted approximately 147 million 233 increase 119 million earned fiscal 2016 following table sets forth certain information derived companys consolidated statements operations balance sheets well operating data ratios periods indicated 1 average gross loans receivable determined averaging monthend gross loans receivable indicated period 2 average net loans receivable determined averaging monthend gross loans receivable less unearned interest deferred fees indicated period 3 operating margin computed total revenues less provision loan losses general administrative expenses percentage total revenues comparison fiscal 2017 versus fiscal 2016 net income 736 million fiscal 2017 158 decrease 874 million earned fiscal 2016 operating income revenues less provision loan losses general administrative expenses decreased 292 million due 264 million decrease interest fee income 50 million increase provision expense offset 15 million decrease general administrative expenses net income also impacted 101 million decrease income tax expense 53 million decrease interest expense total revenues decreased 5317 million fiscal 2017 257 million 46 decrease 5575 million fiscal 2016 revenues 1258 branches open throughout fiscal years decreased 338 march 31 2017 company 1327 branches operation decrease 12 branches march 31 2016 decrease result merging 44 branches existing branches partially offset opening 18 new branches acquiring 14 branches interest fee income fiscal 2017 decreased 264 million 53 fiscal 2016 experienced 46 decrease average net loans receivable interest fee income year also negatively impacted decrease loan volumes however origination volume improved throughout year increased comparing fourth quarter 2017 fourth quarter 2016 revenues mexican operations negatively impacted fluctuation exchange rate year fluctuation exchange rate negative impact approximately 64 million fiscal 2017’s revenue compared prior year insurance commissions income increased 06 million 10 two fiscal years insurance commissions decreased 25 million 58 comparing two fiscal years due decrease loan volume states insurance product available customers income increased 31 million 165 comparing two fiscal years due mainly increase tax return income 28 million provision loan losses fiscal 2017 increased 50 million 40 previous year increase resulted increase amount loans charged well increase amount loans fully reserved year net chargeoffs fiscal 2017 amounted 1254 million 15 increase 1236 million charged fiscal 2016 believe increase chargeoffs result ceasing inperson visits delinquent borrowers december 2015 accounts 60 days past due 55 47 recency basis 78 71 contractual basis march 31 2017 march 31 2016 respectively excluding impact payroll deduct loans mexico accounts contractually delinquent 60 days past due 69 march 31 2017 compared 64 march 31 2016 fiscal 2017 company also increase yearoveryear loan loss ratios net chargeoffs percentage average net loans increased 148 fiscal 2016 157 fiscal 2017 fiscal 2017 company chargeoff ratio 157 elevated compared historical levels fiscal 2002 fiscal 2006 chargeoffs percent average loans ranged 146 148 fiscal 2007 company experienced temporary decline 133 attributed change bankruptcy law returned 145 fiscal 2008 fiscal 2009 ratio increased 167 highest company’s history result difficult economic environment higher energy costs customers faced ratio steadily declined 155 fiscal 2010 139 fiscal 2013 increased 147 fiscal 2014 general administrative expenses fiscal 2017 decreased 15 million 05 previous fiscal year personnel expense increased 24 million despite prior year benefiting release 114 million expense previously accrued longterm equity incentive awards expense decreased due 12 million expense related planned bond offering completed recorded fiscal 2016 well 15 million decrease mileage expense occupancy equipment expense decreased due 13 million loss taken result sale corporate jet fiscal 2016 general administrative expenses divided average open branches increased 04 comparing two fiscal years overall general administrative expenses percent total revenues increased 503 fiscal 2017 483 fiscal 2016 interest expense decreased 53 million 199 fiscal 2017 compared previous fiscal year result 36 decrease effective rate decrease average debt outstanding 241 income tax expense decreased 101 million 200 primarily decrease pretax income effective tax rate decreased 354 fiscal 2017 compared 366 fiscal 2016 decrease primarily due reduction state tax expense related companys settlement state taxing authority current year comparison fiscal 2016 versus fiscal 2015 net income 874 million fiscal 2016 211 decrease 1108 million earned fiscal 2015 decrease net income significantly impacted 100 million aftertax gain realized fiscal 2015 sale previously chargedoff accounts repeated fiscal 2016 operating income revenues less provision loan losses general administrative expenses excluding impact chargeoff sale decreased 186 million due 291 million decrease interest fee income 48 million increase provision expense offset 229 million decrease general administrative expenses net income also impacted 147 million decrease income tax expense 35 million increase interest expense total revenues decreased 5575 million fiscal 2016 527 million 86 decrease 6102 million fiscal 2015 revenues 1233 branches open throughout fiscal years decreased 69 march 31 2016 company 1339 branches operation increase 19 branches march 31 2015 interest fee income fiscal 2016 decreased 291 million 56 fiscal 2015 experienced 33 decrease average net loans receivable less loans 60 days contractually past due comparing two corresponding periods us traditional mexican loans accrual interest discontinued loan becomes 60 days past contractual due date unpaid accrued interest reversed interest income interest fee income year also negatively impacted continued decrease volumes revenues mexican operations negatively impacted fluctuation exchange rate year fluctuation exchange rate negative impact approximately 89 million fiscal 2016’s revenue compared prior year percentage loans outstanding represent larger loans including sales finance loans decreased 405 march 31 2015 402 march 31 2016 insurance commissions income decreased 236 million 275 two fiscal years insurance commissions decreased 45 million 94 comparing two fiscal years due decrease loan volume states insurance product available customers income decreased 191 million 502 comparing two fiscal years decrease resulted primarily inclusion income sale approximately 160 million charged accounts sold fiscal 2015 company also repurchased portion accounts sold fiscal 2015 fiscal 2016 resulting 16 million loss repurchase fiscal 2016 income also impacted decrease world class buying club wcbc sales revenue 24 million decrease revenue motor club product 12 million decreases partially offset increase tax preparation revenue 20 million increase revenue paradata 10 million provision loan losses fiscal 2016 increased 48 million 40 previous year increase resulted increase amount loans charged offset decrease general reserve associated slower growth current fiscal year net chargeoffs fiscal 2016 amounted 1236 million 117 increase 1106 million charged fiscal 2015 believe increase chargeoffs result ceasing inperson visits delinquent borrowers december 2015 accounts 60 days past due 47 43 recency basis 71 70 contractual basis march 31 2016 march 31 2015 excluding impact payroll deduct loans mexico accounts contractually delinquent 60 days past due 64 march 31 2016 compared 61 march 31 2015 fiscal 2016 company also increase yearoveryear loan loss ratios net chargeoffs percentage average net loans increased 129 fiscal 2015 148 fiscal 2016 net chargeoff ratio fiscal 2015 benefited change branch level incentives year change allows managers continue collection efforts accounts 91 days past due without monthly bonus negatively impacted expected resulted increase accounts 91 days past due lower chargeoffs fiscal 2015 estimate net chargeoff ratio would approximately 141 fiscal 2015 excluding impact change fiscal 2016s chargeoff ratio 148 estimated fiscal 2015 chargeoff ratio 141 line historical levels fiscal 2002 fiscal 2006 chargeoffs percent average loans ranged 146 148 fiscal 2007 company experienced temporary decline 133 attributed change bankruptcy law returned 145 fiscal 2008 fiscal 2009 ratio increased 167 highest company’s history result difficult economic environment higher energy costs customers faced ratio steadily declined 155 fiscal 2010 139 fiscal 2013 increased 147 fiscal 2014 current year changeoff rate benefit sale 32 million previously charged accounts currently plan continue sale chargedoff accounts however may consider selling charged accounts point future general administrative expenses fiscal 2016 decreased 229 million 78 previous fiscal year general administrative expenses impacted current period overall decrease share based compensation well release expense previously accrued group b performance based restricted stock awards company determined earnings per share targets associated group b stock awards achievable measurement period ends march 31 2017 fourth quarter compensation committee board directors amended awards allowing 25 group b awards vest certain officers required forfeit remaining group b shares part amendment net release resulted decrease personnel expense approximately 77 million general administrative expenses also decreased approximately 12 million due reversal longterm equity incentive accruals resulting resignation former senior vice president year partially offset accrual approximately 400000 severancerelated expenses company also reversed approximately 25 million certain longterm equity incentive accruals related retirement former ceo september 30 2015 company recorded additional 12 million expense related planned bond offering completed 13 million loss taken result sale corporate jet general administrative expenses divided average open branches decreased 110 comparing two fiscal years overall general administrative expenses percent total revenues increased 483 fiscal 2016 479 fiscal 2015 interest expense increased 35 million 152 fiscal 2016 compared previous fiscal year result 316 increase effective rate partially offset decrease average debt outstanding 120 income tax expense decreased 147 million 226 primarily decrease pretax income effective tax rate decreased 366 fiscal 2016 compared 370 fiscal 2015 decrease primarily due cumulative adjustment deferred state tax expense related companys change automated tax provision system current year regulatory matters internal investigation disclosed part item 3 “legal proceedings−internal investigation” company conducting internal investigation operations mexico focusing legality fcpa certain local laws certain payments related loans maintenance company’s books records associated payments treatment compensation matters certain employees internal investigation continues address whether extent improper payments may violate fcpa local laws made approximately 2010 2017 behalf wac de méxico sofom subsidiary company government officials mexico relating loans made unionized employees company voluntarily contacted sec doj advise agencies internal investigation underway company intends cooperate agencies conclusion cannot drawn time whether either agency open proceeding investigate matter proceeding opened potential remedies agencies may seek addition although management seek avoid disruption operations mexico company cannot determine time ultimate effect investigation remedial measures operations violations fcpa local laws occurred company could subject fines civil criminal penalties equitable remedies including profit disgorgement related interest injunctive relief addition disposition matters could adversely impact ability collect outstanding loans result modifications business practices compliance programs including significant restructuring curtailment operations mexico disposition could also potentially require monitor appointed review future business practices goal ensuring compliance fcpa applicable laws company could also face fines sanctions penalties authorities mexico well thirdparty claims shareholders andor stakeholders company addition disclosure investigation could adversely affect company’s reputation ability obtain new business retain existing business current clients potential clients attract retain employees access capital markets determined violation fcpa occurred violation may give rise event default company’s credit agreement violation material adverse effect company’s business operations properties assets condition financial otherwise amount settlement resulted company failing satisfy financial covenants additional potential fcpa violations laws regulations may uncovered investigation see part item 1a “risk factorswe may exposed liabilities fcpa determination company subsidiaries violated fcpa could material adverse effect business liquidity” “−the terms debt limit conduct business” annual report form 10k additional information cfpb investigation previously disclosed march 12 2014 company received civil investigative demand “cid” consumer financial protection bureau “cfpb” stated purpose cid determine whether company “engaging unlawful acts practices connection marketing offering extension credit violation sections 1031 1036 consumer financial protection act 12 usc §§ 5531 5536 truth lending act 15 usc §§ 1601 et seq regulation z 12 cfr pt 1026 federal consumer financial law” “also determine whether bureau action obtain legal equitable relief would public interest” company responded within deadlines specified cid broad requests production documents answers interrogatories written reports related loans made company numerous aspects company’s business also previously disclosed august 7 2015 company received letter cfpb’s enforcement office notifying company accordance cfpb’s discretionary notice opportunity respond advise “nora” process staff cfpb’s enforcement office considering recommending cfpb take legal action company “nora letter” nora letter states staff cfpb’s enforcement office expects allege company violated consumer financial protection act 2010 12 usc §5536 nora letter confirms company opportunity make nora submission written statement setting forth reasons law policy company believes cfpb take legal action company understands nora letter intended ensure potential subjects enforcement actions opportunity present positions cfpb enforcement action recommended commenced company made nora submissions cfpb’s enforcement office company expects continue additional requests demands information cfpb ongoing interactions cfpb company counsel part investigation currently unable predict ultimate timing outcome cfpb investigation company believes marketing lending practices lawful assurance cfpbs ongoing investigation future exercise enforcement regulatory discretionary powers result findings alleged violations federal consumer financial protection laws could lead enforcement actions proceedings litigation imposition damages fines penalties restitution monetary liabilities sanctions settlements changes company’s business practices operations could material adverse effect company’s business financial condition results operations eliminate altogether companys ability operate business profitably terms substantially similar currently operates see “business government regulation federal legislation” discussion matters federal regulations company’s operations subject “risk factors” information regarding regulations related risks cfpb proposed rulemaking initiative june 2 2016 cfpb announced proposed rules unfair deceptive abusive acts practices rulemaking authority relating payday vehicle title similar loans proposal would cover shortterm loans contractual term 45 days less well “longerterm loans” term longer 45 days allin apr excess 36 lender either nonpurchase money security interest consumer’s vehicle right collect repayment consumer’s bank account paycheck cfpb’s “longerterm” credit proposals seek address concern consumers suffer harm lenders fail reasonably underwrite loans take security interest consumer’s vehicle access repayment consumer’s account wages although company make loans terms 45 days less obtain access customer’s bank account paycheck repayment loans make vehiclesecured loans apr within scope proposal proposals would require lender condition making covered longerterm loan first make goodfaith reasonable determination consumer ability repay covered longerterm loan without reborrowing defaulting proposals would require lender consider verify amount timing consumers income consumers major financial obligations consumers borrowing history prior making covered loan lenders would also required determine consumer able make projected payments covered longerterm loan payments due still fulfilling major financial obligations meeting living expenses ability repay assessment would apply initial longerterm loan subsequent refinancing addition proposals would include rebuttable presumption customers seeking refinance covered longerterm loan lack “ability repay” time refinancing borrower delinquent seven days recently delinquent outstanding loan within past 30 days ii borrower stated indicated inability make scheduled payment within past 30 days iii refinancing would result first scheduled payment due longer period time refinancing loan next regularly scheduled payment outstanding loan iv refinancing would provide consumer disbursement funds amount would substantially exceed amount payment due outstanding loan within 30 days refinancing overcome presumption inability repay lender would verify improvement borrower’s financial capacity indicate ability repay additional extension credit proposals subject possible change final rules would issued implemented cannot predict ultimate rulemaking provide company believe proposals currently described cfpb would material impact company’s existing lending procedures company currently underwrites loans including secured vehicle title would fall within scope proposals reviewing customer’s ability repay based company’s standards however assurance proposals longerterm loans implemented final rulemaking would require changes company’s practices procedures loans could materially adversely affect company’s ability make loans cost making loans company’s ability frequency could refinance loans profitability loans final rulemaking also could effects beyond contemplated initial proposal could materially adversely impact business operations cfpb’s outline proposed rulemaking initiative described cfpb also stated expects conduct separate rulemaking identify larger participants installment lending market purposes supervision program though timing rulemaking uncertain company believes implementation rules would likely bring company’s business cfpb’s supervisory authority among things would subject company reporting obligations onsite compliance examinations cfpb see part item 1 “business government regulation federal legislation” discussion matters federal regulations company’s operations subject part item 1a “risk factors” information regarding regulatory related risks military lending act july 2015 department defense “dod” amended regulations implementing military lending act “mla” issuing final regulations “final rule” prior mla regulations prohibited creditors making payday loans nonpurchase money motor vehicle title loans term less 181 days refund anticipation loans “covered borrowers” includes members armed forces active duty ii active guard reserve duty iii dependents apr exceeded 36 company make loans covered prior mla regulations however final rule expands mla 36 apr cap cover broader range credit products final rule covers credit offered extended “covered borrower” primarily personal family household purposes either subject finance charge payable written agreement four installments final rule mandates among things creditor must provide oral written disclosures including allinclusive apr referred military annual percentage rate “mapr” must require arbitration agreements “covered borrowers additionally final rule prohibits creditors entering credit transactions covered borrowers use title vehicle security credit obligation creditors may elect check borrower’s status “covered borrower” either database maintained dod nationwide consumer reporting agency entering consumer credit transaction provides creditor legally conclusive determination borrower’s status affords creditor safe harbor liability “covered borrower” determination final rule became effective october 1 2015 limitations final rule apply consumer credit transactions accounts consumer credit consummated established october 3 2016 effective september 1 2016 company elected longer make loans covered borrowers active duty military personnel dependents due new restrictions law company believes implementation final rule adversely affect operations financial condition new mexico rate cap bills december 15 2016 bill prefiled new mexico state senate enacted would place 36 rate cap contract extension credit entered july 1 2017 initiative tabled early february 2015 legislative committee similar legislation passed states operate could materially adversely affect worst case eliminate company’s lending practices operations profitability prospects company state federal trade associations worked oppose legislation however uncertain whether efforts successful preventing passage similar legislation future discussed elsewhere report company’s operations subject extensive state federal laws regulations changes laws regulations application could material adverse effect company’s business results operations prospects ability continue operations jurisdictions affected changes see part item 1 “business government regulation state legislation” “ federal legislation” part item 1a“risk factors” information regarding legislation related risks critical accounting policies company’s accounting reporting policies accordance gaap conform general practices within finance company industry significant accounting policies used preparation consolidated financial statements discussed note 1 consolidated financial statements certain critical accounting policies involve significant judgment company’s management including use estimates assumptions affect reported amounts assets liabilities revenues expenses result changes estimates assumptions could significantly affect company’s financial position results operations company considers policies regarding allowance loan losses sharebased compensation income taxes critical accounting policies due significant degree management judgment involved allowance loan losses company developed policies procedures assessing adequacy allowance loan losses take consideration various assumptions estimates respect loan portfolio company’s assumptions estimates may affected future changes economic conditions among factors additional discussion concerning allowance loan losses see “credit quality” sharebased compensation company measures compensation cost sharebased awards fair value recognizes compensation service period awards expected vest fair value restricted stock based number shares granted quoted price common stock time grant fair value stock options determined using blackscholes valuation model blackscholes model requires input highly subjective assumptions including expected volatility riskfree interest rate expected life changes materially affect fair value estimate addition estimation sharebased awards ultimately vest requires judgment extent actual results updated estimates differ current estimates amounts recorded cumulative adjustment period estimates revised company considers many factors estimating expected forfeitures including types awards employee class historical experience actual results future changes estimates may differ substantially current estimates income taxes management uses certain assumptions estimates determining income taxes payable refundable deferred income tax liabilities assets events recognized differently financial statements income tax returns income tax expense determining amounts requires analysis certain transactions interpretation tax laws regulations management exercises considerable judgment evaluating amount timing recognition resulting income tax liabilities assets judgments estimates reevaluated periodic basis regulatory business factors change assurance given either tax returns submitted management income tax reported consolidated financial statements adjusted either adverse rulings changes tax code assessments made internal revenue service state foreign taxing authorities company subject potential adverse adjustments including limited increase statutory federal state income tax rates permanent nondeductibility amounts currently considered deductible either future periods dependency generation future taxable income order ultimately realize deferred income tax assets fasb asc 740 company includes current deferred tax impact tax positions financial statements likely likelihood greater 50 positions sustained taxing authorities full knowledge relevant information based technical merits tax position company supports tax positions unambiguous tax law prior experience taxing authority analysis considers relevant facts circumstances regulations management must still rely assumptions estimates determine overall likelihood success proper quantification given tax position credit quality company’s delinquency net chargeoff ratios reflect among factors changes mix loans portfolio quality receivables success collection efforts bankruptcy trends general economic conditions delinquency computed basis date last full contractual payment loan known recency method basis amount past due accordance original payment terms loan known contractual method upon refinancings contractual delinquency loan measured based upon terms new agreement impacted refinanced loans classification new loan modification existing loan management closely monitors portfolio delinquency using methods measure quality companys loan portfolio probability credit losses following table classifies gross loans receivable company delinquent contractual basis least 61 days march 31 2017 2016 2015 excluding impact payroll deduct loans mexico accounts contractually delinquent 60 days 69 march 31 2017 payroll deduct loans mexico installment loans union members agreement union deduct loan payment members payroll remit members behalf company additional administrative process unique payroll deduct product often results higher level contractual delinquencies however historical net chargeoffs average net loans lower overall company ratio payroll deduct loans increased 540 mexican portfolio march 31 2016 593 march 31 2017 fiscal 2017 approximately 797 company’s loans based accounts generated refinancings outstanding loans origination new loans previous customers refinancing represents new loan transaction present customer portion new loan proceeds used repay balance existing loan remaining portion advanced customer fiscal 2017 2016 2015 percentages company’s loan originations refinancings existing loans 668 694 715 respectively company’s refinancing policies limited state regulations cases consider customer’s payment history require customer made multiple payments loan considered refinancing considered current refinancing customer 45 days delinquent contractual basis delinquent refinancings may extended customers 45 days past due contractual basis customer completes new application manager believes customer’s ability intent repay improved company’s policy refinance delinquent loans amounts greater original amounts financed cases customer must complete new application every two years fiscal 2017 2016 delinquent refinancings represented 12 14 respectively company’s total loan volume chargeoffs percentage loans made category greatest loans made new borrowers less loans made former borrowers refinancings percentage total loans charged refinancings represent greatest percentage due volume loans made category following table depicts chargeoffs percent loans made category percent total chargeoffs fiscal 2017 company maintains allowance loan losses amount managements opinion adequate provide losses inherent existing loan portfolio company charges current earnings provision loan losses amounts added allowance maintain levels expected cover probable losses principal establishing allowance loan losses company takes consideration growth loan portfolio current levels chargeoffs current levels delinquencies current economic factors company uses mathematical calculation determine initial allowance end reporting period calculation originated managements estimate future chargeoffs used allocate expenses branch level two components calculating allowance loan losses company refers general reserve specific reserve calculation starting point time needed additional provisions added determined management ensure allowance adequate general reserve 425 gross loan portfolio specific reserve generally represents 100 loans 91 days past due recency basis including bankrupt accounts category methodology based historical data showing collection loans 91 days past due bankrupt loans remote process performed determine adequacy allowance loan losses well considering trends current levels delinquencies chargeoff levels economic trends energy food prices primary tool used movement model contractual recency basis considers rolling twelve months delinquency determine expected chargeoffs sum expected chargeoffs determined movement model contractual recency basis plus amount related delinquent refinancings compared allowance resulting mathematical calculation determine adjustments required make allowance adequate management would also determine adjustments needed consolidated annual provision loan losses less total chargeoffs management uses precision level 5 allowance loan losses compared aforementioned movement model determining adjustments needed companys policy charge earlier loans deemed uncollectible six months elapsed since date last full contractual payment companys chargeoff policy consistently applied changes made periods reported companys delinquencies net chargeoff ratios significantly impacted fiscal 2015 change branch level incentive plan became effective july 1 2014 change allows managers continue collection efforts accounts 91 days past due without monthly bonus negatively impacted expected resulted increase accounts 91 days past due lower chargeoffs fiscal 2015 also believe chargeoffs fiscal 2016 negatively impacted ceasing inperson visits delinquent borrowers december 2015 companys historical annual chargeoff rate past 10 years ranged 129 167 net loans management considers chargeoff policy evaluating appropriateness allowance loan losses estimate losses company uses historical information net chargeoffs average loan life method based fact many customers refinance loans prior contractual maturity average contractual loan terms approximately 13 months average loan life approximately 8 months company allowance loan losses approximated 7 months average net chargeoffs march 31 2017 management believes allowance sufficient cover estimated losses existing loans based historical chargeoffs average loan life large percentage loans charged fiscal year companys books beginning fiscal year company believes appropriate provide losses loans originated twelve months net chargeoffs needed allowance due average life loan portfolio less twelve months method employed accordance gaap following summary changes allowance loan losses years ended march 31 2017 2016 2015 1 average net loans receivable determined averaging monthend gross loans receivable less unearned interest deferred fees indicated period quarterly information seasonality companys loan volume corresponding loans receivable follow seasonal trends companys highest loan demand typically occurs october december third fiscal quarter loan demand generally lowest loan repayment highest january march fourth fiscal quarter loan volume average balances typically remain relatively level remainder year seasonal trend affects quarterly operating performance corresponding fluctuations interest fee income insurance commissions earned provision loan losses recorded well fluctuations companys cash needs consequently operating results companys third fiscal quarter generally significantly lower quarters operating results fourth fiscal quarter significantly higher quarters following table sets forth quarterly basis certain items included companys unaudited consolidated financial statements shows number branches open fiscal years 2017 2016 recently issued accounting pronouncements see part ii item 8 financial statements supplementary data note 1summary significant accounting policies consolidated financial statements impact new accounting pronouncements liquidity capital resources company financed continues finance operations acquisitions branch expansion combination cash flows operations borrowings institutional lenders company generally applied cash flows operations fund loan volume fund acquisitions repay longterm indebtedness repurchase common stock companys gross loans receivable decreased 11123 million march 31 2014 10598 million march 31 2017 net cash provided operating activities fiscal years 2017 2016 2015 2194 million 2061 million 2419 million respectively company continues believe stock repurchases viable component company’s longterm financial strategy excellent use excess cash opportunity arises however amended credit facility limits share repurchases 50 consolidated adjusted net income fiscal year commencing fiscal year ending march 31 2017 company plans open acquire approximately 25 branches united states fiscal 2018 expenditures company open furnish new branches averaged approximately 35000 per branch fiscal 2017 new branches generally required 100000 400000 fund outstanding loans receivable originated first 12 months operation fiscal 2017 company opened 18 new branches merged 44 branches existing ones company acquired 14 branches fiscal 2017 company believes attractive opportunities acquire new branches receivables competitors acquire branches communities currently served company continue become available conditions local economies financial circumstances owners change company revolving credit facility syndicate banks revolving credit facility provides revolving borrowings lesser aggregate commitments facility b borrowing base includes 550000 letters credit subfacility march 31 2017 aggregate commitments credit facility 3700 million borrowing base limitation equal product company’s eligible finance receivables less unearned finance charges insurance premiums insurance commissions b advance rate percentage ranges 79 85 based collateral performance indicator completely described administrative agent revolving credit facility right time permitted discretion without obligation set aside reasonable reserves borrowing base amounts may deem appropriate including without limitation reserves respect regulatory events increased operational legal regulatory risk may 2017 credit facility amended among things extend term june 15 2019 increase aggregate commitments 4800 million additional information may 2017 amendment credit facility see part ii item 8 footnote 18 subsequent events notes consolidated financial statements year ended march 31 2017 funds borrowed revolving credit facility bear interest libor rate plus 40 per annum minimum rate 50 year ended march 31 2017 effective interest rate including commitment fee borrowings revolving credit facility 58 company pays commitment fee equal 050 per annum daily unused portion commitments march 31 2017 2951 million outstanding facility 743 million unused borrowing availability borrowing base limitations company’s obligations revolving credit facility together treasury management hedging obligations owing lender revolving credit facility affiliate lender required guaranteed company’s whollyowned domestic subsidiaries obligations company subsidiary guarantors revolving credit facility together treasury management hedging obligations secured firstpriority security interest substantially assets company subsidiary guarantors agreement governing company’s revolving credit facility contains affirmative negative covenants including covenants restrict ability company subsidiaries among things incur guarantee indebtedness incur liens pay dividends repurchase redeem capital stock dispose assets engage mergers consolidations make acquisitions investments redeem prepay subordinated debt amend subordinated debt documents make changes nature business engage transactions affiliates agreement also contains financial covenants including minimum consolidated net worth 3300 million plus 50 borrowers consolidated net income fiscal year beginning 2017 minimum fixed charge coverage ratio 25 10 maximum ratio total debt consolidated adjusted net worth 20 10 maximum ratio subordinated debt consolidated adjusted net worth 10 agreement allows company incur subordinated debt matures termination date revolving credit facility contains specified subordination terms subject limitations amount imposed financial covenants agreement addition agreement establishes maximum specified level collateral performance indicator collateral performance indicator equal sum threemonth rolling average rate receivables least sixty days past due b eightmonth rolling average net chargeoff rate company compliance covenants march 31 2017 believe covenants materially limit business expansion strategy agreement contains events default including without limitation nonpayment principal interest obligations violation covenants misrepresentation crossdefault debt bankruptcy insolvency events judgments certain erisa events actual asserted invalidity loan documentation invalidity subordination provisions subordinated debt certain changes control company occurrence certain regulatory events including entry stay order judgment ruling similar event related company’s subsidiaries’ originating holding pledging collecting enforcing eligible finance receivables material company subsidiary remains unvacated undischarged unbonded unstayed appeal otherwise period 60 days date entry reasonably likely cause material adverse change determined violation fcpa occurred described part item 3 “legal proceedings−internal investigation” violation may give rise event default credit agreement violation material adverse effect business operations properties assets condition financial otherwise amount settlement resulted company failing satisfy financial covenants company believes cash flow operations borrowings revolving credit facility sources adequate fund expected cost opening acquiring new branches including funding initial operating losses new branches funding loans receivable originated branches companys branches next 12 months foreseeable future beyond except otherwise discussed report including limited discussions part 1 item 1a risk factors supplemented subsequent disclosures information company files furnishes sec time management currently aware trends demands commitments events uncertainties believes could result could reasonably likely result material adverse effect company’s liquidity following table summarizes company’s contractual obligations period thousands share repurchase program march 10 2015 board directors authorized company repurchase 250 million company’s common stock march 31 2017 company 65 million aggregate remaining repurchase capacity march 10 2015 repurchase authorization timing actual number shares repurchased depend variety factors including stock price corporate regulatory requirements market economic conditions although repurchase authorization stated expiration date company’s stock repurchase program may suspended discontinued time company continues believe stock repurchases viable component company’s longterm financial strategy excellent use excess cash opportunity arises however amended credit facility limits share repurchases 50 consolidated adjusted net income fiscal year commencing fiscal year ending march 31 2017 first priority ensure enough capital fund loan growth extent excess capital may continue repurchasing stock appropriate authorized board directors march 31 2017 debt outstanding 2951 million shareholders equity 4611 million resulting debttoequity ratio 0610 continue monitor debttoequity ratio committed maintaining debt level allow us continue execute business objectives putting undue stress consolidated balance sheet inflation company believe inflation within reasonably anticipated rates material adverse effect financial condition although inflation would increase company’s operating costs absolute terms company expects decrease value money would result increase size loans demanded customer base reasonable anticipate change customer preference would result increase total loan receivables increase absolute revenues generated larger amount loans receivable company believes increase absolute revenues offset increase operating costs addition company’s loans relatively short contractual term average life unlikely loans made given point time repaid significantly inflated dollars legal matters time company involved routine litigation relating claims arising operations normal course business see part item 3 “legal proceedings” note 16 audited consolidated financial statements discussion legal matters item 7a nannanitem 7a quantitative qualitative disclosures market risk companys outstanding debt revolving credit facility 572 million march 31 1999 interest borrowings facility based companys option prime rate libor plus 160 based outstanding balance march 31 1999 change 1 interest rate would cause change interest expense approximately 572000 annual basis item 8item 7a quantitative qualitative disclosures market risk market risk reflects risk economic loss resulting adverse changes market price interest rates company generally offers loans prevailing statutory rates terms exceed 36 months management believes carrying value approximates fair value loan portfolio companys outstanding debt revolving credit facility 679 million march 31 2000 interest borrowings facility based companys option prime rate libor plus 160 based outstanding balance march 31 2000 change 1 interest rate would cause change interest expense approximately 679000 annual basis item 8item 7a quantitative qualitative disclosures market risk companys outstanding debt revolving credit facility 832 million march 31 2001 interest borrowings facility based companys option prime rate libor plus 175 based outstanding balance march 31 2001 change 1 interest rate would cause change interest expense approximately 832000 annual basis item 8item 7a quantitative qualitative disclosures market risk companys outstanding debt revolving credit facility 769 million march 31 2002 interest borrowings facility based companys option prime rate libor plus 175 based outstanding balance march 31 2002 change 1 interest rate would cause change interest expense approximately 769000 annual basis item 8item 7a quantitative qualitative disclosures market risk “management’s discussion analysis financial condition results operations quantitative qualitative disclosures market risk” report incorporated reference response item 7a item 8item 7a quantitative qualitative disclosures market risk “management’s discussion analysis financial condition results operations quantitative qualitative disclosures market risk” report incorporated reference response item 7a item 8item 7a quantitative qualitative disclosures market risk “management’s discussion analysis financial condition results operations quantitative qualitative disclosures market risk” report incorporated reference response item 7a part ii item 8item 7a quantitative qualitative disclosures market risk “management’s discussion analysis financial condition results operations quantitative qualitative disclosures market risk” report incorporated reference response item 7a part ii item 8item 7a quantitative qualitative disclosures market risk “management’s discussion analysis financial condition results operations quantitative qualitative disclosures market risk” report incorporated reference response item 7a part ii item 8item 7a quantitative qualitative disclosures market risk “management’s discussion analysis financial condition results operations quantitative qualitative disclosures market risk” report incorporated reference response item 7a part ii item 8nanitem 7a quantitative qualitative disclosures market risk interest rate risk march 31 2015 company’s financial instruments consisted following cash equivalents loans receivable senior notes payable fair value approximates carrying value instruments loans receivable originated prevailing market rates average life approximately 8 months given shortterm nature loans continually repriced current market rates company’s outstanding debt revolving credit facility 5012 million march 31 2015 interest borrowings facility based greater 4 one month libor plus 30 based outstanding balance march 31 2015 change 1 libor interest rate would cause change interest expense approximately 09 million annual basis foreign currency exchange rate risk september 2005 company began opening branches mexico local businesses utilize mexican peso functional currency consolidated financial statements company denominated us dollars therefore subject fluctuation us dollar mexican peso foreign exchange rates change revenues nonus operations accounted approximately 86 84 total revenues twelve month periods ended march 31 2015 2014 respectively may continue periodtoperiod fluctuations relative portions international revenues total consolidated revenues international operations subject risks including limited differing economic conditions changes political climate differing tax structures regulations restrictions foreign exchange rate volatility compared united states accordingly future consolidated financial position well consolidated results operations results could adversely affected changes factors foreign exchange rate fluctuations may adversely impact financial position assets liabilities foreign operations translated us dollars preparing consolidated balance sheet exposure foreign exchange rate fluctuations arises part balances intercompany accounts included subsidiary balance sheets intercompany accounts denominated functional currency foreign subsidiaries translated us dollars reporting period end additionally foreign exchange rate fluctuations may impact consolidated results operations exchange rate fluctuations impact amounts reported consolidated statement income effect foreign exchange rate fluctuations consolidated financial position recognized within shareholders’ equity accumulated comprehensive income loss net translation adjustment twelve months ended march 31 2015 loss approximately 108 million company’s foreign currency exchange rate exposures may change time business practices evolve could material effect company’s financial results company continue monitor assess effect foreign currency fluctuations may institute hedging strategies company performs foreign exchange sensitivity analysis quarterly basis assumes hypothetical 10 increase decrease value us dollar relative mexican peso foreign exchange risk sensitivity net loans receivable consolidated net income assessed using hypothetical scenarios assumes earnings mexican pesos recognized evenly throughout period actual results may differ results noted tables particularly due assumptions utilized events occur included method used foreign exchange risk sensitivity net loans denominated mexican pesos translated us dollars approximately 564 million 580 million march 31 2015 2014 respectively reported net loans receivable amount summarized following table following table summarizes results foreign exchange risk sensitivity analysis reported net income dates indicated part ii item 8item 7a quantitative qualitative disclosures market risk interest rate risk march 31 2016 company’s financial instruments consisted following cash equivalents loans receivable senior notes payable fair value approximates carrying value instruments loans receivable originated prevailing market rates average life approximately 8 months given shortterm nature loans continually repriced current market rates company’s outstanding debt revolving credit facility 3747 million march 31 2016 interest borrowings facility based rate libor plus 40 minimum rate 50 based outstanding balance march 31 2016 change 1 libor interest rate would cause change interest expense approximately 16 million annual basis foreign currency exchange rate risk company operated branches mexico since september 2005 local businesses utilize mexican peso functional currency consolidated financial statements company denominated us dollars therefore subject fluctuation us dollar mexican peso foreign exchange rates change revenues nonus operations accounted approximately 76 86 total revenues twelve month periods ended march 31 2016 2015 respectively may continue periodtoperiod fluctuations relative portions international revenues total consolidated revenues international operations subject risks including limited differing economic conditions changes political climate differing tax structures regulations restrictions foreign exchange rate volatility compared united states accordingly future consolidated financial position well consolidated results operations results could adversely affected changes factors foreign exchange rate fluctuations may adversely impact financial position assets liabilities foreign operations translated us dollars preparing consolidated balance sheet exposure foreign exchange rate fluctuations arises part balances intercompany accounts included subsidiary balance sheets intercompany accounts denominated functional currency foreign subsidiaries translated us dollars reporting period end additionally foreign exchange rate fluctuations may impact consolidated results operations exchange rate fluctuations impact amounts reported consolidated statement income effect foreign exchange rate fluctuations consolidated financial position recognized within shareholders’ equity accumulated comprehensive income loss net translation adjustment twelve months ended march 31 2016 loss approximately 80 million company’s foreign currency exchange rate exposures may change time business practices evolve could material effect company’s financial results company continue monitor assess effect foreign currency fluctuations may institute hedging strategies company performs foreign exchange sensitivity analysis quarterly basis assumes hypothetical 10 increase decrease value us dollar relative mexican peso foreign exchange risk sensitivity net loans receivable consolidated net income assessed using hypothetical scenarios assumes earnings mexican pesos recognized evenly throughout period actual results may differ results noted tables particularly due assumptions utilized events occur included method used foreign exchange risk sensitivity net loans denominated mexican pesos translated us dollars approximately 513 million 564 million march 31 2016 2015 respectively reported net loans receivable amount summarized following table following table summarizes results foreign exchange risk sensitivity analysis reported net income dates indicated part ii item 8item 7a quantitative qualitative disclosures market risk interest rate risk march 31 2018 company’s financial instruments consisted following cash equivalents loans receivable senior notes payable fair value approximates carrying value instruments loans receivable originated prevailing market rates average life approximately 8 months given shortterm nature loans continually repriced current market rates company’s outstanding debt revolving credit facility 2449 million march 31 2018 interest borrowings facility based rate libor plus 40 minimum rate 50 based outstanding balance companys revolving credit facility march 31 2018 change 1 libor interest rate would cause change interest expense approximately 24 million annual basis foreign currency exchange rate risk company operated branches mexico since september 2005 local businesses utilize mexican peso functional currency consolidated financial statements company denominated us dollars therefore subject fluctuation us dollar mexican peso foreign exchange rate changes revenues nonus operations accounted approximately 84 77 total revenues twelvemonth periods ended march 31 2018 2017 respectively may continue periodtoperiod fluctuations relative portions international revenues total consolidated revenues international operations subject risks including limited differing economic conditions changes political climate differing tax structures regulations restrictions foreign exchange rate volatility compared united states accordingly future consolidated financial position well consolidated results operations could adversely affected changes factors foreign exchange rate fluctuations may adversely impact financial position assets liabilities foreign operations translated us dollars preparing consolidated balance sheet exposure foreign exchange rate fluctuations arises part balances intercompany accounts included subsidiary balance sheets intercompany accounts denominated functional currency foreign subsidiaries translated us dollars reporting period end additionally foreign exchange rate fluctuations may impact consolidated results operations exchange rate fluctuations impact amounts reported consolidated statement income effect foreign exchange rate fluctuations consolidated financial position recognized within shareholders’ equity accumulated comprehensive income loss net translation adjustment twelve months ended march 31 2018 income approximately 17 million company’s foreign currency exchange rate exposure may change time business practices evolve could material effect company’s financial results company continue monitor assess effect foreign currency fluctuations may institute hedging strategies company performs foreign exchange sensitivity analysis quarterly basis assumes hypothetical 10 increase decrease value us dollar relative mexican peso foreign exchange risk sensitivity net loans receivable consolidated net income assessed using hypothetical scenarios assumes earnings mexican pesos recognized evenly throughout period actual results may differ results noted tables particularly due assumptions utilized events occur included method used foreign exchange risk sensitivity net loans denominated mexican pesos translated us dollars approximately 608 million 662 million march 31 2018 2017 respectively reported net loans receivable amount summarized following table following table summarizes results foreign exchange risk sensitivity analysis reported net income dates indicated part ii item 8item 7a quantitative qualitative disclosures market risk interest rate risk march 31 2020 company’s financial instruments consisted following cash equivalents loans receivable senior notes payable fair value approximates carrying value instruments loans receivable originated prevailing market rates average life approximately 8 months given shortterm nature loans continually repriced current market rates company’s outstanding debt revolving credit facility 4511 million march 31 2020 interest borrowings facility based rate libor plus applicable margin 30 40 based certain ebitda related metrics set forth revolving credit agreement determined adjusted monthly basis minimum rate 40 based outstanding balance companys revolving credit facility march 31 2020 change 1 libor interest rate would cause change interest expense approximately 45 million annual basis part ii item 8item 7a quantitative qualitative disclosures market risk company’s financial instruments consist following cash loans receivable senior notes payable subordinated notes payable fair value approximates carrying value instruments loans receivable originated prevailing market rates average life approximately four months given shortterm nature loans continually repriced current market rates company’s revolving credit facility variable rate based margin libor reprices changes libor interest rate subordinated notes 10 considered market rate type instrument company’s outstanding debt revolving credit facility 981 million march 31 2003 interest borrowings facility based company’s option prime rate libor plus 185 based outstanding balance march 31 2003 change 1 interest rate would cause change interest expense approximately 981000 annual basis item 8item 7a quantitative qualitative disclosures market risk “management’s discussion analysis financial condition results operations quantitative qualitative disclosures market risk” report incorporated reference response item 7a part ii item 8item 7a quantitative qualitative disclosures market risk interest rate risk march 31 2019 company’s financial instruments consisted following cash equivalents loans receivable senior notes payable fair value approximates carrying value instruments loans receivable originated prevailing market rates average life approximately 8 months given shortterm nature loans continually repriced current market rates company’s outstanding debt revolving credit facility 2519 million march 31 2019 interest borrowings facility based rate libor plus applicable margin 30 40 based certain ebitda related metrics set forth revolving credit agreement determined adjusted monthly basis minimum rate 40 based outstanding balance companys revolving credit facility march 31 2019 change 1 libor interest rate would cause change interest expense approximately 25 million annual basis foreign currency exchange rate risk sale foreign subsidiaries effective july 1 2018 company held branches mexico local businesses utilized mexican peso functional currency consolidated financial statements company denominated us dollars therefore impacted changes us dollar mexican peso exchange rate sale companys foreign subsidiaries result sale company currently subject foreign currency exchange rate risk change us dollar mexican peso exchange rate march 31 2019 would material companys audited consolidated financial statements part ii item 8item 7a quantitative qualitative disclosures market risk “management’s discussion analysis financial condition results operations quantitative qualitative disclosures market risk” report incorporated reference response item 7a part ii item 8item 7a quantitative qualitative disclosures market risk “management’s discussion analysis financial condition results operations quantitative qualitative disclosures market risk” report incorporated reference response item 7a part ii item 8item 7a quantitative qualitative disclosures market risk interest rate risk march 31 2014 company’s financial instruments consisted following cash equivalents loans receivable senior notes payable fair value approximates carrying value instruments loans receivable originated prevailing market rates average life approximately eight months given shortterm nature loans continually repriced current market rates company’s outstanding debt revolving credit facility 5055 million march 31 2014 interest borrowings facility based greater 1 one month libor plus 30 based outstanding balance march 31 2014 change 1 libor interest rate would cause change interest expense approximately 08 million annual basis foreign currency exchange rate risk september 2005 company began opening offices mexico local businesses utilize mexican peso functional currency consolidated financial statements company denominated us dollars therefore subject fluctuation us dollar mexican peso foreign exchange rates change revenues nonus operations accounted approximately 82 70 total revenues twelve month periods ended march 31 2014 2013 respectively may continue periodtoperiod fluctuations relative portions international revenues total consolidated revenues international operations subject risks including limited differing economic conditions changes political climate differing tax structures regulations restrictions foreign exchange rate volatility compared united states accordingly future consolidated financial position well consolidated results operations results could adversely affected changes factors foreign exchange rate fluctuations may adversely impact financial position assets liabilities foreign operations translated us dollars preparing consolidated balance sheet exposure foreign exchange rate fluctuations arises part balances intercompany accounts included subsidiary balance sheets intercompany accounts denominated functional currency foreign subsidiaries translated us dollars reporting period end additionally foreign exchange rate fluctuations may impact consolidated results operations exchange rate fluctuations impact amounts reported consolidated statement income effect foreign exchange rate fluctuations consolidated financial position recognized within shareholders’ equity accumulated comprehensive income loss net translation adjustment twelve months ended march 31 2014 loss approximately 37 million company’s foreign currency exchange rate exposures may change time business practices evolve could material effect company’s financial results company continue monitor assess effect foreign currency fluctuations may institute hedging strategies company performs foreign exchange sensitivity analysis quarterly basis assumes hypothetical 10 increase decrease value us dollar relative mexican peso foreign exchange risk sensitivity net loans receivable consolidated net income assessed using hypothetical scenarios assumes earnings mexican pesos recognized evenly throughout period actual results may differ results noted tables particularly due assumptions utilized events occur included method used foreign exchange risk sensitivity net loans denominated mexican pesos translated us dollars approximately 580 million 508 million march 31 2014 2013 respectively reported net loans receivable amount summarized following table following table summarizes results foreign exchange risk sensitivity analysis reported net income dates indicated part ii item 8item 7a quantitative qualitative disclosures market risk interest rate risk march 31 2017 company’s financial instruments consisted following cash equivalents loans receivable senior notes payable fair value approximates carrying value instruments loans receivable originated prevailing market rates average life approximately 8 months given shortterm nature loans continually repriced current market rates company’s outstanding debt revolving credit facility 2951 million march 31 2017 interest borrowings facility based rate libor plus 40 minimum rate 50 based outstanding balance march 31 2017 change 1 libor interest rate would cause change interest expense approximately 29 million annual basis foreign currency exchange rate risk company operated branches mexico since september 2005 local businesses utilize mexican peso functional currency consolidated financial statements company denominated us dollars therefore subject fluctuation us dollar mexican peso foreign exchange rates change revenues nonus operations accounted approximately 77 76 total revenues twelve month periods ended march 31 2017 2016 respectively may continue periodtoperiod fluctuations relative portions international revenues total consolidated revenues international operations subject risks including limited differing economic conditions changes political climate differing tax structures regulations restrictions foreign exchange rate volatility compared united states accordingly future consolidated financial position well consolidated results operations results could adversely affected changes factors foreign exchange rate fluctuations may adversely impact financial position assets liabilities foreign operations translated us dollars preparing consolidated balance sheet exposure foreign exchange rate fluctuations arises part balances intercompany accounts included subsidiary balance sheets intercompany accounts denominated functional currency foreign subsidiaries translated us dollars reporting period end additionally foreign exchange rate fluctuations may impact consolidated results operations exchange rate fluctuations impact amounts reported consolidated statement income effect foreign exchange rate fluctuations consolidated financial position recognized within shareholders’ equity accumulated comprehensive income loss net translation adjustment twelve months ended march 31 2017 loss approximately 48 million company’s foreign currency exchange rate exposures may change time business practices evolve could material effect company’s financial results company continue monitor assess effect foreign currency fluctuations may institute hedging strategies company performs foreign exchange sensitivity analysis quarterly basis assumes hypothetical 10 increase decrease value us dollar relative mexican peso foreign exchange risk sensitivity net loans receivable consolidated net income assessed using hypothetical scenarios assumes earnings mexican pesos recognized evenly throughout period actual results may differ results noted tables particularly due assumptions utilized events occur included method used foreign exchange risk sensitivity net loans denominated mexican pesos translated us dollars approximately 546 million 513 million march 31 2017 2016 respectively reported net loans receivable amount summarized following table following table summarizes results foreign exchange risk sensitivity analysis reported net income dates indicated part ii item 8 item 8 financial statements supplementary data consolidated financial statements company independent auditors report thereon contained annual report incorporated reference response item 8 item 9item 8 financial statements supplementary data consolidated financial statements company independent auditors report thereon contained annual report incorporated reference response item 8 item 9item 8 financial statements supplementary data consolidated financial statements company independent auditors report thereon contained annual report incorporated reference response item 8 item 9item 8 financial statements supplementary data consolidated financial statements company independent auditors report thereon contained annual report incorporated reference response item 8 item 9item 8 financial statements supplementary data consolidated financial statements company independent auditors report thereon contained annual report incorporated reference response item 8 item 9item 8 financial statements supplementary data consolidated financial statements company independent auditors report thereon contained annual report incorporated reference response item 8 item 9item 8 financial statements supplementary data consolidated balance sheets see accompanying notes consolidated financial statements consolidated statements operations see accompanying notes consolidated financial statements consolidated statements shareholders’ equity see accompanying notes consolidated financial statements consolidated statements cash flows see accompanying notes consolidated financial statements notes consolidated financial statements 1 summary significant accounting policies company’s accounting reporting policies accordance united states generally accepted accounting principles conform general practices within finance company industry following description significant policies used preparing consolidated financial statements nature operations company smallloan consumer finance company headquartered greenville south carolina offers shortterm small loans mediumterm larger loans related credit insurance products ancillary products services individuals limited access sources consumer credit also offers income tax return preparation services refund anticipation loans third party bank customer base others company also markets computer software related services finance companies paradata financial systems “paradata” subsidiary march 31 2004 company operated 526 offices south carolina georgia texas oklahoma louisiana tennessee missouri illinois new mexico kentucky alabama principles consolidation consolidated financial statements include accounts world acceptance corporation wholly owned subsidiaries “company” subsidiaries consist operating entities various states paradata software company acquired fiscal 1994 wac insurance company ltd captive reinsurance company established fiscal 1994 significant intercompany balances transactions eliminated consolidation use estimates preparation financial statements preparation financial statements conformity accounting principles generally accepted united states america requires management make estimates assumptions affect reported amount assets liabilities disclosure contingent liabilities date financial statements reported amounts revenues expenses reporting period actual results could differ estimates business segments company reports operating segments accordance sfas 131 “disclosures segments enterprise related information” “sfas 131” operating segments components enterprise separate financial information available evaluated regularly chief operating decision maker deciding allocate resources assess performance sfas 131 requires public enterprise report measure segment profit loss certain specific revenue expense items segment assets information way operating segments determined items company one reportable segment consumer finance company revenue generating activities company including sale insurance products income tax preparation buying club automobile club done existing branch network conjunction compliment lending operation discrete financial information available activities meet criteria sfas 131 reported separately paradata provides data processing systems 115 separate finance companies including company march 31 2004 2003 paradata total assets 3765000 3351000 respectively represented less 20 total consolidated assets fiscal year end total net revenues system sales support paradata years ended march 31 2004 2003 2002 2251000 2268000 2522000 respectively represented less 3 consolidated revenue year years ended march 31 2004 2003 2002 paradata income taxes 288000 486000 773000 respectively although paradata operating segment sfas 131 meet criteria require separate disclosure loans interest income company licensed originate direct cash consumer loans states georgia south carolina texas oklahoma louisiana tennessee missouri illinois new mexico kentucky alabama fiscal 2004 2003 company originated loans generally ranging 3000 terms 24 months less experience indicates majority direct cash consumer loans renewed fees received direct costs incurred origination loans deferred amortized interest income contractual lives loans unamortized amounts recognized income time loans renewed paid full loans carried gross amount outstanding reduced unearned interest insurance income net deferred origination fees direct costs allowance loan losses unearned interest deferred time loans made accreted income collection method approximates level yield method charges late payments credited income collected company generally offers loans prevailing statutory rates terms exceed 24 months management believes carrying value approximates fair value loan portfolio allowance loan losses company maintains allowance loan losses amount management’s opinion adequate cover losses inherent existing loan portfolio company charges current earnings provision loan losses amounts added allowance maintain levels expected cover probable losses principal establishing allowance loan losses company takes consideration growth loan portfolio mix loan portfolio current levels chargeoffs current levels delinquencies current economic factors allowance loan losses allocated unallocated component company uses historical information net chargeoffs loan type average loan life loan type estimate allocated component allowance loan losses methodology based fact many customers renew loans prior contractual maturity average contractual loan terms approximately nine months average loan life approximately four months allowance loan loss model also reserves 100 principal loans greater 90 days past due recency basis loans charged earlier loans deemed uncollectible six months elapsed since date last full contractual payment company’s chargeoff policy consistently applied significant changes made policy periods reported management considers chargeoff policy evaluating appropriateness allowance loan losses unallocated component allowance loan losses probable losses inherent loan portfolio captured allocated allowance amounted approximately 30 million 28 million march 31 2004 2003 respectively company records acquired loans fair value based current interest rates less allowances uncollectibility collection costs company normally records acquired loans books however acquired loan portfolios generally include loans company deems uncollectible allowance assigned allowance loan losses estimated based review loan portfolio considering delinquency levels chargeoffs loan mix current economic factors company records acquired loans gross value records related allowance loan losses adjustment allowance loan losses reflected purchase accounting acquisitions subsequent chargeoffs related acquired loans reflected purchase accounting acquisition adjustment year acquisition march 31 2004 2003 concentrations loans local economy type property one borrower property equipment property equipment stated cost less accumulated depreciation amortization depreciation recorded using straightline method estimated useful life related asset follows building 40 years furniture fixtures 5 10 years equipment 3 7 years vehicles 3 years amortization leasehold improvements recorded using straightline method lesser estimated useful life asset term lease additions premises equipment major replacements betterments added cost maintenance repairs minor replacements charged operating expense incurred assets retired otherwise disposed cost accumulated depreciation removed accounts gain loss reflected income assets include costs incurred connection originating longterm debt remaining unamortized costs aggregated 31079 171564 march 31 2004 2003 respectively amortized interest expense life respective indebtedness intangible assets intangible assets include cost acquiring existing customers value assigned noncompete agreements goodwill excess cost fair value net assets acquired assets amortized follows customer lists 10 years noncompete agreements term agreement approximates estimated useful lives effective april 1 2002 company ceased amortization goodwill management periodically evaluates recoverability unamortized balances assets adjusts necessary company tests impairment accordance sfas 142 “goodwill intangible assets” “sfas 142” potential impairment goodwill exists carrying amount reporting unit exceeds implied fair value fair value reporting unit computed using one combination following three methods income market value cost method income method uses discounted cash flow analysis determine fair value considering reporting unit’s capital structure applying riskadjusted discount rate forecast earnings based capital asset pricing model market value method used recent transaction analysis publicly traded comparable analysis similar assets liabilities determine fair value cost method assumes net assets recent business combination accounted purchase method accounting recorded fair value event circumstance occurred triggering decline value extent reporting unit’s carrying amount exceeds fair value indication exists reporting unit’s goodwill may impaired second step impairment test performed second step implied fair value reporting unit’s goodwill determined allocating reporting unit’s fair value assets recognized unrecognized liabilities reporting unit acquired business combination date impairment test compared carrying amount implied fair value reporting unit goodwill lower carrying amount goodwill impaired written implied fair value loss recognized limited carrying amount goodwill impairment loss recognized future increases fair value result reversal previously recognized losses following april 1 2002 adoption sfas 142 company unamortized goodwill amount 774000 unamortized identifiable intangible assets amount 132 million related loan office purchases sfas 142 goodwill longer amortized amortization expense related goodwill 166000 107000 tax 2002 company continue amortize identifiable intangible assets relate noncompete agreements customer lists following presents details goodwill amortization expense net income thousands except share data years ended march 31 fair value financial instruments sfas 107 “disclosures fair value financial instruments” requires disclosures fair value financial instruments whether recognized balance sheet practicable estimate value cases quoted market prices available fair values based estimates using present value valuation techniques company’s financial instruments consist following cash loans receivable senior notes payable subordinated notes payable notes payable fair value approximates carrying value instruments loans receivable originated prevailing market rates average life approximately four months given shortterm nature loans continually repriced current market rates company’s revolving credit facility notes payable variable rate based margin libor reprices changes libor interest rate subordinated notes 10 considered market rate type instrument insurance premiums insurance premiums credit life accident health property unemployment insurance written connection certain loans net refunds applicable advance insurance commissions retained company remitted monthly insurance company commissions credited unearned insurance commissions recognized income life related insurance contracts using method similar used recognition interest income nonfile insurance nonfile premiums charged certain loans inception renewal lieu recording perfecting company’s security interest assets pledged certain loans remitted thirdparty insurance company nonfile insurance coverage insurance related insurance premiums claims recoveries reflected accompanying consolidated financial statements except reduction loan losses see note 6 certain losses related loans recoverable life accident health property unemployment insurance claims reimbursed nonfile insurance claims subject policy limitations remaining losses charged allowance loan losses income taxes income taxes accounted asset liability method deferred tax assets liabilities recognized future tax consequences attributable differences financial statement carrying amounts existing assets liabilities respective tax bases operating loss tax credit carryforwards deferred tax assets liabilities measured using enacted tax rates expected apply taxable income years temporary differences expected recovered settled effect deferred tax assets liabilities change tax rates recognized income period includes enactment date supplemental cash flow information years ended march 31 2004 2003 2002 company paid interest 3747688 4448128 5305890 respectively years ended march 31 2004 2003 2002 company paid income taxes 15457676 14847574 10591108 respectively supplemental noncash financing activities years ended march 31 2004 2003 2002 consist earnings per share earnings per share “eps” computed accordance sfas 128 “earnings per share” basic eps includes dilution computed dividing income available common shareholders weightedaverage number common shares outstanding period diluted eps reflects potential dilution securities could share earnings company potential common stock included diluted eps computation consists stock options computed using treasury stock method reclassification certain reclassification entries made fiscal 2003 2002 conform fiscal 2004 presentation impact shareholders’ equity net income previously reported result reclassifications stockbased compensation march 31 2003 company three stockbased employee compensation option plans described fully note 10 company accounts option plans recognition measurement principles apb opinion 25 “accounting stock issued employees” related interpretations “apb opinion 25” stockbased employee compensation cost reflected net income related plans options granted plans exercise price equal greater market value underlying common stock date grant following table illustrates effect net income earnings per share company applied fair value recognition provisions sfas 123 “accounting stock based compensation” “sfas 123” stockbased employee compensation option plans years ended march 31 recently adopted accounting pronouncements accounting guarantees november 2002 fasb issued fasb interpretation 45 “guarantor’s accounting disclosure requirements guarantees including indirect guarantees indebtedness others” “fin 45” fin 45 elaborates disclosure made guarantor interim annual financial statements obligations certain guarantees issued also clarifies guarantor required recognize inception guarantee liability fair value obligation undertaken issuing guarantee fin 45 clarifies guarantor required disclose nature guarantee b maximum potential amount future payments guarantee c carrying amount liability nature extent recourse provisions available collateral would enable guarantor recover amounts paid guarantee fin 45 also clarifies guarantor required recognize inception guarantee liability obligation undertaken issuing guarantee inception initial recognition initial measurement provisions fin 45 applicable prospective basis guarantees issued modified december 31 2002 disclosure requirements fin 45 effective financial statements ending december 15 2002 company adopted initial recognition initial measurement provisions fin 45 effective january 1 2003 adopted disclosure requirements effective march 31 2003 accounting variable interest entities january 2003 fasb issued fasb interpretation 46 “fin 46” “consolidation variable interest entities” addresses consolidation business enterprises variable interest entities fin 46 enterprise holds significant variable interest variable interest entity primary beneficiary required disclose nature purpose size activities variable interest entity exposure loss result variable interest holder’s involvement entity nature involvement entity date involvement began primary beneficiary variable interest entity required disclose nature purpose size activities variable interest entity carrying amount classification consolidated assets collateral variable interest entity’s obligations lack recourse creditors beneficial interest holders consolidated variable interest entity general creditors beneficial interest holders consolidated variable entity general creditor primary beneficiary fin 46 effective first fiscal year interim period beginning june 15 2003 company interest variable interest entities impact upon adoption december 2003 fasb issued revision fin 46 “fin 46r” new fin 46r guidance application fin 46r required financial statements entities interests structures commonly referred specialpurpose entities periods ending december 15 2003 application types variable interest entities required financial statements periods ending march 15 2004 revision impact company upon adoption revenue recognition december 2003 securities exchange commission “sec” issued staff accounting bulletin 104 “revenue recognition” “sab 104” sab 104 summarizes certain sec staff’s views applying generally accepted accounting principles revenue recognition financial statements adoption sab 104 impact consolidated financial statements accounting certain financial instruments characteristics liabilities equity may 2002 financial accounting standards board “fasb” issued statement financial accounting standards “sfas” 150 “accounting certain financial instruments characteristics liabilities equity” “sfas 150” sfas 150 establishes standards classification measurement certain financial instruments characteristics liabilities equity sfas 150 effective financial instruments entered modified may 31 2003 otherwise effective beginning first interim period beginning june 15 2003 adoption sfas 150 impact consolidated financial statements amendment statement 133 derivative instruments hedging activities april 2003 fasb issued sfas 149 “amendment statement 133 derivative instruments hedging activities” “sfas 149” sfas 149 amends clarifies financial accounting reporting derivatives including instruments embedded contracts collectively referred derivatives hedging activities sfas 133 “accounting derivative instruments hedging activities” sfas 149 effective contracts entered modified june 30 2003 adoption sfas 149 impact consolidated financial statements 2 allowance loan losses following summary changes allowance loan losses years ended march 31 2004 2003 2002 years ended march 31 2004 2003 2002 company recorded adjustments approximately 13 million 10 million 889000 respectively allowance loan losses connection acquisitions accordance generally accepted accounting principles adjustments represent allowance loan losses acquired loans 3 property equipment summaries property equipment follow 4 intangible assets intangible assets net accumulated amortization consist following summarizes changes carrying amount goodwill year ended march 31 2004 estimated amortization expense intangible assets years ended march 31 follows 2437879 2005 2366787 2006 2100198 2007 1646956 2008 1435096 2009 aggregate 2473261 years thereafter 5 notes payable summaries company’s notes payable follow senior credit facilities 152000000 revolving credit facility provides borrowings 1520 million 914 million outstanding march 31 2004 subject borrowing base formula company may borrow option rate prime libor plus 200 march 31 2004 company’s interest rate 320 unused amount available revolver 606 million revolving credit facility commitment fee 0375 per annum unused portion commitment borrowings revolving credit facility mature september 30 2005 member company’s board directors serves executive vice president south financial group parent carolina first bank march 31 2004 carolina first bank committed fund 200 million credit facility outstanding 12 million notes payable 2000000 senior subordinated secured notes mature june 30 2004 bear interest 100 payable quarterly notes issued discounted price equal 996936 may prepaid subject certain prepayment penalties substantially company’s assets pledged collateral borrowings revolving credit facility company’s assets also pledged collateral senior subordinated notes subordinated basis notes payable company 482000 note payable unaffiliated insurance company bearing interest 10 payable annually matures september 2004 company also 12 million note payable bank bearing interest libor plus 200 payable monthly repaid five annual installments 200000 beginning may 1 2004 various debt agreements contain restrictions amounts permitted indebtedness investments working capital repurchases common stock cash dividends march 31 2004 412 million available covenants payment cash dividends repurchase company’s common stock addition agreements restrict liens assets sale transfer subsidiaries company compliance various debt covenants periods presented aggregate annual maturities notes payable fiscal years subsequent march 31 2004 follows 2005 2682000 2006 91550000 2007 200000 2008 200000 2009 200000 thereafter 200000 6 nonfile insurance company maintains nonfile insurance coverage unaffiliated insurance company following summary nonfile insurance activity years ended march 31 2004 2003 2002 7 leases company conducts operations leased facilities except owned corporate office building expected normal course business expiring leases renewed company’s option replaced leases acquisitions properties company’s leases operating leases future minimum lease payments noncancelable operating leases march 31 2004 follows rental expense cancelable noncancelable operating leases years ended march 31 2004 2003 2002 5460005 4830932 4266549 respectively 8 income taxes income tax expense attributable income continuing operations consists income tax expense attributable income continuing operations 16650000 12987000 10695000 years ended march 31 2004 2003 2002 respectively differed amounts computed applying us federal income tax rate 35 pretax income continuing operations result following tax effects temporary differences give rise significant portions deferred tax assets deferred tax liabilities march 31 2004 2003 presented valuation allowance deferred tax assets march 31 2004 2003 412000 290000 respectively valuation allowance potential total deferred tax assets march 31 2004 2003 relates state net operating losses assessing realizability deferred tax assets management considers whether likely portion deferred tax assets realized ultimate realization deferred tax assets dependent upon generation future taxable income periods temporary differences become deductible management considers scheduled reversals deferred tax liabilities projected future taxable income tax planning strategies making assessment order fully realize deferred tax asset company need generate future taxable income prior expiration deferred tax assets governed tax code based upon level historical taxable income projections future taxable income periods deferred tax assets deductible management believes likely company realize benefits deductible differences net existing valuation allowances march 31 2004 amount deferred tax asset considered realizable however could reduced near term estimates future taxable income carryforward period reduced internal revenue service examined company’s federal income tax returns fiscal years 1994 1996 tax returns fiscal 2000 subsequent years subject examination taxing authorities 9 earnings per share following reconciliation numerators denominators basic diluted eps calculations options purchase 50000 591115 1185815 shares common stock various prices outstanding years ended march 31 2004 2003 2002 respectively included computation diluted eps option exercise price greater average market price common shares options expire various dates still outstanding march 31 2004 10 benefit plans retirement plan company provides defined contribution employee benefit plan 401k plan covering fulltime employees whereby employees invest 15 gross pay company makes matching contribution equal 50 employees’ contributions first 6 gross pay company’s expense plan 594430 430530 423145 years ended march 31 2004 2003 2002 respectively supplemental executive retirement plan company instituted supplemental executive retirement plan “serp” nonqualified executive benefit plan company agrees pay executive additional benefits future usually retirement return continued employment executive company selects key executives participate serp unfunded plan means specific assets set aside company connection establishment plan executive rights agreement beyond general creditor company years ended march 31 2004 2003 2002 contributions 588021 515394 447520 respectively charged operations related serp executive deferred compensation plan company executive deferral plan eligible executives may elect defer portion incentive compensation paid executive incentive plan march 31 2004 285000 deferred plan stock option plans company 1992 stock option plan 1994 stock option plan 2002 stock option plan benefit certain directors officers key employees plans 4350000 shares authorized common stock reserved issuance pursuant grants approved compensation stock option committee options maximum duration 10 years may subject certain vesting requirements priced market value company’s common stock date grant option company applies apb opinion 25 accounting stock option plans described preceding paragraph accordingly compensation expense recognized stockbased option plans fair value option granted estimated date grant using blackscholes optionpricing model following assumptions used grants 2004 2003 2002 respectively dividend yield zero expected volatility 396 475 465 riskfree interest rate 39 519 expected lives 10 years plans three years fair values options granted 2004 2003 2002 963 499 433 respectively option activity years ended march 31 follows following table summarizes information regarding stock options outstanding march 31 2004 11 acquisitions following table sets forth acquisition activity company last three fiscal years company evaluates acquisition determine acquired enterprise meets definition business meet definition business accounted sfas 141 meet definition business combination accounted asset purchases results acquisitions included company’s consolidated financial statements since respective acquisition dates pro forma impact purchases though acquired beginning periods presented would material effect results operations reported 12 quarterly information unaudited following sets forth selected quarterly operating data 13 litigation march 31 2004 company certain subsidiaries named defendants various legal actions arising normal business activities damages various amounts claimed although amount ultimate liability respect matters cannot determined company believes liability material adverse effect company’s consolidated financial statements taken whole 14 commitments company entered employment agreements certain key executive employees employment agreements terms two three years call aggregate minimum annual base salaries 743400 adjusted annually determined company’s compensation stock option committee agreements also provide annual incentive bonuses based achievement certain predetermined operational goals board directors world acceptance corporation greenville south carolina audited accompanying consolidated balance sheets world acceptance corporation subsidiaries march 31 2004 2003 related consolidated statements operations shareholders’ equity cash flows years threeyear period ended march 31 2004 consolidated financial statements responsibility company’s management responsibility express opinion consolidated financial statements based audits conducted audits accordance standards public company accounting oversight board united states standards require plan perform audit obtain reasonable assurance whether financial statements free material misstatement audit includes examining test basis evidence supporting amounts disclosures financial statements audit also includes assessing accounting principles used significant estimates made management well evaluating overall financial statement presentation believe audits provide reasonable basis opinion consolidated financial statements referred present fairly material respects financial position world acceptance corporation subsidiaries march 31 2004 2003 results operations cash flows years threeyear period ended march 31 2004 conformity us generally accepted accounting principles discussed note 1 consolidated financial statements april 1 2002 company adopted statement financial accounting standards 142 “goodwill intangible assets” greenville south carolina june 4 2004 item 9item 8 financial statements supplementary data consolidated balance sheets see accompanying notes consolidated financial statements consolidated statements operations see accompanying notes consolidated financial statements consolidated statements shareholders’ equity see accompanying notes consolidated financial statements consolidated statements cash flows see accompanying notes consolidated financial statements 1 summary significant accounting policies company’s accounting reporting policies accordance us generally accepted accounting principles conform general practices within finance company industry following description significant policies used preparing consolidated financial statements nature operations company smallloan consumer finance company headquartered greenville south carolina offers shortterm small loans mediumterm larger loans related credit insurance products ancillary products services individuals limited access sources consumer credit also offers income tax return preparation services refund anticipation loans third party bank customer base others company also markets computer software related services finance companies paradata financial systems “paradata” subsidiary march 31 2005 company operated 579 offices south carolina georgia texas oklahoma louisiana tennessee missouri illinois new mexico kentucky alabama colorado principles consolidation consolidated financial statements include accounts world acceptance corporation wholly owned subsidiaries “company” subsidiaries consist operating entities various states paradata software company acquired fiscal 1994 wac insurance company ltd captive reinsurance company established fiscal 1994 significant intercompany balances transactions eliminated consolidation use estimates preparation financial statements preparation financial statements conformity us generally accepted accounting principals requires management make estimates assumptions affect reported amount assets liabilities disclosure contingent liabilities date financial statements reported amounts revenues expenses reporting period actual results could differ estimates business segments company reports operating segments accordance sfas 131 “disclosures segments enterprise related information” “sfas 131” operating segments components enterprise separate financial information available evaluated regularly chief operating decision maker deciding allocate resources assess performance sfas 131 requires public enterprise report measure segment profit loss certain specific revenue expense items segment assets information way operating segments determined items company one reportable segment consumer finance company revenue generating activities company including sale insurance products income tax preparation buying club automobile club done existing branch network conjunction compliment lending operation discrete financial information available activities meet criteria sfas 131 reported separately paradata provides data processing systems 109 separate finance companies including company march 31 2005 2004 paradata total assets 1904000 3760000 respectively represented less 20 total consolidated assets fiscal year end total net revenues system sales support paradata years ended march 31 2005 2004 2003 2332000 2251000 2268000 respectively represented less 3 consolidated revenue year years ended march 31 2005 2004 2003 paradata income taxes 332000 288000 486000 respectively although paradata operating segment sfas 131 meet criteria require separate disclosure cash equivalents purposes statement cash flows company considers highly liquid investments maturity three months less date original issuance cash equivalents loans interest income company licensed originate direct cash consumer loans states georgia south carolina texas oklahoma louisiana tennessee missouri illinois new mexico kentucky alabama colorado fiscal 2005 2004 company originated loans generally ranging 3000 terms 24 months less experience indicates majority direct cash consumer loans renewed fees received direct costs incurred origination loans deferred amortized interest income contractual lives loans unamortized amounts recognized income time loans renewed paid full loans carried gross amount outstanding reduced unearned interest insurance income net deferred origination fees direct costs allowance loan losses unearned interest deferred time loans made accreted income collection method approximates level yield method charges late payments credited income collected company generally offers loans prevailing statutory rates terms exceed 24 months management believes carrying value approximates fair value loan portfolio allowance loan losses company maintains allowance loan losses amount management’s opinion adequate cover losses inherent existing loan portfolio company charges current earnings provision loan losses amounts added allowance maintain levels expected cover probable losses principal establishing allowance loan losses company takes consideration growth loan portfolio mix loan portfolio current levels chargeoffs current levels delinquencies current economic factors allowance loan losses allocated unallocated component company uses historical information net chargeoffs loan type average loan life loan type estimate allocated component allowance loan losses methodology based fact many customers renew loans prior contractual maturity average contractual loan terms approximately nine months average loan life approximately four months allowance loan loss model also reserves 100 principal loans greater 90 days past due recency basis loans charged earlier loans deemed uncollectible six months elapsed since date last full contractual payment company’s chargeoff policy consistently applied significant changes made policy periods reported management considers chargeoff policy evaluating appropriateness allowance loan losses company records acquired loans fair value based current interest rates less allowances uncollectibility collection costs acquired loan portfolios generally include loans company deems uncollectible allowance assigned acquiree allowance loan losses estimated based review loan portfolio considering delinquency levels chargeoffs loan mix current economic factors company records acquired loans gross value records related allowance loan losses reflected purchase accounting acquisitions also see note 2 consolidated financial statements subsequent chargeoffs related acquired loans reflected purchase accounting acquisition adjustment year acquisition march 31 2005 2004 concentrations loans local economy type property one borrower property equipment property equipment stated cost less accumulated depreciation amortization depreciation recorded using straightline method estimated useful life related asset follows building 40 years furniture fixtures 5 10 years equipment 3 7 years vehicles 3 years amortization leasehold improvements recorded using straightline method lesser estimated useful life asset term lease additions premises equipment major replacements betterments added cost maintenance repairs minor replacements charged operating expense incurred assets retired otherwise disposed cost accumulated depreciation removed accounts gain loss reflected income assets include cash surrender value life insurance policies prepaid expenses deposits intangible assets intangible assets include cost acquiring existing customers value assigned noncompete agreements goodwill excess cost fair value net assets acquired assets amortized follows customer lists 9 years noncompete agreements term agreement approximates estimated useful lives effective april 1 2002 company ceased amortization goodwill management periodically evaluates recoverability unamortized balances assets adjusts necessary company tests impairment accordance sfas 142 “goodwill intangible assets” “sfas 142” potential impairment goodwill exists carrying amount reporting unit exceeds implied fair value fair value reporting unit computed using one combination following three methods income market value cost method income method uses discounted cash flow analysis determine fair value considering reporting unit’s capital structure applying riskadjusted discount rate forecast earnings based capital asset pricing model market value method uses recent transaction analysis publicly traded comparable analysis similar assets liabilities determine fair value cost method assumes net assets recent business combination accounted purchase method accounting recorded fair value event circumstance occurred triggering decline value extent reporting unit’s carrying amount exceeds fair value indication exists reporting unit’s goodwill may impaired second test performed second step implied fair value reporting unit’s goodwill determined allocating reporting unit’s fair value assets recognized unrecognized liabilities reporting unit acquired business combination date impairment test compared carrying amount implied fair value reporting unit goodwill lower carrying amount goodwill impaired written implied fair value loss recognized limited carrying amount goodwill impairment loss recognized future increases fair value result reversal previously recognized losses fair value financial instruments sfas 107 “disclosures fair value financial instruments” requires disclosures fair value financial instruments whether recognized balance sheet practicable estimate value cases quoted market prices available fair values based estimates using present value valuation techniques company’s financial instruments consist following cash loans receivable senior notes payable note payable fair value approximates carrying value instruments loans receivable originated prevailing market rates average life approximately four months given shortterm nature loans continually repriced current market rates company’s revolving credit facility note payable variable rate based margin libor reprice changes libor insurance premiums insurance premiums credit life accident health property unemployment insurance written connection certain loans net refunds applicable advance insurance commissions retained company remitted monthly insurance company commissions credited unearned insurance commissions recognized income life related insurance contracts using method similar used recognition interest income nonfile insurance nonfile premiums charged certain loans inception renewal lieu recording perfecting company’s security interest assets pledged certain loans remitted thirdparty insurance company nonfile insurance coverage insurance related insurance premiums claims recoveries reflected accompanying consolidated financial statements except reduction loan losses see note 6 certain losses related loans recoverable life accident health property unemployment insurance claims reimbursed nonfile insurance claims subject policy limitations remaining losses charged allowance loan losses income taxes income taxes accounted asset liability method deferred tax assets liabilities recognized future tax consequences attributable differences financial statement carrying amounts existing assets liabilities respective tax bases operating loss tax credit carryforwards deferred tax assets liabilities measured using enacted tax rates expected apply taxable income years temporary differences expected recovered settled effect deferred tax assets liabilities change tax rates recognized income period includes enactment date supplemental cash flow information years ended march 31 2005 2004 2003 company paid interest 4529445 3747688 4448128 respectively years ended march 31 2005 2004 2003 company paid income taxes 16600328 15457676 14847574 respectively supplemental noncash financing activities years ended march 31 2005 2004 2003 consist earnings per share earnings per share “eps” computed accordance sfas 128 “earnings per share” basic eps includes dilution computed dividing income available common shareholders weightedaverage number common shares outstanding period diluted eps reflects potential dilution securities could share earnings company potential common stock included diluted eps computation consists stock options computed using treasury stock method reclassifications certain reclassification entries made fiscal 2004 2003 conform fiscal 2005 presentation impact shareholders’ equity net income previously reported result reclassifications stockbased compensation march 31 2005 company three stockbased employee compensation option plans described fully note 10 company accounts option plans recognition measurement principles apb opinion 25 “accounting stock issued employees” related interpretations “apb opinion 25” stockbased employee compensation cost reflected net income related plans options granted plans exercise price equal greater market value underlying common stock date grant following table illustrates effect net income earnings per share company applied fair value recognition provisions sfas 123 “accounting stock based compensation” “sfas 123” stockbased employee compensation option plans years ended march 31 recently issued accounting pronouncements accounting certain loans debt securities acquired transfer effective april 1 2005 company adopted sop 033 “sop 033” “accounting certain loans debt securities acquired transfer” prohibits carry creation valuation allowances initial accounting loans acquired transfer within scope sop prohibition valuation allowance carryover applies purchase individual loan pool loans group loans acquired purchase business combination initial adoption issue impact financial condition results operations company process evaluating impact pronouncement future acquisitions sharebased payment december 2004 fasb issued sfas 123r “sfas 123r” “sharebased payment” requires companies recognize income statement grantdate fair value stock options equitybased compensation issued employees sfas 123r amendment sfas 123 “sfas 123” “accounting stockbased compensation” related implementation guidance sfas 123r change accounting guidance sharebased payment transactions parties employees provided sfas 123 sfas 123r way award classified affect measurement compensation cost liabilityclassified awards remeasured fair value balancesheet date award settled liabilityclassified awards include following • employee awards cashbased settlement repurchase features stock appreciation right cashsettlement option • awards fixed dollar amount settleable company‘s stock • sharebased awards netsettlement feature amount excess minimum tax withholding • awards vest become exercisable based achievement condition service performance market condition equityclassified awards measured grantdate fair value amortized subsequent vesting period subsequently remeasured equityclassified awards include following • sharebased awards netsettlement features minimum tax withholdings • awards permit cashless exercise using broker unrelated employer • awards containing put feature give employees right require company repurchase shares fair value employee bears risks rewards normally associated ownership six months longer effective april 21 2005 securities exchange commission issued amendment rule 401a1 regulation sx delaying effective date public entities file small business issuers first annual period beginning june 15 2005 instead sfas 123r’s original effective date beginning first interim reporting period beginning june 15 2005 company adopt sfas april 1 2006 evaluating impact company’s fiscal 2007 results operations accounting nonmonetary transactions december 2004 fasb issued sfas 153 “sfas 153” “exchanges nonmonetary assetsan amendment apb opinion 29” eliminates exception nonmonetary exchanges similar productive assets replaces general exception exchanges nonmonetary assets commercial substance nonmonetary exchange commercial substance future cash flows entity expected change significantly result exchange sfas 153 effective nonmonetary transactions occurring fiscal years beginning june 15 2005 2 allowance loan losses following summary changes allowance loan losses years ended march 31 2005 2004 2003 years ended march 31 2005 2004 2003 company recorded adjustments approximately 14 million 13 million 10 million respectively allowance loan losses connection acquisitions accordance generally accepted accounting principles adjustments represent allowance loan losses acquired loans also see note 1 3 property equipment summaries property equipment follow 4 intangible assets intangible assets net accumulated amortization consist following summarizes changes carrying amount goodwill year ended march 31 2004 2005 estimated amortization expense intangible assets years ended march 31 follows 2716990 2006 2447406 2007 1983585 2008 1636234 2009 1347538 2010 aggregate 2693533 years thereafter goodwill tested impairment annually company performed annual impairment test march 31 2005 determined none recorded goodwill impaired 5 notes payable summaries company’s notes payable follow senior notes payable 152000000 revolving credit facility provides borrowings 1520 million 829 million outstanding march 31 2005 subject borrowing base formula company may borrow option rate prime libor plus 200 march 31 2005 company’s interest rate 49 unused amount available revolver 691 million revolving credit facility commitment fee 0375 per annum unused portion commitment borrowings revolving credit facility mature september 30 2006 member company’s board directors serves executive vice president south financial group parent carolina first bank march 31 2005 carolina first bank committed fund 200 million credit facility outstanding 10 million another note payable note payable company also 10 million note payable bank bearing interest libor plus 200 payable monthly repaid five annual installments 200000 ending may 1 2009 various debt agreements contain restrictions amounts permitted indebtedness investments working capital repurchases common stock cash dividends march 31 2005 573 million available covenants payment cash dividends repurchase company’s common stock addition agreements restrict liens assets sale transfer subsidiaries company compliance various debt covenants periods presented aggregate annual maturities notes payable fiscal years subsequent march 31 2005 follows 2006 200000 2007 83100000 2008 200000 2009 200000 2010 200000 none thereafter 6 nonfile insurance company maintains nonfile insurance coverage unaffiliated insurance company following summary nonfile insurance activity years ended march 31 2005 2004 2003 7 leases company conducts operations leased facilities except owned corporate office building expected normal course business expiring leases renewed company’s option replaced leases acquisitions properties company’s leases operating leases future minimum lease payments noncancelable operating leases march 31 2005 follows rental expense cancelable noncancelable operating leases years ended march 31 2005 2004 2003 6857274 5460005 4830932 respectively 8 income taxes income tax expense attributable income continuing operations consists income tax expense attributable income continuing operations 19868000 16650000 12987000 years ended march 31 2005 2004 2003 respectively differed amounts computed applying us federal income tax rate 35 pretax income continuing operations result following tax effects temporary differences give rise significant portions deferred tax assets deferred tax liabilities march 31 2005 2004 presented valuation allowance deferred tax assets march 31 2005 2004 516000 412000 respectively valuation allowance potential total deferred tax assets march 31 2005 2004 relates state net operating losses assessing realizability deferred tax assets management considers whether likely portion deferred tax assets realized ultimate realization deferred tax assets dependent upon generation future taxable income periods temporary differences become deductible management considers scheduled reversals deferred tax liabilities projected future taxable income tax planning strategies making assessment order fully realize deferred tax asset company need generate future taxable income prior expiration deferred tax assets governed tax code based upon level historical taxable income projections future taxable income periods deferred tax assets deductible management believes likely company realize benefits deductible differences net existing valuation allowances march 31 2005 amount deferred tax asset considered realizable however could reduced near term estimates future taxable income carryforward period reduced internal revenue service examined company’s federal income tax returns fiscal years 1994 1996 tax returns fiscal 2002 subsequent years subject examination taxing authorities 9 earnings per share following reconciliation numerators denominators basic diluted eps calculations options purchase 0 50000 591115 shares common stock various prices outstanding years ended march 31 2005 2004 2003 respectively included computation diluted eps option exercise price greater average market price common shares 10 benefit plans retirement plan company provides defined contribution employee benefit plan 401k plan covering fulltime employees whereby employees invest 15 gross pay company makes matching contribution equal 50 employees’ contributions first 6 gross pay company’s expense plan 610536 594430 430530 years ended march 31 2005 2004 2003 respectively supplemental executive retirement plan company instituted supplemental executive retirement plan “serp” nonqualified executive benefit plan company agrees pay executive additional benefits future usually retirement return continued employment executive company selects key executives participate serp unfunded plan means specific assets set aside company connection establishment plan executive rights agreement beyond general creditor company years ended march 31 2005 2004 2003 contributions 317882 588021 515394 respectively charged operations related serp executive deferred compensation plan company executive deferral plan eligible executives may elect defer portion incentive compensation paid executive incentive plan march 31 2005 285000 deferred plan stock option plans company 1992 stock option plan 1994 stock option plan 2002 stock option plan benefit certain directors officers key employees plans 4350000 shares authorized common stock reserved issuance pursuant grants approved compensation stock option committee options maximum duration 10 years may subject certain vesting requirements priced market value company’s common stock date grant option company applies apb opinion 25 accounting stock option plans described preceding paragraph accordingly compensation expense recognized stockbased option plans fair value option granted estimated date grant using blackscholes optionpricing model following assumptions used grants 2005 2004 2003 respectively dividend yield zero expected volatility 411 396 475 riskfree interest rate 41 39 expected lives 10 years plans three years fair values options granted 902 2005 963 2004 499 2003 option activity years ended march 31 follows following table summarized information regarding stock options outstanding march 31 2005 11 acquisitions following table sets forth acquisition activity company last three fiscal years company evaluates acquisition determine acquired enterprise meets definition business meet definition business accounted sfas 141 meet definition business combination accounted asset purchases results acquisitions included company’s consolidated financial statements since respective acquisition dates pro forma impact purchases though acquired beginning periods presented would material effect results operations reported 12 quarterly information unaudited following sets forth selected quarterly operating data 13 litigation march 31 2005 company certain subsidiaries named defendants various legal actions arising normal business activities damages various amounts claimed although amount ultimate liability respect matters cannot determined company believes liability material adverse effect company’s results operations financial condition taken whole 14 commitments company entered employment agreements certain key executive employees employment agreements terms one three years call aggregate minimum annual base salaries 800000 adjusted annually determined company’s compensation stock option committee agreements also provide annual incentive bonuses based achievement certain predetermined operational goals board directors world acceptance corporation consent incorporation reference registration statement 3352166 3398938 333107426 33314399 form s8 world acceptance corporation report dated june 9 2005 respect consolidated balance sheets world acceptance corporation subsidiaries march 31 2005 2004 related consolidated statements operations shareholders’ equity cash flows years threeyear period ended march 31 2005 report appears march 31 2005 annual report form 10k world acceptance corporation greenville south carolina june 9 2005 item 9item 8 financial statements supplementary data consolidated balance sheets see accompanying notes consolidated financial statements consolidated statements operations see accompanying notes consolidated financial statements consolidated statements shareholders’ equity comprehensive income see accompanying notes consolidated financial statements consolidated statements cash flows see accompanying notes consolidated financial statements notes consolidated financial statements 1 summary significant accounting policies companys accounting reporting policies accordance us generally accepted accounting principles conform general practices within finance company industry following description significant policies used preparing consolidated financial statements nature operations company smallloan consumer finance company headquartered greenville south carolina offers shortterm small loans mediumterm larger loans related credit insurance products ancillary products services individuals limited access sources consumer credit also offers income tax return preparation services access refund anticipation loans third party bank customer base others company also markets computer software related services financial services companies paradata financial systems “paradata” subsidiary march 31 2008 company operated 803 offices south carolina georgia texas oklahoma louisiana tennessee missouri illinois new mexico kentucky alabama company also operated 35 offices mexico company subject numerous lending regulations vary jurisdiction principles consolidation consolidated financial statements include accounts world acceptance corporation wholly owned subsidiaries “company” subsidiaries consist operating entities various states mexico paradata software company acquired fiscal 1994 wac insurance company ltd captive reinsurance company established fiscal 1994 servicios world acceptance corporation de mexico service company established fiscal 2006 significant intercompany balances transactions eliminated consolidation financial statements company’s foreign subsidiaries mexico prepared using local currency functional currency assets liabilities subsidiaries translated us dollars current exchange rate income expense translated average exchange rate period resulting translation gains losses recognized component equity “accumulated comprehensive income loss” use estimates preparation financial statements preparation financial statements conformity us generally accepted accounting principals requires management make estimates assumptions affect reported amount assets liabilities disclosure contingent liabilities date financial statements reported amounts revenues expenses reporting period significant item subject estimates assumptions could materially change near term allowance loan losses actual results could differ estimates business segments company reports operating segments accordance sfas 131 “disclosures segments enterprise related information” “sfas 131” operating segments components enterprise separate financial information available evaluated regularly chief operating decision maker deciding allocate resources assess performance sfas 131 requires public enterprise report measure segment profit loss certain specific revenue expense items segment assets information way operating segments determined items company one reportable segment consumer finance company revenue generating activities company including sale insurance products income tax preparation buying club automobile club done existing branch network conjunction compliment lending operation discrete financial information available activities meet criteria sfas 131 reported separately paradata provides data processing systems 113 separate finance companies including company march 31 2008 2007 paradata total assets 17 million 27 million respectively represented less 1 total consolidated assets fiscal year end total net revenues system sales support paradata years ended march 31 2008 2007 2006 22 million 25 million 23 million respectively represented approximately 1 consolidated revenue year years ended march 31 2008 2007 2006 paradata income loss income taxes 255000 112000 308000 respectively although paradata operating segment sfas 131 meet criteria require separate disclosure cash equivalents purposes statement cash flows company considers highly liquid investments maturity three months less date original issuance cash equivalents loans interest income company licensed originate direct cash consumer loans states georgia south carolina texas oklahoma louisiana tennessee missouri illinois new mexico kentucky alabama addition company also originated direct cash consumer loans mexico fiscal 2008 2007 company originated loans generally ranging 3000 terms months less experience indicates majority direct cash consumer loans renewed company accounts refinancing new loan generally customer must make payment order qualify renewal furthermore lending policy predetermined lending amounts cases renewal result advancing additional funds company believes advancement additional funds constitutes minor modification terms existing loan present value cash flows terms new loan 10 present value remaining cash flows terms original loan fees received direct costs incurred origination loans deferred amortized interest income contractual lives loans unamortized amounts recognized income time loans renewed paid full loans carried gross amount outstanding reduced unearned interest insurance income net deferred origination fees direct costs allowance loan losses company generally calculates interest revenue loans using rule 78’s recognizes interest revenue using collection method cash method recognizing revenue company believes combination two methods differ materially interest method accrual method recognizing revenue charges late payments credited income collected company generally offers loans prevailing statutory rates terms exceed 24 months management believes carrying value approximates fair value loan portfolio allowance loan losses company maintains allowance loan losses amount management’s opinion adequate cover losses inherent existing loan portfolio company charges current earnings provision loan losses amounts added allowance maintain levels expected cover probable losses principal establishing allowance loan losses company takes consideration growth loan portfolio mix loan portfolio current levels chargeoffs current levels delinquencies current economic factors allowance loan losses allocated unallocated component company uses historical information net chargeoffs loan type average loan life loan type estimate allocated component allowance loan losses method based fact many customers renew loans prior contractual maturity average contractual loan terms approximately nine months average loan life approximately four months allowance loan loss model also reserves 100 principal loans greater days past due recency basis loans charged earlier loans deemed uncollectible six months elapsed since date last full contractual payment company’s chargeoff policy consistently applied significant changes made policy periods reported management considers chargeoff policy evaluating appropriateness allowance loan losses statement position 033 sop 033 “accounting certain loans debt securities acquired transfer” prohibits carryover creation valuation allowances initial accounting loans acquired transfer within scope sop company believes loans acquired since adoption sop 033 shown evidence deterioration credit quality since origination therefore within scope sop 033 therefore company records acquired loans within scope sop 033 fair value based current interest rates less allowance uncollectibility property equipment property equipment stated cost less accumulated depreciation amortization depreciation recorded using straightline method estimated useful life related asset follows building 40 years furniture fixtures 5 10 years equipment 3 7 years vehicles 3 years amortization leasehold improvements recorded using straightline method lesser estimated useful life asset term lease additions premises equipment major replacements improvements added cost maintenance repairs minor replacements charged operating expense incurred assets retired otherwise disposed cost accumulated depreciation removed accounts gain loss reflected statement operations assets include cash surrender value life insurance policies prepaid expenses debt issuance cost deposits derivatives hedging activities company currently uses interest rate swap foreign currency option economically hedge variable cash flows associated 30 million liborbased borrowings mexican peso expenditures interest rate swap agreement foreign currency option carried fair value changes fair value recorded period component statement operations intangible assets goodwill intangible assets include cost acquiring existing customers value assigned noncompete agreements customer lists amortized straight line accelerated basis estimated weighted average useful life 9 years noncompete agreements amortized straight line basis term agreement evaluate goodwill annually impairment fourth quarter fiscal year using market valuebased approach one reporting unit consumer finance company multiple components lowest level individual offices components aggregated impairment testing similar economic characteristics writeoff goodwill close office goodwill assigned march 31 2008 offices recorded goodwill impairment longlived assets assess impairment longlived assets including property equipment intangible assets whenever changes events indicate carrying amount may recoverable assess impairment assets generally office level based operating cash flows office plans office closings write assets fair value based analysis sum expected future undiscounted cash flows less carrying amount assets record material impairment charges fiscal years 2008 2007 2006 fair value financial instruments sfas 107 disclosures fair value financial instruments requires disclosures fair value financial instruments whether recognized balance sheet practicable estimate value cases quoted market prices available fair values based estimates using present value valuation techniques company’s financial instruments consist following cash loans receivable senior notes payable convertible senior subordinated notes payable note payable foreign currency options interest rate swaps fair value approximates carrying value instruments except convertible subordinated notes payable loans receivable originated prevailing market rates average life approximately four months given shortterm nature loans continually repriced current market rates company’s revolving credit facility note payable variable rate based margin libor reprice changes libor convertible subordinated notes payable fair value based current quoted market price 88385000 103537500 march 31 2008 2007 respectively carrying value convertible subordinated notes payable 110000000 march 31 2008 2007 swap option valued based information third party broker insurance premiums insurance premiums credit life accident health property unemployment insurance written connection certain loans net refunds applicable advance insurance commissions retained company remitted monthly insurance company commissions credited unearned insurance commissions recognized income life related insurance contracts using method similar used recognition interest income nonfile insurance nonfile premiums charged certain loans inception renewal lieu recording perfecting companys security interest assets pledged certain loans remitted thirdparty insurance company nonfile insurance coverage insurance related insurance premiums claims recoveries reflected accompanying consolidated financial statements except reduction loan losses see note 9 certain losses related loans recoverable life accident health property unemployment insurance claims reimbursed nonfile insurance claims subject policy limitations remaining losses charged allowance loan losses income taxes income taxes accounted asset liability method deferred tax assets liabilities recognized future tax consequences attributable differences financial statement carrying amounts existing assets liabilities respective tax bases operating loss tax credit carryforwards deferred tax assets liabilities measured using enacted tax rates expected apply taxable income years temporary differences expected recovered settled effect deferred tax assets liabilities change tax rates recognized income period includes enactment date supplemental cash flow information years ended march 31 2008 2007 2006 company paid interest 10788530 9686128 6958983 respectively years ended march 31 2008 2007 2006 company paid income taxes 32018340 26478254 9928505 respectively supplemental noncash financing activities years ended march 31 2008 2007 2006 consist earnings per share earnings per share “eps” computed accordance sfas 128 “earnings per share” basic eps includes dilution computed dividing net income weightedaverage number common shares outstanding period diluted eps reflects potential dilution securities could share earnings company potential common stock included diluted eps computation consists stock options restricted stock warrants computed using treasury stock method potential common stock related convertible senior notes included diluted eps computation using method prescribed eitf 048 “the effect contingently convertible instruments dilutive earnings per share” reclassifications certain reclassification entries made fiscal 2007 2006 conform fiscal 2008 presentation impact shareholders’ equity net income previously reported result reclassifications stockbased compensation december 2004 financial accounting standards board “fasb” issued sfas 123r “sfas 123r” “sharebased payment” requires companies recognize income statement grantdate fair value stock options equitybased compensation issued employees sfas 123r amendment sfas 123 “sfas 123” “accounting stockbased compensation” related implementation guidance sfas 123r change accounting guidance sharebased payment transactions parties employees provided sfas 123 sfas 123r way award classified affect measurement compensation cost liabilityclassified awards remeasured fair value balancesheet date award settled equityclassified awards measured grantdate fair value amortized subsequent vesting period subsequently remeasured fair value nonvested stock awards purposes recognizing stockbased compensation expense market price stock grant date fair value options estimated grant date using blackscholes option pricing model see note 13 march 31 2008 company several sharebased employee compensation plans described fully note 13 prior april 1 2006 company accounted option plans recognition measurement principles apb opinion 25 “accounting stock issued employees” related interpretations “apb opinion 25” permitted sfas 123 stockbased employee compensation cost recognized net income related stock options year ended march 31 2006 options granted plans exercise price equal market value underlying common stock date grant effective april 1 2006 company adopted sfas 123r using modified prospective transition method transition compensation cost recognized 2007 includes compensation cost sharebased payments granted prior yet vested april 1 2006 based grant date fair value estimated accordance original provisions sfas 123 b compensation cost sharebased payments granted subsequent april 1 2006 based grantdate fair value estimated accordance provisions statement 123r since compensation cost based awards ultimately expected vest reduced estimated forfeitures sfas 123r requires forfeitures estimated time grant revised necessary subsequent periods actual forfeitures differ estimates prior adoption sfas 123r company recorded forfeitures occurred results change material company elected expense future grants awards graded vesting graded vesting basis requisite service period entire award results prior periods restated prior adoption sfas 123r company presented tax benefits resulting sharebased compensation cash flows operating activities consolidated statements cash flows sfas 123r requires cash flows resulting tax deductions excess grantdate fair value sharebased awards included cash flows financing activities following table provides pro forma net income earnings per share information company applied fair value recognition provisions sfas 123r stockbased employee compensation option plans year ended march 31 2006 dollars thousands except per share data disclosures years ended march 31 2008 2007 presented amounts recognized consolidated financial statements see note 13 summary company’s assumptions used estimate grant date per share fair value options table comprehensive income total comprehensive income consists net income comprehensive income loss company’s comprehensive income loss accumulated comprehensive income loss comprised foreign currency translation adjustments concentration risk year ended march 31 2008 company operated 11 states united states well mexico years ended march 31 2006 2007 2008 total revenues within companys four largest states measured total revenues accounted approximately 61 62 respectively companys total revenues recently issued accounting pronoucements convertible debt instruments may 9 2008 fasb issued fasb staff position apb 141 “accounting convertible debt instruments may settled cash upon conversion including partial cash settlement” “fsp apb 141” fsp apb 141 applies convertible debt instrument conversion may settled wholly partly cash requires cashsettleable convertibles separated debt equity components issuance prohibits use fairvalue option instruments fsp apb 141 effective first fiscal period beginning december 15 2008 must applied retrospectively periods presented cumulative effect adjustment made earliest period presented required adopt fsp apb 141 first quarter fiscal 2010 currently assessing impact consolidated financial statements recently adopted accounting pronouncements accounting uncertainty income taxes july 2006 fasb interpretation 48 “accounting uncertainty income taxes interpretation fasb statement 109” “fin 48” issued clarifies accounting uncertainty income taxes recognized entity’s financial statements accordance statement financial accounting standards 109 “accounting income taxes” prescribing minimum recognition threshold measurement attribute tax position taken expected taken tax return required meet recognized financial statements fin 48 also provides guidance derecognition measurement classification interest penalties accounting interim periods disclosure transition may 2007 fasb issued fsp fin 481 “definition settlement fasb interpretation 48” fsp fin 481 provides guidance company determine whether tax position effectively settled purpose recognizing previously unrecognized tax benefits fsp fin 481 effective upon initial adoption fin 48 company adopted first quarter fiscal 2008 discussed footnote 11 consolidated financial statements accounting purchases life insurance september 2006 fasb ratified consensus reached eitf issue 065 “accounting purchases life insurance determining amount could realized accordance fasb technical bulletin 854 accounting purchases life insurance” fasb technical bulletin 854 requires amount could realized insurance contract date statement financial position reported asset since issuance fasb technical bulletin 854 diversity practice calculation amount could realized insurance contracts issue 065 concludes company consider additional amounts eg cash stabilization reserves deferred acquisition cost taxes included contractual terms insurance policy cash surrender value determining amount could realized accordance fasb technical bulletin 854 adoption interpretation material impact company’s consolidated financial statements 2 accumulated comprehensive loss company applies provision fasb statement financial accounting standards 130 “reporting comprehensive income” following summarizes accumulated comprehensive loss march 31 2008 2007 2006 3 allowance loan losses following summary changes allowance loan losses years ended march 31 2008 2007 2006 company follows statement position 033 sop 033 accounting certain loans debt securities acquired transfer prohibits carry creation valuation allowances initial accounting loans acquired transfer within scope sop management believes loan shown deterioration days delinquent company believes loans acquired shown evidence deterioration credit quality since origination therefore within scope sop 033 company pay consideration record acquired loans 60 days delinquent loans acquired 60 days past due included scope sop 033 therefore subsequent refinances restructures loans would accounted new loan years ended march 31 2008 2007 2006 company recorded adjustments approximately 01 million 09 million 04 million respectively allowance loan losses connection acquisitions accordance generally accepted accounting principles adjustments represent allowance loan losses acquired loans meet scope sop 033 also see note 1 4 property equipment property equipment consist depreciation expense 3760000 3058000 2372000 years ended march 31 2008 2007 2006 respectively 5 intangible assets intangible assets net accumulated amortization consist estimated amortization expense intangible assets years ended march 31 follows 23 million 2009 20 million 2010 16 million 2011 13 million 2012 10 million 2013 aggregate 18 million years thereafter 6 goodwill following summarizes changes carrying amount goodwill year ended march 31 2008 2007 august 2006 january 2007 company closed san antonio texas tallassee alabama branches respectively time goodwill associated branches determined impaired subsequently written company performed annual impairment test march 31 2008 determined none recorded goodwill impaired 7 notes payable companys notes payable consist senior notes payable 187000000 revolving credit facility provides borrowings 187 million 1045 million outstanding march 31 2008 subject borrowing base formula additional 30 million available seasonal revolving credit commitment november 15 year march 31 immediately succeeding year cover increase loan demand period company may borrow option rate prime libor plus 180 march 31 2008 company’s interest rate 525 unused amount available revolver 825 million excluding 30 million dollar seasonal line expires march 31 revolving credit facility commitment fee 0375 per annum unused portion commitment borrowings revolving credit facility mature september 30 2009 member company’s board directors served director south financial group parent carolina first bank march 31 2008 carolina first bank committed fund 259 million credit facility including 36 million seasonal line substantially company’s assets pledged collateral borrowings revolving credit agreement second amendment amended restated credit agreement company entered second amendment amended restated credit agreement dated october 2 2006 “amendment” amends company’s amended restated revolving credit agreement dated july 20 2005 amended “credit agreement” among company banks party thereto “banks” jpmorgan chase bank coagent harris na agent banks amendment permitted company incur 110000000 aggregate principal amount indebtedness convertible notes defined convertible senior notes section terms including subordination terms set forth offering memorandum convertible notes dated october 3 2006 also described company’s registration statement form s3 filed december 18 2006 sec file 333139445 confirmed notes constitute subordinated indebtedness defined credit agreement addition amendment modified consolidated net worth fixed charge coverage ratio financial covenants credit agreement adjusted indebtedness negative covenant credit agreement amended prohibits incurrence senior debt defined credit agreement consolidated basis exceeds 375 sum consolidated adjusted net worth aggregate unpaid principal amount subordinated debt ii subordinated debt exceeds 150 consolidated adjusted net worth amendment eliminated restricted payments negative covenant credit agreement replaced covenant requiring obligations credit agreement constitute senior debt agreement covering subordinated debt obligations constitute designated senior debt indenture convertible notes ii restricting amendments subordinated debt amendments respect interest rates deferral repayments matters adverse senior lenders iii restricting voluntary prepayments redemptions cash payments upon conversion subordinated debt except payments pro forma basis create default event default defined credit agreement amendment also permitted convertible note hedge warrant transactions described convertible senior notes section provided default company convertible note hedge warrant transactions also constitute event default credit agreement convertible senior notes october 10 2006 company issued 110 million aggregate principal amount 30 convertible senior subordinated notes due october 1 2011 “convertible notes” qualified institutional brokers accordance rule 144a securities act 1933 interest convertible notes payable semiannually arrears april 1 october 1 year commencing april 1 2007 convertible notes company’s direct senior subordinated unsecured obligations rank equally right payment existing future unsecured senior subordinated debt company senior right payment company’s existing future subordinated debt junior company’s existing future senior debt convertible notes structurally junior liabilities company’s subsidiaries convertible notes convertible prior maturity subject certain conditions described initial conversion rate 160229 shares per 1000 principal amount notes represents initial conversion price approximately 6241 per share subject adjustment upon conversion company pay cash principal amount notes converted deliver shares common stock extent daily conversion value exceeds proportionate principal amount based 30 tradingday observation period holders may convert convertible notes prior july 1 2011 one following conditions satisfied • fiscal quarter commencing december 31 2006 last reported sale price common stock least 20 trading days period 30 consecutive trading days ending last trading day preceding fiscal quarter greater equal 120 applicable conversion price last trading day • five business day period ten consecutive trading day period trading price per note day ten consecutive trading day period less 98 product last reported sale price company’s common stock applicable conversion rate day • occurrence specified corporate transactions convertible notes converted connection certain fundamental changes occur prior october 1 2011 company may obligated pay additional makewhole premium respect convertible notes converted company undergoes certain fundamental changes holders convertible notes may require company purchase convertible notes price equal 100 principal amount convertible notes purchased plus accrued interest excluding purchase date holders may also surrender convertible notes conversion anytime july 1 2011 close business third business day immediately preceding maturity date regardless whether foregoing conditions satisfied contingent conversion feature required bifurcated accounted separately provisions fas 133 “accounting derivative instruments hedging activities” aggregate underwriting commissions debt issuance costs incurred respect issuance convertible notes approximately 36 million amortized period convertible senior notes outstanding convertible notes hedge strategy concurrent connection sale convertible notes company purchased call options purchase shares company’s common stock equal conversion rate date options exercised convertible notes price 6241 per share cost call options totaled 246 million company also sold warrants counterparties purchase company aggregate 1762519 shares company’s common stock price 7397 per share received net proceeds sale increasing warrants 162 million taken together call option warrant agreements increased effective conversion price convertible notes 7397 per share call options warrants must settled net shares date settlement market price per share company’s common stock 7397 per share company required deliver shares common stock representing value call options warrants excess 7397 per share warrants strike price 7397 generally exercisable anytime company issued sold warrants transaction exempt registration requirements securities act 1933 amended virtue section 42 thereof underwriting commissions discounts connection sale warrants accordance eitf 0019 “accounting derivative financial instruments indexed potentially settled company’s stock” company accounted call options warrants net reduction additional paid capital required recognize subsequent changes fair value call options warrants consolidated financial statements note payable company also 400000 note payable carolina first bank bearing interest libor plus 200 payable monthly repaid two remaining annual installments 200000 ending may 1 2009 debt covenants various debt agreements contain restrictions amounts permitted indebtedness investments working capital repurchases common stock cash dividends march 31 2008 224 million available covenants payment cash dividends repurchase companys common stock addition agreements restrict liens assets sale transfer subsidiaries company compliance various debt covenants periods presented aggregate annual maturities notes payable fiscal years subsequent march 31 2008 follows 2009 200000 2010 104700000 2011 0 2012 110000000 none thereafter 8 derivative financial instruments october 5 2005 company entered interest rate swap notional amount 30 million economically hedge portion cash flows floating rate revolving credit facility terms interest rate swap company pay fixed rate 4755 30 million notional amount receive payments counterparty based 1 month libor rate term ending october 5 2010 interest rate differentials paid received swap agreement recognized adjustments interest expense march 31 2008 company recorded liability related interest rate swap 17 million represented fair value interest rate swap date corresponding unrealized loss 18 million recorded reduction income year ended march 31 2008 year ended march 31 2008 interest expense decreased approximately 39000 result net disbursements terms interest rate swap may 9 2007 company entered 3 million foreign exchange currency option economically hedge foreign exchange risk relative mexican peso terms option contract company exchange 3 million us dollars rate 1118 mexican pesos may 9 2008 fair value option march 31 2008 immaterial company enter derivative financial instruments trading speculative purposes purpose instruments reduce exposure variability future cash flows attributable portion liborbased borrowings reduce variability foreign cash flows fair value interest rate swap option recorded consolidated balance sheets asset liability company currently accounting derivative instruments using cash flow hedge accounting provisions sfas 133 therefore changes fair value swap option included earnings income expenses using derivative instruments company exposed credit market risk credit risk counterparty derivative instrument fail perform exists extent fair value gain derivative credit risk created fair value derivative contract positive since generally indicates counterparty owes company fair value derivative negative credit risk exists since company would owe counterparty market risk adverse effect financial instruments change interest rates implied volatility exchange rates company manages market risk associated interest rate contracts currency options establishing monitoring limits types degree risk may undertaken market risk associated derivatives used interest rate foreign currency risk management activities fully incorporated company’s market risk sensitivity analysis 9 nonfile insurance company maintains nonfile insurance coverage unaffiliated insurance company following summary nonfile insurance activity years ended march 31 2008 2007 2006 10 leases company conducts operations leased facilities except owned corporate office building companys leases typically lease term three years contain lessee renewal options majority leases provide lessee pays property taxes insurance common area maintenance costs expected normal course business expiring leases renewed companys option replaced leases acquisitions properties company’s leases operating leases future minimum lease payments noncancelable operating leases march 31 2008 follows rental expense cancelable noncancelable operating leases years ended march 31 2008 2007 2006 12198271 9555103 7730647 respectively 11 income taxes income tax expense benefit consists income tax expense 34721036 29274000 23080000 years ended march 31 2008 2007 2006 respectively differed amounts computed applying us federal income tax rate 35 pretax income continuing operations result following tax effects temporary differences give rise significant portions deferred tax assets deferred tax liabilities march 31 2008 2007 presented march 31 2008 deferred tax asset included 4500000 related uncertain tax positions identified adoption fin 48 valuation allowance deferred tax assets march 31 2008 2007 406639 742000 respectively valuation allowance total deferred tax assets march 31 2008 2007 relates state net operating losses assessing realizability deferred tax assets management considers whether likely portion deferred tax assets realized ultimate realization deferred tax assets dependent upon generation future taxable income periods temporary differences become deductible management considers scheduled reversals deferred tax liabilities projected future taxable income tax planning strategies making assessment order fully realize deferred tax asset company need generate future taxable income prior expiration deferred tax assets governed tax code based upon level historical taxable income projections future taxable income periods deferred tax assets deductible management believes likely company realize benefits deductible differences net existing valuation allowances march 31 2008 amount deferred tax asset considered realizable however could reduced near term estimates future taxable income carryforward period reduced company adopted provision financial standards accounting board interpretation 48 accounting uncertainty income taxes “fin 48” interpretation fasb statement 109 april 1 2007 result implementation interpretation 48 company recognized charge approximately 550000 april 1 2007 balance retained earnings april 1 2007 march 31 2008 company 5530703 8764255 total gross unrecognized tax benefits including interest respectively total approximately 800000 2208734 respectively represents amount unrecognized tax benefits permanent nature recognized would affect annual effective tax rate reconciliation beginning ending amount unrecognized tax benefits follows company’s continuing practice recognize interest penalties related income tax matters income tax expense march 31 2008 company 1239335 accrued gross interest 883335 current period expense company determined possible total amount unrecognized tax benefits related various state examinations significantly increase decrease within twelve months reporting date however time reasonable estimate range possible change cannot made correspondence conducted state taxing authorities company subject us mexican income taxes well various state local jurisdictions exceptions company longer subject us federal state local nonus income tax examinations tax authorities years 2003 although carryforward attributes generated prior 2003 may still adjusted upon examination taxing authorities either used future period federal income tax returns 2005 2006 2007 currently examination taxing authorities addition income tax returns 2001 2006 examination state authority completed examinations issued proposed assessment tax years 2001 2006 company initial process responding jurisdiction consideration proposed assessment total gross unrecognized tax benefit increased 23 million time early predict final outcome tax issue future recoverability charge tax issue resolved company expects accrue approximately 40000 per quarter interest 12 earnings per share following reconciliation numerators denominators basic diluted eps calculations options purchase 183030 77556 133000 shares common stock various prices outstanding years ended march 31 2008 2007 2006 respectively included computation diluted eps option exercise price greater average market price common shares related convertible senior notes payable 1762519 related warrants included computation diluted eps effect instruments antidilutive 13 benefit plans retirement plan company provides defined contribution employee benefit plan 401k plan covering fulltime employees whereby employees invest maximum designated year company makes matching contribution equal 50 employees contributions first 6 gross pay companys expense plan 1078896 948519 619433 years ended march 31 2008 2007 2006 respectively supplemental executive retirement plan company instituted supplemental executive retirement plan “serp” nonqualified executive benefit plan company agrees pay executive additional benefits future usually retirement return continued employment executive company selects key executives participate serp unfunded plan means specific assets set aside company connection establishment plan executive rights agreement beyond general creditor company years ended march 31 2008 2007 2006 contributions 836977 474865 454165 respectively charged operations related serp unfunded liability 4000000 2989000 2707000 march 31 2008 2006 respectively three years presented unfunded liability estimated using following assumptions annual salary increase 35 3 years discount rate 6 3 years retirement age 65 executive deferred compensation plan company executive deferral plan eligible executives may elect defer portion incentive compensation paid executive incentive plan march 31 2008 2007 balance outstanding 101123 217480 respectively plan stock option plans company 1992 stock option plan 1994 stock option plan 2002 stock option plan 2005 stock option plan benefit certain directors officers key employees plans 4350000 shares authorized common stock reserved issuance pursuant grants approved compensation stock option committee board directors stock options granted plans maximum duration 10 years may subject certain vesting requirements generally one year directors five years officers key employees priced market value companys common stock date grant option march 31 2008 234123 shares available grant plans fair value company’s stock options granted estimated date grant using blackscholes optionpricing model requires input highly subjective assumptions changes materially affect fair value estimate assumptions include estimating length time employees retain vested stock options exercising estimated volatility common stock price expected term number options ultimately complete vesting requirements additionally may factors would otherwise significant effect value employee stock options granted considered model accordingly management believes blackscholes optionpricing model provides reasonable estimate fair value model necessarily provide best single measure fair value company’s employee stock options weightedaverage fair value grant date options issued years ended march 31 2008 2007 2006 1441 2644 1493 per share respectively following summary company’s weightedaverage assumptions used estimate weightedaverage per share fair value options granted date grant using blackscholes optionpricing model expected stock price volatility based historical volatility company’s stock period approximating expected life expected life represents period time options expected outstanding grant date riskfree interest rate reflects interest rate grant date zerocoupon us governmental bonds remaining life similar expected option term option activity year ended march 31 2008 follows aggregate intrinsic value reflected table represents total pretax intrinsic value difference closing stock price march 31 2008 exercise price multiplied number inthemoney options would received option holders option holders exercised options march 31 2008 amount change market price per share changes total intrinsic value options exercised periods ended march 31 2008 2007 2006 follows march 31 2008 total unrecognized stockbased compensation expense related nonvested stock options amounted approximately 62 million expected recognized weightedaverage period approximately 31 years following table summarizes information regarding stock options outstanding march 31 2008 restricted stock november 28 2007 company granted 20800 shares restricted stock equity classified grant date fair value 3094 per share certain executive officers onethird restricted stock vested immediately onethird vest first second anniversary grant company granted additional 15150 shares restricted stock equity classified grant date fair value 3094 per share executive officers 15150 shares vest three years based company’s compounded annual eps growth according following schedule november 12 2007 company granted 8000 shares restricted stock equity classified grant date fair value 2819 per share certain officers onethird restricted stock vested immediately onethird vest first second anniversary grant april 30 2007 company granted 8000 shares restricted stock equity classified grant date fair value 4293 per share independent directors onehalf restricted stock vested immediately half vest first anniversary grant compensation expense related restricted stock based number shares expected vest fair market value common stock grant date company recognized 16 million 11 million compensation expense years ended march 31 2008 2007 respectively related restricted stock included component general administrative expenses consolidated statements operations shares expected vest march 31 2008 approximately 10 million unrecognized compensation cost related unvested restricted stock awards granted expected recognized next two years summary status company’s restricted stock march 31 2008 changes year ended march 31 2008 presented total sharebased compensation included component net income years ended march 31 follows 14 acquisitions following table sets forth acquisition activity company last three fiscal years company evaluates acquisition determine transaction meets definition business combination transactions meet definition business combination accounted sfas 141 acquisitions accounted asset purchases acquisitions independent third parties titan acquisition october 13 2006 company purchased assets consisting primarily loans receivable titan financial group ii llc certain affiliated companies approximately 135 million cash assets included approximately 125 million net loan receivable portfolios 117000 fixed assets acquisition recorded business combination management determined fair value customer list exceeded excess purchase price paid fair value tangible assets therefore excess recorded customer list goodwill recorded titan office locations across georgia south carolina company kept open 39 69 titan offices consolidated remaining titan offices existing operations results acquisition included company’s consolidated financial statements since acquisition date pro forma impact purchase though acquired beginning periods presented would material effect results operations reported acquisitions acquisition results new office company records transaction business combination since office acquired continue generate loans company typically retains existing employees office location purchase price allocated estimated fair value tangible assets acquired estimated fair value identified intangible assets acquired generally noncompete agreements customer lists remainder allocated goodwill nine months ended march 31 2008 13 acquisitions recorded business combinations acquisition portfolio loans company records transaction asset purchase asset purchase goodwill recorded purchase price allocated estimated fair value tangible intangible assets acquired nine months ended march 31 2008 twelve acquisitions recorded asset acquisitions company’s acquisitions include tangible assets generally loans furniture equipment intangible assets generally noncompete agreements customer lists goodwill recorded fair values estimated pursuant processes described acquired loans valued net loan balance given shortterm nature loans generally four months loans subject continual repricing current rates management believes net loan balances approximate fair value furniture equipment valued specific purchase price agreed parties time acquisition management believes approximates fair values noncompete agreements valued stated amount paid party agreements company believes approximates fair value fair value customer lists based valuation model utilizes company’s historical data estimate value acquired customer lists business combination remaining excess purchase price fair value tangible assets customer list noncompete agreements allocated goodwill offices company acquires small privately owned offices sufficient historical data determine attrition company believes customers acquired characteristics perform similarly customers therefore company utilized attrition patterns customers developing method reevaluated periodically customer lists allocated office level evaluated impairment office level triggering event occurs accordance sfas 144 triggering event occurs impairment loss customer list generally remaining unamortized customer list balance acquisitions original fair value customer list allocated office generally less 100000 management believes event triggering event occur impairment loss unamortized customer list would immaterial results acquisitions included company’s consolidated financial statements since respective acquisition dates pro forma impact purchases though acquired beginning periods presented would material effect results operations reported 15 quarterly information unaudited following sets forth selected quarterly operating data 16 litigation march 31 2008 company certain subsidiaries named defendants various legal actions arising normal business activities damages various amounts claimed although amount ultimate liability respect matters cannot determined company believes liability material adverse effect company’s results operations financial condition taken whole management’s report internal control financial reporting responsible establishing maintaining adequate internal control financial reporting defined rules 13a 15f securities exchange act 1934 assessed effectiveness internal control financial reporting march 31 2008 assessment based criteria set forth committee sponsoring organizations treadway commission coso internal controlintegrated framework internal control financial reporting process designed provide reasonable assurance regarding reliability financial reporting preparation financial statements external purposes accordance generally accepted accounting principles internal control financial reporting includes policies procedures 1 pertain maintenance records reasonable detail accurately fairly reflect transactions dispositions assets 2 provide reasonable assurance transactions recorded necessary permit preparation financial statements accordance generally accepted accounting principles receipts expenditures made accordance authorizations management board directors 3 provide reasonable assurance regarding prevention timely detection unauthorized acquisition use disposition assets could material effect financial statements inherent limitations internal control financial reporting may prevent detect misstatements also assumptions regarding internal control financial reporting future periods based evaluation effectiveness prior period subject risk controls may become inadequate changes conditions degree compliance policies procedures may deteriorate based using coso criteria believe internal control financial reporting march 31 2008 effective independent registered public accounting firm audited consolidated financial statements included annual report issued attestation report effectiveness internal control financial reporting stated report mclean iii kelly malson mclean iii kelly malson chairman chief executive officer vice president chief financial officer report independent registered public accounting firm board directors world acceptance corporation audited accompanying consolidated balance sheets world acceptance corporation subsidiaries “company” march 31 2008 2007 related consolidated statements operations shareholders’ equity comprehensive income cash flows years threeyear period ended march 31 2008 consolidated financial statements responsibility company’s management responsibility express opinion consolidated financial statements based audits conducted audits accordance standards public company accounting oversight board united states standards require plan perform audit obtain reasonable assurance whether financial statements free material misstatement audit includes examining test basis evidence supporting amounts disclosures financial statements audit also includes assessing accounting principles used significant estimates made management well evaluating overall financial statement presentation believe audits provide reasonable basis opinion consolidated financial statements referred present fairly material respects financial position world acceptance corporation subsidiaries march 31 2008 2007 results operations cash flows years threeyear period ended march 31 2008 conformity us generally accepted accounting principles discussed note 1 company adopted fasb interpretation 48 accounting uncertainty income taxes effective april 1 2007 statement financial accounting standard revised 2004 sharebased payment effective april 1 2006 also audited accordance standards public company accounting oversight board united states world acceptance corporation’s internal control financial reporting march 31 2008 based criteria established internal controlintegrated framework issued committee sponsoring organizations treadway commission coso report dated may 30 2008 expressed unqualified opinion effectiveness company’s internal control financial reporting greenville south carolina may 30 report independent registered public accounting firm board directors world acceptance corporation audited world acceptance corporation subsidiaries’ “company’s” internal control financial reporting march 31 2008 based criteria established internal controlintegrated framework issued committee sponsoring organizations treadway commission coso company’s management responsible maintaining effective internal control financial reporting assessment effectiveness internal control financial reporting included accompanying management’s report internal control financial reporting responsibility express opinion company’s internal control financial reporting based audit conducted audit accordance standards public company accounting oversight board united states standards require plan perform audit obtain reasonable assurance whether effective internal control financial reporting maintained material respects audit included obtaining understanding internal control financial reporting assessing risk material weakness exists testing evaluating design operating effectiveness internal control based assessed risk audit also included performing procedures considered necessary circumstances believe audit provides reasonable basis opinion companys internal control financial reporting process designed provide reasonable assurance regarding reliability financial reporting preparation financial statements external purposes accordance generally accepted accounting principles companys internal control financial reporting includes policies procedures 1 pertain maintenance records reasonable detail accurately fairly reflect transactions dispositions assets company 2 provide reasonable assurance transactions recorded necessary permit preparation financial statements accordance generally accepted accounting principles receipts expenditures company made accordance authorizations management directors company 3 provide reasonable assurance regarding prevention timely detection unauthorized acquisition use disposition company’s assets could material effect financial statements inherent limitations internal control financial reporting may prevent detect misstatements also projections evaluation effectiveness future periods subject risk controls may become inadequate changes conditions degree compliance policies procedures may deteriorate opinion company maintained material respects effective internal control financial reporting march 31 2008 based criteria established internal controlintegrated framework issued committee sponsoring organizations treadway commission coso also audited accordance standards public company accounting oversight board united states consolidated balance sheets company march 31 2008 2007 related consolidated statements operations shareholders’ equity comprehensive income cash flows years threeyear period ended march 31 2008 report dated may 30 2008 expressed unqualified opinion consolidated financial statements greenville south carolina may 30 item9 changes disagreements accountants accounting financial disclosure company disagreements accounting financial disclosure matters independent registered public accountants report item 9item 8 financial statements supplementary data consolidated balance sheets see accompanying notes consolidated financial statements consolidated statements operations see accompanying notes consolidated financial statements consolidated statements shareholders’ equity comprehensive income see accompanying notes consolidated financial statements consolidated statements cash flows see accompanying notes consolidated financial statements notes consolidated financial statements 1 summary significant accounting policies companys accounting reporting policies accordance us generally accepted accounting principles conform general practices within finance company industry following description significant policies used preparing consolidated financial statements nature operations company smallloan consumer finance company headquartered greenville south carolina offers shortterm small loans mediumterm larger loans related credit insurance products ancillary products services individuals limited access sources consumer credit also offers income tax return preparation services access refund anticipation loans third party bank customer base others company also markets computer software related services financial services companies paradata financial systems “paradata” subsidiary march 31 2010 company operated 910 offices south carolina georgia texas oklahoma louisiana tennessee missouri illinois new mexico kentucky alabama company also operated 80 offices mexico company subject numerous lending regulations vary jurisdiction principles consolidation consolidated financial statements include accounts world acceptance corporation wholly owned subsidiaries “company” subsidiaries consist operating entities various states mexico paradata software company acquired fiscal 1994 wac insurance company ltd captive reinsurance company established fiscal 1994 servicios world acceptance corporation de mexico service company established fiscal 2006 significant intercompany balances transactions eliminated consolidation financial statements company’s foreign subsidiaries mexico prepared using local currency functional currency assets liabilities subsidiaries translated us dollars current exchange rate income expense translated average exchange rate period resulting translation gains losses recognized component equity “accumulated comprehensive income loss” use estimates preparation financial statements preparation financial statements conformity us generally accepted accounting principles gaap requires management make estimates assumptions affect reported amount assets liabilities disclosure contingent liabilities date financial statements reported amounts revenues expenses reporting period significant item subject estimates assumptions could materially change near term allowance loan losses actual results could differ estimates reclassification certain prior period amounts reclassified conform current presentation reclassifications impact previously reported net income shareholders’ equity business segments company reports operating segments accordance financial accounting standards board fasb accounting standards codification asc topic 280 prior authoritative literature statement financial accounting standards sfas 131 “disclosures segments enterprise related information” operating segments components enterprise separate financial information available evaluated regularly chief operating decision maker deciding allocate resources assess performance fasb asc topic 280 requires public enterprise report measure segment profit loss certain specific revenue expense items segment assets information way operating segments determined items company one reportable segment consumer finance company revenue generating activities company including sale insurance products income tax preparation buying club automobile club done existing branch network conjunction complement lending operation discrete financial information available activities meet criteria fasb asc 280 topic reported separately paradata provides data processing systems 107 separate finance companies including company march 31 2010 2009 paradata total assets 12 million 17 million represented less 10 total consolidated assets fiscal year end total net revenues system sales support paradata years ended march 31 2010 2009 2008 18 million 20 million 22 million respectively represented less 1 consolidated revenue year although paradata operating segment fasb asc topic 280 meet criteria require separate disclosure cash equivalents purposes statement cash flows company considers highly liquid investments maturity three months less date original issuance cash equivalents loans interest income company licensed originate direct cash consumer loans states georgia south carolina texas oklahoma louisiana tennessee missouri illinois new mexico kentucky alabama addition company also originates direct cash consumer loans mexico fiscal 2010 2009 company originated loans generally ranging 4000 terms 36 months less experience indicates majority direct cash consumer loans refinanced company accounts refinancing new loan generally customer must make multiple payments order qualify refinancing furthermore company’s lending policy predetermined lending amounts cases refinancing result advancing additional funds company believes advancement additional funds constitutes minor modification terms existing loan present value cash flows terms new loan 10 present value remaining cash flows terms original loan fees received direct costs incurred origination loans deferred amortized interest income contractual lives loans unamortized amounts recognized income time loans refinanced paid full loans carried gross amount outstanding reduced unearned interest insurance income net deferred origination fees direct costs allowance loan losses company generally calculates interest revenue loans using rule 78s recognizes interest revenue using collection method cash method recognizing revenue company believes combination two methods differ materially interest method accrual method recognizing revenue charges late payments credited income collected company generally offers loans prevailing statutory rates terms exceed 36 months management believes carrying value approximates fair value loan portfolio allowance loan losses company maintains allowance loan losses amount management’s opinion adequate cover losses inherent existing loan portfolio company charges current earnings provision loan losses amounts added allowance maintain levels expected cover probable losses principal establishing allowance loan losses company takes consideration growth loan portfolio mix loan portfolio current levels chargeoffs current levels delinquencies current economic factors allowance loan losses allocated unallocated component company uses historical current economic information net chargeoffs loan type average loan life loan type estimate allocated component allowance loan losses method based fact many customers refinance loans prior contractual maturity average contractual loan terms approximately 11 months average loan life approximately four months allowance loan loss model also reserves 100 principal loans greater 90 days past due recency basis loans charged earlier loans deemed uncollectible six months elapsed since date last full contractual payment company’s chargeoff policy consistently applied significant changes made policy periods reported management considers chargeoff policy evaluating appropriateness allowance loan losses fasb asc topic 310 prior authoritative literature statement position 033 “accounting certain loans debt securities acquired transfer” prohibits carryover creation valuation allowances initial accounting loans acquired transfer within scope authoritative literature company believes loans acquired since adoption fasb asc topic 310 shown evidence deterioration credit quality since origination therefore within scope fasb asc topic 310 therefore company records acquired loans within scope fasb asc topic 310 fair value based current interest rates less allowance loan losses property equipment property equipment stated cost less accumulated depreciation amortization depreciation recorded using straightline method estimated useful life related asset follows building 40 years furniture fixtures 5 10 years equipment 3 7 years vehicles 3 years amortization leasehold improvements recorded using straightline method lesser estimated useful life asset term lease additions premises equipment major replacements improvements added cost maintenance repairs minor replacements charged operating expense incurred assets retired otherwise disposed cost accumulated depreciation removed accounts gain loss reflected consolidated statement operations operating leases company’s office leases typically lease term three years contain lessee renewal options cancellation clauses event regulatory changes company typically renews leases one option periods accordingly company amortizes leasehold improvements shorter economic lives generally five years lease term considers renewal periods reasonably assured assets include cash surrender value life insurance policies prepaid expenses debt issuance costs deposits derivatives hedging activities company uses interest rate swaps foreign currency options economically hedge variable cash flows associated 50 million liborbased borrowings currency fluctuations interest rate swap agreements foreign currency options carried fair value changes fair value recorded period component consolidated statement operations see note 10 discussion related interest rate swaps march 31 2010 2009 company foreign currency options outstanding intangible assets goodwill intangible assets include cost acquiring existing customers value assigned noncompete agreements customer lists amortized straight line accelerated basis estimated period benefit ranging 5 20 years weighted average approximately 9 years noncompete agreements amortized straight line basis term agreement company evaluates goodwill annually impairment fourth quarter fiscal year using market valuebased approach company one reporting unit consumer finance company multiple components lowest level individual offices company’s components aggregated impairment testing similar economic characteristics company writes goodwill closes office goodwill assigned march 31 2010 company 84 offices recorded goodwill impairment longlived assets company assesses impairment longlived assets including property equipment intangible assets whenever changes events indicate carrying amount may recoverable company assesses impairment assets generally office level based operating cash flows office company’s plans office closings company write assets fair value based analysis sum expected future undiscounted cash flows less carrying amount assets company record impairment charges fiscal years 2010 2009 2008 fair value financial instruments fasb asc topic 825 prior authoritative literature sfas 107 disclosures fair value financial instruments requires disclosures fair value financial instruments whether recognized balance sheet practicable estimate value cases quoted market prices available fair values based estimates using present value valuation techniques company’s financial instruments consist following cash equivalents loans receivable senior notes payable convertible senior subordinated notes payable interest rate swaps fair value approximates carrying value instruments except convertible subordinated notes payable loans receivable originated prevailing market rates average life approximately four months given shortterm nature loans continually repriced current market rates company’s revolving credit facility variable rate based margin libor reprice changes libor fair value convertible subordinated notes payable based current quoted market price 73388700 61701550 march 31 2010 2009 respectively carrying value convertible subordinated notes payable net discount 71492041 83731538 march 31 2010 2009 respectively swaps valued based information third party broker insurance premiums insurance premiums credit life accident health property unemployment insurance written connection certain loans net refunds applicable advance insurance commissions retained company remitted monthly insurance company commissions credited unearned insurance commissions recognized income life related insurance contracts using method similar used recognition interest income nonfile insurance nonfile premiums charged certain loans lieu recording perfecting companys security interest assets pledged premiums remitted thirdparty insurance company insurance related insurance premiums claims recoveries reflected accompanying consolidated financial statements except reduction loan losses see note 12 certain losses related loans recoverable life accident health property unemployment insurance claims reimbursed nonfile insurance claims subject policy limitations remaining losses charged allowance loan losses income taxes income taxes accounted asset liability method deferred tax assets liabilities recognized future tax consequences attributable differences financial statement carrying amounts existing assets liabilities respective tax bases operating loss tax credit carryforwards deferred tax assets liabilities measured using enacted tax rates expected apply taxable income years temporary differences expected recovered settled effect deferred tax assets liabilities change tax rates recognized income period includes enactment date beginning adoption fasb asc topic 74010 prior authoritative literature fasb interpretation 48 “accounting uncertainty income taxes” april 1 2007 company recognizes effect income tax positions likely sustained recognized income tax positions measured largest amount greater 50 likely realized changes recognition measurement reflected period change judgment occurs prior adoption company recognized effect income tax positions likelihood positions sustained probable supplemental cash flow information years ended march 31 2010 2009 2008 company paid interest 9354502 9373237 10788530 respectively years ended march 31 2010 2009 2008 company paid income taxes 40628124 37302456 32018340 respectively earnings per share earnings per share “eps” computed accordance fasb asc topic 260 prior authoritative literature sfas 128 “earnings per share” basic eps includes dilution computed dividing net income weightedaverage number common shares outstanding period diluted eps reflects potential dilution securities could share earnings company potential common stock included diluted eps computation consists stock options restricted stock warrants computed using treasury stock method potential common stock related convertible senior notes included diluted eps computation using method prescribed fasb asc topic 2601045 prior authoritative literature eitf 048 “the effect contingently convertible instruments dilutive earnings per share” see note 15 reconciliation numerators denominators basic dilutive eps calculations stockbased compensation fasb asc topic 71810 prior authoritative literature sfas 123r “sharebased payment” requires companies recognize income statement grantdate fair value stock options equitybased compensation issued employees fasb asc topic 71810 change accounting guidance sharebased payment transactions parties employees provided fasb asc topic 71810 fasb asc topic 71810 way award classified affect measurement compensation cost liabilityclassified awards remeasured fair value balancesheet date award settled equityclassified awards measured grantdate fair value amortized subsequent vesting period subsequently remeasured fair value nonvested stock awards purposes recognizing stockbased compensation expense market price stock grant date fair value options estimated grant date using blackscholes option pricing model see note 16 march 31 2010 company several sharebased employee compensation plans described fully note 16 effective april 1 2006 company adopted fasb asc topic 718 using modified prospective transition method transition compensation cost recognized fiscal years 2008 2009 2010 includes compensation cost sharebased payments granted prior yet vested april 1 2006 based grant date fair value estimated accordance original provisions fasb asc topic 718 b compensation cost sharebased payments granted subsequent april 1 2006 based grantdate fair value estimated accordance provisions fasb asc topic 718 since compensation cost based awards ultimately expected vest reduced estimated forfeitures fasb asc topic 718 requires forfeitures estimated time grant revised necessary subsequent periods actual forfeitures differ estimates company elected expense grants awards graded vesting straightline basis requisite service period separately vesting portion award comprehensive income total comprehensive income consists net income comprehensive income loss company’s comprehensive income loss accumulated comprehensive income loss comprised foreign currency translation adjustments concentration risk year ended march 31 2010 company operated 11 states united states well mexico years ended march 31 2010 2009 2008 total revenues within companys four largest states measured total revenues accounted approximately 58 59 62 respectively companys total revenues advertising costs advertising costs expensed incurred advertising costs approximately 128 million 131 million 126 million fiscal years 2010 2009 2008 respectively recently issued accounting pronouncements fasb accounting standards codification june 2009 fasb issued fasb asc topic 105 prior authoritative literature sfas 168 “the fasb accounting standards codification hierarchy generally accepted accounting principles” fasb asc topic 105 replaces sfas 162 establishes fasb accounting standards codification source authoritative accounting principles recognized fasb applied nongovernmental entities preparation financial statements conformity gaap fasb asc topic 105 effective financial statements issued interim annual periods ending september 15 2009 adoption pronouncement impact company’s financial statement disclosures references authoritative accounting literature referenced accordance codification business combinations december 2007 fasb issued fasb asc topic 80510 prior authoritative literature sfas 141 r “business combinations” replaces sfas 141 fasb asc 80510 effective company april 1 2009 establishes principles requirements acquirer recognizes measures financial statements identifiable assets acquired liabilities assumed noncontrolling interest acquiree goodwill acquired fasb asc topic 80510 also establishes disclosure requirements enable users evaluate nature financial effects business combination fasb asc topic 80510 changes business combinations accounted impacts financial statements acquisition date subsequent periods adoption fasb asc topic 80510 impact company’s financial position results operations although may material impact accounting business combinations future cannot currently determined april 2009 fasb issued fasb asc topic 8051005 prior authoritative literature fsp 141r1 “accounting assets acquired liabilities assumed business combination arises contingencies” business combinations standard requires acquirer recognize fair value asset acquired liability assumed contingency acquisition date fair value determined measurement period fasb asc topic 8051005 effective fiscal years interim periods within fiscal years beginning december 15 2008 early adoption prohibited company adopted provisions april 1 2009 fasb asc topic 8051005 applied prospectively acquisitions fiscal 2010 subsequent events may 2009 fasb issued fasb asc topic 855 prior authoritative literature “sfas 165” “subsequent events” establishes general standards accounting disclosure events occur balance sheet date financial statements available issued “subsequent events” specifically fasb asc topic 855 sets forth period balance sheet date management reporting entity evaluate events transactions may occur potential recognition financial statements identifies circumstances entity recognize events transactions occurring balance sheet date financial statements disclosures made events transactions occur balance sheet date fasb asc topic 855 provides largely guidance subsequent events previously existed auditing literature disclosure required financial statements interim annual periods ending june 15 2009 company performed evaluation subsequent events date consolidated financial statements filed may 11 2010 board directors authorized company repurchase 20 million company’s common stock repurchase authorization follows addition similar repurchase authorization 15 million announced may 11 2009 june 8 2010 company repurchased 779321 shares approximately 274 million taking consideration repurchases company 62 million aggregate remaining repurchase capacity company’s outstanding repurchase authorizations useful life intangible assets april 2008 fasb issued fasb asc topic 35030551c prior authoritative literature fasb staff position fas 1423 “determination useful life intangible assets” fasb asc topic 35030551c applies recognized intangible assets guidance restricted estimating useful life recognized intangible assets fasb asc topic 35030551c effective first fiscal period beginning december 15 2008 must applied prospectively intangible assets acquired effective date company adopted fasb asc topic 35030551c effective april 1 2009 significant impact consolidated financial statements determining fair value volume level activity asset liability significantly decreased identifying transactions orderly fasb asc topic 82010654 prior authoritative literature fasb staff position fas 1574 “determining fair value volume level activity asset liability significantly decreased identifying transactions orderly” provides additional guidance estimating fair value accordance fasb asc topic 820 volume level activity asset liability significantly decreased fasb asc topic 82010654 also provides guidance determining transaction orderly one company adopted fasb asc topic 82010654 quarter ended june 30 2009 adoption significant impact company’s consolidated financial statements instruments indexed entity’s stock june 2008 fasb ratified fasb asc topic 81540 prior authoritative literature eitf issue 075 “determining whether instrument embedded feature indexed entity’s stock” fasb asc topic 81540 provides new twostep model applied freestanding financial instrument embedded feature characteristics derivative fasb asc topic 8151015 prior authoritative literature fasb 133 “accounting derivative instruments hedging activities” determining whether financial instrument embedded feature indexed issuer’s stock thus able qualify scope exception also adds clarity impact foreign currency denominated strike prices marketbased employee stock option valuation instruments evaluation fasb asc topic 81540 also applies freestanding financial instrument potentially settled entity’s stock regardless whether instrument characteristics derivative fasb asc topic 8151015 company adopted fasb asc topic 81540 quarter ended june 30 2009 adoption material impact company’s consolidated financial statements 2 change accounting principle may 2008 fasb issued fasb asc topic 47020 prior authoritative literature fasb staff position apb 141 “accounting convertible debt instruments may settled cash upon conversion including partial cash settlement” fasb asc topic 47020 applies convertible debt instrument conversion may settled wholly partly cash requires cashsettleable convertibles separated debt equity components issuance prohibits use fairvalue option instruments fasb asc topic 47020 effective first fiscal period beginning december 15 2008 applied retrospectively periods presented cumulative effect adjustment made earliest period presented company adopted fasb asc topic 47020 effective april 1 2009 impact consolidated financial statements follows 3 accumulated comprehensive loss company applies provisions fasb asc topic 22010 prior authoritative literature sfas 130 “reporting comprehensive income” following summarizes accumulated comprehensive loss income march 31 2010 2009 2008 4 allowance loan losses following summary changes allowance loan losses years ended march 31 2010 2009 2008 company follows fasb asc topic 310 prohibits carry creation valuation allowances initial accounting loans acquired transfer within scope accounting literature management believes loan shown deterioration 60 days delinquent company believes loans acquired shown evidence deterioration credit quality since origination therefore within scope fasb asc topic 310 company pay consideration record acquired loans 60 days delinquent loans acquired 60 days past due included scope fasb asc topic 310 therefore subsequent refinances restructures loans would accounted new loan years ended march 31 2009 2008 company recorded adjustments approximately 05 million 01 million respectively allowance loan losses connection acquisitions accordance generally accepted accounting principles adjustment made year ended march 31 2010 adjustments represent allowance loan losses acquired loans meet scope fasb asc topic 310 also see note 1 5 property equipment property equipment consist depreciation expense approximately 5767000 4784000 3760000 years ended march 31 2010 2009 2008 respectively 6 intangible assets following table provides gross carrying amount related accumulated amortization definitelived intangible assets estimated amortization expense intangible assets future years ended march 31 follows 18 million 2011 15 million 2012 11 million 2013 08 million 2014 04 million 2015 aggregate 20 million years thereafter 7 goodwill following summarizes changes carrying amount goodwill year ended march 31 2010 2009 company performed annual impairment test fourth quarter fiscal 2010 determined none recorded goodwill impaired 8 notes payable companys notes payable consist senior notes payable 238317000 revolving credit facility provides borrowings 238317000 99150000 outstanding march 31 2010 subject borrowing base formula company may borrow option rate prime libor plus 300 minimum 400 march 31 2010 2009 company’s interest rate 425 325 respectively unused amount available revolver march 31 2010 1392 million revolving credit facility commitment fee 0375 per annum unused portion commitment borrowings revolving credit facility mature july 31 2011 member company’s board directors serves director south financial group parent carolina first bank march 31 2010 carolina first bank committed fund 259 million credit facility substantially company’s assets pledged collateral borrowings revolving credit agreement convertible senior notes october 10 2006 company issued 110 million aggregate principal amount 30 convertible senior subordinated notes due october 1 2011 “convertible notes” qualified institutional brokers accordance rule 144a securities act 1933 interest convertible notes payable semiannually arrears april 1 october 1 year commencing april 1 2007 convertible notes company’s direct senior subordinated unsecured obligations rank equally right payment existing future unsecured senior subordinated debt company senior right payment company’s existing future subordinated debt junior company’s existing future senior debt convertible notes structurally junior liabilities company’s subsidiaries convertible notes convertible prior maturity subject certain conditions described initial conversion rate 160229 shares per 1000 principal amount notes represents initial conversion price approximately 6241 per share subject adjustment upon conversion company pay cash principal amount notes converted deliver shares common stock extent daily conversion value exceeds proportionate principal amount based 30 tradingday observation period holders may convert convertible notes prior july 1 2011 one following conditions satisfied • fiscal quarter commencing december 31 2006 last reported sale price common stock least 20 trading days period 30 consecutive trading days ending last trading day preceding fiscal quarter greater equal 120 applicable conversion price last trading day • five business day period ten consecutive trading day period trading price per note day ten consecutive trading day period less 98 product last reported sale price company’s common stock applicable conversion rate day • occurrence specified corporate transactions convertible notes converted connection certain fundamental changes occur prior october 1 2011 company may obligated pay additional makewhole premium respect convertible notes converted company undergoes certain fundamental changes holders convertible notes may require company purchase convertible notes price equal 100 principal amount convertible notes purchased plus accrued interest excluding purchase date holders may also surrender convertible notes conversion anytime july 1 2011 close business third business day immediately preceding maturity date regardless whether foregoing conditions satisfied contingent conversion feature required bifurcated accounted separately provisions fasb asc topic 8151015 aggregate underwriting commissions debt issuance costs incurred respect issuance convertible notes approximately 36 million amortized period convertible senior notes outstanding convertible notes hedge strategy concurrent connection sale convertible notes company purchased call options purchase shares company’s common stock equal conversion rate date options exercised convertible notes price 6241 per share cost call options totaled 246 million company also sold warrants counterparties purchase company aggregate 1762519 shares company’s common stock price 7397 per share received net proceeds sale warrants 162 million taken together call option warrant agreements increased effective conversion price convertible notes 7397 per share call options warrants must settled net shares date settlement market price per share company’s common stock 7397 per share company required deliver shares common stock representing value call options warrants excess 7397 per share warrants strike price 7397 generally exercisable anytime company issued sold warrants transaction exempt registration requirements securities act 1933 amended virtue section 42 thereof underwriting commissions discounts connection sale warrants accordance fasb asc topic 81540 prior authoritative literature eitf 0019 “accounting derivative financial instruments indexed potentially settled company’s stock” company accounted call options warrants net reduction additional paid capital required recognize subsequent changes fair value call options warrants consolidated financial statements accounting convertible debt instruments may settled cash upon conversion april 1 2009 adopted fasb asc topic 47020 prior authoritative literature fsp apb 141 accounting convertible debt instruments may settled cash upon conversion including partial cash settlement fasb asc topic 47020 requires convertible debt separated liability equity components manner reflects nonconvertible debt borrowing rate determined 87 time issuance convertible notes must applied retroactively periods presented see note 2 disclosure financial statement impact adoption fasb asc 47020 carrying amounts debt equity components follows interest expense relating contractual interest coupon amortization discount liability component follows fiscal 2010 2009 effective interest rate liability component 84 due combination put call conversion options part terms convertible note agreement remaining discount liability component amortized 16 months debt covenants various debt agreements contain restrictions amounts permitted indebtedness investments working capital repurchases common stock cash dividends march 31 2010 671 million available covenants payment cash dividends repurchase companys common stock repurchase subordinated debt addition agreements restrict liens assets sale transfer subsidiaries aggregate annual maturities notes payable fiscal years subsequent march 31 2010 follows 2011 0 2012 176150000 none thereafter 9 extinguishment debt fiscal 2010 company repurchased privately negotiated transactions aggregate principal amount 180 million convertible notes average discount face value approximately 197 company spent approximately 144 million aggregate repurchases transactions treated extinguishment debt accounting purposes company recorded gain approximately 22 million repurchase convertible notes partially offset writeoff 230000 deferred financing costs associated repurchase cancellation convertible notes fiscal 2009 company repurchased privately negotiated transactions aggregate principal amount 150 million convertible notes average discount face value approximately 388 company spent approximately 92 million aggregate repurchases transactions treated extinguishment debt accounting purposes company recorded gain approximately 40 million repurchase convertible notes partially offset writeoff 300000 deferred financing costs associated repurchase cancellation convertible notes 10 derivative financial instruments december 8 2008 company entered interest rate swap notional amount 20 million economically hedge portion cash flows floating rate revolving credit facility terms interest rate swap company pays fixed rate 24 20 million notional amount receives payments counterparty based 1 month libor rate term ending december 8 2011 interest rate differentials paid received swap agreement recognized adjustments interest expense october 5 2005 company entered interest rate swap notional amount 30 million economically hedge portion cash flows floating rate revolving credit facility terms interest rate swap company pay fixed rate 4755 30 million notional amount receive payments counterparty based 1 month libor rate term ending october 5 2010 interest rate differentials paid received swap agreement recognized adjustments interest expense may 15 2008 company entered 10 million foreign currency exchange option economically hedge foreign exchange risk relative mexican peso terms option contract company could exchange 10 million us dollars rate 110 mexican pesos per dollar option sold october 2008 company recorded 15 million net gain fair value company’s interest rate derivative instruments included consolidated balance sheets follows interest rate swaps currently liability positions therefore significant risk loss related counterparty credit risk gains losses recognized company’s consolidated statements operations result interest rate swaps foreign currency exchange option follows company enter derivative financial instruments trading speculative purposes purpose instruments reduce exposure variability future cash flows attributable portion liborbased borrowings reduce variability foreign cash flows company currently accounting derivative instruments using cash flow hedge accounting provisions fasb asc topic 8151015 therefore changes fair value swap option included earnings income expenses using derivative instruments company exposed credit market risk credit risk counterparty derivative instrument fail perform exists extent fair value gain derivative market risk adverse effect financial instruments change interest rates implied volatility exchange rates company manages market risk associated interest rate contracts currency options establishing monitoring limits types degree risk may undertaken market risk associated derivatives used interest rate foreign currency risk management activities fully incorporated company’s market risk sensitivity analysis 11 insurance commissions income insurance commissions income years ending march 31 2010 2009 2008 consist 12 nonfile insurance company maintains nonfile insurance coverage unaffiliated insurance company following summary nonfile insurance activity years ended march 31 2010 2009 2008 13 leases company conducts operations leased facilities except owned corporate office building companys leases typically lease term three years contain lessee renewal options majority leases provide lessee pays property taxes insurance common area maintenance costs expected normal course business expiring leases renewed companys option replaced leases acquisitions properties company’s leases operating leases future minimum lease payments noncancelable operating leases march 31 2010 follows rental expense cancelable noncancelable operating leases years ended march 31 2010 2009 2008 15865447 14257168 12198271 respectively 14 income taxes income tax expense benefit consists income tax expense 45782667 35080790 33095596 years ended march 31 2010 2009 2008 respectively differed amounts computed applying us federal income tax rate 35 pretax income continuing operations result following tax effects temporary differences give rise significant portions deferred tax assets deferred tax liabilities march 31 2010 2009 presented valuation allowance deferred tax assets march 31 2010 2009 1274 1214 respectively valuation allowance total deferred tax assets march 31 2010 2009 relates state net operating losses assessing realizability deferred tax assets management considers whether likely portion deferred tax assets realized ultimate realization deferred tax assets dependent upon generation future taxable income periods temporary differences become deductible management considers scheduled reversals deferred tax liabilities projected future taxable income tax planning strategies making assessment order fully realize deferred tax asset company need generate future taxable income prior expiration deferred tax assets governed tax code based upon level historical taxable income projections future taxable income periods deferred tax assets deductible management believes likely company realize benefits deductible differences net existing valuation allowances march 31 2010 amount deferred tax asset considered realizable however could reduced near term estimates future taxable income carryforward period reduced company required assess whether earnings company’s mexican foreign subsidiary permanently reinvested respective foreign jurisdiction previously untaxed foreign earnings company longer permanently reinvested thus become taxable united states march 31 2010 company determined 20097 cumulative undistributed net losses well future net earnings mexican foreign subsidiaries permanently reinvested company adopted provision fasb asc topic 74010 april 1 2007 result implementation company recognized charge approximately 550000 april 1 2007 balance retained earnings march 31 2010 march 31 2009 company 5762087 4715681 total gross unrecognized tax benefits including interest respectively total approximately 3168539 2747945 respectively represents amount unrecognized tax benefits permanent nature recognized would affect annual effective tax rate reconciliation beginning ending amount unrecognized tax benefits follows company’s continuing practice recognize interest penalties related income tax matters income tax expense march 31 2010 company 1076567 accrued gross interest 232911 current period expense company determined possible total amount unrecognized tax benefits related various state examinations significantly increase decrease within twelve months reporting date however time reasonable estimate range possible change cannot made correspondence conducted state taxing authorities company subject us mexican income taxes well various state local jurisdictions exceptions company longer subject us federal state local nonus income tax examinations tax authorities years 2006 although carryforward attributes generated prior 2006 may still adjusted upon examination taxing authorities either used future period income tax returns 2001 2006 examination state authority completed examinations issued proposed assessment tax years 2001 2006 consideration proposed assessment total gross unrecognized tax benefit increased 32 million fiscal 2010 time early predict final outcome tax issue future recoverability charge tax issue resolved company expects accrue approximately 55000 per quarter interest 15 earnings per share following reconciliation numerators denominators basic diluted eps calculations options purchase 100152 130583 183030 shares common stock various prices outstanding years ended march 31 2010 2009 2008 respectively included computation diluted eps option exercise price greater average market price common shares related convertible senior notes payable 1762519 related warrants included computation diluted eps effect instruments antidilutive 16 benefit plans retirement plan company provides defined contribution employee benefit plan 401k plan covering fulltime employees whereby employees invest maximum designated year company makes matching contribution equal 50 employees contributions first 6 gross pay companys expense plan 1059884 1078987 1078896 years ended march 31 2010 2009 2008 respectively supplemental executive retirement plan company instituted supplemental executive retirement plan “serp” nonqualified executive benefit plan company agrees pay executive additional benefits future usually retirement return continued employment executive company selects key executives participate serp unfunded plan means specific assets set aside company connection establishment plan executive rights agreement beyond general creditor company years ended march 31 2010 2009 2008 contributions 928407 806792 836977 respectively charged operations related serp unfunded liability 5385106 4722000 4000000 march 31 2010 2009 2008 respectively may 2009 company instituted second supplemental executive retirement plan “serp” provide one executive type benefits original serp would qualified due age second serp also unfunded plan specific assets set aside company connection plan three years presented unfunded liability estimated using following assumptions annual salary increase 35 3 years discount rate 6 3 years retirement age 65 executive deferred compensation plan company executive deferral plan eligible executives may elect defer portion incentive compensation paid executive incentive plan march 31 2010 2009 executive deferred compensation plan stock option plans company 1994 stock option plan 2002 stock option plan 2005 stock option plan 2008 stock option plan benefit certain directors officers key employees plans 4850000 shares authorized common stock reserved issuance pursuant grants approved compensation stock option committee board directors stock options granted plans maximum duration 10 years may subject certain vesting requirements generally one year directors five years officers key employees priced market value companys common stock date grant option march 31 2010 516895 shares available grant plans stock based compensation recognized provided fasb asc topic 71810 fasb asc topic 50550 prior authoritative literature sfas 123r “share based payment” fasb asc topic 71810 requires sharebased payments employees including grants employee stock options recognized compensation expense requisite service period generally vesting period financial statements based fair values impact forfeitures may occur prior vesting also estimated considered amount recognized company elected use modified prospective transition method retroactively adjust results prior periods transition method stock option compensation recognized expense remaining unvested portion stock option awards granted prior april 1 2006 based fair values estimated grant date accordance provisions fasb asc topic 71810 company applied blackscholes valuation model determining fair value stock option awards compensation expense recognized options expected vest forfeitures estimated based historical experience future expectations weightedaverage fair value grant date options issued years ended march 31 2010 2009 2008 1532 851 1441 per share respectively following summary company’s weightedaverage assumptions used estimate weightedaverage per share fair value options granted date grant using blackscholes optionpricing model expected stock price volatility based historical volatility company’s stock period approximating expected life expected life represents period time options expected outstanding grant date riskfree interest rate reflects interest rate grant date zerocoupon us governmental bonds remaining life similar expected option term option activity year ended march 31 2010 follows aggregate intrinsic value reflected table represents total pretax intrinsic value difference closing stock price march 31 2010 exercise price multiplied number inthemoney options would received option holders option holders exercised options march 31 2010 amount change market price per share changes total intrinsic value options exercised periods ended march 31 2010 2009 2008 follows march 31 2010 total unrecognized stockbased compensation expense related nonvested stock options amounted 7460763 expected recognized weightedaverage period approximately 365 years following table summarizes information regarding stock options outstanding march 31 2010 restricted stock november 9 2009 company granted 41346 shares restricted stock equity classified grant date fair value 2673 per share certain executive officers company onethird restricted stock vested immediately onethird vest first second anniversary grant date company granted additional 23159 shares restricted stock equity classified grant date fair value 2673 per share executive officers 23159 shares vest april 30 2012 based company’s compounded annual eps growth according following schedule april 30 2009 may 11 2009 company granted 15000 shares 3000 shares restricted stock equity classified respectively grant date fair value 2968 2041 per share respectively independent directors certain officer grants vested immediately november 10 2008 company granted 50000 shares restricted stock equity classified grant date fair value 1685 per share certain executive officers onethird restricted stock grant vested immediately onethird vest first second anniversary grant date company granted additional 29100 shares restricted stock equity classified grant date fair value 1685 per share executive officers 29100 shares vest three years based company’s compounded annual eps growth according following schedule may 19 2008 company granted 12000 shares restricted stock equity classified grant date fair value 4367 per share independent directors certain officer onehalf restricted stock vested immediately half vested first anniversary grant november 28 2007 company granted 20800 shares restricted stock equity classified grant date fair value 3094 per share certain executive officers onethird restricted stock vested immediately onethird vested first second anniversaries grant company granted additional 15150 shares restricted stock equity classified grant date fair value 3094 per share executive officers 15150 shares vest three years based company’s compounded annual eps growth according following schedule november 12 2007 company granted 8000 shares restricted stock equity classified grant date fair value 2819 per share certain officers onethird restricted stock vested immediately onethird vested first second anniversaries grant compensation expense related restricted stock based number shares expected vest fair market value common stock grant date company recognized 195 million 17 million 16 million compensation expense years ended march 31 2010 2009 2008 respectively related restricted stock included component general administrative expenses consolidated statements operations purposes accruing expense shares expected vest march 31 2010 approximately 149 million unrecognized compensation cost related unvested restricted stock awards granted expected recognized next two years summary status company’s restricted stock march 31 2010 changes year ended march 31 2010 presented total sharebased compensation included component net income years ended march 31 follows 17 acquisitions following table sets forth acquisition activity company last three fiscal years company evaluates acquisition determine transaction meets definition business combination transactions meet definition business combination accounted fasb asc topic 80510 prior authoritative literature sfas 141r acquisitions accounted asset purchases acquisitions independent third parties acquisition results new office company records transaction business combination since office acquired continue generate loans company typically retains existing employees office location purchase price allocated estimated fair value tangible assets acquired estimated fair value identified intangible assets acquired generally noncompete agreements customer lists remainder allocated goodwill year ended march 31 2010 one acquisition recorded business combination acquisition portfolio loans company records transaction asset purchase asset purchase goodwill recorded purchase price allocated estimated fair value tangible intangible assets acquired year ended march 31 2010 22 acquisitions recorded asset acquisitions company’s acquisitions include tangible assets generally loans furniture equipment intangible assets generally noncompete agreements customer lists goodwill recorded fair values estimated pursuant processes described acquired loans valued net loan balance given shortterm nature loans generally four months loans subject continual repricing current rates management believes net loan balances approximate fair value furniture equipment valued specific purchase price agreed parties time acquisition management believes approximates fair values noncompete agreements valued stated amount paid party agreements company believes approximates fair value fair value customer lists based valuation model utilizes company’s historical data estimate value acquired customer lists business combination remaining excess purchase price fair value tangible assets customer list noncompete agreements allocated goodwill offices company acquires small privately owned offices sufficient historical data determine attrition company believes customers acquired characteristics perform similarly customers therefore company utilized attrition patterns customers developing method reevaluated periodically customer lists allocated office level evaluated impairment office level triggering event occurs accordance fasb asc topic 3601005 prior authoritative literature sfas 144 triggering event occurs impairment loss customer list generally remaining unamortized customer list balance acquisitions original fair value customer list allocated office generally less 100000 management believes event triggering event occur impairment loss unamortized customer list would immaterial results acquisitions included company’s consolidated financial statements since respective acquisition dates pro forma impact purchases though acquired beginning periods presented would material effect results operations reported 18 fair value effective april 1 2008 first day fiscal 2009 company adopted provisions fasb asc topic 820 prior authoritative literature sfas 157 “fair value measurements” financial assets liabilities well assets liabilities carried fair value recurring basis financial statements fasb asc topic 820 defines fair value establishes framework measuring fair value expands disclosures fair value measurements fasb asc topic 820 applies accounting pronouncements fasb previously concluded fair value relevant measurement attribute accordingly fasb asc topic 820 require new fair value measurements effective april 1 2009 company adopted provisions fasb asc topic 820 nonfinancial assets liabilities previously deferred provisions fasb asc topic 8201065 prior authoritative literature fsp fas 1572 assets liabilities measured fair value grouped three levels prioritize inputs used measure fair value assets liabilities levels level 1 quoted prices unadjusted active markets identical assets liabilities level 2 inputs quoted prices observable assets liabilities either directly indirectly inputs include quoted prices similar assets liabilities active markets quoted prices identical similar assets liabilities market less active level 3 unobservable inputs assets liabilities reflecting reporting entity’s assumptions following financial liabilities measured fair value recurring basis march 31 company’s interest rate swaps valued using “income approach” valuation technique method used valuation techniques convert future amounts single present amount measurement based value indicated current market expectations future amounts assets liabilities measured fair value non recurring basis fiscal 2010 fair value longterm debt book value estimated fair value longterm debt follows thousands difference estimated fair value longterm debt compared historical cost reported condensed consolidated balance sheets march 31 2010 march 31 2009 relates primarily market quotations company’s 30 convertible senior subordinated notes due october 1 2011 19 quarterly information unaudited following sets forth selected quarterly operating data 20 litigation march 31 2010 company certain subsidiaries named defendants various legal actions arising normal business activities damages various amounts claimed although amount ultimate liability respect matters cannot determined company believes liability material adverse effect company’s results operations financial condition taken whole management’s report internal control financial reporting responsible establishing maintaining adequate internal control financial reporting defined rules 13a 15f securities exchange act 1934 assessed effectiveness internal control financial reporting march 31 2010 assessment based criteria set forth committee sponsoring organizations treadway commission coso internal controlintegrated framework internal control financial reporting process designed provide reasonable assurance regarding reliability financial reporting preparation financial statements external purposes accordance generally accepted accounting principles internal control financial reporting includes policies procedures 1 pertain maintenance records reasonable detail accurately fairly reflect transactions dispositions assets 2 provide reasonable assurance transactions recorded necessary permit preparation financial statements accordance generally accepted accounting principles receipts expenditures made accordance authorizations management board directors 3 provide reasonable assurance regarding prevention timely detection unauthorized acquisition use disposition assets could material effect financial statements inherent limitations internal control financial reporting may prevent detect misstatements also assumptions regarding internal control financial reporting future periods based evaluation effectiveness prior period subject risk controls may become inadequate changes conditions degree compliance policies procedures may deteriorate based using coso criteria believe internal control financial reporting march 31 2010 effective independent registered public accounting firm audited consolidated financial statements included annual report issued attestation report effectiveness internal control financial reporting stated report mclean iii kelly malson mclean iii kelly malson chairman chief executive officer senior vice president chief financial officer report independent registered public accounting firm board directors world acceptance corporation audited world acceptance corporation subsidiaries’ “company’s” internal control financial reporting march 31 2010 based criteria established internal control integrated framework issued committee sponsoring organizations treadway commission coso company’s management responsible maintaining effective internal control financial reporting assessment effectiveness internal control financial reporting included accompanying management’s report internal control financial reporting responsibility express opinion company’s internal control financial reporting based audit conducted audit accordance standards public company accounting oversight board united states standards require plan perform audit obtain reasonable assurance whether effective internal control financial reporting maintained material respects audit included obtaining understanding internal control financial reporting assessing risk material weakness exists testing evaluating design operating effectiveness internal control based assessed risk audit also included performing procedures considered necessary circumstances believe audit provides reasonable basis opinion companys internal control financial reporting process designed provide reasonable assurance regarding reliability financial reporting preparation financial statements external purposes accordance generally accepted accounting principles companys internal control financial reporting includes policies procedures 1 pertain maintenance records reasonable detail accurately fairly reflect transactions dispositions assets company 2 provide reasonable assurance transactions recorded necessary permit preparation financial statements accordance generally accepted accounting principles receipts expenditures company made accordance authorizations management directors company 3 provide reasonable assurance regarding prevention timely detection unauthorized acquisition use disposition company’s assets could material effect financial statements inherent limitations internal control financial reporting may prevent detect misstatements also projections evaluation effectiveness future periods subject risk controls may become inadequate changes conditions degree compliance policies procedures may deteriorate opinion company maintained material respects effective internal control financial reporting march 31 2010 based criteria established internal control integrated framework issued committee sponsoring organizations treadway commission coso also audited accordance standards public company accounting oversight board united states consolidated balance sheets company march 31 2010 2009 related consolidated statements operations shareholders’ equity comprehensive income cash flows years threeyear period ended march 31 2010 report dated june 8 2010 expressed unqualified opinion consolidated financial statements greenville south carolina june 8 report independent registered public accounting firm board directors world acceptance corporation audited accompanying consolidated balance sheets world acceptance corporation subsidiaries “company” march 31 2010 2009 related consolidated statements operations shareholders’ equity comprehensive income cash flows years threeyear period ended march 31 2010 consolidated financial statements responsibility company’s management responsibility express opinion consolidated financial statements based audits conducted audits accordance standards public company accounting oversight board united states standards require plan perform audit obtain reasonable assurance whether financial statements free material misstatement audit includes examining test basis evidence supporting amounts disclosures financial statements audit also includes assessing accounting principles used significant estimates made management well evaluating overall financial statement presentation believe audits provide reasonable basis opinion consolidated financial statements referred present fairly material respects financial position world acceptance corporation subsidiaries march 31 2010 2009 results operations cash flows years threeyear period ended march 31 2010 conformity us generally accepted accounting principles also audited accordance standards public company accounting oversight board united states world acceptance corporation’s internal control financial reporting march 31 2010 based criteria established internal control integrated framework issued committee sponsoring organizations treadway commission coso report dated june 8 2010 expressed unqualified opinion effectiveness company’s internal control financial reporting greenville south carolina june 8 item 9item 8 financial statements supplementary data consolidated balance sheets see accompanying notes consolidated financial statements consolidated statements operations see accompanying notes consolidated financial statements consolidated statements shareholders equity comprehensive income see accompanying notes consolidated financial statements consolidated statements cash flows see accompanying notes consolidated financial statements notes consolidated financial statements 1 summary significant accounting policies companys accounting reporting policies accordance us generally accepted accounting principles conform general practices within finance company industry following description significant policies used preparing consolidated financial statements nature operations company smallloan consumer finance company headquartered greenville south carolina offers shortterm small loans mediumterm larger loans related credit insurance products ancillary products services individuals limited access sources consumer credit also offers income tax return preparation services customer base others company also markets computer software related services financial services companies paradata financial systems “paradata” subsidiary march 31 2011 company operated 972 offices south carolina georgia texas oklahoma louisiana tennessee missouri illinois new mexico kentucky alabama wisconsin company also operated 95 offices mexico company subject numerous lending regulations vary jurisdiction principles consolidation consolidated financial statements include accounts world acceptance corporation wholly owned subsidiaries “company” subsidiaries consist operating entities various states mexico paradata software company acquired fiscal 1994 wac insurance company ltd captive reinsurance company established fiscal 1994 servicios world acceptance corporation de mexico service company established fiscal 2006 significant intercompany balances transactions eliminated consolidation financial statements company’s foreign subsidiaries mexico prepared using local currency functional currency assets liabilities subsidiaries translated us dollars current exchange rate income expense translated average exchange rate period resulting translation gains losses recognized component equity “accumulated comprehensive income loss” use estimates preparation financial statements preparation financial statements conformity us generally accepted accounting principles gaap requires management make estimates assumptions affect reported amount assets liabilities disclosure contingent liabilities date financial statements reported amounts revenues expenses reporting period significant item subject estimates assumptions could materially change near term allowance loan losses actual results could differ estimates reclassification certain prior period amounts reclassified conform current presentation reclassifications impact previously reported net income shareholders’ equity business segments company reports operating segments accordance financial accounting standards board fasb accounting standards codification asc topic 280 operating segments components enterprise separate financial information available evaluated regularly chief operating decision maker deciding allocate resources assess performance fasb asc topic 280 requires public enterprise report measure segment profit loss certain specific revenue expense items segment assets information way operating segments determined items company one reportable segment consumer finance company revenue generating activities company including sale insurance products income tax preparation buying club automobile club done existing branch network conjunction complement lending operation discrete financial information available activities meet criteria fasb asc topic 280 reported separately paradata provides data processing systems 103 separate finance companies including company march 31 2011 2010 paradata total assets 09 million 12 million represented less 10 total consolidated assets fiscal year end total net revenues system sales support paradata years ended march 31 2011 2010 2009 19 million 18 million 20 million respectively represented less 1 consolidated revenue year although paradata operating segment fasb asc topic 280 meet criteria require separate disclosure cash equivalents purposes statement cash flows company considers highly liquid investments maturity three months less date original issuance cash equivalents loans interest income company licensed originate direct cash consumer loans states georgia south carolina texas oklahoma louisiana tennessee missouri illinois new mexico kentucky alabama wisconsin addition company also originates direct cash consumer loans mexico fiscal 2011 2010 company originated loans generally ranging 4000 terms 36 months less experience indicates majority direct cash consumer loans refinanced company accounts refinancing new loan generally customer must make multiple payments order qualify refinancing furthermore company’s lending policy predetermined lending amounts cases refinancing result advancing additional funds company believes advancement additional funds constitutes minor modification terms existing loan present value cash flows terms new loan 10 present value remaining cash flows terms original loan fees received direct costs incurred origination loans deferred amortized interest income contractual lives loans unamortized amounts recognized income time loans refinanced paid full loans carried gross amount outstanding reduced unearned interest insurance income net deferred origination fees direct costs allowance loan losses company calculates interest revenue loans using rule 78s recognizes interest revenue using collection method cash method recognizing revenue company believes combination two methods differ materially interest method accrual method recognizing revenue charges late payments credited income collected company generally offers loans prevailing statutory rates terms exceed 36 months management believes carrying value approximates fair value loan portfolio allowance loan losses company maintains allowance loan losses amount management’s opinion adequate cover losses inherent existing loan portfolio company charges current earnings provision loan losses amounts added allowance maintain levels expected cover probable losses principal establishing allowance loan losses company takes consideration growth loan portfolio current levels chargeoffs current levels delinquencies current economic factors allowance loan losses allocated unallocated component company uses historical current economic information net chargeoffs loan type average loan life loan type estimate allocated component allowance loan losses method based fact many customers refinance loans prior contractual maturity average contractual loan terms approximately 11 months average loan life approximately four months allowance loan loss model also reserves 100 principal loans greater 90 days past due recency basis loans charged earlier loans deemed uncollectible six months elapsed since date last full contractual payment company’s chargeoff policy consistently applied significant changes made policy periods reported management considers chargeoff policy evaluating appropriateness allowance loan losses fasb asc topic 310 prohibits carryover creation valuation allowances initial accounting loans acquired transfer within scope authoritative literature company believes loans acquired since adoption fasb asc topic 310 shown evidence deterioration credit quality since origination therefore within scope fasb asc topic 310 therefore company records acquired loans within scope fasb asc topic 310 fair value nonaccrual policy company calculates interest revenue loans using rule 78s recognizes interest revenue using collection method cash method recognizing revenue company believes combination two methods differ materially interest method accrual method recognizing revenue since company uses collection method recognizing interest insurance income interest accrued payments collected customers impaired loans company defines impaired loans bankrupt accounts 91 days past due accordance company’s chargeoff policy loan deemed uncollectible 100 net investment chargedoff except case borrower filed bankruptcy accounts 91 days past due including bankrupt accounts 91 days past due reserved 100 additional requirements asu 201020 credit quality company’s receivables disclosed note 3 property equipment property equipment stated cost less accumulated depreciation amortization depreciation recorded using straightline method estimated useful life related asset follows building 40 years furniture fixtures 5 10 years equipment 3 7 years vehicles 3 years amortization leasehold improvements recorded using straightline method lesser estimated useful life asset term lease additions premises equipment major replacements improvements added cost maintenance repairs minor replacements charged operating expense incurred assets retired otherwise disposed cost accumulated depreciation removed accounts gain loss reflected consolidated statement operations operating leases company’s office leases typically lease term three five years contain lessee renewal options cancellation clauses event regulatory changes company typically renews leases one option periods accordingly company amortizes leasehold improvements shorter economic lives generally five years lease term considers renewal periods reasonably assured assets include cash surrender value life insurance policies prepaid expenses debt issuance costs deposits derivatives hedging activities company uses interest rate swaps used foreign currency options economically hedge variable cash flows associated 20 million liborbased borrowings currency fluctuations respectively interest rate swap agreements carried fair value changes fair value recorded period component consolidated statement operations see note 9 discussion related interest rate swaps march 31 2011 2010 company foreign currency options outstanding intangible assets goodwill intangible assets include cost acquiring existing customers value assigned noncompete agreements customer lists amortized straight line accelerated basis estimated period benefit ranging 5 20 years weighted average approximately 10 years noncompete agreements amortized straight line basis term agreement company evaluates goodwill annually impairment fourth quarter fiscal year using market valuebased approach company one reporting unit consumer finance company multiple components lowest level individual offices company’s components aggregated impairment testing similar economic characteristics company writes goodwill closes office goodwill assigned march 31 2011 company 85 offices recorded goodwill impairment longlived assets company assesses impairment longlived assets including property equipment intangible assets whenever changes events indicate carrying amount may recoverable company assesses impairment assets generally office level based operating cash flows office company’s plans office closings company write assets fair value based analysis sum expected future undiscounted cash flows less carrying amount assets company recorded immaterial impairment charge fiscal year 2011 record impairment charges fiscal years 2010 2009 fair value financial instruments fasb asc topic 825 requires disclosures fair value financial instruments whether recognized balance sheet practicable estimate value cases quoted market prices available fair values based estimates using present value valuation techniques company’s financial instruments consist following cash equivalents loans receivable senior notes payable junior subordinated notes payable convertible senior subordinated notes payable interest rate swaps fair value approximates carrying value instruments except convertible subordinated notes payable loans receivable originated prevailing market rates average life approximately four months given shortterm nature loans continually repriced current market rates company’s revolving credit facility junior subordinated note payable variable rate based margin libor reprice changes libor fair value convertible subordinated notes payable based current quoted market price 85616300 73388700 march 31 2011 2010 respectively carrying value convertible subordinated notes payable net discount 75180400 71492041 march 31 2011 2010 respectively swap valued based information third party broker insurance premiums insurance premiums credit life accident health property unemployment insurance written connection certain loans net refunds applicable advance insurance commissions retained company remitted monthly insurance company commissions credited unearned insurance commissions recognized income life related insurance contracts using method similar used recognition interest income nonfile insurance nonfile premiums charged certain loans lieu recording perfecting companys security interest assets pledged premiums remitted third party insurance company insurance related insurance premiums claims recoveries reflected accompanying consolidated financial statements except reduction loan losses see note 11 certain losses related loans recoverable life accident health property unemployment insurance claims reimbursed nonfile insurance claims subject policy limitations remaining losses charged allowance loan losses income taxes income taxes accounted asset liability method deferred tax assets liabilities recognized future tax consequences attributable differences financial statement carrying amounts existing assets liabilities respective tax bases operating loss tax credit carryforwards deferred tax assets liabilities measured using enacted tax rates expected apply taxable income years temporary differences expected recovered settled effect deferred tax assets liabilities change tax rates recognized income period includes enactment date beginning adoption fasb asc topic 74010 april 1 2007 company recognizes effect income tax positions likely sustained recognized income tax positions measured largest amount greater 50 likely realized changes recognition measurement reflected period change judgment occurs prior adoption company recognized effect income tax positions likelihood positions sustained probable supplemental cash flow information years ended march 31 2011 2010 2009 company paid interest 9840627 9354502 9373237 respectively years ended march 31 2011 2010 2009 company paid income taxes 50487423 40628124 37302456 respectively earnings per share earnings per share “eps” computed accordance fasb asc topic basic eps includes dilution computed dividing net income weightedaverage number common shares outstanding period diluted eps reflects potential dilution securities could share earnings company potential common stock included diluted eps computation consists stock options restricted stock warrants computed using treasury stock method potential common stock related convertible senior notes included diluted eps computation using method prescribed fasb asc topic 2601045 see note 14 reconciliation numerators denominators basic dilutive eps calculations stockbased compensation fasb asc topic 71810 requires companies recognize income statement grantdate fair value stock options equitybased compensation issued employees fasb asc topic 71810 change accounting guidance sharebased payment transactions parties employees provided fasb asc topic 71810 fasb asc topic 71810 way award classified affect measurement compensation cost liabilityclassified awards remeasured fair value balancesheet date award settled equityclassified awards measured grantdate fair value amortized subsequent vesting period subsequently remeasured fair value nonvested stock awards purposes recognizing stockbased compensation expense market price stock grant date fair value options estimated grant date using blackscholes option pricing model see note 15 march 31 2011 company several sharebased employee compensation plans described fully note 15 effective april 1 2006 company adopted fasb asc topic 718 using modified prospective transition method transition compensation cost recognized fiscal years 2009 2010 2011 includes compensation cost sharebased payments granted prior yet vested april 1 2006 based grant date fair value estimated accordance original provisions fasb asc topic 718 b compensation cost sharebased payments granted subsequent april 1 2006 based grantdate fair value estimated accordance provisions fasb asc topic 718 since compensation cost based awards ultimately expected vest reduced estimated forfeitures fasb asc topic 718 requires forfeitures estimated time grant revised necessary subsequent periods actual forfeitures differ estimates company elected expense grants awards graded vesting straightline basis requisite service period separately vesting portion award comprehensive income total comprehensive income consists net income comprehensive income loss company’s comprehensive income loss accumulated comprehensive income loss comprised foreign currency translation adjustments concentration risk year ended march 31 2011 company operated 12 states united states well mexico years ended march 31 2011 2010 2009 total revenues within companys four largest states measured total revenues accounted approximately 57 58 59 respectively companys total revenues advertising costs advertising costs expensed incurred advertising costs approximately 131 million 128 million 131 million fiscal years 2011 2010 2009 respectively recently issued accounting pronouncements variable interest entities june 2009 fasb issued asc topic 81030 “variable interest entities” fasb asc topic 81030 changes reporting entity determines whether entity insufficiently capitalized controlled voting similar rights consolidated determination whether reporting entity required consolidate another entity based among things entity’s purpose design reporting entity’s ability direct activities entity significantly impact entity’s performance fasb asc topic 81030 effective reporting entity’s first fiscal year beginning november 15 2009 adoption fasb asc topic 81030 year ended march 31 2011 impact company’s financial position results operations improving disclosures fair value measurements january 2010 fasb issued accounting standards update 201006 “asu 201006” “improving disclosures fair value measurements” amends fasb asc topic 82010 “fair value measurements disclosures” require disclosure transfers levels 1 2 gross presentation items level 3 rollforward guidance also clarifies level disaggregation required fair value measurement disclosures requires disclosure inputs valuation techniques used levels 2 3 exception gross presentation items level 3 rollforward effective fiscal years beginning december 15 2010 company adopted guidance effective april 1 2010 significant impact consolidated financial statements disclosures credit quality financing receivables allowance credit losses accounting standards update 201020 “asu 201020” “disclosures credit quality financing receivables allowance credit losses” requires companies provide information disclosures credit quality financing receivables credit reserves held asu 201020 intended improve transparency financial reporting public nonpublic companies hold financing receivables include loans lease receivables longterm receivables disclosures required asu 201020 included note 3 2 accumulated comprehensive income loss company applies provisions fasb asc topic 22010 following summarizes accumulated comprehensive loss income march 31 2011 2010 2009 3 allowance loan losses credit quality indicators following summary changes allowance loan losses years ended march 31 2011 2010 2009 following summary loans individually collectively evaluated impairment period indicated following assessment credit quality period indicated following summary past due receivables year ended march 31 2009 company recorded adjustments approximately 05 million allowance loan losses connection acquisitions accordance generally accepted accounting principles adjustment made years ended march 31 2011 2010 adjustment represented allowance loan losses acquired loans meet scope fasb asc topic 310 see note 1 4 property equipment property equipment consist depreciation expense approximately 6173000 5767000 4784000 years ended march 31 2011 2010 2009 respectively 5 intangible assets following table provides gross carrying amount related accumulated amortization definitelived intangible assets estimated amortization expense intangible assets future years ended march 31 follows 16 million 2012 12 million 2013 08 million 2014 05 million 2015 03 million 2016 aggregate 18 million years thereafter 6 goodwill following summarizes changes carrying amount goodwill year ended march 31 2011 2010 company performed annual impairment test fourth quarter fiscal 2011 determined none recorded goodwill impaired however year branch closed immaterial impairment loss recorded 7 notes payable companys notes payable consist senior notes payable 225000000 revolving credit facility provides borrowings 225000000 82250000 outstanding march 31 2011 subject borrowing base formula company may borrow option rate prime libor plus 300 minimum 400 march 31 2011 2010 company’s prime interest rate 425 unused amount available revolver march 31 2011 1428 million revolving credit facility commitment fee 0375 per annum unused portion commitment borrowings revolving credit facility mature august 31 2012 substantially company’s assets pledged collateral borrowings revolving credit agreement junior subordinated note payable september 17 2010 company entered junior subordinated note payable wells fargo preferred capital inc “wells fargo” providing nonrevolving line credit maturing september 17 2015 wells fargo also lender revolving credit agreement junior subordinated note payable initially provides commitment 750 million commitment amount reduced annually 50 million beginning first anniversary closing date term loan borrowings junior subordinated note payable limited 85 eligible accounts receivable company subsidiaries less sum unearned finance charges unearned insurance premiums insurance commissions applicable eligible accounts receivable ii principal amounts outstanding revolving credit agreement iii marktomarket liability hedging agreement iv aggregate principal amounts outstanding convertible notes v unsecured onbalance sheet indebtedness company direct indirect subsidiaries including accrued liabilities taxes excluding obligations junior subordinated note payable reflected company’s recent consolidated financial statements interest borrowed amounts junior subordinated note payable monthly arrears rate per annum equal sum onemonth libor effect time plus 4875 provided however period outstanding principal balance borrowings junior subordinated note payable less 30 million “minimum balance” company shall pay interest minimum balance company required pay unused line fee rate 25 basis points 375 basis points per annum based whether usage rate month equal greater 65 less 65 average daily unused portion maximum amount commitments junior subordinated note payable addition company paid wells fargo nonrefundable commitment fee 487500 connection junior subordinated note payable junior subordinated note payable guaranteed company’s domestic subsidiaries pursuant subordinated guaranty agreement although initially unsecured payment full convertible notes secured second lien assets company guarantor pursuant subordinated security agreement pledge indenture trust signed company “company security agreement” subordinated security agreement pledge indenture trust signed company’s domestic subsidiaries “subsidiary security agreement” liens created secure junior subordinated note payable payment full convertible notes subject first lien position lenders revolving credit agreement junior subordinated note payable subordinated revolving credit agreement rank convertible notes paid full thereafter junior subordinated note payable subordinate revolving credit agreement pursuant terms conditions subordination intercreditor agreement “subordination agreement” dated september 17 2010 among company wells fargo individually agent lenders party junior subordinated note payable bank montreal individually agent lenders party revolving credit agreement harris na senior creditor collateral agent subordination agreement require indebtedness revolving credit agreement paid full bankruptcy proceeding indebtedness junior subordinated note payable paid addition provide customary standstill periods junior subordinated note payable customary cure periods revolving credit agreement customary restrictions respect prepayments indebtedness junior subordinated note payable customary restrictions respect amending revolving credit agreement junior subordinated note payable junior subordinated note payable contains financial covenants requiring company maintain minimum net worth defined fiscal quarter company ending march 31 2010 275000000 ii fiscal quarter thereafter sum minimum net worth immediately preceding fiscal quarter plus 50 consolidated net income fiscal quarter without deduction case deficit consolidated net income fiscal quarter b maintain fixed charge coverage ratio least 200 100 end fiscal quarter junior subordinated note payable contains restrictive covenants limit ability company direct indirect subsidiaries incur indebtedness create assume liens prepay certain indebtedness acquire sell dispose substantial part assets engage certain mergers consolidations engage transactions affiliates make investments covenants junior subordinated note payable subject number qualifications exceptions addition junior subordinated note payable requires company maintain wells fargo lender revolving credit agreement senior revolving credit facility case commitment amount least 20 total commitments thereunder unless wells fargo sole discretion agrees providing lesser percentage total commitments junior subordinated note payable also contains representations warranties events default customary type transaction september 17 2010 company borrowed 300 million junior subordinated note payable used proceeds borrowing repay portion revolving credit agreement borrowings continue outstanding march 31 2011 leave company borrowing capacity 450 million junior subordinated note payable subject terms conditions described convertible senior notes october 10 2006 company issued 110 million aggregate principal amount 30 convertible senior subordinated notes due october 1 2011 “convertible notes” qualified institutional brokers accordance rule 144a securities act 1933 interest convertible notes payable semiannually arrears april 1 october 1 year commencing april 1 2007 convertible notes company’s direct senior subordinated unsecured obligations rank equally right payment existing future unsecured senior subordinated debt company senior right payment company’s existing future subordinated debt junior company’s existing future senior debt convertible notes structurally junior liabilities company’s subsidiaries convertible notes convertible prior maturity subject certain conditions described initial conversion rate 160229 shares per 1000 principal amount notes represents initial conversion price approximately 6241 per share subject adjustment upon conversion company pay cash principal amount notes converted deliver shares common stock extent daily conversion value exceeds proportionate principal amount based 30 tradingday observation period holders may convert convertible notes prior july 1 2011 one following conditions satisfied • fiscal quarter commencing december 31 2006 last reported sale price common stock least 20 trading days period 30 consecutive trading days ending last trading day preceding fiscal quarter greater equal 120 applicable conversion price last trading day • five business day period ten consecutive trading day period trading price per note day ten consecutive trading day period less 98 product last reported sale price company’s common stock applicable conversion rate day • occurrence specified corporate transactions convertible notes converted connection certain fundamental changes occur prior october 1 2011 company may obligated pay additional makewhole premium respect convertible notes converted company undergoes certain fundamental changes holders convertible notes may require company purchase convertible notes price equal 100 principal amount convertible notes purchased plus accrued interest excluding purchase date holders may also surrender convertible notes conversion anytime july 1 2011 close business third business day immediately preceding maturity date regardless whether foregoing conditions satisfied contingent conversion feature required bifurcated accounted separately provisions fasb asc topic 8151015 aggregate underwriting commissions debt issuance costs incurred respect issuance convertible notes approximately 36 million amortized period convertible senior notes outstanding convertible notes hedge strategy concurrent connection sale convertible notes company purchased call options purchase shares company’s common stock equal conversion rate date options exercised convertible notes price 6241 per share cost call options totaled 246 million company also sold warrants counterparties purchase company aggregate 1762519 shares company’s common stock price 7397 per share received net proceeds sale warrants 162 million taken together call option warrant agreements increased effective conversion price convertible notes 7397 per share call options warrants must settled net shares date settlement market price per share company’s common stock 7397 per share company required deliver shares common stock representing value call options warrants excess 7397 per share warrants strike price 7397 generally exercisable time company issued sold warrants transaction exempt registration requirements securities act 1933 amended virtue section 42 thereof underwriting commissions discounts connection sale warrants accordance fasb asc topic 81540 company accounted call options warrants net reduction additional paid capital required recognize subsequent changes fair value call options warrants consolidated financial statements see note 8 information regarding company’s repurchase convertible notes reduced outstanding aggregate principal amount notes outstanding 770 million march 31 2011 accounting convertible debt instruments may settled cash upon conversion april 1 2009 company adopted fasb asc topic 47020 fasb asc topic 47020 required convertible debt separated liability equity components manner reflects company’s nonconvertible debt borrowing rate determined approximately 87 time issuance convertible notes carrying amounts debt equity components follows thousands interest expense relating contractual interest coupon amortization discount liability component follows thousands fiscal 2011 2010 2009 effective interest rate liability component 82 84 respectively due combination put call conversion options part terms convertible notes agreement remaining discount liability component amortized six months debt covenants various debt agreements contain restrictions amounts permitted indebtedness investments working capital repurchases common stock cash dividends march 31 2011 732 million available covenants payment cash dividends repurchase companys common stock repurchase subordinated debt addition agreements restrict liens assets sale transfer subsidiaries aggregate annual maturities notes payable fiscal years subsequent march 31 2011 follows 8 extinguishment debt fiscal 2011 company repurchase convertible notes fiscal 2010 company repurchased privately negotiated transactions aggregate principal amount 180 million convertible notes average discount face value approximately 197 company spent approximately 144 million aggregate repurchases transactions treated extinguishment debt accounting purposes company recorded gain approximately 22 million repurchase convertible notes partially offset writeoff 230000 deferred financing costs associated repurchase cancellation convertible notes fiscal 2009 company repurchased privately negotiated transactions aggregate principal amount 150 million convertible notes average discount face value approximately 388 company spent approximately 92 million aggregate repurchases transactions treated extinguishment debt accounting purposes company recorded gain approximately 40 million repurchase convertible notes partially offset writeoff 300000 deferred financing costs associated repurchase cancellation convertible notes 9 derivative financial instruments december 8 2008 company entered interest rate swap notional amount 20 million economically hedge portion cash flows floating rate revolving credit facility terms interest rate swap company pays fixed rate 24 20 million notional amount receives payments counterparty based 1 month libor rate term ending december 8 2011 interest rate differentials paid received swap agreement recognized adjustments interest expense october 5 2005 company entered interest rate swap notional amount 30 million economically hedge portion cash flows floating rate revolving credit facility terms interest rate swap company paid fixed rate 4755 30 million notional amount received payments counterparty based 1 month libor rate term ended october 5 2010 may 15 2008 company entered 10 million foreign currency exchange option economically hedge foreign exchange risk relative mexican peso terms option contract company could exchange 10 million us dollars rate 110 mexican pesos per dollar option sold october 2008 company recorded 15 million net gain fiscal 2009 fair value company’s interest rate derivative instruments included consolidated balance sheets follows interest rate swap currently liability position therefore significant risk loss related counterparty credit risk gains losses recognized company’s consolidated statements operations result interest rate swaps foreign currency exchange option follows company enter derivative financial instruments trading speculative purposes purpose instruments reduce exposure variability future cash flows attributable portion liborbased borrowings reduce variability foreign cash flows company currently accounting derivative instruments using cash flow hedge accounting provisions fasb asc topic 8151015 therefore changes fair value swap option included earnings income expenses using derivative instruments company exposed credit market risk credit risk counterparty derivative instrument fail perform exists extent fair value gain derivative market risk adverse effect financial instruments change interest rates implied volatility exchange rates company manages market risk associated interest rate contracts currency options establishing monitoring limits types degree risk may undertaken market risk associated derivatives used interest rate foreign currency risk management activities fully incorporated company’s market risk sensitivity analysis 10 insurance commissions income insurance commissions income years ending march 31 2011 2010 2009 consist 11 nonfile insurance company maintains nonfile insurance coverage unaffiliated insurance company following summary nonfile insurance activity years ended march 31 2011 2010 2009 12 leases company conducts operations leased facilities except owned corporate office building companys leases typically lease term three five years contain lessee renewal options majority leases provide lessee pays property taxes insurance common area maintenance costs expected normal course business expiring leases renewed companys option replaced leases acquisitions properties company’s leases operating leases future minimum lease payments noncancelable operating leases march 31 2011 follows rental expense cancelable noncancelable operating leases years ended march 31 2011 2010 2009 17821568 15865447 14257168 respectively 13 income taxes income tax expense benefit consists income tax expense 51999932 45782667 35080790 years ended march 31 2011 2010 2009 respectively differed amounts computed applying us federal income tax rate 35 pretax income continuing operations result following march 31 2011 company net operating losses state income tax purposes 103 million available offset future taxable state income expires 2030 tax effects temporary differences give rise significant portions deferred tax assets deferred tax liabilities march 31 2011 2010 presented valuation allowance deferred tax assets march 31 2011 2010 1274 valuation allowance total deferred tax assets march 31 2011 2010 relates state net operating losses assessing realizability deferred tax assets management considers whether likely portion deferred tax assets realized ultimate realization deferred tax assets dependent upon generation future taxable income periods temporary differences become deductible management considers scheduled reversals deferred tax liabilities projected future taxable income tax planning strategies making assessment order fully realize deferred tax asset company need generate future taxable income prior expiration deferred tax assets governed tax code based upon level historical taxable income projections future taxable income periods deferred tax assets deductible management believes likely company realize benefits deductible differences net existing valuation allowances march 31 2011 amount deferred tax asset considered realizable however could reduced near term estimates future taxable income carryforward period reduced company required assess whether earnings company’s mexican foreign subsidiary permanently reinvested respective foreign jurisdiction previously untaxed foreign earnings company longer permanently reinvested thus become taxable united states march 31 2011 company determined 1852476 cumulative undistributed net earnings well future net earnings mexican foreign subsidiaries permanently reinvested march 31 2011 march 31 2010 company 2271345 5762087 total gross unrecognized tax benefits including interest respectively total approximately 957773 3168539 respectively represents amount unrecognized tax benefits permanent nature recognized would affect annual effective tax rate reconciliation beginning ending amount unrecognized tax benefits follows march 31 2011 approximately 858000 gross unrecognized tax benefits expected resolved next 12 months settlements taxing authorities expiration statute limitations company’s continuing practice recognize interest penalties related income tax matters income tax expense march 31 2011 company 176132 accrued gross interest 117240 current period expense company subject us mexican income taxes well various state local jurisdictions exceptions company longer subject us federal state local nonus income tax examinations tax authorities years 2007 although carryforward attributes generated prior 2007 may still adjusted upon examination taxing authorities either used future period august 12 2010 company entered agreement state south carolina settled issues related tax years march 31 1997 march 31 2006 settlement resulted company recognizing net tax benefit 919373 14 earnings per share following reconciliation numerators denominators basic diluted eps calculations options purchase 29450 100152 130583 shares common stock various prices outstanding years ended march 31 2011 2010 2009 respectively included computation diluted eps option exercise price greater average market price common shares related convertible notes related warrants included computation diluted eps 1233763 2011 1762519 2010 2009 effect instruments antidilutive 15 benefit plans retirement plan company provides defined contribution employee benefit plan 401k plan covering fulltime employees whereby employees invest maximum designated year company makes matching contribution equal 50 employees contributions first 6 gross pay companys expense plan 1175574 1059884 1078987 years ended march 31 2011 2010 2009 respectively supplemental executive retirement plan company instituted supplemental executive retirement plan “serp” nonqualified executive benefit plan company agrees pay executive additional benefits future usually retirement return continued employment executive company selects key executives participate serp unfunded plan means specific assets set aside company connection establishment plan executive rights agreement beyond general creditor company may 2009 company instituted second supplemental executive retirement plan “serp” provide one executive type benefits original serp would qualified due age second serp also unfunded plan specific assets set aside company connection plan years ended march 31 2011 2010 2009 contributions 924177 928407 806792 respectively charged operations related serp unfunded liability 6044528 5385106 4722000 march 31 2011 2010 2009 respectively three years presented unfunded liability estimated using following assumptions annual salary increase 35 3 years discount rate 6 3 years retirement age 65 executive director deferred compensation plans company board directors deferred compensation plan executive deferral plan eligible executives may elect defer portion incentive compensation paid respective plan eligible directors may elect defer portion compensation paid respective plan march 31 2011 2010 one director executive deferred compensation plans stock option plans company 1994 stock option plan 2002 stock option plan 2005 stock option plan 2008 stock option plan benefit certain directors officers key employees plans 4850000 shares authorized common stock reserved issuance pursuant grants approved compensation stock option committee board directors stock options granted plans maximum duration 10 years may subject certain vesting requirements generally one year directors five years officers key employees priced market value companys common stock date grant option march 31 2011 233244 shares available grant plans stockbased compensation recognized provided fasb asc topic 71810 fasb asc topic 50550 fasb asc topic 71810 requires sharebased payments employees including grants employee stock options recognized compensation expense requisite service period generally vesting period financial statements based fair values impact forfeitures may occur prior vesting also estimated considered amount recognized stock option compensation recognized expense unvested portion stock option awards granted based fair values estimated grant date accordance provisions fasb asc topic 71810 company applied blackscholes valuation model determining fair value stock option awards compensation expense recognized options expected vest forfeitures estimated based historical experience future expectations weightedaverage fair value grant date options issued years ended march 31 2011 2010 2009 2396 1532 851 per share respectively following summary company’s weightedaverage assumptions used estimate weightedaverage per share fair value options granted date grant using blackscholes optionpricing model expected stock price volatility based historical volatility company’s stock period approximating expected life expected life represents period time options expected outstanding grant date riskfree interest rate reflects interest rate grant date zerocoupon us governmental bonds remaining life similar expected option term option activity year ended march 31 2011 follows aggregate intrinsic value reflected table represents total pretax intrinsic value difference closing stock price march 31 2011 exercise price multiplied number inthemoney options would received option holders option holders exercised options march 31 2011 amount change market price per share changes total intrinsic value options exercised periods ended march 31 2011 2010 2009 follows march 31 2011 total unrecognized stockbased compensation expense related nonvested stock options amounted 9778309 expected recognized weightedaverage period approximately 39 years following table summarizes information regarding stock options outstanding march 31 2011 restricted stock november 8 2010 company granted 29080 shares restricted stock equity classified grant date fair value 4304 per share certain officers onethird restricted stock vested immediately onethird vest first second anniversary grant date company granted additional 15871 shares restricted stock equity classified grant date fair value 4304 per share certain executive officers 15871 shares vest april 30 2013 based company’s compounded annual eps growth according following schedule april 30 2010 company granted 10000 shares restricted stock equity classified grant date fair value 3528 per share independent directors shares granted vested immediately november 9 2009 company granted 41346 shares restricted stock equity classified grant date fair value 2673 per share certain officers onethird restricted stock vested immediately another third vested first anniversary grant final third scheduled vest second anniversary grant date company granted additional 23159 shares restricted stock equity classified grant date fair value 2673 per share certain executive officers 23159 shares vest april 30 2012 based company’s compounded annual eps growth according following schedule november 10 2008 company granted 50000 shares restricted stock equity classified grant date fair value 1685 per share certain officers onethird restricted stock vested immediately onethird vested first second anniversaries grant date company granted additional 29100 shares restricted stock equity classified grant date fair value 1685 per share certain executive officers 29100 shares vest three years based company’s compounded annual eps growth according following schedule may 19 2008 company granted 12000 shares restricted stock equity classified grant date fair value 4367 per share independent directors certain officer onehalf restricted stock vested immediately half vested first anniversary grant compensation expense related restricted stock based number shares expected vest fair market value common stock grant date company recognized 21 million 195 million 17 million compensation expense years ended march 31 2011 2010 2009 respectively related restricted stock included component general administrative expenses consolidated statements operations purposes accruing expense shares expected vest march 31 2011 approximately 17 million unrecognized compensation cost related unvested restricted stock awards granted expected recognized next two years summary status company’s restricted stock march 31 2011 changes year ended march 31 2011 presented total sharebased compensation included component net income years ended march 31 follows 16 acquisitions following table sets forth acquisition activity company last three fiscal years thousands company evaluates acquisition determine transaction meets definition business combination transactions meet definition business combination accounted fasb asc topic 80510 acquisitions accounted asset purchases acquisitions independent third parties acquisition results new office company records transaction business combination since office acquired continue generate loans company typically retains existing employees office location purchase price allocated estimated fair value tangible assets acquired estimated fair value identified intangible assets acquired generally noncompete agreements customer lists remainder allocated goodwill year ended march 31 2011 six acquisitions recorded business combinations acquisition portfolio loans company records transaction asset purchase asset purchase goodwill recorded purchase price allocated estimated fair value tangible intangible assets acquired year ended march 31 2011 14 acquisitions recorded asset acquisitions company’s acquisitions include tangible assets generally loans furniture equipment intangible assets generally noncompete agreements customer lists goodwill recorded fair values estimated pursuant processes described acquired loans valued net loan balance given shortterm nature loans generally four months loans subject continual repricing current rates management believes net loan balances approximate fair value furniture equipment valued specific purchase price agreed parties time acquisition management believes approximates fair values noncompete agreements valued stated amount paid party agreements company believes approximates fair value fair value customer lists based valuation model utilizes company’s historical data estimate value acquired customer lists business combination remaining excess purchase price fair value tangible assets customer list noncompete agreements allocated goodwill offices company acquires small privatelyowned offices sufficient historical data determine attrition company believes customers acquired characteristics perform similarly customers therefore company utilized attrition patterns customers developing method reevaluated periodically customer lists allocated office level evaluated impairment office level triggering event occurs accordance fasb asc topic 3601005 triggering event occurs impairment loss customer list generally remaining unamortized customer list balance acquisitions original fair value customer list allocated office generally less 100000 management believes event triggering event occur impairment loss unamortized customer list would immaterial results acquisitions included company’s consolidated financial statements since respective acquisition dates pro forma impact purchases though acquired beginning periods presented would material effect results operations reported 17 fair value company carries certain financial instruments derivative assets liabilities fair value recurring basis fair value defined exchange price would received asset paid transfer liability exit price principal advantageous market asset liability orderly transaction market participants measurement date company determines fair values financial instruments based fair value hierarchy requires entity maximize use observable inputs minimize use unobservable inputs measuring fair value financial assets liabilities measured fair value grouped three levels prioritize inputs used measure fair value assets liabilities levels level 1 quoted prices unadjusted active markets identical assets liabilities level 2 inputs quoted prices observable assets liabilities either directly indirectly inputs include quoted prices similar assets liabilities active markets quoted prices identical similar assets liabilities market less active level 3 unobservable inputs assets liabilities reflecting reporting entity’s assumptions following financial liabilities measured fair value recurring basis march 31 company’s interest rate swaps valued using “income approach” valuation technique method used valuation techniques convert future amounts single present amount measurement based value indicated current market expectations future amounts fair value debt book value estimated fair value debt follows thousands difference estimated fair value debt compared historical cost reported consolidated balance sheets march 31 2011 march 31 2010 relates primarily market quotations company’s 30 convertible senior subordinated notes due october 1 2011 carrying value senior notes payable junior subordinated note payable approximated fair value notes payable variable interest rate assets liabilities measured fair value nonrecurring basis fiscal 2011 fiscal 2010 18 quarterly information unaudited following sets forth selected quarterly operating data 19 litigation march 31 2011 company certain subsidiaries named defendants otherwise involved various legal actions proceedings arising normal business activities including matters damages various amounts claimed view inherent difficulty predicting outcome legal matters theories potentially involve large number parties early stages company generally cannot predict eventual outcome pending matters timing ultimate resolution matters eventual loss fines penalties settlement impact related matters including described material adverse effect company’s results operations financial condition taken whole however light inherent uncertainties involved matters assurance adverse outcome one matters material company materially adversely affect results operations cash flows particular reporting period september 24 2010 company world finance corporation georgia served summons complaint case rita hopkins vs world acceptance corporation world finance corporation georgia fortegra financial corporation fka life south life south insurance company superior court fulton county georgia case number 2010cv191370 alleging violations georgia potentially applicable states’ laws connection sale nonfile insurance products seeking class certification unspecified monetary damages injunctive relief attorney’s fees october 22 2010 company removed action united states district court northern district georgia atlanta division case number110cv03429 ms hopkins subsequently amended complaint assert violations federal laws addition state laws added insurance company south lyndon southern insurance company defendants company filed motion compel arbitration stay action court yet decided motion company intends defend vigorously matter 20 subsequent events may 23 2011 april 26 2011 board directors authorized company repurchase 50 million company’s common stock repurchase authorization follows addition similar repurchase authorization 20 million announced august 4 2010 taking account shares repurchased june 3 2011 including pending repurchase orders subject settlement company 160 million aggregate remaining repurchase capacity company’s outstanding repurchase authorizations timing actual number shares repurchased depend variety factors including stock price corporate regulatory requirements market economic conditions although repurchase authorizations stated expiration date company’s stock repurchase program may suspended discontinued time management’s report internal control financial reporting responsible establishing maintaining adequate internal control financial reporting defined rules 13a 15f securities exchange act 1934 assessed effectiveness internal control financial reporting march 31 2011 assessment based criteria set forth committee sponsoring organizations treadway commission coso internal controlintegrated framework internal control financial reporting process designed provide reasonable assurance regarding reliability financial reporting preparation financial statements external purposes accordance generally accepted accounting principles internal control financial reporting includes policies procedures 1 pertain maintenance records reasonable detail accurately fairly reflect transactions dispositions assets 2 provide reasonable assurance transactions recorded necessary permit preparation financial statements accordance generally accepted accounting principles receipts expenditures made accordance authorizations management board directors 3 provide reasonable assurance regarding prevention timely detection unauthorized acquisition use disposition assets could material effect financial statements inherent limitations internal control financial reporting may prevent detect misstatements also assumptions regarding internal control financial reporting future periods based evaluation effectiveness prior period subject risk controls may become inadequate changes conditions degree compliance policies procedures may deteriorate based using coso criteria believe internal control financial reporting march 31 2011 effective independent registered public accounting firm audited consolidated financial statements included annual report issued attestation report effectiveness internal control financial reporting stated report mclean iii kelly malson mclean iii kelly malson chairman chief executive officer senior vice president chief financial officer report independent registered public accounting firm board directors world acceptance corporation audited accompanying consolidated balance sheets world acceptance corporation subsidiaries “company” march 31 2011 2010 related consolidated statements operations shareholders’ equity comprehensive income cash flows years threeyear period ended march 31 2011 consolidated financial statements responsibility company’s management responsibility express opinion consolidated financial statements based audits conducted audits accordance standards public company accounting oversight board united states standards require plan perform audit obtain reasonable assurance whether financial statements free material misstatement audit includes examining test basis evidence supporting amounts disclosures financial statements audit also includes assessing accounting principles used significant estimates made management well evaluating overall financial statement presentation believe audits provide reasonable basis opinion consolidated financial statements referred present fairly material respects financial position world acceptance corporation subsidiaries march 31 2011 2010 results operations cash flows years threeyear period ended march 31 2011 conformity us generally accepted accounting principles also audited accordance standards public company accounting oversight board united states world acceptance corporation’s internal control financial reporting march 31 2011 based criteria established internal control integrated framework issued committee sponsoring organizations treadway commission coso report dated june 3 2011 expressed unqualified opinion effectiveness company’s internal control financial reporting greenville south carolina june 3 2011 report independent registered public accounting firm board directors world acceptance corporation audited world acceptance corporation subsidiaries’ “company’s” internal control financial reporting march 31 2011 based criteria established internal control integrated framework issued committee sponsoring organizations treadway commission coso company’s management responsible maintaining effective internal control financial reporting assessment effectiveness internal control financial reporting included accompanying management’s report internal control financial reporting responsibility express opinion company’s internal control financial reporting based audit conducted audit accordance standards public company accounting oversight board united states standards require plan perform audit obtain reasonable assurance whether effective internal control financial reporting maintained material respects audit included obtaining understanding internal control financial reporting assessing risk material weakness exists testing evaluating design operating effectiveness internal control based assessed risk audit also included performing procedures considered necessary circumstances believe audit provides reasonable basis opinion companys internal control financial reporting process designed provide reasonable assurance regarding reliability financial reporting preparation financial statements external purposes accordance generally accepted accounting principles companys internal control financial reporting includes policies procedures 1 pertain maintenance records reasonable detail accurately fairly reflect transactions dispositions assets company 2 provide reasonable assurance transactions recorded necessary permit preparation financial statements accordance generally accepted accounting principles receipts expenditures company made accordance authorizations management directors company 3 provide reasonable assurance regarding prevention timely detection unauthorized acquisition use disposition company’s assets could material effect financial statements inherent limitations internal control financial reporting may prevent detect misstatements also projections evaluation effectiveness future periods subject risk controls may become inadequate changes conditions degree compliance policies procedures may deteriorate opinion company maintained material respects effective internal control financial reporting march 31 2011 based criteria established internal control integrated framework issued committee sponsoring organizations treadway commission coso also audited accordance standards public company accounting oversight board united states consolidated balance sheets company march 31 2011 2010 related consolidated statements operations shareholders’ equity comprehensive income cash flows years threeyear period ended march 31 2011 report dated june 3 2011 expressed unqualified opinion consolidated financial statements greenville south carolina june 3 2011 item 9item 8 financial statements supplementary data see accompanying notes consolidated financial statements consolidated statements operations see accompanying notes consolidated financial statements consolidated statements shareholders equity comprehensive income loss see accompanying notes consolidated financial statements consolidated statements cash flows see accompanying notes consolidated financial statements notes consolidated financial statements 1 summary significant accounting policies companys accounting reporting policies accordance us generally accepted accounting principles conform general practices within finance company industry following description significant policies used preparing consolidated financial statements nature operations company smallloan consumer finance company headquartered greenville south carolina offers shortterm small loans mediumterm larger loans related credit insurance products ancillary products services individuals limited access sources consumer credit also offers income tax return preparation services customer base others company also markets computer software related services financial services companies paradata financial systems “paradata” subsidiary march 31 2012 company operated 1032 offices south carolina georgia texas oklahoma louisiana tennessee missouri illinois new mexico kentucky alabama wisconsin company also operated 105 offices mexico company subject numerous lending regulations vary jurisdiction principles consolidation consolidated financial statements include accounts world acceptance corporation wholly owned subsidiaries “company” subsidiaries consist operating entities various states mexico paradata software company acquired fiscal 1994 wac insurance company ltd captive reinsurance company established fiscal 1994 servicios world acceptance corporation de mexico service company established fiscal 2006 significant intercompany balances transactions eliminated consolidation financial statements company’s foreign subsidiaries mexico prepared using local currency functional currency assets liabilities subsidiaries translated us dollars current exchange rate income expense translated average exchange rate period resulting translation gains losses recognized component equity “accumulated comprehensive income loss net” use estimates preparation financial statements preparation financial statements conformity us generally accepted accounting principles gaap requires management make estimates assumptions affect reported amount assets liabilities disclosure contingent liabilities date financial statements reported amounts revenue expenses reporting period significant item subject estimates assumptions could materially change near term allowance loan losses actual results could differ estimates reclassification certain prior period amounts reclassified conform current presentation reclassifications impact previously reported net income shareholders’ equity business segments company reports operating segments accordance financial accounting standards board fasb accounting standards codification asc topic 280 operating segments components enterprise separate financial information available evaluated regularly chief operating decision maker deciding allocate resources assess performance fasb asc topic 280 requires public enterprise report measure segment profit loss certain specific revenue expense items segment assets information way operating segments determined items company one reportable segment consumer finance company revenue generating activities company including sale insurance products income tax preparation buying club automobile club done existing branch network conjunction complement lending operation discrete financial information available activities meet criteria fasb asc topic 280 reported separately paradata provides data processing systems 103 separate finance companies including company march 31 2012 2011 paradata total assets 10 million 09 million represented less 1 total consolidated assets fiscal year end total net revenues system sales support paradata years ended march 31 2012 2011 2010 23 million 19 million 18 million respectively represented less 1 consolidated revenue year although paradata operating segment fasb asc topic 280 meet criteria require separate disclosure cash equivalents purposes statement cash flows company considers highly liquid investments maturity three months less date original issuance cash equivalents loans interest income company licensed originate consumer loans states georgia south carolina texas oklahoma louisiana tennessee missouri illinois new mexico kentucky alabama wisconsin addition company also originates consumer loans mexico fiscal 2012 2011 company originated loans generally ranging 4000 terms 36 months less experience indicates majority consumer loans refinanced company accounts refinancing new loan generally customer must make multiple payments order qualify refinancing furthermore company’s lending policy predetermined lending amounts cases refinancing result advancing additional funds company believes advancement additional funds constitutes minor modification terms existing loan present value cash flows terms new loan 10 present value remaining cash flows terms original loan fees received direct costs incurred origination loans deferred amortized interest income contractual lives loans unamortized amounts recognized income time loans refinanced paid full loans carried gross amount outstanding reduced unearned interest insurance income net deferred origination fees direct costs allowance loan losses company calculates interest revenue loans using rule 78s recognizes interest revenue using collection method cash method recognizing revenue company believes combination two methods differ materially interest method accrual method recognizing revenue charges late payments credited income collected company generally offers loans prevailing statutory rates terms exceed 36 months management believes carrying value approximates fair value loan portfolio allowance loan losses company maintains allowance loan losses amount management’s opinion adequate cover losses inherent existing loan portfolio company charges current earnings provision loan losses amounts added allowance maintain levels expected cover probable losses principal establishing allowance loan losses company takes consideration growth loan portfolio current levels chargeoffs current levels delinquencies current economic factors company uses historical current economic information net chargeoffs loan type average loan life loan type estimate allocated component allowance loan losses method based fact many customers refinance loans prior contractual maturity average contractual loan terms approximately 11 months average loan life approximately four months specific reserve assigned loans 91 days past due bankrupt accounts company established policy loans 91 days past due recency basis including bankrupt accounts category reserved 100 large percentage bankrupt accounts reserved based historical data collection loans 91 days past due bankrupt accounts remote general reserve assigned loans less 91 days past due bankrupt accounts company takes consideration growth loan portfolio current levels delinquencies current historical chargeoff levels company also takes consideration economic trends energy food prices general reserve ranges approximately 45 55 loan balance net unearned interest fees average loan life approximately 4 months past 10 years company’s loans 61 days past due ranged 21 27 recency basis 34 43 contractual basis historical delinquencies remained tight band company’s chargeoff policy company believes general reserve adequate loans charged earlier loans deemed uncollectible six months elapsed since date last full contractual payment company’s chargeoff policy consistently applied significant changes made policy periods reported company’s historical annual chargeoff rate past 10 years ranged 133 167 management considers chargeoff policy evaluating appropriateness allowance loan losses fasb asc topic 310 prohibits carryover creation valuation allowances initial accounting loans acquired transfer within scope authoritative literature company believes loans acquired since adoption fasb asc topic 310 shown evidence deterioration credit quality since origination therefore within scope fasb asc topic 310 therefore company records acquired loans within scope fasb asc topic 310 fair value nonaccrual policy company calculates interest revenue loans using rule 78s recognizes interest revenue using collection method cash method recognizing revenue company believes combination two methods differ materially interest method accrual method recognizing revenue since company uses collection method recognizing interest insurance income interest accrued payments collected customers impaired loans company defines impaired loans bankrupt accounts 90 days past accordance company’s chargeoff policy loan deemed uncollectible 100 net investment chargedoff except case borrower filed bankruptcy march 31 2012 bankrupt accounts chargedoff approximately 56 million bankrupt accounts 91 days past due reserved 100 company also considers accounts 91 days past due impaired accounts reserved 100 additional requirements asu 201020 credit quality company’s receivables disclosed note 3 property equipment property equipment stated cost less accumulated depreciation amortization depreciation recorded using straightline method estimated useful life related asset follows building 40 years furniture fixtures 5 10 years equipment 3 7 years vehicles 3 years amortization leasehold improvements recorded using straightline method lesser estimated useful life asset term lease additions premises equipment major replacements improvements added cost maintenance repairs minor replacements charged operating expense incurred assets retired otherwise disposed cost accumulated depreciation removed accounts gain loss reflected consolidated statement operations operating leases company’s office leases typically lease term three five years contain lessee renewal options cancellation clauses event regulatory changes company typically renews leases one option periods accordingly company amortizes leasehold improvements shorter economic lives generally five years lease term considers renewal periods reasonably assured assets include cash surrender value life insurance policies prepaid expenses debt issuance costs deposits derivatives hedging activities company used interest rate swaps foreign currency options economically hedge variable cash flows currency fluctuations respectively interest rate swap agreements carried fair value changes fair value recorded period component consolidated statement operations see note 9 discussion related interest rate swaps march 31 2012 2011 company foreign currency options outstanding march 31 2012 company interest rate swaps outstanding intangible assets goodwill intangible assets include cost acquiring existing customers fair value assigned noncompete agreements customer lists amortized straight line accelerated basis estimated period benefit ranging 5 20 years weighted average approximately 10 years noncompete agreements amortized straight line basis term agreement company evaluates goodwill annually impairment fourth quarter fiscal year using market valuebased approach company one reporting unit consumer finance company multiple components lowest level individual offices company’s components aggregated impairment testing similar economic characteristics company writes goodwill closes office goodwill assigned march 31 2012 company 86 offices recorded goodwill impairment longlived assets company assesses impairment longlived assets including property equipment intangible assets whenever changes events indicate carrying amount may recoverable company assesses impairment assets generally office level based operating cash flows office company’s plans office closings company write assets fair value based analysis sum expected future undiscounted cash flows less carrying amount assets company recorded immaterial impairment charge approximately 25000 fiscal year ended 2011 record impairment charges fiscal year ended 2012 2010 fair value financial instruments fasb asc topic 825 requires disclosures fair value financial instruments whether recognized balance sheet practicable estimate value cases quoted market prices available fair values based estimates using present value valuation techniques company’s financial instruments periods reported consist following cash equivalents loans receivable senior notes payable junior subordinated notes payable convertible senior subordinated notes payable interest rate swaps fair value approximates carrying value instruments except convertible subordinated notes payable loans receivable originated prevailing market rates average life approximately four months given shortterm nature loans continually repriced current market rates company’s revolving credit facility junior subordinated note payable variable rate based margin libor reprice changes libor fair value convertible subordinated notes payable based quoted market price 856 million march 31 2011 carrying value convertible subordinated notes payable net discount 752 million march 31 2011 interest rate swap outstanding march 31 2011 valued based information third party broker insurance premiums insurance premiums credit life accident health property unemployment insurance written connection certain loans net refunds applicable advance insurance commissions retained company remitted monthly insurance company commissions credited unearned insurance commissions recognized income life related insurance contracts using method similar used recognition interest income nonfile insurance nonfile premiums charged certain loans lieu recording perfecting companys security interest assets pledged premiums remitted third party insurance company insurance related insurance premiums claims recoveries reflected accompanying consolidated financial statements except reduction loan losses see note 11 certain losses related loans recoverable life accident health property unemployment insurance claims reimbursed nonfile insurance claims subject policy limitations remaining losses charged allowance loan losses income taxes income taxes accounted asset liability method deferred tax assets liabilities recognized future tax consequences attributable differences financial statement carrying amounts existing assets liabilities respective tax bases operating loss tax credit carryforwards deferred tax assets liabilities measured using enacted tax rates expected apply taxable income years temporary differences expected recovered settled effect deferred tax assets liabilities change tax rates recognized income period includes enactment date company recognizes effect income tax positions likely sustained recognized income tax positions measured largest amount greater 50 likely realized changes recognition measurement reflected period change judgment occurs supplemental cash flow information years ended march 31 2012 2011 2010 company paid interest 11076970 9840627 9354502 respectively years ended march 31 2012 2011 2010 company paid income taxes 60760661 50487423 40628124 respectively earnings per share earnings per share “eps” computed accordance fasb asc topic 260 basic eps includes dilution computed dividing net income weightedaverage number common shares outstanding period diluted eps reflects potential dilution securities could share earnings company potential common stock included diluted eps computation consists stock options restricted stock warrants computed using treasury stock method potential common stock related convertible senior notes included diluted eps computation using method prescribed fasb asc topic 2601045 see note 14 reconciliation numerators denominators basic dilutive eps calculations stockbased compensation fasb asc topic 71810 requires companies recognize income statement grantdate fair value stock options equitybased compensation issued employees fasb asc topic 71810 change accounting guidance sharebased payment transactions parties employees provided fasb asc topic 71810 fasb asc topic 71810 way award classified affect measurement compensation cost liabilityclassified awards remeasured fair value balancesheet date award settled equityclassified awards measured grantdate fair value amortized subsequent vesting period subsequently remeasured fair value nonvested stock awards purposes recognizing stockbased compensation expense market price stock grant date fair value options estimated grant date using blackscholes option pricing model see note 15 march 31 2012 company several sharebased employee compensation plans described fully note 15 company uses modified prospective transition method accordance fasb asc topic 718 method transition compensation cost recognized fiscal years 2010 2011 2012 based grantdate fair value estimated accordance provisions fasb asc topic 718 since compensation cost based awards ultimately expected vest reduced estimated forfeitures fasb asc topic 718 requires forfeitures estimated time grant revised necessary subsequent periods actual forfeitures differ estimates company elected expense grants awards graded vesting straightline basis requisite service period separately vesting portion award comprehensive income total comprehensive income consists net income comprehensive income loss company’s comprehensive income loss accumulated comprehensive income loss comprised foreign currency translation adjustments concentration risk year ended march 31 2012 company operated 12 states united states well mexico years ended march 31 2012 2011 2010 total revenues within companys four largest states measured total revenues accounted approximately 56 57 58 respectively companys total revenues advertising costs advertising costs expensed incurred advertising costs approximately 142 million 131 million 128 million fiscal years 2012 2011 2010 respectively new accounting pronouncements adopted disclosures credit quality financing receivables allowance credit losses accounting standards update 201020 asu 201020 “disclosures credit quality financing receivables allowance credit losses” requires companies provide information disclosures credit quality financing receivables credit reserves held asu 201020 intended improve transparency financial reporting public nonpublic companies hold financing receivables include loans lease receivables longterm receivables disclosures required asu 201020 included note 3 intangibles goodwill december 2010 fasb issued accounting pronouncement related intangibles goodwill asc topic 350 requires company consider whether adverse qualitative factors indicating impairment may exist performing step 2 impairment test reporting units zero negative carrying amounts provisions pronouncement effective fiscal years interim periods within years beginning december 15 2010 early adoption pronouncement year ended march 31 2012 material impact company’s consolidated financial statements creditor’s determination whether restructuring troubled debt restructuring april 2011 fasb issued accounting pronouncement asu 201102 related creditor’s determination considered troubled debt restructuring amends guidance evaluating whether restructuring receivable creditor troubled debt restructuring asu 201102 responds concerns creditors inconsistently applying existing guidance identifying troubled debt restructurings asu 201102 effective public entity first interim annual period beginning june 15 2011 retrospective application required restructurings occurring beginning fiscal year adoption purposes identifying disclosing troubled debt restructuring time company required disclose activitybased information troubled debt restructurings previously deferred fasb asu 20111 deferral effective date disclosures troubled debt restructurings update 201020 adoption pronouncement beginning year ended march 31 2012 material impact company’s consolidated financial statements recently issued accounting pronouncements fair value measurement may 2011 fasb issued accounting pronouncement asu 201104 related fair value measurement fasb asc topic 820 amends current guidance achieve common fair value measurement disclosure requirements us gaap international financial reporting standards amendments generally represent clarification fasb asc topic 820 also include instances particular principle requirement measuring fair value disclosing information fair value measurements changed pronouncement effective fiscal years interim periods within years beginning december 15 2011 company adopt pronouncement fiscal year beginning april 1 2012 company expect pronouncement material effect consolidated financial statements comprehensive income asu 201105 “comprehensive income topic 220 presentation comprehensive income” “asu 201105” amends topic 220 “comprehensive income” require nonowner changes stockholders’ equity presented either single continuous statement comprehensive income two separate consecutive statements additionally asu 201105 requires entities present face financial statements reclassification adjustments items reclassified comprehensive income net income statement statements components net income components comprehensive income presented option present components comprehensive income part statement changes stockholders’ equity eliminated asu 201105 effective annual interim periods beginning december 15 2011 however certain provisions related presentation reclassification adjustments deferred asu 201112 “comprehensive income topic 820 deferral effective date amendments presentation reclassifications items accumulated comprehensive income accounting standards update 201105” asu 201105 expected significant impact financial statements company adopt pronouncement annual interim reporting beginning april 1 2012 testing goodwill impairment asu 201108 “testing goodwill impairment” permits entity make qualitative assessment whether likely reporting unit’s fair value less carrying amount applying twostep goodwill impairment test entity concludes likely fair value reporting unit less carrying amount need perform twostep impairment test asu effective annual interim goodwill impairment tests performed fiscal years beginning december 15 2011 early adoption permitted company adopt pronouncement fiscal year beginning april 1 2012 expect material impact 2 accumulated comprehensive income loss company applies provisions fasb asc topic 22010 following summarizes accumulated comprehensive loss income march 31 2012 2011 2010 3 allowance loan losses credit quality indicators following summary changes allowance loan losses years ended march 31 2012 2011 2010 following summary loans individually collectively evaluated impairment period indicated following assessment credit quality period indicated following summary past due receivables 4 property equipment property equipment consist depreciation expense approximately 6494000 6173000 5767000 years ended march 31 2012 2011 2010 respectively 5 intangible assets following table provides gross carrying amount related accumulated amortization definitelived intangible assets estimated amortization expense intangible assets future years ended march 31 follows 13 million 2013 09 million 2014 06 million 2015 04 million 2016 03 million 2017 aggregate 20 million years thereafter 6 goodwill following summarizes changes carrying amount goodwill year ended march 31 2012 2011 company performed annual impairment test fourth quarter fiscal 2012 2011 determined none recorded goodwill impaired however fiscal 2011 branch closed immaterial impairment loss recorded 7 notes payable march 31 2012 companys notes payable consisted senior notes payable 300000000 revolving credit facility provides borrowings 3000 million 2293 million outstanding march 31 2012 subject borrowing base formula company may borrow option rate prime libor plus 300 minimum 400 march 31 2012 2011 company’s effective interest rate 40 44 respectively unused amount available revolver march 31 2012 707 million revolving credit facility commitment fee 040 per annum unused portion commitment borrowings revolving credit facility mature august 31 2013 substantially company’s assets pledged collateral borrowings revolving credit agreement junior subordinated note payable september 17 2010 company entered 750 million junior subordinated note payable wells fargo preferred capital inc “wells fargo” providing nonrevolving line credit maturing september 17 2015 wells fargo also lender revolving credit agreement funds borrowed junior subordinated note payable bear interest libor plus 4875 per annum march 31 2012 2011 interest rate borrowings junior subordinated note payable 51 company required pay unused line fee rate 25 basis points 375 basis points per annum based whether usage rate month equal greater 65 less 65 average daily unused portion maximum amount commitments junior subordinated note payable amounts outstanding junior subordinated note payable may exceed specified percentages eligible loans receivable march 31 2012 2011 500 million 300 million respectively outstanding 200 million 450 million respectively unused borrowing availability borrowing base limitations beginning september 17 2011 maximum available borrowings reduced 50 million reduced 50 million annually thereafter debt covenants various debt agreements contain restrictions amounts permitted indebtedness investments working capital cash dividends addition agreements restrict liens assets sale transfer subsidiaries debt maturities march 31 2012 aggregate annual maturities notes payable fiscal years subsequent march 31 2012 follows 8 extinguishment debt fiscal 2012 2011 company repurchase convertible notes addition convertible notes matured october 1 2011 fiscal 2010 company repurchased privately negotiated transactions aggregate principal amount 180 million convertible notes average discount face value approximately 197 company spent approximately 144 million aggregate repurchases transactions treated extinguishment debt accounting purposes company recorded gain approximately 22 million repurchase convertible notes partially offset writeoff 230000 deferred financing costs associated repurchase cancellation convertible notes 9 derivative financial instruments december 8 2008 company entered interest rate swap notional amount 20 million economically hedge portion cash flows floating rate revolving credit facility terms interest rate swap company paid fixed rate 24 20 million notional amount received payments counterparty based 1 month libor rate term ended december 8 2011 interest rate differentials paid received swap agreement recognized adjustments interest expense fair value company’s interest rate derivative instruments included consolidated balance sheets follows gains losses recognized company’s consolidated statements operations result interest rate swaps foreign currency exchange option follows company enter derivative financial instruments trading speculative purposes purpose instruments reduce exposure variability future cash flows attributable portion liborbased borrowings company currently accounting derivative instruments using cash flow hedge accounting provisions fasb asc topic 8151015 therefore changes fair value swaps included earnings income expenses using derivative instruments company exposed credit market risk credit risk counterparty derivative instrument fail perform exists extent fair value gain derivative market risk adverse effect financial instruments change interest rates company manages market risk associated interest rate contracts establishing monitoring limits types degree risk may undertaken market risk associated derivatives used interest rate risk management activities fully incorporated company’s market risk sensitivity analysis 10 insurance commissions income insurance commissions income years ending march 31 2012 2011 2010 consist 11 nonfile insurance company maintains nonfile insurance coverage unaffiliated insurance company following summary nonfile insurance activity years ended march 31 2012 2011 2010 12 leases company conducts operations leased facilities except owned corporate office building companys leases typically lease term three five years contain lessee renewal options majority leases provide lessee pays property taxes insurance common area maintenance costs expected normal course business expiring leases renewed companys option replaced leases acquisitions properties company’s leases operating leases future minimum lease payments noncancelable operating leases march 31 2012 follows rental expense cancelable noncancelable operating leases years ended march 31 2012 2011 2010 19971807 17821568 15865447 respectively 13 income taxes income tax expense benefit consists income tax expense 59178898 51999932 45782667 years ended march 31 2012 2011 2010 respectively differed amounts computed applying us federal income tax rate 35 pretax income continuing operations result following march 31 2012 company net operating losses state income tax purposes 3326728 available offset future taxable state income expires 2030 tax effects temporary differences give rise significant portions deferred tax assets deferred tax liabilities march 31 2012 2011 presented valuation allowance deferred tax assets march 31 2012 2011 1274 valuation allowance total deferred tax assets march 31 2012 2011 relates state net operating losses assessing realizability deferred tax assets management considers whether likely portion deferred tax assets realized ultimate realization deferred tax assets dependent upon generation future taxable income periods temporary differences become deductible management considers scheduled reversals deferred tax liabilities projected future taxable income tax planning strategies making assessment order fully realize deferred tax asset company need generate future taxable income prior expiration deferred tax assets governed tax code based upon level historical taxable income projections future taxable income periods deferred tax assets deductible management believes likely company realize benefits deductible differences net existing valuation allowances march 31 2012 amount deferred tax asset considered realizable however could reduced near term estimates future taxable income carryforward period reduced company required assess whether earnings company’s mexican foreign subsidiary permanently reinvested respective foreign jurisdiction previously untaxed foreign earnings company longer permanently reinvested thus become taxable united states earnings ever repatriated united states company would required accrue pay taxes cumulative undistributed earnings march 31 2012 company determined 4885059 cumulative undistributed net earnings well future net earnings mexican foreign subsidiaries permanently reinvested march 31 2012 2011 company 2942931 2271345 total gross unrecognized tax benefits including interest respectively totals approximately 1455000 958000 respectively represents amount unrecognized tax benefits permanent nature recognized would affect annual effective tax rate reconciliation beginning ending amount unrecognized tax benefits follows march 31 2012 approximately 1162000 gross unrecognized tax benefits expected resolved next 12 months settlements taxing authorities expiration statute limitations company’s continuing practice recognize interest penalties related income tax matters income tax expense march 31 2012 company 238545 accrued gross interest 183074 current period expense company subject us mexican income taxes well various state local jurisdictions exceptions company longer subject us federal state local nonus income tax examinations tax authorities years 2008 although carryforward attributes generated prior 2008 may still adjusted upon examination taxing authorities either used future period company’s federal tax returns periods ended march 31 2010 2011 currently audit internal revenue service 14 earnings per share following reconciliation numerators denominators basic diluted eps calculations options purchase 29586 29450 100152 shares common stock various prices outstanding years ended march 31 2012 2011 2010 respectively included computation diluted eps option exercise price antidilutive years ended december 31 2012 2011 2010 warrants related convertible notes payable included computation dilutive earnings per share effect instruments antidilutive warrants expired february 9 2012 strike price 7397 generally exercisable time february 9 2012 company issued sold warrants transaction exempt registration requirements securities act 1933 amended virtue section 42 thereof underwriting commissions discounts connection sale warrants 15 benefit plans retirement plan company provides defined contribution employee benefit plan 401k plan covering fulltime employees whereby employees invest maximum designated year company makes matching contribution equal 50 employees contributions first 6 gross pay companys expense plan 1290659 1175574 1059884 years ended march 31 2012 2011 2010 respectively supplemental executive retirement plan company instituted supplemental executive retirement plan “serp” nonqualified executive benefit plan company agrees pay executive additional benefits future usually retirement return continued employment executive company selects key executives participate serp unfunded plan means specific assets set aside company connection establishment plan executive rights agreement beyond general creditor company may 2009 company instituted second supplemental executive retirement plan “serp” provide one executive type benefits original serp would qualified due age second serp also unfunded plan specific assets set aside company connection plan years ended march 31 2012 2011 2010 contributions 971779 924177 928407 respectively charged operations related serp unfunded liability 6732123 6044528 5385106 march 31 2012 2011 2010 respectively three years presented unfunded liability estimated using following assumptions annual salary increase 35 3 years discount rate 6 3 years retirement age 65 executive deferred compensation plan company executive deferral plan eligible executives directors may elect defer portion incentive compensation paid executive deferral plan march 31 2012 2011 executive deferred compensation plan stock option plans company 2002 stock option plan 2005 stock option plan 2008 stock option plan 2011 stock option plan benefit certain directors officers key employees plans 4100000 shares authorized common stock reserved issuance pursuant grants approved compensation stock option committee board directors stock options granted plans maximum duration 10 years may subject certain vesting requirements generally one year directors five years officers key employees priced market value companys common stock date grant option march 31 2012 1462688 shares available grant plans stockbased compensation recognized provided fasb asc topic 71810 fasb asc topic 50550 fasb asc topic 71810 requires sharebased payments employees including grants employee stock options recognized compensation expense requisite service period generally vesting period financial statements based fair values impact forfeitures may occur prior vesting also estimated considered amount recognized stock option compensation recognized expense unvested portion stock option awards granted based fair values estimated grant date accordance provisions fasb asc topic 71810 company applied blackscholes valuation model determining fair value stock option awards compensation expense recognized options expected vest forfeitures estimated based historical experience future expectations weightedaverage fair value grant date options issued years ended march 31 2012 2011 2010 3594 2396 1532 per share respectively following summary company’s weightedaverage assumptions used estimate weightedaverage per share fair value options granted date grant using blackscholes optionpricing model expected stock price volatility based historical volatility company’s stock period approximating expected life expected life represents period time options expected outstanding grant date riskfree interest rate reflects interest rate grant date zerocoupon us governmental bonds remaining life similar expected option term option activity year ended march 31 2012 follows aggregate intrinsic value reflected table represents total pretax intrinsic value difference closing stock price march 31 2012 exercise price multiplied number inthemoney options would received option holders option holders exercised options march 31 2012 amount change market price per share changes total intrinsic value options exercised periods ended march 31 2012 2011 2010 follows march 31 2012 total unrecognized stockbased compensation expense related nonvested stock options amounted 12268517 expected recognized weightedaverage period approximately 39 years following table summarizes information regarding stock options outstanding march 31 2012 restricted stock november 7 2011 company granted 15077 shares restricted stock equity classified grant date fair value 6770 per share certain executive officers onethird restricted stock vested immediately onethird vest november 7 2012 2013 respectively date company granted additional 24200 shares restricted stock equity classified grant date fair value 6770 per share certain officers onethird restricted stock vest november 7 2012 2013 2014 respectively date company granted additional 11139 shares restricted stock equity classified grant date fair value 6770 per share certain executive officers 11139 shares vest april 30 2014 based company’s compounded annual eps growth according following schedule april 29 2011 company granted 10000 shares restricted stock equity classified grant date fair value 6795 per share independent directors shares granted vested immediately november 8 2010 company granted 29080 shares restricted stock equity classified grant date fair value 4304 per share certain officers onethird restricted stock vested immediately onethird vested november 8 2011 final third scheduled vest november 8 2012 respectively date company granted additional 15871 shares restricted stock equity classified grant date fair value 4304 per share certain executive officers 15871 shares vest april 30 2013 based company’s compounded annual eps growth according following schedule april 30 2010 company granted 10000 shares restricted stock equity classified grant date fair value 3528 per share independent directors shares granted vested immediately november 9 2009 company granted 41346 shares restricted stock equity classified grant date fair value 2673 per share certain officers onethird restricted stock vested immediately onethird vested november 9 2010 final third vested november 9 2011 date company granted additional 23159 shares restricted stock equity classified grant date fair value 2673 per share certain executive officers 23159 shares vested april 30 2012 based company’s achievement compounded annual eps growth 15 higher award measurement period november 10 2008 company granted 50000 shares restricted stock equity classified grant date fair value 1685 per share certain officers onethird restricted stock vested immediately onethird vested november 10 2009 2010 respectively date company granted additional 29100 shares restricted stock equity classified grant date fair value 1685 per share certain executive officers 29100 shares vested november 10 2011 based company’s achievement compounded annual eps growth 15 higher award measurement period compensation expense related restricted stock based number shares expected vest fair market value common stock grant date company recognized 29 million 21 million 20 million compensation expense years ended march 31 2012 2011 2010 respectively related restricted stock included component general administrative expenses consolidated statements operations purposes accruing expense shares expected vest march 31 2012 approximately 29 million unrecognized compensation cost related unvested restricted stock awards granted expected recognized next 21 years summary status company’s restricted stock march 31 2012 changes year ended march 31 2012 presented total sharebased compensation included component net income years ended march 31 2012 2011 2010 follows 16 acquisitions following table sets forth acquisition activity company last three fiscal years thousands company evaluates acquisition determine transaction meets definition business combination transactions meet definition business combination accounted fasb asc topic 80510 acquisitions accounted asset purchases acquisitions independent third parties acquisition results new office company records transaction business combination since office acquired continue generate loans company typically retains existing employees office location purchase price allocated estimated fair value tangible assets acquired estimated fair value identified intangible assets acquired generally noncompete agreements customer lists remainder allocated goodwill year ended march 31 2012 two acquisitions recorded business combinations acquisition portfolio loans company records transaction asset purchase asset purchase goodwill recorded purchase price allocated estimated fair value tangible intangible assets acquired year ended march 31 2012 23 acquisitions recorded asset acquisitions company’s acquisitions include tangible assets generally loans furniture equipment intangible assets generally noncompete agreements customer lists goodwill recorded fair values estimated pursuant processes described acquired loans valued net loan balance given shortterm nature loans generally four months loans subject continual repricing current rates management believes net loan balances approximate fair value furniture equipment valued specific purchase price agreed parties time acquisition management believes approximates fair values noncompete agreements valued stated amount paid party agreements company believes approximates fair value fair value customer lists based valuation model utilizes company’s historical data estimate value acquired customer lists business combination remaining excess purchase price fair value tangible assets customer list noncompete agreements allocated goodwill offices company acquires small privatelyowned offices sufficient historical data determine attrition company believes customers acquired characteristics perform similarly customers therefore company utilized attrition patterns customers developing method reevaluated periodically customer lists allocated office level evaluated impairment office level triggering event occurs accordance fasb asc topic 3601005 triggering event occurs impairment loss customer list generally remaining unamortized customer list balance acquisitions original fair value customer list allocated office generally less 100000 management believes event triggering event occur impairment loss unamortized customer list would immaterial results acquisitions included company’s consolidated financial statements since respective acquisition dates pro forma impact purchases though acquired beginning periods presented would material effect results operations reported 17 fair value company carries certain financial instruments derivative assets liabilities fair value recurring basis fair value defined exchange price would received asset paid transfer liability exit price principal advantageous market asset liability orderly transaction market participants measurement date company determines fair values financial instruments based fair value hierarchy requires entity maximize use observable inputs minimize use unobservable inputs measuring fair value financial assets liabilities measured fair value grouped three levels prioritize inputs used measure fair value assets liabilities levels level 1 quoted prices unadjusted active markets identical assets liabilities level 2 inputs quoted prices observable assets liabilities either directly indirectly inputs include quoted prices similar assets liabilities active markets quoted prices identical similar assets liabilities market less active level 3 unobservable inputs assets liabilities reflecting reporting entity’s assumptions following financial liabilities measured fair value recurring basis march 31 company’s interest rate swaps valued using “income approach” valuation technique method used valuation techniques convert future amounts single present amount measurement based value indicated current market expectations future amounts fair value debt book value estimated fair value debt follows thousands difference estimated fair value debt compared historical cost reported consolidated balance sheets march 31 2011 relates primarily market quotations company’s 30 convertible senior subordinated notes matured october 1 2011 carrying value senior notes payable junior subordinated note payable approximated fair value notes payable variable interest rate assets liabilities measured fair value nonrecurring basis fiscal 2012 fiscal 2011 18 quarterly information unaudited following sets forth selected quarterly operating data 19 litigation march 31 2012 company certain subsidiaries named defendants otherwise involved various legal actions proceedings arising normal business activities including matters damages various amounts claimed view inherent difficulty predicting outcome legal matters theories potentially involve large number parties early stages company generally cannot predict eventual outcome pending matters timing ultimate resolution matters eventual loss fines penalties settlement impact related matters company believe however reasonably possible losses arising currently pending legal matters material company’s financial statements 20 subsequent events may 1 2012 company entered second amendment revolving credit facility among changes amendment credit facility extends term august 31 2014 changes revolving credit commitment amount 4830 million connection amendment company drew 500 million prepay satisfy full junior subordinated note payable scheduled mature september 17 2015 amendment included exhibit annual report form 10k consolidated financial statements part described greater detail form 8k filed company may 1 2012 see note 7 audited consolidated financial statements discussion company’s notes payable may 1 2012 board directors authorized company repurchase 50 million company’s common stock repurchase authorization follows addition similar repurchase authorization 20 million announced february 29 2012 25 million announced february 14 2012 taking account shares repurchased may 29 2012 including pending repurchase orders subject settlement company 179 million aggregate remaining repurchase capacity company’s outstanding repurchase authorizations timing actual number shares repurchased depend variety factors including stock price corporate regulatory requirements market economic conditions although repurchase authorizations stated expiration date company’s stock repurchase program may suspended discontinued time management’s report internal control financial reporting responsible establishing maintaining adequate internal control financial reporting defined rules 13a 15f securities exchange act 1934 assessed effectiveness internal control financial reporting march 31 2012 assessment based criteria set forth committee sponsoring organizations treadway commission coso internal controlintegrated framework internal control financial reporting process designed provide reasonable assurance regarding reliability financial reporting preparation financial statements external purposes accordance generally accepted accounting principles internal control financial reporting includes policies procedures 1 pertain maintenance records reasonable detail accurately fairly reflect transactions dispositions assets 2 provide reasonable assurance transactions recorded necessary permit preparation financial statements accordance generally accepted accounting principles receipts expenditures made accordance authorizations management board directors 3 provide reasonable assurance regarding prevention timely detection unauthorized acquisition use disposition assets could material effect financial statements inherent limitations internal control financial reporting may prevent detect misstatements also assumptions regarding internal control financial reporting future periods based evaluation effectiveness prior period subject risk controls may become inadequate changes conditions degree compliance policies procedures may deteriorate based using coso criteria believe internal control financial reporting march 31 2012 effective independent registered public accounting firm audited consolidated financial statements included annual report issued attestation report effectiveness internal control financial reporting stated report mclean iii kelly malson mclean iii kelly malson chairman chief executive officer senior vice president chief financial officer report independent registered public accounting firm board directors world acceptance corporation audited accompanying consolidated balance sheets world acceptance corporation subsidiaries march 31 2012 2011 related consolidated statements operations shareholders’ equity comprehensive income cash flows years threeyear period ended march 31 2012 consolidated financial statements responsibility company’s management responsibility express opinion consolidated financial statements based audits conducted audits accordance standards public company accounting oversight board united states standards require plan perform audit obtain reasonable assurance whether financial statements free material misstatement audit includes examining test basis evidence supporting amounts disclosures financial statements audit also includes assessing accounting principles used significant estimates made management well evaluating overall financial statement presentation believe audits provide reasonable basis opinion consolidated financial statements referred present fairly material respects financial position world acceptance corporation subsidiaries march 31 2012 2011 results operations cash flows years threeyear period ended march 31 2012 conformity us generally accepted accounting principles also audited accordance standards public company accounting oversight board united states world acceptance corporation’s internal control financial reporting march 31 2012 based criteria established internal control integrated framework issued committee sponsoring organizations treadway commission coso report dated june 1 2012 expressed unqualified opinion effectiveness company’s internal control financial reporting greenville south carolina may 29 2012 report independent registered public accounting firm board directors world acceptance corporation audited world acceptance corporation subsidiaries’ “the company’s” internal control financial reporting march 31 2012 based criteria established internal control integrated framework issued committee sponsoring organizations treadway commission coso company’s management responsible maintaining effective internal control financial reporting assessment effectiveness internal control financial reporting included accompanying management’s report internal control financial reporting responsibility express opinion company’s internal control financial reporting based audit conducted audit accordance standards public company accounting oversight board united states standards require plan perform audit obtain reasonable assurance whether effective internal control financial reporting maintained material respects audit included obtaining understanding internal control financial reporting assessing risk material weakness exists testing evaluating design operating effectiveness internal control based assessed risk audit also included performing procedures considered necessary circumstances believe audit provides reasonable basis opinion company’s internal control financial reporting process designed provide reasonable assurance regarding reliability financial reporting preparation financial statements external purposes accordance generally accepted accounting principles company’s internal control financial reporting includes policies procedures 1 pertain maintenance records reasonable detail accurately fairly reflect transactions dispositions assets company 2 provide reasonable assurance transactions recorded necessary permit preparation financial statements accordance generally accepted accounting principles receipts expenditures company made accordance authorizations management directors company 3 provide reasonable assurance regarding prevention timely detection unauthorized acquisition use disposition company’s assets could material effect financial statements inherent limitations internal control financial reporting may prevent detect misstatements also projections evaluation effectiveness future periods subject risk controls may become inadequate changes conditions degree compliance policies procedures may deteriorate opinion company maintained material respects effective internal control financial reporting march 31 2012 based criteria established internal control integrated framework issued committee sponsoring organizations treadway commission coso also audited accordance standards public company accounting oversight board united states consolidated balance sheets company march 31 2012 2011 related consolidated statements operations shareholders’ equity comprehensive income cash flows years threeyear period ended march 31 2012 report dated june 1 2012 expressed unqualified opinion consolidated financial statements greenville south carolina may 29 2012 item 9nanitem 8 financial statements supplementary data consolidated balance sheets see accompanying notes consolidated financial statements consolidated statements operations see accompanying notes consolidated financial statements consolidated statements comprehensive income see accompanying notes consolidated financial statements consolidated statements shareholders equity see accompanying notes consolidated financial statements consolidated statements cash flows see accompanying notes consolidated financial statements notes consolidated financial statements 1 summary significant accounting policies companys accounting reporting policies accordance us generally accepted accounting principlesgaap conform general practices within finance company industry following description significant policies used preparing consolidated financial statements nature operations company smallloan consumer finance company headquartered greenville south carolina offers shortterm small loans mediumterm larger loans related credit insurance products ancillary products services individuals limited access sources consumer credit also offers income tax return preparation services customer base others company also markets computer software related services financial services companies paradata financial systems “paradata” subsidiary march 31 2015 company operated 1172 branches alabama georgia idaho illinois indiana kentucky louisiana mississippi missouri new mexico oklahoma south carolina tennessee texas wisconsin company also operated 148 branches mexico company subject numerous lending regulations vary jurisdiction principles consolidation consolidated financial statements include accounts world acceptance corporation whollyowned subsidiaries “company” subsidiaries consist operating entities various states mexico paradata software company acquired fiscal 1994 wac insurance company ltd captive reinsurance company established fiscal 1994 servicios world acceptance corporation de mexico service company established fiscal 2006 significant intercompany balances transactions eliminated consolidation financial statements company’s foreign subsidiaries mexico prepared using local currency functional currency assets liabilities subsidiaries translated us dollars current exchange rate income expense translated average exchange rate period resulting translation gains losses recognized component equity “accumulated comprehensive lossincome” use estimates preparation consolidated financial statements preparation financial statements conformity gaap requires management make estimates assumptions affect reported amount assets liabilities disclosure contingent liabilities date financial statements reported amounts revenue expenses reporting period significant item subject estimates assumptions could materially change near term allowance loan losses actual results could differ estimates reclassification certain prior period amounts reclassified conform current presentation reclassifications impact previously reported net income shareholders equity business segments company reports operating segments accordance financial accounting standards board fasb accounting standards codification asc topic 280 operating segments components enterprise separate financial information available evaluated regularly chief operating decision maker deciding allocate resources assess performance fasb asc topic 280 requires public enterprise report measure segment profit loss certain specific revenue expense items segment assets information way operating segments determined items company one reportable segment consumer finance company revenue generating activities company including sale insurance products income tax preparation world class buying club automobile club done existing branch network conjunction complement lending operation discrete financial information available activities meet criteria fasb asc topic 280 reported separately companys three us divisions southern central western meet aggregation criteria fasb asc topic 280 march 31 2015 2014 companys mexico operations accounted approximately 26 21 total consolidated assets total revenues years ended march 31 2015 2014 2013 524 million 506 million 411 million represented 86 84 73 consolidated revenues although companys mexico operations operating segment fasb asc topic 280 meet criteria require separate disclosure paradata provides data processing systems 102 separate finance companies including company march 31 2015 2014 paradata total assets 02 million 13 million represented less 1 total consolidated assets fiscal year end total net revenues system sales support paradata years ended march 31 2015 2014 2013 21 million 24 million 21 million respectively represented less 1 consolidated revenue year although paradata operating segment fasb asc topic 280 meet criteria require separate disclosure cash equivalents purposes statement cash flows company considers highly liquid investments maturity three months less date original issuance cash equivalents march 31 2015 2014 company 11 million 07 million restricted cash associated captive insurance subsidiary reinsures portion credit insurance sold connection loans made company loans interest fee income company licensed originate consumer loans states georgia south carolina texas oklahoma louisiana tennessee missouri illinois new mexico kentucky alabama wisconsin indiana idaho mississippi addition company also originates consumer loans mexico fiscal 2015 2014 2013 company originated loans generally ranging 4000 terms 42 months less experience indicates majority consumer loans refinanced company accounts majority refinancings new loan generally customer must make multiple payments order qualify refinancing furthermore companys lending policy predetermined lending amounts cases refinancing result advancing additional funds company believes advancement additional funds constitutes minor modification terms existing loan present value cash flows terms new loan 10 present value remaining cash flows terms original loan gross loans receivable march 31 2015 2014 consisted following fees received direct costs incurred origination loans deferred amortized interest income contractual lives loans using interest method unamortized amounts recognized income time loans refinanced paid full except refinancings constitute minor modification connection preparation consolidated financial statements year ended march 31 2015 company reclassified certain loan origination costs personnel expenses present reduction interest fee income compliance accounting standards codification 31020 nonrefundable fees costs company historically deferred costs compliance standard inappropriately recorded net difference deferral costs loans originated period amortization deferred costs period within statement operations company evaluated materiality reclassifications accordance sec staff accounting bulletin 99 materiality sec staff accounting bulletin 108 considering effects prior year misstatements quantifying misstatements current year financial statements accounting standards codification 250 accounting changes error corrections concluded reclassifications individually aggregate immaterial prior periods impacted adjustments immaterial company elected revise previously reported revenue expenses shown following table corrections impact company’s consolidated balance sheets net income consolidated statements comprehensive income consolidated statements shareholders’ equity consolidated statements cash flows earnings per share loans carried gross amount outstanding reduced unearned interest insurance income net deferred origination fees direct costs allowance loan losses company recognizes interest fee income using interest method charges late payments credited income collected company generally offers loans prevailing statutory rates terms exceed 42 months management believes carrying value approximates fair value loan portfolio nonaccrual policy accrual interest discontinued loan 60 days past contractual due date interest accrual discontinued unpaid accrued interest reversed interest income loan nonaccrual status interest revenue recognized payment received loan moves nonaccrual status remains nonaccrual status paid charged refinanced allowance loan losses company maintains allowance loan losses amount managements opinion adequate provide losses inherent existing loan portfolio company charges current earnings provision loan losses amounts added allowance maintain levels expected cover probable losses principal establishing allowance loan losses company takes consideration growth loan portfolio current levels chargeoffs current levels delinquencies current economic factors company uses mathematical calculation determine initial allowance end reporting period calculation originated managements estimate future chargeoffs used allocate expenses branch level two components calculating allowance loan losses company refers general reserve specific reserve calculation starting point time needed additional provisions added determined management make allowance adequate general reserve 425 gross loan portfolio specific reserve represents 100 gross loan balance loans 90 days past due recency basis including bankrupt accounts category methodology based historical data showing collection loans 90 days past due bankrupt accounts remote process performed determine adequacy allowance loan losses well considering trends current levels delinquencies chargeoff levels economic trends energy food prices primary tool used movement model contractual recency basis considers rolling twelve months delinquency determine expected chargeoffs sum expected chargeoffs determined movement model contractual recency basis plus amount delinquent refinancings compared allowance resulting mathematical calculation determine adjustments needed make allowance adequate management would also determine adjustments needed consolidated annual provision loan losses less total chargeoffs management uses precision level 5 allowance loan losses compared aforementioned movement model determining adjustments needed companys policy charge loans earlier loans deemed uncollectible six months elapsed since date last full contractual payment companys chargeoff policy consistently applied changes made periods reported companys historical annual chargeoff rate past 10 years ranged 129 167 net loans companys delinquencies net chargeoff ratios significantly impacted year change branch level incentive plan became effective july 1 2014 change allows managers continue collection efforts accounts 90 days past due without monthly bonus negatively impacted expected resulted increase accounts 90 days past due lower chargeoffs year management considers chargeoff policy evaluating appropriateness allowance loan losses fasb asc topic 31030 prohibits carryover creation valuation allowances initial accounting loans acquired transfer within scope authoritative literature company believes loans acquired since adoption fasb asc topic 31030 shown evidence deterioration credit quality since origination therefore within scope fasb asc topic 31030 impaired loans company defines impaired loans bankrupt accounts 90 days past due accordance company’s chargeoff policy loan deemed uncollectible 100 net investment charged except case borrower filed bankruptcy march 31 2015 bankrupt accounts charged approximately 60 million bankrupt accounts 90 days past due reserved 100 gross loan balance company also considers accounts 90 days past due impaired accounts reserved 100 gross loan balance delinquency primary credit quality indicator used determine credit quality companys receivables additional requirements asc 31010 disclosed note 2 property equipment property equipment stated cost less accumulated depreciation amortization depreciation recorded using straightline method estimated useful life related asset follows building 40 years furniture fixtures 5 10 years equipment 3 7 years vehicles 3 years amortization leasehold improvements recorded using straightline method lesser estimated useful life asset term lease additions premises equipment major replacements improvements added cost maintenance repairs minor replacements charged operating expense incurred assets retired otherwise disposed cost accumulated depreciation removed accounts gain loss reflected consolidated statement operations operating leases company’s branch leases typically lease term three five years contain lessee renewal options cancellation clauses event regulatory changes company typically renews leases one option periods accordingly company amortizes leasehold improvements shorter economic lives generally five years lease term considers renewal periods reasonably assured assets include cash surrender value life insurance policies prepaid expenses debt issuance costs deposits intangible assets goodwill intangible assets include cost acquiring existing customers customer lists fair value assigned noncompete agreements customer lists amortized straight line accelerated basis estimated period benefit ranging 5 20 years weighted average approximately 16 years noncompete agreements amortized straight line basis term agreement ranging 2 7 years weighted average approximately 5 years customer lists allocated branch level evaluated impairment branch level triggering event occurs accordance fasb asc topic 360105 triggering event occurs impairment loss customer list generally remaining unamortized customer list balance acquisitions original fair value customer list allocated branch less 100000 management believes event triggering event occur impairment loss unamortized customer list would immaterial noncompete agreements valued stated amount paid party agreements company believes approximates fair value fair value customer lists based valuation model utilizes company’s historical data estimate value acquired customer lists business combination remaining excess purchase price fair value tangible assets customer list noncompete agreements allocated goodwill branches company acquires small privatelyowned branches sufficient historical data determine customer attrition company believes customers acquired characteristics perform similarly customers therefore company utilized attrition patterns customers developing attrition acquired customers method reevaluated periodically company evaluates goodwill annually impairment fourth quarter fiscal year using market valuebased approach company one reporting unit consumer finance company multiple components lowest level individual branches company’s components aggregated impairment testing similar economic characteristics march 31 2015 company 92 branches recorded goodwill impairment longlived assets company assesses impairment longlived assets including property equipment intangible assets whenever changes events indicate carrying amount may recoverable company assesses impairment assets generally branch level based operating cash flows branch company’s plans branch closings company write assets fair value based analysis sum expected future undiscounted cash flows less carrying amount assets company record impairment charges fiscal year ended 2015 2014 2013 fair value financial instruments fasb asc topic 825 requires disclosures fair value financial instruments whether recognized balance sheet practicable estimate value cases quoted market prices available fair values based estimates using present value valuation techniques company’s financial instruments periods reported consist following cash equivalents loans receivable senior notes payable fair value approximates carrying value instruments loans receivable originated prevailing market rates average life approximately 8 months given shortterm nature loans continually repriced current market rates company’s revolving credit facility variable rate based margin libor reprices changes libor insurance premiums commissions insurance premiums credit life accident health property unemployment insurance written connection certain loans net refunds applicable advance insurance commissions retained company remitted monthly insurance company commissions credited unearned insurance commissions recognized income life related insurance contracts company recognizes insurance income using rule 78s method credit life decreasing term credit accident health unemployment insurance pro rata method credit life level term credit property nonfiling insurance nonfiling insurance premiums charged certain loans lieu recording perfecting companys security interest assets pledged premiums recoveries remitted third party insurance company reflected accompanying consolidated financial statements see note 8 claims paid third party insurance company result reduction loan losses certain losses related loans recoverable life accident health property unemployment insurance claims reimbursed nonfiling insurance claims subject policy limitations remaining losses charged allowance loan losses income taxes income taxes accounted asset liability method deferred tax assets liabilities recognized future tax consequences attributable differences financial statement carrying amounts existing assets liabilities respective tax bases operating loss tax credit carryforwards deferred tax assets liabilities measured using enacted tax rates expected apply taxable income years temporary differences expected recovered settled effect deferred tax assets liabilities change tax rates recognized income period includes enactment date company recognizes effect income tax positions likely sustained recognized income tax positions measured largest amount greater 50 likely realized changes recognition measurement reflected period change judgment occurs earnings per share earnings per share “eps” computed accordance fasb asc topic 260 basic eps includes dilution computed dividing net income weightedaverage number common shares outstanding period diluted eps reflects potential dilution securities could share earnings company potential common stock included diluted eps computation consists stock options restricted stock computed using treasury stock method see note 11 reconciliation numerators denominators basic dilutive eps calculations stockbased compensation fasb asc topic 71810 requires companies recognize income statement grantdate fair value stock options equitybased compensation issued employees fasb asc topic 71810 change accounting guidance sharebased payment transactions parties employees provided fasb asc topic 71810 fasb asc topic 71810 way award classified affect measurement compensation cost liabilityclassified awards remeasured fair value balancesheet date award settled equityclassified awards measured grantdate fair value amortized subsequent vesting period subsequently remeasured fair value nonvested stock awards purposes recognizing stockbased compensation expense market price stock grant date fair value options estimated grant date using blackscholes option pricing model see note 12 march 31 2015 company several sharebased employee compensation plans described fully note 12 company uses modified prospective transition method accordance fasb asc topic 718 method transition compensation cost recognized fiscal years 2013 2014 2015 based grantdate fair value estimated accordance provisions fasb asc topic 718 since compensation cost based awards ultimately expected vest reduced estimated forfeitures fasb asc topic 718 requires forfeitures estimated time grant revised necessary subsequent periods actual forfeitures differ estimates company elected expense grants awards graded vesting straightline basis requisite service period separately vesting portion award share repurchases companys board directors approved stock repurchase program authorizes us repurchase common shares open market privately negotiated transactions price levels deem attractive march 10 2015 board directors authorized company repurchase 250 million company’s common stock repurchase authorization follows addition similar repurchase authorizations 250 million announced february 19 2015 250 million announced july 23 2014 taking account shares repurchased may 29 2015 company 115 million aggregate remaining repurchase capacity company’s outstanding repurchase authorizations timing actual number shares repurchased depend variety factors including stock price corporate regulatory requirements market economic conditions although repurchase authorizations stated expiration date company’s stock repurchase program may suspended discontinued time comprehensive income total comprehensive income consists net income comprehensive income loss company’s comprehensive income loss accumulated comprehensive income loss comprised foreign currency translation adjustments concentration risk company generally serves individuals limited access sources consumer credit banks credit unions consumer finance businesses credit card lenders year ended march 31 2015 company operated fifteen states united states well mexico years ended march 31 2015 2014 2013 total revenue within companys four largest states texas georgia tennessee carolina accounted approximately 54 58 56 respectively companys total revenues company maintains amounts bank accounts times may exceed federally insured limits company experienced losses accounts maintained large domestic banks management believes company’s exposure credit risk minimal accounts advertising costs advertising costs expensed incurred advertising costs approximately 173 million 161 million 148 million fiscal years 2015 2014 2013 respectively accounting standards adopted revenue contracts customers may 2014 financial accounting standards board issued accounting standards update “asu” 201409 supersedes revenue recognition requirements topic 605 revenue recognition industryspecific guidance asu 201409 based principle revenue recognized depict transfer goods services customers amount reflects consideration entity expects entitled exchange goods services asu 201409 also requires additional disclosure nature amount timing uncertainty revenue cash flows arising customer contracts including significant judgments changes judgments assets recognized costs incurred obtain fulfill contract guidance allows either full retrospective adoption modified retrospective adoption however early adoption permitted currently evaluating impact adoption guidance consolidated financial statements disclosure uncertainties entity’s ability continue going concern august 2014 financial accounting standards board issued accounting standards update “asu” 201415 requires management evaluate whether substantial doubt entity’s ability continue going concern provide related footnote disclosures certain circumstances asu 201415 effective annual interim periods beginning december 15 2016 early adoption permitted believe adoption guidance material impact consolidated financial statements simplifying presentation debt issuance costs april 2015 financial accounting standards board issued accounting standards update asu 201503 requires entity present debt issuance costs balance sheet direct deduction related debt liability opposed asset amortization costs continue reported interest expense asu 201503 effective annual interim periods beginning december 15 2015 early adoption permitted believe adoption guidance material impact consolidated financial statements reviewed newly issued accounting pronouncements concluded either applicable business expected material effect consolidated financial statements result future adoption 2 allowance loan losses credit quality indicators following summary changes allowance loan losses years ended march 31 2015 2014 2013 following summary loans individually collectively evaluated impairment period indicated average investment impaired loans 492 million 329 million respectively periods ended march 31 2015 2014 practical compute amount interest earned impaired loans following assessment credit quality period indicated 1 loans nonaccrual status following summary past due receivables 3 property equipment property equipment consist depreciation expense approximately 65 million 63 million 64 million years ended march 31 2015 2014 2013 respectively 4 intangible assets following table provides gross carrying amount related accumulated amortization definitelived intangible assets estimated amortization expense intangible assets future years ended march 31 follows 05 million 2016 04 million 2017 04 million 2018 03 million 2019 03 million 2020 aggregate 13 million years thereafter 5 goodwill following summarizes changes carrying amount goodwill year ended march 31 2015 2014 company performed annual impairment test fourth quarter fiscal 2015 2014 determined none recorded goodwill impaired 6 notes payable senior notes payable 680000000 revolving credit facility companys notes payable consist 6800 million senior notes payable revolving credit facility borrowings 5012 million outstanding borrowing facility 750000 standby letters credit related workers compensation outstanding march 31 2015 extent letter credit drawn upon disbursement funded credit facility amounts due related letter credit march 31 2015 expires december 31 2015 amended base credit facility reduce 6800 million 630 million june 15 2015 subject borrowing base formula based eligible loans receivable company may borrow rate libor plus 30 minimum 40 march 31 2015 march 31 2014 company’s effective interest rate including commitment fee 43 44 respectively unused amount available revolver march 31 2015 815 million company also 966 million may become available revolving credit facility grows net eligible finance receivables revolving credit facility commitment fee 040 per annum unused portion commitment company pays interest monthly basis borrowings revolving credit facility mature june 15 2016 junior subordinated note payable september 17 2010 company entered 750 million junior subordinated note payable wells fargo preferred capital inc “wells fargo” providing nonrevolving line credit wells fargo also lender revolving credit agreement company repaid junior subordinated note may 2012 substantially company’s assets excluding mexico pledged collateral borrowings revolving credit agreement debt covenants companys revolving credit agreement contains number financial covenants including minimum net worth fixed charge coverage requirements credit agreement also contains certain covenants including covenants impose limitations company respect declaring paying dividends making distributions acquiring common preferred stock warrants options ii redeeming purchasing prepaying principal interest subordinated debt iii incurring additional indebtedness iv entering merger consolidation sale substantial assets subsidiaries company compliance covenants march 31 2015 believe covenants materially limit business expansion strategy debt maturities march 31 2015 aggregate annual maturities notes payable fiscal years subsequent march 31 2015 follows 7 insurance commissions income insurance commissions income years ending march 31 2015 2014 2013 consist 8 nonfiling insurance company maintains nonfiling insurance coverage unaffiliated insurance company following summary nonfiling insurance activity years ended march 31 2015 2014 2013 9 leases company conducts operations leased facilities except owned corporate office building companys leases typically lease term three five years contain lessee renewal options majority leases provide lessee pays property taxes insurance common area maintenance costs expected normal course business expiring leases renewed companys option replaced leases acquisitions properties company’s leases operating leases future minimum lease payments noncancelable operating leases march 31 2015 follows mexico commitments approximately 567 million mxn translated spot rate 1523 rental expense cancelable noncancelable operating leases years ended march 31 2015 2014 2013 approximately 260 million 239 million 219 million respectively 10income taxes income tax expense benefit consists income tax expense 65196881 63636273 62201083 years ended march 31 2015 2014 2013 respectively differed amounts computed applying us federal income tax rate 35 pretax income continuing operations result following tax effects temporary differences give rise significant portions deferred tax assets deferred tax liabilities march 31 2015 2014 presented valuation allowance deferred tax assets march 31 2015 2014 1274 valuation allowance total deferred tax assets march 31 2015 2014 relates state net operating losses assessing realizability deferred tax assets management considers whether likely portion deferred tax assets realized ultimate realization deferred tax assets dependent upon generation future taxable income periods temporary differences become deductible management considers scheduled reversals deferred tax liabilities projected future taxable income tax planning strategies making assessment order fully realize deferred tax asset company need generate future taxable income prior expiration deferred tax assets governed tax code based upon level historical taxable income projections future taxable income periods related temporary differences deductible management believes likely company realize benefits deductible differences net existing valuation allowances march 31 2015 amount deferred tax asset considered realizable however could reduced near term estimates future taxable income carryforward period reduced company required assess whether earnings companys mexican foreign subsidiary permanently reinvested respective foreign jurisdiction previously untaxed foreign earnings company longer permanently reinvested thus become taxable united states earnings ever repatriated united states company would required accrue pay taxes cumulative undistributed earnings march 31 2015 company determined approximately 235 million cumulative undistributed net earnings well future net earnings mexican foreign subsidiaries permanently reinvested march 31 2015 unrecognized deferred tax liability amount 206 million related investment mexican subsidiaries march 31 2015 2014 company 86 million 64 million total gross unrecognized tax benefits including interest respectively totals approximately 66 million 46 million respectively represents amount net unrecognized tax benefits permanent nature recognized would affect annual effective tax rate reconciliation beginning ending amount unrecognized tax benefits follows march 31 2015 approximately 44 million gross unrecognized tax benefits expected resolved next 12 months settlements taxing authorities expiration statute limitations company’s continuing practice recognize interest penalties related income tax matters income tax expense march 31 2015 2014 company 940805 614279 accrued gross interest respectively 474484 379417 240609 represented current period expense periods ended march 31 2015 2014 2013 company subject us mexican income taxes well various state local jurisdictions exceptions company longer subject us federal state local nonus income tax examinations tax authorities years 2011 although carryforward attributes generated prior 2011 may still adjusted upon examination taxing authorities either used future period 11 earnings per share following reconciliation numerators denominators basic diluted eps calculations options purchase 543879 404421 403123 shares common stock various prices outstanding years ended march 31 2015 2014 2013 respectively included computation diluted eps option exercise price antidilutive connection preparation consolidated financial statements three six month periods ended september 30 2014 errors computation disclosure earnings per share identified errors resulted inclusion restricted stock outstanding basic weighted average common shares outstanding well inclusion performance based restricted stock met necessary performance conditions end reporting period dilutive calculation weighted average diluted shares outstanding company evaluated materiality errors accordance sec staff accounting bulletin 99 materiality sec staff accounting bulletin 108 considering effects prior year misstatements quantifying misstatements current year financial statements accounting standards codification 250 accounting changes error corrections concluded errors individually aggregate immaterial prior periods impacted adjustments immaterial company elected revise previously reported basic diluted earnings per share shown following table corrections impact company’s consolidated balance sheets net income consolidated statement comprehensive income consolidated statements shareholders equity consolidated statements cash flows 12 benefit plans retirement plan company provides defined contribution employee benefit plan 401k plan covering fulltime employees whereby employees invest maximum designated year company makes matching contribution equal 50 employees contributions first 6 gross pay companys expense plan 1470600 1483712 1432170 years ended march 31 2015 2014 2013 respectively supplemental executive retirement plan company instituted supplemental executive retirement plan “serp” nonqualified executive benefit plan company agrees pay executive additional benefits future usually retirement return continued employment executive serp unfunded plan specific assets set aside company connection establishment plan executive rights agreement beyond general creditor company may 2009 company instituted second supplemental executive retirement plan provide one executive type benefits original serp would qualified due age second serp also unfunded plan specific assets set aside company connection plan years ended march 31 2015 2014 2013 contributions 642710 909466 1022979 respectively charged expense related serp expense year ended march 31 2014 offset reversal 904138 expense accrued two executives resigned year unfunded liability 7516249 7186076 7470918 march 31 2015 2014 2013 respectively three years presented unfunded liability estimated using following assumptions annual salary increase 35 3 years discount rate 60 3 years retirement age 65 executive deferred compensation plan company executive deferral plan eligible executives directors may elect defer portion incentive compensation paid executive deferral plan march 31 2015 2014 executive deferred compensation plan stock option plans company 2002 stock option plan 2005 stock option plan 2008 stock option plan 2011 stock option plan benefit certain directors officers key employees plans total 4100000 shares authorized common stock reserved issuance pursuant grants approved compensation stock option committee board directors stock options granted plans maximum duration 10 years may subject certain vesting requirements generally five years officers directors key employees priced market value companys common stock date grant option march 31 2015 total 209178 shares available grant plans stockbased compensation recognized provided fasb asc topic 71810 fasb asc topic 50550 fasb asc topic 71810 requires sharebased payments employees including grants employee stock options recognized compensation expense requisite service period generally vesting period consolidated financial statements based grant date fair values impact forfeitures may occur prior vesting also estimated considered amount recognized company applied blackscholes valuation model determining grant date fair value stock option awards compensation expense recognized options expected vest forfeitures estimated based historical experience future expectations weightedaverage fair value grant date options issued years ended march 31 2015 2014 2013 3450 4380 3606 per share respectively fair value estimated grant date using weightedaverage assumptions listed expected stock price volatility based historical volatility company’s stock period approximating expected life expected life represents period time options expected outstanding grant date riskfree rate reflects interest rate grant date zero coupon us governmental bonds remaining life similar expected option term option activity year ended march 31 2015 follows aggregate intrinsic value reflected table represents total pretax intrinsic value difference closing stock price march 31 2015 exercise price multiplied number inthemoney options would received option holders option holders exercised options march 31 2015 amount change stocks market price changes total intrinsic value options exercised periods ended march 31 2015 2014 2013 follows march 31 2015 total unrecognized stockbased compensation expense related nonvested stock options amounted approximately 180 million expected recognized weightedaverage period approximately 33 years restricted stock fiscal 2014 2013 company granted 8590 70800 group performance based restricted stock awards certain officers march 31 2015 60390 remain unforfeited group awards vested april 30 2015 based companys achievement following performance goals march 31 2015 fiscal 2014 2013 company granted 56660 443700 group b performance based restricted stock awards certain officers march 31 2014 373360 remain unforfeited group b awards vest follows company achieves following performance goals successive trailing four quarters measurement period ending march 31 2017 november 7 2011 company granted 15077 shares restricted stock equity classified grant date fair value 6770 per share certain executive officers onethird restricted stock vested immediately onethird vested november 7 2012 3249 net forfeits vested november 7 2013 respectively date company granted additional 24200 shares restricted stock equity classified grant date fair value 6770 per share certain officers onethird restricted stock vested november 7 2012 onethird restricted stock vested november 7 2013 onethird restricted stock vested november 7 2014 respectively date company granted additional 11139 shares restricted stock equity classified grant date fair value 6770 per share certain executive officers remaining unforfeited 7275 shares vested april 30 2014 based company’s compounded annual eps growth according following schedule compensation expense related restricted stock based number shares expected vest fair market value common stock grant date company recognized approximately 81 million 60 million 48 million compensation expense years ended march 31 2015 2014 2013 respectively included component general administrative expenses companys consolidated statements operations march 31 2015 approximately 88 million unrecognized compensation cost related unvested performancebased restricted stock awards expected recognized next 16 years based current estimates addition approximately 67 million unrecognized compensation cost related unvested performancebased restricted stock awards expected vest based current estimates change 67 million could expensed accordingly future periods summary status company’s restricted stock march 31 2015 changes year ended march 31 2015 presented total sharebased compensation included component net income years ended march 31 2015 2014 2013 follows 13 acquisitions company evaluates acquisition determine acquired enterprise meets definition business acquired enterprises meet definition business accounted business combination fasb asc topic 80510 acquisitions accounted asset purchases acquisitions independent third parties following table sets forth acquisition activity company years ended march 31 2015 2014 2013 years acquisition results new branch company records transaction business combination since branch acquired continue generate loans company typically retains existing employees branch location purchase price allocated estimated fair value tangible assets acquired estimated fair value identified intangible assets acquired generally noncompete agreements customer lists remainder allocated goodwill year ended march 31 2015 two acquisitions recorded business combinations acquisition portfolio loans company records transaction asset purchase asset purchase goodwill recorded purchase price allocated estimated fair value tangible intangible assets acquired year ended march 31 2015 three acquisitions recorded asset acquisitions company’s acquisitions include tangible assets generally loans furniture equipment intangible assets generally noncompete agreements customer lists goodwill recorded fair values estimated pursuant processes described acquired loans valued net loan balance given shortterm nature loans generally eight months loans priced current rates management believes net loan balances approximate fair value furniture equipment valued specific purchase price agreed parties time acquisition management believes approximates fair values 14 fair value fair value disclosures company may carry certain financial instruments derivative assets liabilities fair value recurring basis fair value defined price would received sell asset paid transfer liability orderly transaction market participants measurement date company determines fair values financial instruments based fair value hierarchy requires entity maximize use observable inputs minimize use unobservable inputs measuring fair value financial assets liabilities measured fair value grouped three levels prioritize inputs used measure fair value assets liabilities levels •level 1 quoted prices unadjusted active markets identical assets liabilities •level 2 inputs quoted prices observable assets liabilities either directly indirectly inputs include quoted prices similar assets liabilities active markets quoted prices identical similar assets liabilities market less active •level 3 unobservable inputs assets liabilities reflecting reporting entity’s assumptions company’s financial instruments periods reported consist following cash equivalents loans receivable senior notes payable fair value approximates carrying value instruments loans receivable originated prevailing market rates average life approximately 8 months given shortterm nature loans continually repriced current market rates company’s revolving credit facility variable rate based margin libor reprices changes libor company also considered creditworthiness determination fair value carrying amount estimated fair values company’s financial instruments summarized level follows significant assets liabilities measured fair value nonrecurring basis march 31 2015 2014 15 quarterly information unaudited following sets forth selected quarterly operating data total revenues general administrative expenses revised compliance accounting standards codification 31020 nonrefundable fees costs described note 1 companys highest loan demand occurs generally october december third fiscal quarter loan demand generally lowest loan repayment highest january march fourth fiscal quarter consequently company experiences significant seasonal fluctuations operating results cash needs operating results companys third fiscal quarter generally lower quarters operating results fourth fiscal quarter generally higher quarters 16 litigation previously disclosed march 12 2014 company received civil investigative demand “cid” consumer financial protection bureau “cfpb” stated purpose cid determine whether company “engaging unlawful acts practices connection marketing offering extension credit violation sections 1031 1036 consumer financial protection act 12 usc §§ 5531 5536 truth lending act 15 usc §§ 1601 et seq regulation z 12 cfr pt 1026 federal consumer financial law” “also determine whether bureau action obtain legal equitable relief would public interest” company responded within deadlines specified cid broad requests production documents answers interrogatories written reports related loans made company numerous aspects company’s business subsequent march 2014 cid company received responded actively process responding additional broad requests demands information cfpb expects continue additional requests demands information cfpb ongoing interactions cfpb company counsel part investigation currently unable predict ultimate timing outcome cfpb investigation company believes marketing lending practices lawful assurance cfpbs ongoing investigation future exercise enforcement regulatory discretionary powers result findings alleged violations federal consumer financial protection laws could lead enforcement actions proceedings litigation imposition damages fines penalties restitution monetary liabilities sanctions settlements changes company’s business practices operations could material adverse effect company’s business financial condition results operations eliminate altogether companys ability operate business profitably terms substantially similar currently operates previously disclosed april 22 2014 shareholder filed putative class action complaint edna selan epstein v world acceptance corporation et al united states district court district south carolina case number 614cv01606 company certain current former officers behalf persons purchased otherwise acquired company’s common stock april 25 2013 march 12 2014 complaint alleges company made false misleading statements various sec reports public statements violation federal securities laws preceding company’s disclosure form 8k filed march 13 2014 received abovereferenced cid cfpb complaint seeks class certification unspecified monetary damages costs attorneys’ fees company believes complaint without merit june 25 2014 company filed motion dismiss complaint august 12 2014 lead plaintiff operating engineers construction industry miscellaneous pension fund filed amended complaint amended complaint contains similar allegations original complaint expands class period includes additional allegations company’s loan growth volume figures inflated weakness company’s internal controls relating accounting treatment certain smalldollar loan refinancings company filed motion dismiss amended complaint september 16 2014 october 21 2014 plaintiff filed response opposition company’s motion dismiss amended complaint company filed reply brief support motion dismiss november 17 2014 may 18 2015 court issued order denying company’s motion dismiss may 28 2015 court granted company’s consent motion extension time company answer amended complaint july 1 2015 may 28 2015 company filed motion asking court certify may 18 2015 order immediate appeal united states court appeals fourth circuit pursuant 28 usc section 1292b stay proceedings pending resolution appeal grounds court’s decision involves controlling question law substantial ground difference opinion immediate appeal may materially advance ultimate termination litigation event motion disallowed court’s decision reversed appeal company intends answer complaint denying liability defend action vigorously addition time company involved routine litigation matters relating claims arising operations normal course business including matters damages various amounts claimed estimating amount range possible losses resulting litigation government actions legal proceedings inherently difficult requires extensive degree judgment particularly matters involve indeterminate claims monetary damages may involve fines penalties damages discretionary amount involve large number claimants significant discretion regulatory authorities represent change regulatory policy interpretation present novel legal theories early stages proceedings subject appeal could result change business practices addition legal proceedings resolved extended periods time potential losses subject change due among things new developments changes legal strategy outcome intermediate procedural substantive rulings parties’ settlement posture evaluation strength weakness case us reasons currently unable predict ultimate timing outcome reasonably estimate possible losses range possible losses resulting matters described based information currently available company believe reasonably possible losses arising currently pending legal matters material company’s results operations financial conditions however light inherent uncertainties involved matters adverse outcome one matters could materially adversely affect company’s financial condition results operations cash flows particular reporting period management’s report internal control financial reporting responsible establishing maintaining adequate internal control financial reporting defined rule 13a 15f securities exchange act 1934 assessed effectiveness internal control financial reporting march 31 2015 assessment based criteria established internal control integrated framework 1992 issued committee sponsoring organizations treadway commission coso internal control financial reporting process designed provide reasonable assurance regarding reliability financial reporting preparation financial statements external purposes accordance generally accepted accounting principles internal control financial reporting includes policies procedures 1 pertain maintenance records reasonable detail accurately fairly reflect transactions dispositions assets 2 provide reasonable assurance transactions recorded necessary permit preparation financial statements accordance generally accepted accounting principles receipts expenditures made accordance authorizations management board directors 3 provide reasonable assurance regarding prevention timely detection unauthorized acquisition use disposition assets could material effect financial statements inherent limitations internal control financial reporting may prevent detect misstatements also assumptions regarding internal control financial reporting future periods based evaluation effectiveness prior period subject risk controls may become inadequate changes conditions degree compliance policies procedures may deteriorate based using coso criteria believe internal control financial reporting march 31 2015 effective independent registered public accounting firm audited consolidated financial statements included annual report issued attestation report effectiveness internal control financial reporting stated report mclean iii john l calmes jr mclean iii john l calmes jr chairman chief executive officer vice president chief financial officer report independent registered public accounting firm board directors world acceptance corporation audited accompanying consolidated balance sheet world acceptance corporation subsidiaries company march 31 2014 related consolidated statements operations comprehensive income shareholders’ equity cash flows years twoyear period ended march 31 2014 consolidated financial statements responsibility company’s management responsibility express opinion consolidated financial statements based audits conducted audits accordance standards public company accounting oversight board united statesthose standards require plan perform audit obtain reasonable assurance whether financial statements free material misstatement audit includes examining test basis evidence supporting amounts disclosures financial statements audit also includes assessing accounting principles used significant estimates made management well evaluating overall financial statement presentation believe audits provide reasonable basis opinion consolidated financial statements referred present fairly material respects financial position world acceptance corporation subsidiaries march 31 2014 results operations cash flows years twoyear period ended march 31 2014 conformity us generally accepted accounting principles kpmg greenville south carolina june 12 2014 report independent registered public accounting firm board directors shareholders world acceptance corporation subsidiaries audited accompanying consolidated balance sheet world acceptance corporation subsidiaries march 31 2015 related consolidated statements operations comprehensive income shareholders equity cash flows year ended financial statements responsibility companys management responsibility express opinion financial statements based audit conducted audit accordance standards public company accounting oversight board united states standards require plan perform audit obtain reasonable assurance whether financial statements free material misstatement audit includes examining test basis evidence supporting amounts disclosures financial statements audit also includes assessing accounting principles used significant estimates made management well evaluating overall financial statement presentation believe audit provides reasonable basis opinion consolidated financial statements referred present fairly material respects financial position world acceptance corporation subsidiaries march 31 2015 results operations cash flows year ended conformity us generally accepted accounting principles also audited accordance standards public company accounting oversight board united states world acceptance corporations subsidiaries internal control financial reporting march 31 2015 based criteria established internal control integrated framework issued committee sponsoring organizations treadway commission 1992 report dated june 1 2015 expressed unqualified opinion effectiveness world acceptance corporations internal control financial reporting mcgladrey llp raleigh north carolina june 1 2015 report independent registered public accounting firm board directors shareholders world acceptance corporation subsidiaries audited world acceptance corporation subsidiaries internal control financial reporting march 31 2015 based criteria established internal control integrated framework issued committee sponsoring organizations treadway commission 1992 world acceptance corporation subsidiaries’ management responsible maintaining effective internal control financial reporting assessment effectiveness internal control financial reporting included accompanying management’s report internal control financial reporting responsibility express opinion companys internal control financial reporting based audit conducted audit accordance standards public company accounting oversight board united states standards require plan perform audit obtain reasonable assurance whether effective internal control financial reporting maintained material respects audit included obtaining understanding internal control financial reporting assessing risk material weakness exists testing evaluating design operating effectiveness internal control based assessed risk audit also included performing procedures considered necessary circumstances believe audit provides reasonable basis opinion companys internal control financial reporting process designed provide reasonable assurance regarding reliability financial reporting preparation financial statements external purposes accordance generally accepted accounting principles companys internal control financial reporting includes policies procedures pertain maintenance records reasonable detail accurately fairly reflect transactions dispositions assets company b provide reasonable assurance transactions recorded necessary permit preparation financial statements accordance generally accepted accounting principles receipts expenditures company made accordance authorizations management directors company c provide reasonable assurance regarding prevention timely detection unauthorized acquisition use disposition companys assets could material effect financial statements inherent limitations internal control financial reporting may prevent detect misstatements also projections evaluation effectiveness future periods subject risk controls may become inadequate changes conditions degree compliance policies procedures may deteriorate opinion world acceptance corporation maintained material respects effective internal control financial reporting march 31 2015 based criteria established internal control integrated framework issued committee sponsoring organizations treadway commission 1992 also audited accordance standards public company accounting oversight board united states consolidated balance sheet world acceptance corporation subsidiaries march 31 2015 related consolidated statements operations comprehensive income shareholders’ equity cash flows year ended report dated june 1 2015 expressed unqualified opinion mcgladrey llp raleigh north carolina june 1 2015 item 9item 8 financial statements supplementary data consolidated balance sheets see accompanying notes consolidated financial statements consolidated statements operations see accompanying notes consolidated financial statements consolidated statements comprehensive income see accompanying notes consolidated financial statements consolidated statements shareholders equity see accompanying notes consolidated financial statements consolidated statements cash flows see accompanying notes consolidated financial statements notes consolidated financial statements 1 summary significant accounting policies companys accounting reporting policies accordance us generally accepted accounting principles gaap conform general practices within finance company industry following description significant policies used preparing consolidated financial statements nature operations company smallloan consumer finance company headquartered greenville south carolina offers shortterm small loans mediumterm larger loans related credit insurance products ancillary products services individuals limited access sources consumer credit also offers income tax return preparation services customer base others march 31 2016 company operated 1186 branches alabama georgia idaho illinois indiana kentucky louisiana mississippi missouri new mexico oklahoma south carolina tennessee texas wisconsin branches aforementioned states operate one following names amicable finance capitol loans colonial finance freeman finance general credit local loans midwestern financial midwestern loans personal credit peoples finance world acceptance world finance company also operated 153 branches mexico branches mexico operate name préstamos avance préstamos viva company subject numerous lending regulations vary jurisdiction principles consolidation consolidated financial statements include accounts world acceptance corporation whollyowned subsidiaries “company” subsidiaries consist operating entities various states mexico paradata software company acquired fiscal 1994 wac insurance company ltd captive reinsurance company established fiscal 1994 servicios world acceptance corporation de mexico service company established fiscal 2006 significant intercompany balances transactions eliminated consolidation financial statements company’s foreign subsidiaries mexico prepared using local currency functional currency assets liabilities subsidiaries translated us dollars current exchange rate income expense translated average exchange rate period resulting translation gains losses recognized component equity “accumulated comprehensive lossincome” use estimates preparation consolidated financial statements preparation financial statements conformity gaap requires management make estimates assumptions affect reported amount assets liabilities disclosure contingent liabilities date financial statements reported amounts revenue expenses reporting period significant item subject estimates assumptions could materially change near term allowance loan losses actual results could differ estimates reclassification certain prior period amounts reclassified conform current presentation reclassifications impact previously reported net income shareholders equity business segments company reports operating segments accordance financial accounting standards board fasb accounting standards codification asc topic 280 operating segments components enterprise separate financial information available evaluated regularly chief operating decision maker deciding allocate resources assess performance fasb asc topic 280 requires public enterprise report measure segment profit loss certain specific revenue expense items segment assets information way operating segments determined items company one reportable segment consumer finance company revenue generating activities company including sale insurance products income tax preparation world class buying club automobile club done existing branch network conjunction complement lending operation discrete financial information available activities meet criteria fasb asc topic 280 reported separately march 31 2016 2015 companys mexico operations accounted approximately 82 81 total consolidated assets total revenues years ended march 31 2016 2015 2014 422 million 524 million 506 million represented 76 86 84 consolidated revenues although companys mexico operations operating segment fasb asc topic 280 meet criteria require separate disclosure paradata provides data processing systems 88 separate finance companies including company march 31 2016 2015 paradata total assets 16 million 15 million represented less 1 total consolidated assets fiscal year end total net revenues system sales support paradata years ended march 31 2016 2015 2014 30 million 21 million 24 million respectively represented less 1 consolidated revenue year although paradata operating segment fasb asc topic 280 meet criteria require separate disclosure cash equivalents purposes statement cash flows company considers highly liquid investments maturity three months less date original issuance cash equivalents march 31 2016 2015 company 22 million 11 million restricted cash associated captive insurance subsidiary reinsures portion credit insurance sold connection loans made company loans interest fee income company licensed originate consumer loans states south carolina georgia texas oklahoma louisiana tennessee illinois missouri new mexico kentucky alabama wisconsin indiana mississippi idaho addition company also originates consumer loans mexico fiscal 2016 2015 2014 company originated loans generally ranging 4000 terms 42 months less experience indicates majority consumer loans refinanced company accounts majority refinancings new loan generally customer must make multiple payments order qualify refinancing furthermore companys lending policy predetermined lending amounts cases refinancing result advancing additional funds company believes advancement additional funds constitutes minor modification terms existing loan present value cash flows terms new loan 10 present value remaining cash flows terms original loan gross loans receivable march 31 2016 2015 consisted following fees received direct costs incurred origination loans deferred amortized interest income contractual lives loans using interest method unamortized amounts recognized income time loans refinanced paid full except refinancings constitute minor modification connection preparation consolidated financial statements year ended march 31 2015 company reclassified certain loan origination costs personnel expenses present reduction interest fee income compliance accounting standards codification 31020 nonrefundable fees costs company historically deferred costs compliance standard inappropriately recorded net difference deferral costs loans originated period amortization deferred costs period within statement operations company evaluated materiality reclassifications accordance sec staff accounting bulletin 99 materiality sec staff accounting bulletin 108 considering effects prior year misstatements quantifying misstatements current year financial statements accounting standards codification 250 accounting changes error corrections concluded reclassifications individually aggregate immaterial prior periods impacted adjustments immaterial company elected revise previously reported revenue expenses shown following table corrections impact company’s consolidated balance sheets net income consolidated statements comprehensive income consolidated statements shareholders’ equity consolidated statements cash flows earnings per share loans carried gross amount outstanding reduced unearned interest insurance income net deferred origination fees direct costs allowance loan losses company recognizes interest fee income using interest method charges late payments credited income collected company generally offers loans prevailing statutory rates terms exceed 42 months management believes carrying value approximates fair value loan portfolio nonaccrual policy accrual interest discontinued loan 60 days past contractual due date interest accrual discontinued unpaid accrued interest reversed interest income loan nonaccrual status interest revenue recognized payment received loan moves nonaccrual status remains nonaccrual status paid charged refinanced allowance loan losses company maintains allowance loan losses amount managements opinion adequate provide incurred losses inherent existing loan portfolio company charges current earnings provision loan losses amounts added allowance maintain levels expected cover probable incurred losses principal establishing allowance loan losses company takes consideration growth loan portfolio current levels chargeoffs current levels delinquencies current economic factors company uses mathematical calculation determine initial allowance end reporting period calculation originated managements estimate future chargeoffs used allocate expenses branch level two components calculating allowance loan losses company refers general reserve specific reserve calculation starting point time needed additional provisions added determined management make allowance adequate general reserve 425 gross loan portfolio specific reserve represents 100 gross loan balance loans 91 days past due 151 days past due payroll deduct loans recency basis including bankrupt accounts category methodology based historical data showing collection loans 91 days past due bankrupt accounts remote process performed determine adequacy allowance loan losses well considering trends current levels delinquencies chargeoff levels economic trends energy food prices primary tool used movement model contractual recency basis considers rolling twelve months delinquency determine expected chargeoffs sum expected chargeoffs determined movement model contractual recency basis plus amount delinquent refinancings compared allowance resulting mathematical calculation determine adjustments needed make allowance adequate management would also determine adjustments needed consolidated annual provision loan losses less total chargeoffs management uses precision level 5 allowance loan losses compared aforementioned movement model determining adjustments needed companys policy charge loans earlier loans deemed uncollectible six months elapsed since date last full contractual payment companys chargeoff policy consistently applied changes made periods reported companys historical annual chargeoff rate past 10 years ranged 129 167 net loans management considers chargeoff policy evaluating appropriateness allowance loan losses fasb asc topic 31030 prohibits carryover creation valuation allowances initial accounting loans acquired transfer within scope authoritative literature company believes loans acquired since adoption fasb asc topic 31030 shown evidence deterioration credit quality since origination therefore within scope fasb asc topic 31030 impaired loans company defines impaired loans bankrupt accounts 91 days past due 151 days past due payroll deduct loans accordance company’s chargeoff policy loan deemed uncollectible 100 net investment charged except case borrower filed bankruptcy march 31 2016 bankrupt accounts charged approximately 55 million bankrupt accounts 91 days past due reserved 100 gross loan balance company also considers accounts 91 days past due 151 days past due payroll deduct loans impaired accounts reserved 100 gross loan balance delinquency primary credit quality indicator used determine credit quality companys receivables additional requirements asc 31010 disclosed note 2 property equipment property equipment stated cost less accumulated depreciation amortization depreciation recorded using straightline method estimated useful life related asset follows buildings 25 40 years furniture fixtures 5 10 years equipment 3 7 years vehicles 3 years amortization leasehold improvements recorded using straightline method lesser estimated useful life asset term lease additions premises equipment major replacements improvements added cost maintenance repairs minor replacements charged operating expense incurred assets retired otherwise disposed cost accumulated depreciation removed accounts gain loss reflected consolidated statement operations operating leases company’s branch leases typically lease term three five years contain lessee renewal options cancellation clauses event regulatory changes company typically renews leases one option periods accordingly company amortizes leasehold improvements shorter economic lives generally five years lease term considers renewal periods reasonably assured assets include cash surrender value life insurance policies prepaid expenses debt issuance costs deposits intangible assets goodwill intangible assets include cost acquiring existing customers customer lists fair value assigned noncompete agreements customer lists amortized straight line accelerated basis estimated period benefit ranging 12 23 years weighted average approximately 16 years noncompete agreements amortized straight line basis term agreement ranging 2 5 years weighted average approximately 5 years customer lists allocated branch level evaluated impairment branch level triggering event occurs accordance fasb asc topic 3601005 triggering event occurs impairment loss customer list generally remaining unamortized customer list balance acquisitions original fair value customer list allocated branch less 100000 management believes event triggering event occur impairment loss unamortized customer list would immaterial noncompete agreements valued stated amount paid party agreements company believes approximates fair value fair value customer lists based valuation model utilizes company’s historical data estimate value acquired customer lists business combination remaining excess purchase price fair value tangible assets customer list noncompete agreements allocated goodwill branches company acquires small privatelyowned branches sufficient historical data determine customer attrition company believes customers acquired characteristics perform similarly customers therefore company utilized attrition patterns customers developing attrition acquired customers method reevaluated periodically company evaluates goodwill annually impairment fourth quarter fiscal year using market valuebased approach company three reporting units us mexico paradata company multiple components lowest level individual branches company’s components aggregated impairment testing similar economic characteristics impairment longlived assets company assesses impairment longlived assets including property equipment intangible assets whenever changes events indicate carrying amount may recoverable company assesses impairment assets generally branch level based operating cash flows branch company’s plans branch closings company write assets fair value based analysis sum expected future undiscounted cash flows less carrying amount assets company record impairment charges fiscal year ended 2016 2015 2014 fair value financial instruments fasb asc topic 825 requires disclosures fair value financial instruments whether recognized balance sheet practicable estimate value cases quoted market prices available fair values based estimates using present value valuation techniques company’s financial instruments periods reported consist following cash equivalents loans receivable senior notes payable fair value approximates carrying value instruments loans receivable originated prevailing market rates average life approximately 8 months given shortterm nature loans continually repriced current market rates company’s revolving credit facility variable rate based margin libor reprices changes libor insurance premiums commissions insurance premiums credit life accident health property unemployment insurance written connection certain loans net refunds applicable advance insurance commissions retained company remitted monthly insurance company commissions credited unearned insurance commissions recognized income life related insurance contracts company recognizes insurance income using rule 78s method credit life decreasing term credit accident health unemployment insurance pro rata method credit life level term credit property nonfiling insurance nonfiling insurance premiums charged certain loans lieu recording perfecting companys security interest assets pledged premiums recoveries remitted third party insurance company reflected accompanying consolidated financial statements see note 8 claims paid third party insurance company result reduction loan losses certain losses related loans recoverable life accident health property unemployment insurance claims reimbursed nonfiling insurance claims subject policy limitations remaining losses charged allowance loan losses income taxes income taxes accounted asset liability method deferred tax assets liabilities recognized future tax consequences attributable differences financial statement carrying amounts existing assets liabilities respective tax bases operating loss tax credit carryforwards deferred tax assets liabilities measured using enacted tax rates expected apply taxable income years temporary differences expected recovered settled effect deferred tax assets liabilities change tax rates recognized income period includes enactment date company recognizes effect income tax positions likely sustained recognized income tax positions measured largest amount greater 50 likely realized changes recognition measurement reflected period change judgment related additional facts circumstances occurs earnings per share earnings per share “eps” computed accordance fasb asc topic 260 basic eps includes dilution computed dividing net income weightedaverage number common shares outstanding period diluted eps reflects potential dilution securities could share earnings company potential common stock included diluted eps computation consists stock options restricted stock computed using treasury stock method see note 11 reconciliation numerators denominators basic dilutive eps calculations stockbased compensation fasb asc topic 71810 requires companies recognize income statement grantdate fair value stock options equitybased compensation issued employees fasb asc topic 71810 change accounting guidance sharebased payment transactions parties employees provided fasb asc topic 71810 fasb asc topic 71810 way award classified affect measurement compensation cost liabilityclassified awards remeasured fair value balancesheet date award settled equityclassified awards measured grantdate fair value amortized subsequent vesting period subsequently remeasured fair value nonvested stock awards purposes recognizing stockbased compensation expense market price stock grant date fair value options estimated grant date using blackscholes option pricing model see note 12 march 31 2016 company several sharebased employee compensation plans described fully note 12 company uses modified prospective transition method accordance fasb asc topic 718 method transition compensation cost recognized fiscal years 2014 2015 2016 based grantdate fair value estimated accordance provisions fasb asc topic 718 since compensation cost based awards ultimately expected vest reduced estimated forfeitures fasb asc topic 718 requires forfeitures estimated time grant revised necessary subsequent periods actual forfeitures differ estimates company elected expense grants awards graded vesting straightline basis requisite service period separately vesting portion award share repurchases companys board directors approved stock repurchase program authorizes us repurchase common shares open market privately negotiated transactions price levels deem attractive march 10 2015 board directors authorized company repurchase 250 million company’s common stock march 31 2016 company 115 million aggregate remaining repurchase capacity company’s outstanding repurchase authorizations timing actual number shares repurchased depend variety factors including stock price corporate regulatory requirements market economic conditions although repurchase authorizations stated expiration date company’s stock repurchase program may suspended discontinued time comprehensive income total comprehensive income consists net income comprehensive income loss company’s comprehensive income loss accumulated comprehensive income loss comprised foreign currency translation adjustments concentration risk company generally serves individuals limited access sources consumer credit banks credit unions consumer finance businesses credit card lenders year ended march 31 2016 company operated fifteen states united states well mexico years ended march 31 2016 2015 2014 total revenue within companys four largest states texas tennessee georgia carolina accounted approximately 53 54 58 respectively companys total revenues company maintains amounts bank accounts times may exceed federally insured limits company experienced losses accounts maintained large domestic banks management believes company’s exposure credit risk minimal accounts advertising costs advertising costs expensed incurred advertising costs approximately 169 million 173 million 161 million fiscal years 2016 2015 2014 respectively accounting standards adopted revenue contracts customers may 2014 financial accounting standards board issued accounting standards update “asu” 201409 supersedes revenue recognition requirements topic 605 revenue recognition industryspecific guidance asu 201409 based principle revenue recognized depict transfer goods services customers amount reflects consideration entity expects entitled exchange goods services asu 201409 also requires additional disclosure nature amount timing uncertainty revenue cash flows arising customer contracts including significant judgments changes judgments assets recognized costs incurred obtain fulfill contract asu 201409 amended asu 201514 effective fiscal years interim periods beginning december 15 2017 early adoption permitted annual reporting periods beginning december 15 2016 currently evaluating impact adoption guidance consolidated financial statements disclosure uncertainties entity’s ability continue going concern august 2014 financial accounting standards board issued accounting standards update “asu” 201415 requires management evaluate whether substantial doubt entity’s ability continue going concern provide related footnote disclosures certain circumstances asu 201415 effective annual interim periods beginning december 15 2016 early adoption permitted believe adoption guidance material impact consolidated financial statements simplifying presentation debt issuance costs april 2015 financial accounting standards board issued accounting standards update asu 201503 requires entity present debt issuance costs balance sheet direct deduction related debt liability opposed asset amortization costs continue reported interest expense august 2015 fasb issued asu 201515 presentation subsequent measurement debt issuance costs associated lineofcredit arrangements amendments sec paragraphs pursuant staff announcement june 18 2015 eitf meeting asu 201515 allows debt issuance costs related lineofcredit agreements presented balance sheet asset asu 201503 201515 effective annual interim periods beginning december 15 2015 early adoption permitted currently evaluating impact adoption guidance consolidated financial statements recognition measurement presentation disclosure financial instruments january 2016 financial accounting standards board issued accounting standards update “asu” 201601 updates certain aspects recognition measurement presentation disclosure financial instruments asu 201601 effective company beginning first quarter 2019 early adoption permitted currently evaluating impact adoption guidance consolidated financial statements leases february 2016 financial accounting standards board issued accounting standards update “asu” 201602 leases topic 842 asu require lessees recognize assets liabilities leases terms greater 12 months disclose information related amount timing uncertainty cash flows arising leases including various qualitative quantitative requirements amendments asu become effective annual periods interim periods within annual periods beginning december 15 2018 currently evaluating impact adoption guidance consolidated financial statements technical corrections improvements march 2016 financial accounting standards board issued accounting standards update “asu” 201608 principal versus agent considerations clarifies implementation guidance principal versus agent considerations asu 201409 revenue contracts customers asu 201608 change core principle guidance asu 201409 rather clarifies distinction principal versus agent considerations implementing asu 201409 technical corrections improvements company believe asu material effect consolidated financial statements stock compensation march 2016 financial accounting standards board issued accounting standards update “asu” 201609 improvements employee share based payment accounting simplifies accounting sharebased payment transactions income tax consequences classification awards either equity liabilities classification statement cash flows amendment asu becomes effective modified retrospective transition accounting tax benefits recognized retrospectively accounting related presentation employee taxes paid prospective accounting related recognition excess tax benefits either prospective retrospective method accounting related presentation excess employee tax benefits annual periods interim periods within annual periods beginning december 15 2016 currently evaluating impact adoption guidance consolidated financial statements revenue contracts customers april 2016 financial accounting standards board issued accounting standards update “asu” 201610 identifying performance obligations licensing amendments clarify following two aspects topic 606 identifying performance obligations b licensing implementation guidance amendments change core principle guidance topic 606 effective date transition requirements amendments effective date transition requirements topic 606 public entities apply amendments annual reporting periods beginning december 15 2017 including interim reporting periods therein ie january 1 2018 calendar year entity early application public entities permitted annual reporting periods beginning december 15 2016 including interim reporting periods within reporting period currently evaluating impact adoption guidance consolidated financial statements reviewed newly issued accounting pronouncements concluded either applicable business expected material effect consolidated financial statements result future adoption 2 allowance loan losses credit quality indicators following summary changes allowance loan losses years ended march 31 2016 2015 2014 following summary loans individually collectively evaluated impairment period indicated average net balance impaired loans 412 million 363 million 259 million respectively years ended march 31 2016 2015 2014 practicable compute amount interest earned impaired loans practicable compute interest income recognized using cashbasis method period loans impaired following assessment credit quality fiscal years indicated 1 loans nonaccrual status following summary past due receivables 3 property equipment property equipment consist depreciation expense approximately 65 million 65 million 63 million years ended march 31 2016 2015 2014 respectively 4 intangible assets following table provides gross carrying amount related accumulated amortization definitelived intangible assets estimated amortization expense intangible assets future years ended march 31 follows 04 million 2017 04 million 2018 04 million 2019 03 million 2020 03 million 2021 aggregate 11 million years thereafter 5 goodwill following summarizes changes carrying amount goodwill years ended march 31 2016 2015 company performed annual impairment test fourth quarters fiscal 2016 2015 determined none recorded goodwill impaired 6 notes payable senior notes payable revolving credit facility companys notes payable consist 5000 million senior revolving credit facility borrowings 3747 million outstanding borrowing facility 15 million standby letters credit related workers compensation surety bonds outstanding march 31 2016 extent letters credit drawn upon disbursement funded credit facility amounts due related letters credit march 31 2016 expire december 31 2016 letters credit automatically extended one year expiration date base credit facility reduce 5000 million 400 million march 31 2017 subject borrowing base formula company may borrow rate libor plus 40 minimum 50 years ended march 31 2016 2015 2014 company’s effective interest rate including commitment fee 56 43 44 respectively unused amount available revolver march 31 2016 1238 million revolving credit facility commitment fee 050 per annum unused portion commitment borrowings revolving credit facility mature june 15 2017 substantially companys assets excluding assets companys mexican subsidiaries pledged collateral borrowings revolving credit agreement debt covenants agreement governing company’s revolving credit facility contains affirmative negative covenants including covenants restrict ability company subsidiaries among things incur guarantee indebtedness incur liens pay dividends repurchase redeem capital stock dispose assets engage mergers consolidations make acquisitions investments redeem prepay subordinated debt amend subordinated debt documents make changes nature business engage transactions affiliates agreement also contains financial covenants including minimum consolidated net worth 2650 million minimum fixed charge coverage ratio 25 10 maximum ratio total debt consolidated adjusted net worth 275 10 maximum ratio subordinated debt consolidated adjusted net worth 10 agreement allows company incur subordinated debt matures termination date revolving credit facility contains specified subordination terms subject limitations amount imposed financial covenants agreement addition agreement establishes maximum specified level collateral performance indicator collateral performance indicator equal sum 1 threemonth rolling average rate receivables least sixty days past due 2 eightmonth rolling average net chargeoff rate company compliance covenants march 31 2016 believe covenants materially limit business expansion strategy agreement contains events default including without limitation nonpayment principal interest obligations violation covenants misrepresentation crossdefault debt bankruptcy insolvency events judgments certain erisa events actual asserted invalidity loan documentation invalidity subordination provisions subordinated debt certain changes control company occurrence certain regulatory events including entry stay order judgment ruling similar event related company’s subsidiaries’ originating holding pledging collecting enforcing eligible finance receivables material company subsidiary remains unvacated undischarged unbonded unstayed appeal otherwise period 60 days date entry reasonably likely cause material adverse change debt maturities march 31 2016 aggregate annual maturities notes payable five fiscal years subsequent march 31 2016 follows 7 insurance income insurance income years ending march 31 2016 2015 2014 consist 8 nonfiling insurance company maintains nonfiling insurance coverage unaffiliated insurance company following summary nonfiling insurance activity years ended march 31 2016 2015 2014 9 leases company conducts operations leased facilities except owned corporate office building companys leases typically lease term three five years contain lessee renewal options majority leases provide lessee pays property taxes insurance common area maintenance costs expected normal course business expiring leases renewed companys option replaced leases acquisitions properties company’s leases operating leases future minimum lease payments noncancelable operating leases march 31 2016 follows mexico commitments approximately 854 million mxn translated spot rate 1724 rental expense cancelable noncancelable operating leases years ended march 31 2016 2015 2014 approximately 271 million 260 million 239 million respectively 10income taxes income tax expense benefit consists income tax expense 50492907 65196880 63636273 years ended march 31 2016 2015 2014 respectively differed amounts computed applying us federal income tax rate 35 pretax income continuing operations result following tax effects temporary differences give rise significant portions deferred tax assets deferred tax liabilities march 31 2016 2015 presented valuation allowance deferred tax assets march 31 2016 2015 1274 valuation allowance total deferred tax assets march 31 2016 2015 relates state colorado net operating losses amount 54318 expire 2025 assessing realizability deferred tax assets management considers whether likely portion deferred tax assets realized ultimate realization deferred tax assets dependent upon generation future taxable income periods temporary differences become deductible management considers scheduled reversals deferred tax liabilities projected future taxable income tax planning strategies making assessment order fully realize deferred tax asset company need generate future taxable income prior expiration deferred tax assets governed tax code based upon level historical taxable income projections future taxable income periods related temporary differences deductible management believes likely company realize benefits deductible differences net existing valuation allowances march 31 2016 amount deferred tax asset considered realizable however could reduced near term estimates future taxable income carryforward period reduced company required assess whether earnings companys mexican foreign subsidiary permanently reinvested respective foreign jurisdiction previously untaxed foreign earnings company longer permanently reinvested thus become taxable united states earnings ever repatriated united states company would required accrue pay taxes cumulative undistributed earnings march 31 2016 company determined approximately 224 million cumulative undistributed net earnings well future net earnings mexican foreign subsidiaries permanently reinvested march 31 2016 unrecognized taxable temporary difference amount 63 million related investment mexican subsidiaries march 31 2016 2015 2014 company 107 million 86 million 64 million total gross unrecognized tax benefits including interest respectively totals approximately 82 million 66 million respectively represents amount net unrecognized tax benefits permanent nature recognized would affect annual effective tax rate reconciliation beginning ending amount unrecognized tax benefits march 31 2016 2015 2014 presented march 31 2016 approximately 58 million gross unrecognized tax benefits expected resolved next 12 months settlements taxing authorities expiration statute limitations company’s continuing practice recognize interest penalties related income tax matters income tax expense march 31 2016 2015 company 1312129 940805 accrued gross interest respectively 599136 474484 379417 represented current period expense periods ended march 31 2016 2015 2014 company subject us mexican income taxes well various state local jurisdictions exception states company longer subject us federal state local nonus income tax examinations tax authorities years 2011 although carryforward attributes generated prior 2011 may still adjusted upon examination taxing authorities either used future period 11 earnings per share following reconciliation numerators denominators basic diluted eps calculations options purchase 825505 543879 404421 shares common stock various prices outstanding years ended march 31 2016 2015 2014 respectively included computation diluted eps option exercise price antidilutive 12 benefit plans retirement plan company provides defined contribution employee benefit plan 401k plan covering fulltime employees whereby employees invest maximum designated year company makes matching contribution equal 50 employees contributions first 6 gross pay companys expense plan 1453468 1470600 1483712 years ended march 31 2016 2015 2014 respectively supplemental executive retirement plan company instituted supplemental executive retirement plan “serp” nonqualified executive benefit plan company agrees pay executive additional benefits future usually retirement return continued employment executive serp unfunded plan specific assets set aside company connection establishment plan executive rights agreement beyond general creditor company may 2009 company instituted second supplemental executive retirement plan provide one executive type benefits original serp would qualified due age second serp also unfunded plan specific assets set aside company connection plan years ended march 31 2016 2015 2014 contributions 1796998 642710 909466 respectively charged expense related serp expense year ended march 31 2014 offset reversal 904138 expense accrued two executives resigned year unfunded liability 8886195 7516249 7186076 march 31 2016 2015 2014 respectively three years presented unfunded liability estimated using following assumptions annual salary increase 35 3 years discount rate 60 3 years retirement age 65 executive deferred compensation plan company executive deferral plan eligible executives directors may elect defer portion incentive compensation paid executive deferral plan march 31 2016 2015 executive deferred compensation plan stock option plans company 2002 stock option plan 2005 stock option plan 2008 stock option plan 2011 stock option plan benefit certain directors officers key employees plans total 4100000 shares authorized common stock reserved issuance pursuant grants approved compensation stock option committee board directors stock options granted plans maximum duration ten years may subject certain vesting requirements generally five years officers directors key employees priced market value companys common stock grant date option march 31 2016 total 444251 shares available grant plans stockbased compensation recognized provided fasb asc topic 71810 fasb asc topic 50550 fasb asc topic 71810 requires sharebased payments employees including grants employee stock options recognized compensation expense requisite service period generally vesting period consolidated financial statements based grant date fair values impact forfeitures may occur prior vesting also estimated considered amount recognized company applied blackscholes valuation model determining grant date fair value stock option awards compensation expense recognized options expected vest forfeitures estimated based historical experience future expectations weightedaverage fair value grant date options issued years ended march 31 2016 2015 2014 1082 3450 4380 per share respectively fair value estimated grant date using weightedaverage assumptions listed expected stock price volatility based historical volatility company’s stock period approximating expected life expected life represents period time options expected outstanding grant date riskfree rate reflects interest rate grant date zero coupon us governmental bonds remaining life similar expected option term option activity year ended march 31 2016 follows aggregate intrinsic value reflected table represents total pretax intrinsic value difference closing stock price march 31 2016 exercise price multiplied number inthemoney options would received option holders option holders exercised options march 31 2016 amount change stocks market price changes total intrinsic value options exercised periods ended march 31 2016 2015 2014 follows march 31 2016 total unrecognized stockbased compensation expense related nonvested stock options amounted approximately 98 million expected recognized weightedaverage period approximately 25 years restricted stock fiscal 2016 company granted 69950 shares restricted stock equity classified certain executive officers grant date weighted average fair value 2811 onethird awards vest anniversary grant date next three years fiscal 2014 2013 company granted 8590 70800 group performance based restricted stock awards certain officers group awards vested april 30 2015 based companys achievement following performance goals march 31 2015 fiscal 2014 2013 company granted 56660 443700 group b performance based restricted stock awards certain officers march 31 2016 26000 remain unvested unforfeited group b awards vest follows company achieves following performance goals successive trailing four quarters measurement period ending march 31 2017 company determined earnings per share targets associated group b stock awards achievable measurement period ends march 31 2017 subsequently compensation committee board directors amended awards allowing 25 group b awards vest certain officers required forfeit remaining group b shares part amendment fasb topic asc 718 defines grant modification change terms conditions stockbased compensation award include accelerated vesting company determined since group b awards would otherwise vested premodification accelerated vesting qualified type iii modification company released approximately 97 million compensation expense including 29 million related type iii modification year ended march 31 2016 associated group b awards compensation expense related restricted stock based number shares expected vest fair market value common stock grant date company recognized net reduction compensation expense 80 million compensation expense 81 million 60 million years ended march 31 2016 2015 2014 respectively included component general administrative expenses companys consolidated statements operations march 31 2016 approximately 14 million unrecognized compensation cost related unvested restricted stock awards expected recognized next 25 years based current estimates addition approximately 19 million unrecognized compensation cost related unvested performancebased restricted stock awards expected vest based current estimates change 19 million could expensed accordingly future periods summary status company’s restricted stock march 31 2016 changes year ended march 31 2016 presented total sharebased compensation included component net income years ended march 31 2016 2015 2014 follows 13 acquisitions company evaluates acquisition determine acquired enterprise meets definition business acquired enterprises meet definition business accounted business combination fasb asc topic 80510 acquisitions accounted asset purchases acquisitions independent third parties following table sets forth acquisition activity company years ended march 31 2016 2015 2014 acquisition results new branch company records transaction business combination since branch acquired continue generate loans company typically retains existing employees branch location purchase price allocated estimated fair value tangible assets acquired estimated fair value identified intangible assets acquired generally noncompete agreements customer lists remainder allocated goodwill year ended march 31 2016 company recorded zero acquisitions business combinations acquisition portfolio loans company records transaction asset purchase asset purchase goodwill recorded purchase price allocated estimated fair value tangible intangible assets acquired year ended march 31 2016 company recorded one acquisition asset acquisition company’s acquisitions include tangible assets generally loans furniture equipment intangible assets generally noncompete agreements customer lists goodwill recorded fair values estimated pursuant processes described acquired loans valued net loan balance given shortterm nature loans generally eight months loans priced current rates management believes net loan balances approximate fair value furniture equipment valued specific purchase price agreed parties time acquisition management believes approximates fair values 14 fair value fair value disclosures company may carry certain financial instruments derivative assets liabilities fair value recurring basis fair value defined price would received sell asset paid transfer liability orderly transaction market participants measurement date company determines fair values financial instruments based fair value hierarchy requires entity maximize use observable inputs minimize use unobservable inputs measuring fair value financial assets liabilities measured fair value grouped three levels prioritize inputs used measure fair value assets liabilities levels •level 1 quoted prices unadjusted active markets identical assets liabilities •level 2 inputs quoted prices observable assets liabilities either directly indirectly inputs include quoted prices similar assets liabilities active markets quoted prices identical similar assets liabilities market less active •level 3 unobservable inputs assets liabilities reflecting reporting entity’s assumptions company’s financial instruments periods reported consist following cash equivalents loans receivable senior notes payable fair value approximates carrying value instruments loans receivable originated prevailing market rates average life approximately 8 months given shortterm nature loans continually repriced current market rates company’s revolving credit facility variable rate based margin libor reprices changes libor company also considered creditworthiness determination fair value carrying amount estimated fair values company’s financial instruments summarized level follows significant assets liabilities measured fair value nonrecurring basis march 31 2016 2015 15 quarterly information unaudited following sets forth selected quarterly operating data companys highest loan demand occurs generally october december third fiscal quarter loan demand generally lowest loan repayment highest january march fourth fiscal quarter consequently company experiences significant seasonal fluctuations operating results cash needs operating results companys third fiscal quarter generally lower quarters operating results fourth fiscal quarter generally higher quarters 16 litigation previously disclosed march 12 2014 company received civil investigative demand “cid” consumer financial protection bureau “cfpb” stated purpose cid determine whether company “engaging unlawful acts practices connection marketing offering extension credit violation sections 1031 1036 consumer financial protection act 12 usc §§ 5531 5536 truth lending act 15 usc §§ 1601 et seq regulation z 12 cfr pt 1026 federal consumer financial law” “also determine whether bureau action obtain legal equitable relief would public interest” company responded within deadlines specified cid broad requests production documents answers interrogatories written reports related loans made company numerous aspects company’s business also previously disclosed august 7 2015 company received letter cfpb’s enforcement office notifying company accordance cfpb’s discretionary notice opportunity respond advise “nora” process staff cfpb’s enforcement office considering recommending cfpb take legal action company “nora letter” nora letter states staff cfpb’s enforcement office expects allege company violated consumer financial protection act 2010 12 usc §5536 nora letter confirms company opportunity make nora submission written statement setting forth reasons law policy company believes cfpb take legal action company understands nora letter intended ensure potential subjects enforcement actions opportunity present positions cfpb enforcement action recommended commenced company made nora submissions cfpbs enforcement office company expects continue additional requests demands information cfpb ongoing interactions cfpb company counsel part investigation currently unable predict ultimate timing outcome cfpb investigation company believes marketing lending practices lawful assurance cfpbs ongoing investigation future exercise enforcement regulatory discretionary powers result findings alleged violations federal consumer financial protection laws could lead enforcement actions proceedings litigation imposition damages fines penalties restitution monetary liabilities sanctions settlements changes company’s business practices operations could material adverse effect company’s business financial condition results operations eliminate altogether companys ability operate business profitably terms substantially similar currently operates previously disclosed april 22 2014 shareholder filed putative class action complaint edna selan epstein v world acceptance corporation et al united states district court district south carolina case number 614cv01606 “edna epstein putative class action” company certain current former officers behalf persons purchased otherwise acquired company’s common stock april 25 2013 march 12 2014 two amended complaints filed plaintiffs several motions filed proceedings complaint alleges company made false misleading statements various sec reports public statements violation federal securities laws preceding company’s disclosure form 8k filed march 13 2014 received abovereferenced cid cfpb ii company’s loan growth volume figures inflated weakness company’s internal controls relating accounting treatment certain smalldollar loan refinancings iii additional allegations regarding among things company’s receipt notice opportunity respond advise letter cfpb august 7 2015 complaint seeks class certification class consisting persons purchased otherwise acquired company’s common stock january 30 2013 august 10 2015 unspecified monetary damages costs attorneys’ fees company believes complaint without merit january 29 2016 defendants moved dismiss second amended complaint lead plaintiff filed response opposition company filed reply support motion dismiss company’s motion dismiss currently pending court time company respond lead plaintiff’s motion class certification yet expired previously disclosed july 15 2015 shareholder filed putative derivative complaint irwin j lipton et al v mclean et al united states district court district south carolina case number 615cv02796mgl “lipton derivative action” behalf company certain current former officers directors september 21 2015 another shareholder filed putative derivative complaint paul parshall et al v mclean et al united states district court district south carolina case number 615cv03779mgl “parshall derivative action” asserting substantially similar claims behalf company certain current former officers directors october 14 2015 court entered order consolidating lipton derivative action parshall derivative action world acceptance corp derivative litigation lead case 615cv02796mgl plaintiffs subsequently filed amended complaint amended consolidated complaint alleges among things defendants breached fiduciary duties disseminating false misleading information company’s shareholders regarding company’s loan growth loan renewals allowances loan losses revenue sources revenue growth compliance gaap sufficiency company’s internal controls accounting procedures ii defendants breached fiduciary duties failing ensure company maintained adequate internal controls iii defendants breached fiduciary duties failing exercise prudent oversight supervision company’s officers employees ensure conformity applicable laws regulations iv defendants unjustly enriched result compensation received allegedly breaching fiduciary duties owed company v defendants wasted corporate assets paying excessive compensation certain company’s executive officers awarding selfinterested stock options certain company’s officers directors incurring legal liability legal costs defend defendants’ unlawful actions authorizing repurchase company stock artificially inflated prices vi certain defendants breached fiduciary duty company selling shares company’s stock artificially inflated prices possession material nonpublic information regarding company’s financial condition vii defendants violated section 10b securities exchange act 1934 making false misleading statements regarding company’s practices regarding loan renewals loan modifications accounting loans viii defendants violated section 14a securities exchange act 1934 failing disclose alleged material facts company’s 2014 2015 proxy statements ix allegations similar made connection edna epstein putative class action described consolidated complaint seeks among things unspecified monetary damages order directing company take steps reform improve corporate governance internal procedures comply applicable laws protect company shareholders future wrongdoing described consolidated complaint defendants filed motions dismiss amended consolidated complaint april 13 2016 time plaintiffs respond defendants’ motions dismiss yet expired addition time company involved routine litigation matters relating claims arising operations normal course business including matters damages various amounts claimed estimating amount range possible losses resulting litigation government actions legal proceedings inherently difficult requires extensive degree judgment particularly matters involve indeterminate claims monetary damages may involve fines penalties damages discretionary amount involve large number claimants significant discretion regulatory authorities represent change regulatory policy interpretation present novel legal theories early stages proceedings subject appeal could result change business practices addition legal proceedings resolved extended periods time potential losses subject change due among things new developments changes legal strategy outcome intermediate procedural substantive rulings parties’ settlement posture evaluation strength weakness case us reasons currently unable predict ultimate timing outcome reasonably estimate possible losses range possible losses resulting matters described based information currently available company believe reasonably possible losses arising currently pending legal matters material company’s results operations financial conditions however light inherent uncertainties involved matters adverse outcome one matters could materially adversely affect company’s financial condition results operations cash flows particular reporting period management’s report internal control financial reporting responsible establishing maintaining adequate internal control financial reporting defined rule 13a 15f securities exchange act 1934 assessed effectiveness internal control financial reporting march 31 2016 assessment based criteria established internal control integrated framework 2013 issued committee sponsoring organizations treadway commission coso internal control financial reporting process designed provide reasonable assurance regarding reliability financial reporting preparation financial statements external purposes accordance generally accepted accounting principles internal control financial reporting includes policies procedures 1 pertain maintenance records reasonable detail accurately fairly reflect transactions dispositions assets 2 provide reasonable assurance transactions recorded necessary permit preparation financial statements accordance generally accepted accounting principles receipts expenditures made accordance authorizations management board directors 3 provide reasonable assurance regarding prevention timely detection unauthorized acquisition use disposition assets could material effect financial statements inherent limitations internal control financial reporting may prevent detect misstatements also assumptions regarding internal control financial reporting future periods based evaluation effectiveness prior period subject risk controls may become inadequate changes conditions degree compliance policies procedures may deteriorate based using coso criteria believe internal control financial reporting march 31 2016 effective independent registered public accounting firm audited consolidated financial statements included annual report issued attestation report effectiveness internal control financial reporting stated report janet lewis matricciani john l calmes jr janet lewis matricciani john l calmes jr chief executive officer senior vice president chief financial officer report independent registered public accounting firm board directors world acceptance corporation audited accompanying consolidated statement operations comprehensive income shareholders’ equity cash flows world acceptance corporation subsidiaries company year ended march 31 2014 consolidated financial statements responsibility company’s management responsibility express opinion consolidated financial statements based audit conducted audit accordance standards public company accounting oversight board united statesthose standards require plan perform audit obtain reasonable assurance whether financial statements free material misstatement audit includes examining test basis evidence supporting amounts disclosures financial statements audit also includes assessing accounting principles used significant estimates made management well evaluating overall financial statement presentation believe audit provides reasonable basis opinion consolidated financial statements referred present fairly material respects results operations cash flows world acceptance corporation subsidiaries year ended march 31 2014 conformity us generally accepted accounting principles kpmg greenville south carolina june 12 2014 report independent registered public accounting firm board directors shareholders world acceptance corporation audited accompanying consolidated balance sheets world acceptance corporation subsidiaries march 31 2016 2015 related consolidated statements operations comprehensive income shareholders equity cash flows two years period ended march 31 2016 financial statements responsibility companys management responsibility express opinion financial statements based audits conducted audits accordance standards public company accounting oversight board united states standards require plan perform audit obtain reasonable assurance whether financial statements free material misstatement audit includes examining test basis evidence supporting amounts disclosures financial statements audit also includes assessing accounting principles used significant estimates made management well evaluating overall financial statement presentation believe audits provide reasonable basis opinion consolidated financial statements referred present fairly material respects financial position world acceptance corporation subsidiaries march 31 2016 2015 results operations cash flows two years period ended march 31 2016 conformity us generally accepted accounting principles also audited accordance standards public company accounting oversight board united states world acceptance corporations subsidiaries’ internal control financial reporting march 31 2016 based criteria established internal control integrated framework issued committee sponsoring organizations treadway commission 2013 report dated march 31 2016 expressed unqualified opinion effectiveness world acceptance corporation ’s internal control financial reporting rsm us llp raleigh north carolina june 1 2016 report independent registered public accounting firm board directors shareholders world acceptance corporation subsidiaries audited world acceptance corporation subsidiaries’ internal control financial reporting march 31 2016 based criteria established internal control integrated framework issued committee sponsoring organizations treadway commission 2013 world acceptance corporation subsidiaries’ management responsible maintaining effective internal control financial reporting assessment effectiveness internal control financial reporting included accompanying management’s report internal control financial reporting responsibility express opinion company’s internal control financial reporting based audit conducted audit accordance standards public company accounting oversight board united states standards require plan perform audit obtain reasonable assurance whether effective internal control financial reporting maintained material respects audit included obtaining understanding internal control financial reporting assessing risk material weakness exists testing evaluating design operating effectiveness internal control based assessed risk audit also included performing procedures considered necessary circumstances believe audit provides reasonable basis opinion company’s internal control financial reporting process designed provide reasonable assurance regarding reliability financial reporting preparation financial statements external purposes accordance generally accepted accounting principles company’s internal control financial reporting includes policies procedures pertain maintenance records reasonable detail accurately fairly reflect transactions dispositions assets company b provide reasonable assurance transactions recorded necessary permit preparation financial statements accordance generally accepted accounting principles receipts expenditures company made accordance authorizations management directors company c provide reasonable assurance regarding prevention timely detection unauthorized acquisition use disposition company’s assets could material effect financial statements inherent limitations internal control financial reporting may prevent detect misstatements also projections evaluation effectiveness future periods subject risk controls may become inadequate changes conditions degree compliance policies procedures may deteriorate opinion world acceptance corporation subsidiaries maintained material respects effective internal control financial reporting march 31 2016 based criteria established internal control integrated framework issued committee sponsoring organizations treadway commission 2013 also audited accordance standards public company accounting oversight board united states consolidated balance sheets world acceptance corporation subsidiaries march 31 2016 2015 related consolidated statements operations comprehensive income shareholders’ equity cash flows years ended report dated june 1 2016 expressed unqualified opinion rsm us llp raleigh north carolina june 1 2016 item 9item 8 financial statements supplementary data consolidated balance sheets see accompanying notes consolidated financial statements consolidated statements operations see accompanying notes consolidated financial statements consolidated statements comprehensive income see accompanying notes consolidated financial statements consolidated statements shareholders equity see accompanying notes consolidated financial statements consolidated statements cash flows see accompanying notes consolidated financial statements notes consolidated financial statements 1 summary significant accounting policies companys accounting reporting policies accordance us generally accepted accounting principles gaap conform general practices within finance company industry following description significant policies used preparing consolidated financial statements nature operations company smalldollar consumer finance installment loan company headquartered greenville south carolina offers shortterm small loans mediumterm larger loans related credit insurance products ancillary products services individuals limited access sources consumer credit also offers income tax return preparation services customer base others march 31 2018 company operated 1177 branches alabama georgia idaho illinois indiana kentucky louisiana mississippi missouri new mexico oklahoma south carolina tennessee texas wisconsin branches aforementioned states operate one following names amicable finance capitol loans colonial finance freeman finance general credit local loans midwestern financial midwestern loans personal credit peoples finance world acceptance world finance company also operated 131 branches mexico branches mexico operate name préstamos avance préstamos viva company subject numerous lending regulations vary jurisdiction principles consolidation consolidated financial statements include accounts world acceptance corporation whollyowned subsidiaries “company” subsidiaries consist operating entities various states mexico paradata financial systems software company acquired fiscal 1994 wac insurance company ltd captive reinsurance company established fiscal 1994 servicios world acceptance corporation de mexico service company established fiscal 2006 significant intercompany balances transactions eliminated consolidation financial statements company’s foreign subsidiaries mexico prepared using local currency functional currency assets liabilities subsidiaries translated us dollars current exchange rate income expense translated average exchange rate period resulting translation gains losses recognized component equity “accumulated comprehensive loss net” use estimates preparation consolidated financial statements preparation financial statements conformity gaap requires management make estimates assumptions affect reported amount assets liabilities disclosure contingent liabilities date financial statements reported amounts revenue expenses reporting period actual results could differ estimates significant item subject estimates assumptions could materially change near term allowance loan losses reclassification certain prior period amounts reclassified conform current presentation reclassifications impact previously reported net income shareholders equity business segments company reports operating segments accordance financial accounting standards board fasb accounting standards codification asc topic 280 operating segments components enterprise separate financial information available evaluated regularly chief operating decision maker deciding allocate resources assess performance fasb asc topic 280 requires public enterprise report measure segment profit loss certain specific revenue expense items segment assets information way operating segments determined items company two reportable segments us mexico operating segments revenue generating activities company including sale insurance products income tax preparation automobile club done within existing branch network conjunction complement lending operations discrete financial information available activities meet criteria fasb asc topic 280 considered operating segments march 31 2018 2017 companys mexico operations accounted approximately 95 87 total consolidated assets respectively total revenues years ended march 31 2018 2017 2016 460 million 409 million 422 million respectively represented 84 77 76 consolidated revenues respectively additional financial information regarding results two reportable segments last three fiscal years refer note 17segments item 8 “financial statements supplementary data” annual report form 10k cash equivalents purposes statement cash flows company considers highly liquid investments maturity three months less date original issuance cash equivalents march 31 2018 2017 company 55 million 39 million respectively restricted cash associated captive insurance subsidiary reinsures portion credit insurance sold connection loans made company loans interest fee income company licensed originate consumer loans states south carolina georgia texas oklahoma louisiana tennessee illinois missouri new mexico kentucky alabama wisconsin indiana mississippi idaho addition company also originates consumer loans mexico fiscal 2018 2017 2016 company originated loans generally ranging 4000 terms 42 months fewer experience indicates majority consumer loans refinanced company accounts majority refinancings new loans generally customer must make multiple payments order qualify refinancing furthermore companys lending policy predetermined lending amounts cases refinancing result advancing additional funds company believes advancement additional funds constitutes minor modification terms existing loan present value cash flows terms new loan 10 present value remaining cash flows terms original loan gross loans receivable march 31 2018 2017 consisted following 1 company decided wind world class buying club program third quarter fiscal 2015 march 31 2015 company longer financing purchase products program however company continue service outstanding retail installment sales contracts 2 company stopped originations loan product fiscal 2018 fees received direct costs incurred origination loans deferred amortized interest income contractual lives loans using interest method unamortized amounts recognized income time loans refinanced paid full except refinancings constitute minor modification loans carried gross amount outstanding reduced unearned interest insurance income net deferred origination fees direct costs allowance loan losses company recognizes interest fee income using interest method charges late payments credited income collected company generally offers loans prevailing statutory rates terms generally exceed 42 months management believes carrying value approximates fair value loan portfolio nonaccrual policy accrual interest discontinued loan 61 days past contractual due date interest accrual discontinued unpaid accrued interest reversed interest income loan nonaccrual status interest revenue recognized payment received loan moves nonaccrual status remains nonaccrual status paid charged refinanced allowance loan losses company maintains allowance loan losses amount managements opinion adequate provide incurred losses inherent existing loan portfolio company charges current earnings provision loan losses amounts added allowance maintain levels expected cover probable incurred losses principal establishing allowance loan losses company takes consideration growth loan portfolio current levels chargeoffs current levels delinquencies current economic factors company uses mathematical calculation determine initial allowance end reporting period calculation originated managements estimate future chargeoffs used allocate expenses branch level two components calculating allowance loan losses company refers general reserve specific reserve calculation starting point time needed additional provisions added determined management make allowance adequate general reserve 425 gross loan portfolio specific reserve represents 100 gross loan balance loans 91 days past due 151 days past due payroll deduct loans recency basis including bankrupt accounts category methodology based historical data showing collection loans 91 days past due bankrupt accounts remote process performed determine adequacy allowance loan losses considers trends current levels delinquencies chargeoff levels economic trends energy food prices primary tool used movement model contractual recency basis considers rolling twelve months delinquency determine expected chargeoffs sum expected chargeoffs determined movement model contractual recency basis plus amount delinquent refinancings compared allowance resulting mathematical calculation determine adjustments needed make allowance adequate management would also determine adjustments needed consolidated annual provision loan losses less total chargeoffs management uses precision level 5 allowance loan losses compared aforementioned movement model determining adjustments needed companys policy charge loans earlier loans deemed uncollectible six months elapsed since date last full contractual payment companys chargeoff policy consistently applied changes made periods reported companys historical annual chargeoff rate net chargeoffs percentage average net loans receivable past 10 years ranged 129 167 net loans management considers chargeoff policy evaluating appropriateness allowance loan losses fasb asc topic 31030 prohibits carryover creation valuation allowances initial accounting loans acquired transfer within scope authoritative literature company believes loans acquired since adoption fasb asc topic 31030 shown evidence deterioration credit quality since origination therefore within scope fasb asc topic 31030 impaired loans company defines impaired loans bankrupt accounts 91 days past due 151 days past due payroll deduct loans accordance company’s chargeoff policy loan deemed uncollectible 100 net investment charged except case borrower filed bankruptcy march 31 2018 bankrupt accounts charged approximately 59 million bankrupt accounts 91 days past due reserved 100 gross loan balance company also considers accounts 91 days past due 151 days past due payroll deduct loans impaired accounts reserved 100 gross loan balance delinquency primary credit quality indicator used determine credit quality companys receivables additional requirements asc 31010 disclosed note 2 property equipment property equipment stated cost less accumulated depreciation amortization depreciation recorded using straightline method estimated useful life related asset follows buildings 25 40 years furniture fixtures 5 10 years equipment 3 7 years vehicles 3 years amortization leasehold improvements recorded using straightline method lesser estimated useful life asset term lease additions premises equipment major replacements improvements added cost maintenance repairs minor replacements charged operating expense incurred assets retired otherwise disposed cost accumulated depreciation removed accounts gain loss reflected consolidated statement operations operating leases company’s branch leases typically lease term three five years contain lessee renewal options cancellation clauses event regulatory changes company typically renews leases one option periods accordingly company amortizes leasehold improvements shorter economic lives generally five years lease term considers renewal periods reasonably assured assets include cash surrender value life insurance policies prepaid expenses debt issuance costs deposits intangible assets goodwill intangible assets include cost acquiring existing customers customer lists fair value assigned noncompete agreements customer lists amortized straight line accelerated basis estimated period benefit ranging 8 230 years weighted average approximately 129 years noncompete agreements amortized straight line basis term agreement ranging 3 53 years weighted average approximately 46 years customer lists allocated branch level evaluated impairment branch level triggering event occurs accordance fasb asc topic 3601005 triggering event occurs impairment loss customer list generally remaining unamortized customer list balance acquisitions original fair value customer list allocated branch less 100000 management believes event triggering event occur impairment loss unamortized customer list would immaterial noncompete agreements valued stated amount paid party agreements company believes approximates fair value fair value customer lists based valuation model utilizes company’s historical data estimate value acquired customer lists business combination remaining excess purchase price fair value tangible assets customer list noncompete agreements allocated goodwill branches company acquires small privatelyowned branches sufficient historical data determine customer attrition company believes customers acquired characteristics perform similarly customers therefore company utilized attrition patterns customers developing estimate attrition acquired customers estimation method reevaluated periodically company evaluates goodwill annually impairment fourth quarter fiscal year using market valuebased approach company two reporting units us mexico company multiple components lowest level individual branches company’s components aggregated impairment testing similar economic characteristics impairment longlived assets company assesses impairment longlived assets including property equipment intangible assets whenever changes events indicate carrying amount may recoverable company assesses impairment assets generally branch level based operating cash flows branch company’s plans branch closings company write assets fair value based analysis sum expected future undiscounted cash flows less carrying amount assets company record impairment charges fiscal year ended 2018 2017 2016 fair value financial instruments fasb asc topic 825 requires disclosures fair value financial instruments regardless whether financial instrument recognized balance sheet practicable estimate value cases quoted market prices available fair values based estimates using present value valuation techniques company’s financial instruments periods reported consist following cash equivalents loans receivable senior notes payable fair value approximates carrying value instruments loans receivable originated prevailing market rates average life approximately 8 months given shortterm nature loans continually repriced current market rates company’s revolving credit facility variable rate based margin libor reprices changes libor insurance premiums commissions insurance premiums credit life accident health property unemployment insurance written connection certain loans net refunds applicable advance insurance commissions retained company remitted monthly insurance company commissions credited unearned insurance commissions recognized income life related insurance contracts company recognizes insurance income using rule 78s method credit life decreasing term credit accident health unemployment insurance pro rata method credit life level term credit property nonfiling insurance nonfiling insurance premiums charged certain loans lieu recording perfecting companys security interest assets pledged premiums recoveries remitted third party insurance company reflected accompanying consolidated financial statements see note 8 claims paid third party insurance company result reduction loan losses certain losses related loans recoverable life accident health property unemployment insurance claims reimbursed nonfiling insurance claims subject policy limitations remaining losses charged allowance loan losses income taxes income taxes accounted asset liability method deferred tax assets liabilities recognized future tax consequences attributable differences financial statement carrying amounts existing assets liabilities respective tax bases operating loss tax credit carryforwards deferred tax assets liabilities measured using enacted tax rates expected apply taxable income years temporary differences expected recovered settled effect deferred tax assets liabilities change tax rates recognized income period includes enactment date company recognizes effect income tax positions likely sustained recognized income tax positions measured largest amount greater 50 likely realized changes recognition measurement reflected period change judgment related additional facts circumstances occurs earnings per share earnings per share “eps” computed accordance fasb asc topic 260 basic eps includes dilution computed dividing net income weightedaverage number common shares outstanding period diluted eps reflects potential dilution securities could share earnings company potential common stock included diluted eps computation consists stock options restricted stock computed using treasury stock method see note 11 reconciliation numerators denominators basic dilutive eps calculations stockbased compensation fasb asc topic 71810 requires companies recognize income statement grantdate fair value stock options equitybased compensation issued employees fasb asc topic 71810 change accounting guidance sharebased payment transactions parties employees provided fasb asc topic 71810 fasb asc topic 71810 way award classified affect measurement compensation cost liabilityclassified awards remeasured fair value balancesheet date award settled equityclassified awards measured grantdate fair value amortized subsequent vesting period subsequently remeasured fair value nonvested stock awards purposes recognizing stockbased compensation expense market price stock grant date fair value options estimated grant date using blackscholes option pricing model see note 12 march 31 2018 company several sharebased employee compensation plans described fully note 12 share repurchases march 10 2015 board directors authorized company repurchase 250 million company’s common stock march 31 2018 company 19 million aggregate remaining repurchase capacity march 10 2015 repurchase authorization timing actual number shares repurchased depend variety factors including stock price corporate regulatory requirements market economic conditions although repurchase authorization stated expiration date company’s stock repurchase program may suspended discontinued time company repurchased shares common stock since first quarter fiscal 2018 time filing uncertain company recommence share repurchases company continues believe stock repurchases viable component company’s longterm financial strategy excellent use excess cash opportunity arises however amended credit facility limits share repurchases 50 consolidated adjusted net income fiscal year commencing fiscal year ending march 31 2017 first priority ensure enough capital fund loan growth extent excess capital may resume repurchasing stock appropriate authorized board directors march 31 2018 debt outstanding 2449 million shareholders equity 5411 million resulting debttoequity ratio 0510 continue monitor debttoequity ratio committed maintaining debt level allow us continue execute business objectives putting undue stress consolidated balance sheet comprehensive income total comprehensive income consists net income comprehensive income loss company’s comprehensive income loss accumulated comprehensive income loss composed foreign currency translation adjustments concentration risk company generally serves individuals limited access sources consumer credit banks credit unions consumer finance businesses credit card lenders year ended march 31 2018 company operated fifteen states united states well mexico years ended march 31 2018 2017 2016 total revenue within companys four largest states texas georgia tennessee south carolina accounted approximately 53 respectively companys total revenues company maintains amounts bank accounts times may exceed federally insured limits company experienced losses accounts maintained large domestic banks management believes company’s exposure credit risk minimal accounts advertising costs advertising costs expensed incurred advertising costs approximately 223 million 179 million 169 million fiscal years 2018 2017 2016 respectively recently adopted accounting standards improvements employee sharebased payment accounting march 2016 fasb issued accounting standards update asu 201609 improvements employee sharebased payment accounting simplifies accounting sharebased payment transactions income tax consequences classification awards either equity liabilities classification statement cash flows public companies amendments asu became effective annual periods interim periods within annual periods beginning december 15 2016 company adopted asu 201609 april 1 2017 adoption guidance impacted companys accounting practices following ways •the company elected account forfeitures occur accordance modified retrospective approach specified asu 201609 company recorded cumulative effect reclassification retained earnings additional paidin capital beginning adoption year approximately 24 million reclassification needed reflect deferred tax expense incurred prior adoption historically charged additional paidin capital retained earnings •the company recognize excess tax benefits deficiencies income tax benefit expense respectively income statement company recognize excess tax benefits shortfalls regardless whether transaction reduces taxes payable current period company record cumulative adjustment related guidance consistent prospective approach specified asu 201609 •the company combine excess tax benefits equity awards income tax cash flows classify cash flows operating activity company classify cash paid directly withholding shares taxwithholding purposes financing activity company apply guidance prospectively specified asu 201609 adoption guidance significant impact companys consolidated financial statements recently issued accounting standards adopted scope modification accounting may 2017 fasb issued asu 201709 scope modification accounting amendments update provide guidance changes terms conditions sharebased payment award require entity apply modification accounting topic 718 according asu 201709 entity account effects modification unless following met 1the fair value modified award fair value original award immediately original award modified 2the vesting conditions modified award vesting conditions original award immediately original award modified 3the classification modified award equity instrument liability instrument classification original award immediately original award modified amendments update effective entities annual periods interim periods within annual periods beginning december 15 2017 early adoption permitted completed evaluation determined adoption asu 201709 material impact consolidated financial statements simplifying test goodwill impairment january 2017 fasb issued asu 201704 simplifying test goodwill impairment asu 201704 eliminates step 2 goodwill impairment test instead amendments update entity perform annual interim goodwill impairment test comparing fair value reporting unit carrying amount additionally entity consider income tax effects tax deductible goodwill carrying amount reporting unit measuring goodwill impairment loss applicable asu 201704 also eliminates requirements reporting unit zero negative carrying amount perform qualitative assessment fails qualitative test perform step 2 goodwill impairment test therefore impairment assessment applies reporting units amendments update effective public entities sec filers fiscal years beginning december 15 2018 early adoption permitted currently evaluating impact adoption guidance consolidated financial statements measurement credit losses financial instruments june 2016 fasb issued asu 201613 financial instruments credit losses amendment seeks provide financial statement users decisionuseful information expected credit losses financial instruments commitments extend credit held reporting entity reporting date achieve objective amendments asu replace incurred loss impairment methodology current gaap methodology reflects expected credit losses requires consideration broader range reasonable supportable information inform credit loss estimates public business entities amendments effective fiscal years beginning december 15 2019 including interim periods within fiscal years early adoption permitted fiscal years beginning december 15 2018 including interim periods within fiscal years currently evaluating impact adoption guidance consolidated financial statements adoption asu could material impact provision loan losses consolidated statements operations allowance loan losses consolidated balance sheets revenue contracts customers identifying performance obligations licensing april 2016 fasb issued asu 201610 identifying performance obligations licensing amendments clarify following two aspects topic 606 identifying performance obligations b licensing implementation guidance amendments change core principle guidance topic 606 effective date transition requirements amendments effective date transition requirements topic 606 public entities apply amendments annual reporting periods beginning december 15 2017 including interim reporting periods therein early application public entities permitted annual reporting periods beginning december 15 2016 including interim reporting periods within reporting period completed evaluation concluded adoption asu 201610 material impact consolidated financial statements leases february 2016 fasb issued asu 201602 leases topic 842 asu require lessees recognize assets liabilities leases terms greater 12 months disclose information related amount timing uncertainty cash flows arising leases including various qualitative quantitative requirements amendments asu become effective annual periods interim periods within annual periods beginning december 15 2018 currently evaluating impact adoption guidance consolidated financial statements expect standard impact assets liabilities addition rightofuse assets lease liabilities expect material impact results operations liquidity recognition measurement financial assets financial liabilities january 2016 fasb issued asu 201601 updates certain aspects recognition measurement presentation disclosure financial instruments asu 201601 effective company beginning first quarter 2019 early adoption permitted completed evaluation determined adoption asu 201601 material impact consolidated financial statements revenue contracts customers may 2014 fasb issued asu 201409 supersedes revenue recognition requirements topic 605 revenue recognition industryspecific guidance asu 201409 based principle revenue recognized depict transfer goods services customers amount reflects consideration entity expects entitled exchange goods services asu 201409 also requires additional disclosure nature amount timing uncertainty revenue cash flows arising customer contracts including significant judgments changes judgments assets recognized costs incurred obtain fulfill contract asu 201409 amended asu 201514 asu 201620 effective fiscal years interim periods beginning december 15 2017 early adoption permitted annual reporting periods beginning december 15 2016 evaluated revenue contracts customers concluded new standard material impact companys consolidated financial statements adopted new guidance effective date april 1 2018 using modified retrospective method whereas prior periods restated reviewed newly issued accounting pronouncements concluded either applicable business expected material effect consolidated financial statements result future adoption 2 allowance loan losses credit quality indicators following summary changes allowance loan losses years ended march 31 2018 2017 2016 following summary loans individually collectively evaluated impairment periods indicated average net balance impaired loans 491 million 422 million 412 million respectively years ended march 31 2018 2017 2016 practicable compute amount interest earned impaired loans practicable compute interest income recognized using cashbasis method period loans impaired following assessment credit quality fiscal years indicated 1 loans nonaccrual status following summary past due receivables 3 property equipment property equipment consist depreciation expense approximately 73 million 69 million 65 million years ended march 31 2018 2017 2016 respectively 4 intangible assets following table provides gross carrying amount related accumulated amortization definitelived intangible assets estimated amortization expense intangible assets future years ended march 31 follows 10 million 2019 10 million 2020 10 million 2021 09 million 2022 09 million 2023 aggregate 18 million years thereafter 5 goodwill following summarizes changes carrying amount goodwill years ended march 31 2018 2017 1 february 28 2017 company completed acquisition fourteen branches mathes management enterprises inc march 31 2017 accounting related acquisition preliminary allowed fasb asc topic 8051025 twelve months ended march 31 2018 company made adjustment fair value customer lists goodwill related purchase resulted companys recording approximately 10 million goodwill corresponding reduction amount previously allocated customer lists company performed annual impairment test fourth quarters fiscal 2018 2017 determined none recorded goodwill impaired however company merge one branch fiscal 2017 goodwill associated goodwill associated branch immaterial consolidated level written 6 notes payable senior notes payable revolving credit facility march 31 2018 companys notes payable consist 4800 million senior revolving credit facility borrowings 2449 million outstanding 03 million standby letters credit related workers compensation outstanding extent letter credit drawn upon disbursement funded credit facility amounts due related letters credit march 31 2018 expire december 31 2018 letters credit automatically extended one year expiration date subject borrowing base formula company may borrow rate libor plus 40 minimum 50 years ended march 31 2018 2017 2016 company’s effective interest rate including commitment fee 60 58 56 respectively unused amount available revolver march 31 2018 2348 million revolving credit facility commitment fee 050 per annum unused portion commitment borrowings revolving credit facility mature june 15 2019 substantially companys assets excluding assets companys mexican subsidiaries pledged collateral borrowings revolving credit agreement debt covenants agreement governing company’s revolving credit facility contains affirmative negative covenants including covenants restrict ability company subsidiaries among things incur guarantee indebtedness incur liens pay dividends repurchase redeem capital stock dispose assets engage mergers consolidations make acquisitions investments redeem prepay subordinated debt amend subordinated debt documents make changes nature business engage transactions affiliates agreement also contains financial covenants including minimum consolidated net worth 3300 million plus 50 borrowers consolidated net income fiscal year beginning 2017 minimum fixed charge coverage ratio 25 10 maximum ratio total debt consolidated adjusted net worth 20 10 maximum ratio subordinated debt consolidated adjusted net worth 10 agreement allows company incur subordinated debt matures termination date revolving credit facility contains specified subordination terms subject limitations amount imposed financial covenants agreement addition agreement establishes maximum specified level collateral performance indicator collateral performance indicator equal sum threemonth rolling average rate receivables least sixty days past due b eightmonth rolling average net chargeoff rate company compliance covenants march 31 2018 believe covenants materially limit business expansion strategy agreement contains events default including without limitation nonpayment principal interest obligations violation covenants misrepresentation crossdefault debt bankruptcy insolvency events judgments certain erisa events actual asserted invalidity loan documentation invalidity subordination provisions subordinated debt certain changes control company occurrence certain regulatory events including entry stay order judgment ruling similar event related company’s subsidiaries’ originating holding pledging collecting enforcing eligible finance receivables material company subsidiary remains unvacated undischarged unbonded unstayed appeal otherwise period 60 days date entry reasonably likely cause material adverse change determined violation fcpa occurred described note 16 violation may give rise event default agreement violation material adverse effect company’s business operations properties assets condition financial otherwise amount settlement penalties fines payments resulted company failing satisfy financial covenants debt maturities march 31 2018 aggregate annual maturities notes payable five fiscal years subsequent march 31 2018 follows 7 insurance income insurance income years ending march 31 2018 2017 2016 consist company whollyowned captive insurance subsidiary reinsures portion credit insurance sold connection loans made company certain coverages currently sold company behalf unaffiliated insurance carrier ceded carrier captive insurance subsidiary providing company additional source income derived earned reinsurance premiums insurance premiums ceded reinsurance subsidiary written revenue recognized life related insurance contracts march 31 2018 2017 2016 amount net written premiums 62 million 45 million 36 million respectively amount earned premiums 53 million 40 million 17 million respectively company maintains cash reserve claims amount determined ceding company march 31 2018 2017 cash reserves 49 million 36 million respectively 8 nonfiling insurance company maintains nonfiling insurance coverage unaffiliated insurance company following summary nonfiling insurance activity years ended march 31 2018 2017 2016 9 leases company conducts operations leased facilities except owned corporate office building companys leases typically lease term three five years contain lessee renewal options majority leases provide lessee pays property taxes insurance common area maintenance costs expected normal course business expiring leases renewed companys option replaced leases acquisitions properties company’s leases operating leases future minimum lease payments noncancelable operating leases march 31 2018 follows rental expense cancelable noncancelable operating leases years ended march 31 2018 2017 2016 approximately 281 million 269 million 271 million respectively 10 income taxes december 22 2017 us government enacted comprehensive tax legislation commonly referred tax cuts jobs act “tcja” tcja included significant changes existing tax law including permanent reduction us federal corporate income tax rate 35 21 onetime repatriation tax deferred foreign income “transition tax” deductions credits businessrelated exclusions permanent reduction us federal corporate income tax rate 35 21 effective january 1 2018 federal tax rate changes fiscal year internal revenue code requires taxpayers compute weighted daily average rate fiscal year enactment result company calculated us federal statutory corporate income tax rate 3155 fiscal year ended march 31 2018 us corporate federal statutory rate 3155 weighted daily average rate preenactment federal statutory rate 35 postenactment federal statutory rate 21 impact changes federal tax rates deferred tax amounts effect transition tax significant unusual infrequent items recognized discrete items company’s income tax expense period event occurs company recorded 105 million provisional amount related net impact revaluing us deferred tax assets liabilities third quarter fiscal 2018 final calculation related net impact revaluing us deferred tax assets liabilities resulted immaterial reduction provisional amount company recorded increase tax expense 49 million related foreign “transition tax” final quarter fiscal 2018 income tax expense benefit consists income tax expense 475 million 404 million 505 million years ended march 31 2018 2017 2016 respectively differed amounts computed applying us federal income tax rate 3155 fiscal 2018 35 fiscal years 2017 2016 pretax income continuing operations result following tax effects temporary differences give rise significant portions deferred tax assets deferred tax liabilities march 31 2018 2017 presented valuation allowance deferred tax assets march 31 2018 2017 33 million 1274 respectively valuation allowance total deferred tax assets march 31 2018 consisted 1274 related state colorado net operating losses amount 54318 expire 2025 foreign tax credit carryforward 33 million arising relation section 965 calculation transition tax current fiscal year company expect generate enough foreign source income future tax years realize tax attribute assessing realizability deferred tax assets management considers whether likely portion deferred tax assets realized ultimate realization deferred tax assets dependent upon generation future taxable income periods temporary differences become deductible management considers scheduled reversals deferred tax liabilities projected future taxable income tax planning strategies making assessment order fully realize deferred tax asset company need generate future taxable income prior expiration deferred tax assets governed tax code based upon level historical taxable income projections future taxable income periods related temporary differences deductible management believes likely company realize benefits deductible differences net existing valuation allowances march 31 2018 amount deferred tax asset considered realizable however could reduced near term estimates future taxable income carryforward period reduced company expecting mexican subsidiaries pay us company dividend fiscal 2019 result company longer claim permanent reinvestment respective foreign jurisdiction march 31 2018 transition tax companys tax basis mexican subsidiaries greater book basis therefore taxable temporary difference march 31 2018 2017 2016 company 88 million 89 million 107 million total gross unrecognized tax benefits including interest respectively totals approximately 69 million 72 million 82 million respectively represents amount net unrecognized tax benefits permanent nature recognized would affect annual effective tax rate reconciliation beginning ending amount unrecognized tax benefits march 31 2018 2017 2016 presented march 31 2018 approximately 42 million gross unrecognized tax benefits expected resolved next 12 months settlements taxing authorities expiration statute limitations company’s continuing practice recognize interest penalties related income tax matters income tax expense march 31 2018 2017 2016 company 19 million 16 million 13 million accrued gross interest respectively 04 million 07 million 06 million represented current period expense periods ended march 31 2018 2017 2016 company subject us mexican income taxes well various state local jurisdictions exception states company longer subject us federal state local nonus income tax examinations tax authorities years 2013 although carryforward attributes generated prior 2013 may still adjusted upon examination taxing authorities either used future period 11 earnings per share following reconciliation numerators denominators basic diluted eps calculations options purchase 299455 733053 825505 shares common stock various prices outstanding years ended march 31 2018 2017 2016 respectively included computation diluted eps option exercise price antidilutive 12 benefit plans retirement plan company provides defined contribution employee benefit plan 401k plan covering fulltime employees whereby employees invest maximum designated year company matches 50 employees contributions first 6 employees eligible compensation providing maximum employer contribution 3 compensation companys expense plan 1358148 1377371 1453468 years ended march 31 2018 2017 2016 respectively supplemental executive retirement plan company instituted supplemental executive retirement plan “serp” nonqualified executive benefit plan company agrees pay executive additional benefits future usually retirement return continued employment executive serp unfunded plan specific assets set aside company connection establishment plan executive rights agreement beyond general creditor company may 2009 company instituted second supplemental executive retirement plan provide one executive type benefits original serp would qualified due age second serp also unfunded plan specific assets set aside company connection plan years ended march 31 2018 2017 2016 contributions 750669 618013 1796998 respectively charged expense related serp unfunded liability 8258550 8447283 8886195 march 31 2018 2017 2016 respectively three years presented unfunded liability estimated using following assumptions annual salary increase 35 3 years discount rate 60 3 years retirement age 65 executive deferred compensation plan company executive deferral plan eligible executives directors may elect defer portion incentive compensation paid executive deferral plan march 31 2018 2017 executive director deferred compensation plan stock option plans company 2002 stock option plan 2005 stock option plan 2008 stock option plan 2011 stock option plan 2017 stock incentive plan benefit certain directors officers key employees plans total 4950000 shares authorized common stock reserved issuance pursuant grants approved compensation stock option committee board directors stock options granted plans maximum duration ten years may subject certain vesting requirements generally three five years officers directors key employees priced market value companys common stock grant date option march 31 2018 total 1258427 shares available grant plans stockbased compensation recognized provided fasb asc topic 71810 fasb asc topic 50550 fasb asc topic 71810 requires sharebased payments employees including grants employee stock options recognized compensation expense requisite service period generally vesting period consolidated financial statements based grant date fair values company applied blackscholes valuation model determining grant date fair value stock option awards compensation expense recognized options expected vest weightedaverage fair value grant date options issued years ended march 31 2018 2017 2016 3949 2225 1082 per share respectively fair value estimated grant date using weightedaverage assumptions listed expected stock price volatility based historical volatility company’s stock period approximating expected life expected life represents period time options expected outstanding grant date riskfree rate reflects interest rate grant date zero coupon us governmental bonds remaining life similar expected option term option activity year ended march 31 2018 follows aggregate intrinsic value reflected table represents total pretax intrinsic value difference closing stock price march 31 2018 exercise price multiplied number inthemoney options would received option holders option holders exercised options march 31 2018 amount change stocks market price changes total intrinsic value options exercised periods ended march 31 2018 2017 2016 follows march 31 2018 total unrecognized stockbased compensation expense related nonvested stock options amounted approximately 25 million expected recognized weightedaverage period approximately 21 years restricted stock fiscal 2018 company granted 24456 shares restricted stock equity classified certain executive officers grant date weighted average fair value 10752 onethird awards vest october 1 next three years fiscal 2014 2013 company granted 8590 70800 group performance based restricted stock awards certain officers group awards vested april 30 2015 based companys achievement following performance goals march 31 2015 fiscal 2014 2013 company granted 56660 443700 group b performance based restricted stock awards certain officers march 31 2018 group b awards remain unforfeited outstanding group b awards would vested follows company achieved following performance goals successive trailing four quarters measurement period ending march 31 2017 fiscal 2016 company determined earnings per share targets associated group b stock awards achievable measurement period ended march 31 2017 subsequently compensation stock option committee board directors amended awards allowing 25 group b awards vest certain officers required forfeit remaining group b shares part amendment fasb topic asc 718 defines grant modification change terms conditions stockbased compensation award include accelerated vesting company determined since group b awards would otherwise vested premodification accelerated vesting qualified type iii modification year ended march 31 2016 company released approximately 97 million compensation expense associated group b awards including 29 million related type iii modification compensation expense related restricted stock based number shares expected vest fair market value common stock grant date company recognized compensation expense 31 million 16 million net reduction compensation expense 80 million years ended march 31 2018 2017 2016 respectively included component general administrative expenses companys consolidated statements operations march 31 2018 approximately 32 million unrecognized compensation cost related unvested restricted stock awards expected recognized next 23 years based current estimates summary status company’s restricted stock march 31 2018 changes year ended march 31 2018 presented total sharebased compensation included component net income years ended march 31 2018 2017 2016 follows 13 acquisitions company evaluates set assets activities acquires determine set meets definition business according fasb asc topic 8051055 acquisitions meeting definition business accounted business combinations acquisitions accounted asset purchases following table sets forth acquisition activity company years ended march 31 2018 2017 2016 1 february 28 2017 company completed acquisition fourteen branches mathes management enterprises inc march 31 2017 accounting related acquisition preliminary allowed fasb asc topic 8051025 twelve months ended march 31 2018 company made adjustment fair value customer lists goodwill related purchase resulted companys recording approximately 10 million goodwill corresponding reduction amount previously allocated customer lists acquisitions accounted business combinations typically result one new branches cases company typically retains existing employees branch location acquisition purchase price allocated tangible assets intangible assets acquired based upon estimated fair market values acquisition date remainder allocated goodwill year ended march 31 2018 company acquired five branches three business combinations described acquisitions accounted asset purchases typically limited acquisitions loan portfolios purchase price allocated tangible assets intangible assets acquired based upon estimated fair market values acquisition date asset purchase goodwill recorded year ended march 31 2018 company recorded 34 acquisitions asset purchases described company’s acquisitions include tangible assets generally loans furniture equipment intangible assets generally noncompete agreements customer lists goodwill recorded fair values estimated pursuant processes described acquired loans valued net loan balance given shortterm nature loans generally 8 months loans priced current rates management believes net loan balances approximate fair value furniture equipment valued specific purchase price agreed parties time acquisition management believes approximates fair values noncompete agreements valued stated amount paid party agreements company believes approximates fair value customer lists valued valuation model utilizes company’s historical data estimate value acquired customer lists customer lists allocated branch level evaluated impairment branch level triggering event occurs accordance fasb asc topic 3601005 triggering event occurs impairment loss customer list generally remaining unamortized customer list balance acquisitions original fair value customer list allocated office less 100000 management believes event triggering event occur impairment loss unamortized customer list would immaterial business combination remaining excess purchase price fair value tangible assets customer lists noncompete agreements allocated goodwill february 15 2018 company completed acquisition three branches nine loan portfolios community finance loans llc acquisition consistent companys strategy expansion areas demographic profiles state regulations attractive acquired branches located georgia acquired loan portfolios located georgia alabama based evaluation agreement consistent framework described company accounted acquisition three branches business combination acquisition nine loan portfolios asset purchase conjunction acquisition company allocated purchase price intangible assets among acquired branches destination branches case loan portfolios based fair values respective acquired assets company recorded goodwill accounting acquisition october 23 2017 company completed acquisition one loan portfolio 1st fidelity loans acquisition consistent companys strategy expansion areas demographic profiles state regulations attractive acquired loan portfolio located state alabama based evaluation agreement consistent framework described company accounted acquisition loan portfolio asset purchase conjunction acquisition company assigned entire purchase price intangible assets destination branch company recorded goodwill accounting acquisition september 8 2017 company completed acquisition one branch fifteen loan portfolios sun loan company tennessee inc sun loan company new mexico 3 inc sun loan company oklahoma number 3 inc acquisition consistent companys strategy expansion areas demographic profiles state regulations attractive acquired branch located tennessee acquired loan portfolios located states tennessee new mexico oklahoma based evaluation agreement consistent framework described company accounted acquisition branch business combination acquisition fifteen loan portfolios asset purchase conjunction acquisition company allocated purchase price intangible assets among acquired branch destination branches case loan portfolios based fair values respective acquired assets company recorded goodwill accounting acquisition august 23 2017 company completed acquisition one loan portfolio alpha credit rockmart llc acquisition consistent companys strategy expansion areas demographic profiles state regulations attractive acquired loan portfolio located state georgia based evaluation agreement consistent framework described company accounted acquisition loan portfolio asset purchase conjunction acquisition company assigned entire purchase price intangible assets destination branch company recorded goodwill accounting acquisition july 7 2017 company completed acquisition one loan portfolio sun loan company missouri inc acquisition consistent companys strategy expansion areas demographic profiles state regulations attractive acquired loan portfolio located state missouri based evaluation agreement consistent framework described company accounted acquisition loan portfolio asset purchase conjunction acquisition company assigned entire purchase price intangible assets destination branch company recorded goodwill accounting acquisition may 8 2017 company completed acquisition two branches eight loan portfolios texan credit corporation acquisition consistent companys strategy expansion areas demographic profiles state regulations attractive acquired branches loan portfolios located state texas based evaluation agreement consistent framework described company accounted acquisition two branches business combination acquisition eight loan portfolios asset purchase conjunction acquisition company allocated purchase price intangible assets among acquired branches destination branches case loan portfolios based fair values respective acquired assets company recorded goodwill accounting acquisition results acquisitions included company’s consolidated financial statements since respective acquisition date pro forma impact branches though acquired beginning periods presented would material effect results operations reported 14 fair value fair value disclosures company may carry certain financial instruments derivative assets liabilities fair value recurring basis fair value defined price would received sell asset paid transfer liability orderly transaction market participants measurement date company determines fair values financial instruments based fair value hierarchy requires entity maximize use observable inputs minimize use unobservable inputs measuring fair value financial assets liabilities measured fair value grouped three levels prioritize inputs used measure fair value assets liabilities levels •level 1 quoted prices unadjusted active markets identical assets liabilities •level 2 inputs quoted prices observable assets liabilities either directly indirectly inputs include quoted prices similar assets liabilities active markets quoted prices identical similar assets liabilities market less active •level 3 unobservable inputs assets liabilities reflecting reporting entity’s assumptions company’s financial instruments periods reported consist following cash equivalents loans receivable senior notes payable fair value approximates carrying value instruments loans receivable originated prevailing market rates average life approximately 8 months given shortterm nature loans continually repriced current market rates company’s revolving credit facility variable rate based margin libor reprices changes libor company also considered creditworthiness determination fair value carrying amount estimated fair values company’s financial instruments summarized level follows significant assets liabilities measured fair value nonrecurring basis march 31 2018 2017 15 quarterly information unaudited following sets forth selected quarterly operating data companys highest loan demand occurs generally october december third fiscal quarter loan demand generally lowest loan repayment highest january march fourth fiscal quarter consequently company experiences significant seasonal fluctuations operating results cash needs operating results companys third fiscal quarter generally lower quarters operating results fourth fiscal quarter generally higher quarters 16 litigation mexico investigation previously disclosed company retained outside legal counsel forensic accountants conduct investigation operations mexico focusing legality fcpa certain local laws certain payments related loans maintenance company’s books records associated payments treatment compensation matters certain employees investigation continues address whether extent improper payments may violate fcpa local laws made approximately 2010 2017 behalf wac de méxico sofom subsidiary company government officials mexico relating loans made unionized employees company voluntarily contacted sec doj advise agencies investigation underway company intends cooperate agencies sec issued formal order investigation conclusion cannot drawn time potential remedies agencies may seek addition company cannot determine time ultimate effect investigation remedial measures operations mexico decisions respect thereto violations fcpa local laws occurred company could subject fines civil criminal penalties equitable remedies including profit disgorgement related interest injunctive relief addition disposition matters could adversely impact ability collect outstanding loans result modifications business practices compliance programs including significant restructuring curtailment effects operations mexico disposition could also potentially require monitor appointed review future business practices goal ensuring compliance fcpa applicable laws company could also face fines sanctions penalties authorities mexico well thirdparty claims shareholders andor stakeholders company addition disclosure investigation could adversely affect company’s reputation ability obtain new business retain existing business current customers potential customers attract retain employees access capital markets determined violation fcpa occurred violation may give rise event default company’s credit agreement violation material adverse effect company’s business operations properties assets condition financial otherwise amount settlement penalties fines payments resulted company failing satisfy financial covenants additional potential fcpa violations laws regulations may uncovered investigation addition ultimate liability disgorgement related interest company believes could liable fines penalties company continuing discussions doj sec regarding matters investigation company cannot reasonably estimate amount fine penalty may pay part possible settlement assess potential liability might incurred settlement reached government litigate matter based information available time additional liability related matter reasonably estimable company continue evaluate amount liability pending final resolution investigation related discussions government cfpb investigation previously disclosed march 12 2014 company received cid consumer financial protection bureau cfpb stated purpose cid determine whether company “engaging unlawful acts practices connection marketing offering extension credit violation sections 1031 1036 consumer financial protection act 12 usc §§ 5531 5536 truth lending act 15 usc §§ 1601 et seq regulation z 12 cfr pt 1026 federal consumer financial law” “also determine whether bureau action obtain legal equitable relief would public interest” company responded within deadlines specified cid broad requests production documents answers interrogatories written reports related loans made company numerous aspects company’s business letter dated january 18 2018 cfpb informed company concluded investigation would proceeding enforcement action company see part item 1 “businessgovernment regulationfederal legislation” discussion matters federal regulations company’s operations subject part item 1a”risk factors” information regarding regulations related risks shareholder complaints previously disclosed april 22 2014 shareholder filed putative class action complaint edna selan epstein v world acceptance corporation et al united states district court district south carolina case number 614cv01606 “edna epstein putative class action” company certain current former officers behalf persons purchased otherwise acquired company’s common stock april 25 2013 march 12 2014 two amended complaints filed plaintiffs several motions filed proceedings complaint currently amended alleges company made false misleading statements various sec reports public statements violation federal securities laws preceding company’s disclosure form 8k filed march 13 2014 received abovereferenced cid cfpb ii company’s loan growth volume figures inflated weakness company’s internal controls relating accounting treatment certain smalldollar loan refinancings iii additional allegations regarding among things company’s receipt notice opportunity respond advise letter cfpb august 7 2015 complaint seeks class certification class consisting persons purchased otherwise acquired company’s common stock january 30 2013 august 10 2015 unspecified monetary damages costs attorneys’ fees company denied claims merit opposed certification proposed class june 7 2017 courtordered mediation parties reached agreement principle settle edna epstein putative class action parties’ stipulation setting forth terms settlement filed court august 25 2017 settlement stipulation provides settlement payment class 16 million funded company’s directors officers liability insurance carriers court entered order preliminarily approving settlement august 31 2017 december 18 2017 court entered final order judgment approving settlement court’s order approving settlement resolves claim asserted defendants action neither company present former officers admitted wrongdoing liability connection settlement previously disclosed july 15 2015 shareholder filed putative derivative complaint irwin j lipton et al v mclean et al united states district court district south carolina case number 615cv02796mgl “lipton derivative action” behalf company certain current former officers directors september 21 2015 another shareholder filed putative derivative complaint paul parshall et al v mclean et al united states district court district south carolina case number 615cv03779mgl “parshall derivative action” asserting substantially similar claims behalf company certain current former officers directors october 14 2015 court entered order consolidating lipton derivative action parshall derivative action world acceptance corp derivative litigation lead case 615cv02796mgl plaintiffs subsequently filed amended complaint amended consolidated complaint alleges among things defendants breached fiduciary duties disseminating false misleading information company’s shareholders regarding company’s loan growth loan renewals allowances loan losses revenue sources revenue growth compliance us generally accepted accounting principles gaap sufficiency company’s internal controls accounting procedures ii defendants breached fiduciary duties failing ensure company maintained adequate internal controls iii defendants breached fiduciary duties failing exercise prudent oversight supervision company’s officers employees ensure conformity applicable laws regulations iv defendants unjustly enriched result compensation received allegedly breaching fiduciary duties owed company v defendants wasted corporate assets paying excessive compensation certain company’s executive officers awarding selfinterested stock options certain company’s officers directors incurring legal liability legal costs defend defendants’ unlawful actions authorizing repurchase company stock artificially inflated prices vi certain defendants breached fiduciary duty company selling shares company’s stock artificially inflated prices possession material nonpublic information regarding company’s financial condition vii defendants violated section 10b securities exchange act 1934 making false misleading statements regarding company’s practices regarding loan renewals loan modifications accounting loans viii defendants violated section 14a securities exchange act 1934 failing disclose alleged material facts company’s 2014 2015 proxy statements ix allegations similar made connection edna epstein putative class action described consolidated complaint seeks among things unspecified monetary damages order directing company take steps reform improve corporate governance internal procedures comply applicable laws protect company shareholders future wrongdoing described consolidated complaint february 28 2017 court entered order dismissing derivative litigation plaintiffs filed notice appeal us court appeals fourth circuit march 27 2017 june 14 2017 following mediation parties reached agreement principle settle derivative litigation parties’ stipulation setting forth terms settlement filed court august 4 2017 settlement stipulation provides company adopt certain corporate governance practices pay plaintiffs’ attorney’s fees expenses amount approved court exceed 475000 fees expenses funded company’s directors officers liability insurance carriers court entered order preliminarily approving settlement august 24 2017 november 7 2017 court entered final order judgment approving settlement awarding plaintiffs’ attorney’s fees expenses amount 475000 court’s order approving settlement resolves claims asserted defendants action neither company present former directors officers admitted wrongdoing liability connection settlement general addition time company involved routine litigation matters relating claims arising operations normal course business including matters damages various amounts claimed estimating amount range possible losses resulting litigation government actions legal proceedings inherently difficult requires extensive degree judgment particularly matters involve indeterminate claims monetary damages may involve fines penalties damages discretionary amount involve large number claimants significant discretion regulatory authorities represent change regulatory policy interpretation present novel legal theories early stages proceedings subject appeal could result change business practices addition legal proceedings resolved extended periods time potential losses subject change due among things new developments changes legal strategy outcome intermediate procedural substantive rulings parties’ settlement posture evaluation strength weakness case us reasons currently unable predict ultimate timing outcome reasonably estimate possible losses range possible losses resulting matters described based information currently available company believe reasonably possible losses arising currently pending legal matters material company’s results operations financial conditions however light inherent uncertainties involved matters adverse outcome one matters could materially adversely affect company’s financial condition results operations cash flows particular reporting period 17 segments company evaluates segment reporting accordance fasb asc 280 segment reporting period including evaluating reporting package reviewed chief operation decision maker “codm” company concluded chief executive officer qualifies codm management believes four possible approaches consider determining company’s operating segments nationality division business line function approaches present total 13 unique entity components 13 unique entity components management determined us mexico components meet tests asc 28010501 classified operating segments us component housed within nationality approach mexico component shared nationality division approaches march 31 2018 us operating segment meets one quantitative thresholds trigger separately disclosed reporting however management believes separately disclosed information mexico operating segment would useful readers financial statements therefore company two reportable segments us mexico components following table presents operating results company’s two reportable segments 1 accordance transfer pricing agreements segments mexico segment reimburses us segment personnelrelated administrative costs incurred us benefit mexico fiscal years 2018 2017 2016 charges totaled 10 million 53 million charges net approximately 43 million expense related investigation companys mexico operations 04 million 15 million charges net approximately 11 million expense reversal related retirement previous senior vice president mexico 27 million respectively 2 accordance companys revolving credit facility substantially company’s assets excluding company’s mexico subsidiaries pledged collateral working capital contributions made us mexico treated contributions capital therefore mexico segment incurs interest expense following table presents longlived assets financial instruments longterm customer relationships financial institution mortgage servicing rights deferred policy acquisition costs deferred tax assets company’s two reportable segments following table presents total assets company’s two reportable segments 18 subsequent events twelfth amendment amended restated revolving credit facility june 1 2018 company entered twelfth amendment “twelfth amendment” amended restated revolving credit agreement originally dated september 17 2010 cumulatively amended “revolving credit agreement” among company lenders named therein wells fargo bank national association successor administrative agent successor collateral agent twelfth amendment amends revolving credit agreement among things extend maturity date revolving credit agreement june 15 2019 june 15 2020 ii require use deposit account control agreements favor administrative agent certain circumstances iii require quarterly reports updating schedule showing company’s deposit accounts management’s report internal control financial reporting responsible establishing maintaining adequate internal control financial reporting defined rule 13a 15f securities exchange act 1934 assessed effectiveness internal control financial reporting march 31 2018 assessment based criteria established internal control integrated framework 2013 issued committee sponsoring organizations treadway commission coso internal control financial reporting process designed provide reasonable assurance regarding reliability financial reporting preparation financial statements external purposes accordance generally accepted accounting principles internal control financial reporting includes policies procedures 1 pertain maintenance records reasonable detail accurately fairly reflect transactions dispositions assets 2 provide reasonable assurance transactions recorded necessary permit preparation financial statements accordance generally accepted accounting principles receipts expenditures made accordance authorizations management board directors 3 provide reasonable assurance regarding prevention timely detection unauthorized acquisition use disposition assets could material effect financial statements inherent limitations internal control financial reporting may prevent detect misstatements also assumptions regarding internal control financial reporting future periods based evaluation effectiveness prior period subject risk controls may become inadequate changes conditions degree compliance policies procedures may deteriorate based using coso criteria believe internal control financial reporting march 31 2018 effective independent registered public accounting firm audited consolidated financial statements included annual report issued attestation report effectiveness internal control financial reporting stated report independent registered public accounting firm shareholders board directors world acceptance corporation subsidiaries opinion financial statements audited accompanying consolidated balance sheets world acceptance corporation subsidiaries company march 31 2018 2017 related consolidated statements operations comprehensive income shareholders equity cash flows three years period ended march 31 2018 related notes consolidated financial statements collectively financial statements opinion financial statements present fairly material respects financial position company march 31 2018 2017 results operations cash flows three years period ended march 31 2018 conformity accounting principles generally accepted united states america also audited accordance standards public company accounting oversight board united states pcaob companys internal control financial reporting march 31 2018 based criteria established internal control integrated framework issued committee sponsoring organizations treadway commission 2013 report dated june 13 2018 expressed unqualified opinion effectiveness companys internal control financial reporting basis opinion financial statements responsibility company’s management responsibility express opinion company’s financial statements based audits public accounting firm registered pcaob required independent respect company accordance us federal securities laws applicable rules regulations securities exchange commission pcaob conducted audits accordance standards pcaob standards require plan perform audits obtain reasonable assurance whether financial statements free material misstatement whether due error fraud audits included performing procedures assess risks material misstatement financial statements whether due error fraud performing procedures respond risks procedures included examining test basis evidence regarding amounts disclosures financial statements audits also included evaluating accounting principles used significant estimates made management well evaluating overall presentation financial statements believe audits provide reasonable basis opinion rsm us llp served companys auditor since 2014 raleigh north carolina june 13 2018 report independent registered public accounting firm shareholders board directors world acceptance corporation subsidiaries opinion internal control financial reporting audited world acceptance corporation subsidiaries’ company internal control financial reporting march 31 2018 based criteria established internal control integrated framework issued committee sponsoring organizations treadway commission 2013 opinion company maintained material respects effective internal control financial reporting march 31 2018 based criteria established internal control integrated framework issued committee sponsoring organizations treadway commission 2013 also audited accordance standards public company accounting oversight board united states pcaob consolidated balance sheets company march 31 2018 2017 related consolidated statements operations comprehensive income shareholders’ equity cash flows three years period ended march 31 2018 report dated june 13 2018 expressed unqualified opinion basis opinion company’s management responsible maintaining effective internal control financial reporting assessment effectiveness internal control financial reporting accompanying management’s report internal control financial reporting responsibility express opinion company’s internal control financial reporting based audit public accounting firm registered pcaob required independent respect company accordance us federal securities laws applicable rules regulations securities exchange commission pcaob conducted audit accordance standards pcaob standards require plan perform audit obtain reasonable assurance whether effective internal control financial reporting maintained material respects audit included obtaining understanding internal control financial reporting assessing risk material weakness exists testing evaluating design operating effectiveness internal control based assessed risk audit also included performing procedures considered necessary circumstances believe audit provides reasonable basis opinion definition limitations internal control financial reporting companys internal control financial reporting process designed provide reasonable assurance regarding reliability financial reporting preparation financial statements external purposes accordance generally accepted accounting principles companys internal control financial reporting includes policies procedures 1 pertain maintenance records reasonable detail accurately fairly reflect transactions dispositions assets company 2 provide reasonable assurance transactions recorded necessary permit preparation financial statements accordance generally accepted accounting principles receipts expenditures company made accordance authorizations management directors company 3 provide reasonable assurance regarding prevention timely detection unauthorized acquisition use disposition companys assets could material effect financial statements inherent limitations internal control financial reporting may prevent detect misstatements also projections evaluation effectiveness future periods subject risk controls may become inadequate changes conditions degree compliance policies procedures may deteriorate rsm us llp raleigh north carolina june 13 2018 item 9item 8 financial statements supplementary data consolidated balance sheets see accompanying notes consolidated financial statements consolidated statements operations see accompanying notes consolidated financial statements consolidated statements comprehensive income see accompanying notes consolidated financial statements consolidated statements shareholders equity see accompanying notes consolidated financial statements consolidated statements cash flows see accompanying notes consolidated financial statements notes consolidated financial statements 1summary significant accounting policies companys accounting reporting policies accordance gaap conform general practices within finance company industry following description significant policies used preparing consolidated financial statements nature operations company smalldollar consumer finance installment loan company headquartered greenville south carolina offers shortterm small loans mediumterm larger loans related credit insurance products ancillary products services individuals limited access sources consumer credit also offers income tax return preparation services customer base others march 31 2020 company operated 1243 branches alabama georgia idaho illinois indiana kentucky louisiana mississippi missouri new mexico oklahoma south carolina tennessee texas utah wisconsin branches aforementioned states operate one following names amicable finance colonial finance freeman finance general credit midwestern loans world acceptance world finance august 3 2018 company affiliates completed sale companys mexico operating segment entirety effective july 1 2018 thus company operated branches mexico march 31 2020 2019 first quarter fiscal 2019 branches mexico operated name préstamos avance préstamos viva company subject numerous lending regulations vary jurisdiction principles consolidation consolidated financial statements include accounts world acceptance corporation whollyowned subsidiaries “company” subsidiaries consist operating entities various states paradata financial systems software company acquired fiscal 1994 wac insurance company ltd captive reinsurance company established fiscal 1994 significant intercompany balances transactions eliminated consolidation financial statements company’s former foreign subsidiaries mexico prepared using local currency functional currency assets liabilities subsidiaries translated us dollars thencurrent exchange rate income expense translated average exchange rate applicable period resulting translation gains losses recognized component equity “accumulated comprehensive loss net” use estimates preparation consolidated financial statements preparation financial statements conformity gaap requires management make estimates assumptions affect reported amount assets liabilities disclosure contingent liabilities date financial statements reported amounts revenue expenses reporting period actual results could differ estimates significant item subject estimates assumptions could materially change near term allowance loan losses reclassification certain prior period amounts reclassified conform current presentation reclassifications impact previously reported net income shareholders equity business segments company reports operating segments accordance fasb asc topic 280 operating segments components enterprise separate financial information available evaluated regularly chief operating decision maker deciding allocate resources assess performance fasb asc topic 280 requires public enterprise report measure segment profit loss certain specific revenue expense items segment assets information way operating segments determined items company one reportable segment revenue generating activities company including sale insurance products income tax preparation automobile club done within existing branch network conjunction complement lending operations discrete financial information available activities meet criteria fasb asc topic 280 considered operating segments cash equivalents purposes statement cash flows company considers highly liquid investments maturity three months less date original issuance cash equivalents march 31 2020 2019 company 54 million 51 million respectively restricted cash associated captive insurance subsidiary reinsures portion credit insurance sold connection loans made company loans interest fee income company licensed originate consumer loans states alabama georgia idaho illinois indiana kentucky louisiana mississippi missouri new mexico oklahoma south carolina texas tennessee utah wisconsin fiscal 2020 2019 2018 company originated loans generally ranging 3200 terms 48 months fewer experience indicates majority consumer loans refinanced company accounts majority refinancings new loans generally customer must make multiple payments order qualify refinancing furthermore companys lending policy predetermined lending amounts cases refinancing result advancing additional funds company believes advancement additional funds constitutes minor modification terms existing loan present value cash flows terms new loan 10 present value remaining cash flows terms original loan following table sets forth information loan products fiscal 2020 gross loans receivable march 31 2020 2019 consisted following fees received direct costs incurred origination loans deferred amortized interest income contractual lives loans using interest method unamortized amounts recognized income time loans refinanced paid full except refinancings constitute minor modification loans carried gross amount outstanding reduced unearned interest insurance income net deferred origination fees direct costs allowance loan losses company recognizes interest fee income using interest method charges late payments credited income collected exception tax advance loans interest free company offers loans prevailing statutory rates terms exceed 48 months management believes carrying value approximates fair value loan portfolio nonaccrual policy accrual interest discontinued loan 61 days past contractual due date interest accrual discontinued unpaid accrued interest reversed interest income loan nonaccrual status interest revenue recognized payment received loan moves nonaccrual status remains nonaccrual status paid charged refinanced allowance loan losses company maintains allowance loan losses amount managements opinion adequate provide incurred losses inherent existing loan portfolio company charges current earnings provision loan losses amounts added allowance maintain levels expected cover probable incurred losses principal establishing allowance loan losses company takes consideration growth loan portfolio current levels chargeoffs current levels delinquencies current economic factors company uses mathematical calculation determine initial allowance end reporting period calculation originated managements estimate future chargeoffs used allocate expenses branch level two components calculating allowance loan losses company refers general reserve specific reserve calculation starting point time needed additional provisions added determined management make allowance adequate general reserve 425 gross loan portfolio specific reserve represents 100 gross loan balance loans 91 days past due recency basis including bankrupt accounts category methodology based historical data showing collection loans 91 days past due remote process performed determine adequacy allowance loan losses considers trends current levels delinquencies chargeoff levels economic trends energy food prices primary tool used movement model recency basis considers rolling twelve months delinquency determine expected chargeoffs sum expected chargeoffs determined recency movement model plus amount delinquent refinancings compared allowance resulting mathematical calculation determine adjustments needed make allowance adequate management would also determine adjustments needed consolidated annual provision loan losses less total chargeoffs management uses precision level 5 allowance loan losses compared aforementioned recency movement model determining adjustments needed companys policy charge loans earlier loans deemed uncollectible six months elapsed since date last full contractual payment companys chargeoff policy consistently applied changes made periods reported companys historical annual chargeoff rate net chargeoffs percentage average net loans receivable past 10 years ranged 128 180 net loans management considers chargeoff policy evaluating appropriateness allowance loan losses impaired loans company defines impaired loans bankrupt accounts 91 days past due recency basis accordance company’s chargeoff policy loan deemed uncollectible 100 net investment charged except case borrower filed bankruptcy march 31 2020 bankrupt accounts charged approximately 63 million bankrupt accounts 91 days past due recency basis reserved 100 gross loan balance company also considers accounts 91 days past due recency basis impaired accounts reserved 100 gross loan balance delinquency primary credit quality indicator used determine credit quality companys receivables additional requirements asc 31010 disclosed note 2 property equipment property equipment stated cost less accumulated depreciation amortization depreciation recorded using straightline method estimated useful life related asset follows buildings 25 40 years furniture fixtures 5 10 years equipment 3 7 years vehicles 3 years amortization leasehold improvements recorded using straightline method lesser estimated useful life asset term lease additions premises equipment major replacements improvements added cost maintenance repairs minor replacements charged operating expense incurred assets retired otherwise disposed cost accumulated depreciation removed accounts gain loss reflected consolidated statement operations operating leases company’s branch leases typically lease term three five years contain lessee renewal options cancellation clauses event regulatory changes company typically renews leases one option periods accordingly company amortizes leasehold improvements shorter economic lives generally five years lease term considers renewal periods reasonably assured assets include cash surrender value life insurance policies prepaid expenses debt issuance costs deposits intangible assets goodwill intangible assets include cost acquiring existing customers customer lists fair value assigned noncompete agreements customer lists amortized straight line accelerated basis estimated period benefit ranging 8 23 years weighted average approximately 96 years noncompete agreements amortized straight line basis term agreement ranging 3 53 years weighted average approximately 49 years customer lists allocated branch level evaluated impairment branch level triggering event occurs accordance fasb asc topic 3601005 triggering event occurs impairment loss customer list generally remaining unamortized customer list balance acquisitions original fair value customer list allocated branch less 100000 management believes event triggering event occur impairment loss unamortized customer list would immaterial noncompete agreements valued stated amount paid party agreements company believes approximates fair value fair value customer lists based valuation model utilizes company’s historical data estimate value acquired customer lists business combination remaining excess purchase price fair value tangible assets customer list noncompete agreements allocated goodwill branches company acquires small privatelyowned branches sufficient historical data determine customer attrition company believes customers acquired characteristics perform similarly customers therefore company utilized attrition patterns customers developing estimate attrition acquired customers estimation method reevaluated periodically company evaluates goodwill annually impairment fourth quarter fiscal year using market valuebased approach company one reporting unit company multiple components lowest level individual branches company’s components aggregated impairment testing similar economic characteristics impairment longlived assets company assesses impairment longlived assets including property equipment intangible assets whenever changes events indicate carrying amount may recoverable company assesses impairment assets generally branch level based operating cash flows branch company’s plans branch closings company write assets fair value based analysis sum expected future undiscounted cash flows less carrying amount assets company record impairment charges fiscal year ended 2020 2019 2018 fair value financial instruments fasb asc topic 825 requires disclosures fair value financial instruments regardless whether financial instrument recognized balance sheet practicable estimate value cases quoted market prices available fair values based estimates using present value valuation techniques company’s financial instruments periods reported consist following cash equivalents loans receivable senior notes payable fair value approximates carrying value instruments loans receivable originated prevailing market rates average life approximately 8 months given shortterm nature loans continually repriced current market rates company’s revolving credit facility variable rate based margin libor reprices changes libor insurance premiums commissions insurance premiums credit life accident health property unemployment insurance written connection certain loans net refunds applicable advance insurance commissions retained company remitted monthly insurance company commissions credited unearned insurance commissions recognized income life related insurance contracts company recognizes insurance income using rule 78s method credit life decreasing term credit accident health unemployment insurance pro rata method credit life level term credit property nonfiling insurance nonfiling insurance premiums charged certain loans lieu recording perfecting companys security interest assets pledged premiums recoveries remitted third party insurance company reflected accompanying consolidated financial statements see note 8 claims paid third party insurance company result reduction loan losses certain losses related loans recoverable life accident health property unemployment insurance claims reimbursed nonfiling insurance claims subject policy limitations remaining losses charged allowance loan losses income taxes income taxes accounted asset liability method deferred tax assets liabilities recognized future tax consequences attributable differences financial statement carrying amounts existing assets liabilities respective tax bases operating loss tax credit carryforwards deferred tax assets liabilities measured using enacted tax rates expected apply taxable income years temporary differences expected recovered settled effect deferred tax assets liabilities change tax rates recognized income period includes enactment date company recognizes effect income tax positions likely sustained recognized income tax positions measured largest amount greater 50 likely realized changes recognition measurement reflected period change judgment related additional facts circumstances occurs earnings per share earnings per share “eps” computed accordance fasb asc topic 260 basic eps includes dilution computed dividing net income weightedaverage number common shares outstanding period diluted eps reflects potential dilution securities could share earnings company potential common stock included diluted eps computation consists stock options restricted stock computed using treasury stock method see note 11 reconciliation numerators denominators basic dilutive eps calculations stockbased compensation fasb asc topic 71810 requires companies recognize income statement grantdate fair value stock options equitybased compensation issued employees fasb asc topic 71810 change accounting guidance sharebased payment transactions parties employees provided fasb asc topic 71810 fasb asc topic 71810 way award classified affect measurement compensation cost liabilityclassified awards remeasured fair value balancesheet date award settled equityclassified awards measured grantdate fair value amortized subsequent vesting period subsequently remeasured fair value nonvested stock awards purposes recognizing stockbased compensation expense market price stock grant date fair value options estimated grant date using blackscholes option pricing model see note 12 march 31 2020 company several sharebased employee compensation plans described fully note 12 share repurchases march 12 2020 board directors authorized company repurchase 300 million company’s outstanding common stock inclusive amount remains available repurchase prior repurchase authorizations march 31 2020 company 226 million aggregate remaining repurchase capacity timing actual number shares common stock repurchased depend variety factors including stock price corporate regulatory requirements restrictions revolving credit facility market economic conditions company continues believe stock repurchases viable component company’s longterm financial strategy excellent use excess cash opportunity arises however revolving credit agreement limits share repurchases 50 consolidated adjusted net income fiscal year commencing fiscal year ending march 31 2017 without prior written consent lenders march 31 2020 debt outstanding 4511 million shareholders equity 4120 million resulting debttoequity ratio 1110 comprehensive income total comprehensive income consists net income comprehensive income loss company’s comprehensive income loss accumulated comprehensive income loss composed foreign currency translation adjustments concentration risk company generally serves individuals limited access sources consumer credit banks credit unions consumer finance businesses credit card lenders year ended march 31 2020 company operated sixteen states united states years ended march 31 2020 2019 2018 total revenue within companys four largest states texas georgia tennessee south carolina accounted approximately 56 57 53 respectively companys total revenues company maintains amounts bank accounts times may exceed federally insured limits company experienced losses accounts maintained large domestic banks management believes company’s exposure credit risk minimal accounts advertising costs advertising costs expensed incurred advertising costs approximately 243 million 225 million 212 million fiscal years 2020 2019 2018 respectively recently adopted accounting standards leases february 2016 fasb issued asu 201602 leases topic 842 asu amended asu 201801 asu 201810 201811 requires lessees recognize assets liabilities leases terms greater 12 months disclose information related amount timing uncertainty cash flows arising leases including various qualitative quantitative requirements amendments asu effective annual periods interim periods within annual periods beginning december 15 2018 upon adoption guidance april 1 2019 company removed deferred rent expense balance 04 million recorded rightofuse asset 874 million recorded lease liability 878 million amounts recorded upon adoption topic 842 adjusted reported companys annual report form 10k fiscal year ended march 31 2019 due company finalizing implementation since filing conjunction adoption company made following elections outlined asu 201602 amendments •the company elected apply new guidance retrospectively beginning period adoption result adoption date beginning reporting period company first applies guidance topic 842 company adjusted comparative years consolidated financial statements make new required disclosures periods adoption date new required disclosures presented period adoption subsequently thereafter •the company elected class underlying asset expense shortterm leases straightline basis life lease rather applying recognition requirements topic 842 according following table •the company elected class underlying asset separate nonlease components lease components instead account separate lease component nonlease components associated lease components single lease component according following table •the company elected following practical expedients must elected package applying topic 842 leases commenced adoption date 1not reassess whether expired existing contracts contain leases 2not reassess lease classification expired existing leases existing leases classified operating leases accordance topic 840 classified operating leases existing leases classified capital leases accordance topic 840 classified finance leases 3not reassess initial direct costs existing leases •the company elected use hindsight determining lease term considering lessee options extend terminate lease purchase underlying asset assessing impairment rightofuse assets applying topic 842 leases commenced adoption date adoption standard impact companys consolidated statements operations adoption require company alter revolving credit facility remain compliance debt covenants simplifying test goodwill impairment january 2017 fasb issued asu 201704 simplifying test goodwill impairment asu 201704 eliminates step 2 goodwill impairment test instead amendments update entity perform annual interim goodwill impairment test comparing fair value reporting unit carrying amount additionally entity consider income tax effects tax deductible goodwill carrying amount reporting unit measuring goodwill impairment loss applicable asu 201704 also eliminates requirements reporting unit zero negative carrying amount perform qualitative assessment fails qualitative assessment perform step 2 goodwill impairment test therefore impairment assessment applies reporting units asu also eliminates provision allowed best estimate goodwill impairment recognized goodwill impairment test complete financial statements issued available issued thus goodwill impairment test must complete issuing financial statements amendments update effective public entities sec filers fiscal years beginning december 15 2019 early adoption permitted company early adopted asu 201704 period ended march 31 2020 adoption impact company’s financial statements recently issued accounting standards adopted measurement credit losses financial instruments june 2016 fasb issued asu 201613 financial instruments credit losses update amended asu 201904 seeks provide financial statement users decisionuseful information expected credit losses financial instruments commitments extend credit held reporting entity reporting date achieve objective amendments asu require loss estimates determined lifetime asset broaden information entity must consider developing expected credit losses asu specify method measuring expected credit losses allows entity apply methods reasonably reflect expectations credit loss estimate based entity’s size complexity risk profile public business entities amendments effective fiscal years beginning december 15 2019 including interim periods within fiscal years early adoption permitted fiscal years beginning december 15 2018 including interim periods within fiscal years company standard apply loan portfolio crossfunctional team led corporate finance established implement new standard completed initial current expected credit loss “cecl” model accounting policy elections continue refine test model estimation techniques operational processes controls used preparing cecl loss estimates related financial statement disclosures cecl calculated losses loan portfolio derived using migration type model based historical loss experience borrower characteristics forecasts factors outstanding loans segmented pools similar risk characteristics primarily based length time borrower customer average life loans generally twelve months less recent borrower performance best indicator expected loss forecasted changes macroeconomic variables generally materially impact loans outstanding end given reporting given short duration loans instead consider partial migration curves well current internal credit quality trends compared historical amounts forecast changes expected losses remaining period considering impact covid19 pandemic well stimulus packages adopted us government relates qualitative adjustment allowance expected losses company adopted guidance april 1 2020 using modified retrospective approach cumulativeeffect adjustment retained earnings initial range impact standard company’s consolidated financial statements increase 145 million 262 million allowance credit losses corresponding decrease retained earnings net tax amounts preliminary company completes processes noted reviewed newly issued accounting pronouncements concluded either applicable business expected material effect consolidated financial statements result future adoption 2allowance loan losses credit quality indicators following summary changes allowance loan losses years ended march 31 2020 2019 2018 following summary loans individually collectively evaluated impairment periods indicated average net balance impaired loans 572 million 470 million 423 million respectively years ended march 31 2020 2019 2018 practicable compute amount interest earned impaired loans practicable compute interest income recognized using cashbasis method period loans impaired following assessment credit quality fiscal years indicated 1 loans nonaccrual status following summary past due receivables 3property equipment property equipment consist depreciation expense approximately 71 million 66 million 73 million years ended march 31 2020 2019 2018 respectively 4 intangible assets following table provides gross carrying amount related accumulated amortization definitelived intangible assets estimated amortization expense intangible assets future years ended march 31 follows 50 million 2021 41 million 2022 36 million 2023 35 million 2024 31 million 2025 aggregate 51 million years thereafter 5goodwill following summarizes changes carrying amount goodwill years ended march 31 2020 2019 company performed annual impairment test fourth quarters fiscal 2020 2019 determined none recorded goodwill impaired 6notes payable senior notes payable revolving credit facility march 31 2020 companys notes payable consisted 6850 million senior revolving credit facility accordion feature permitting maximum aggregate commitments increase 6850 million provided certain conditions met march 31 2020 4511 million outstanding facility including 3000 thousand outstanding standby letter credit related workers compensation extent letter credit drawn upon disbursement funded credit facility amounts due related letter credit march 31 2020 letter credit expires december 31 2020 however automatically extends one year expiration date subject borrowing base formula company may borrow rate libor plus applicable margin 30 40 based certain ebitda related metrics set forth revolving credit agreement determined adjusted monthly basis minimum rate 40 revolving credit facility commitment fee 050 per annum unused portion commitment fees unused portion borrowing totaled 10 million 11 million 08 million years ended march 31 2020 2019 2018 respectively borrowings revolving credit facility mature june 7 2022 years ended march 31 2020 2019 2018 company’s effective interest rate including commitment fee 58 67 60 respectively unused amount available revolver march 31 2020 1802 million substantially companys assets pledged collateral borrowings revolving credit agreement debt covenants agreement governing company’s revolving credit facility contains affirmative negative covenants including covenants restrict ability company subsidiaries among things incur guarantee indebtedness incur liens pay dividends repurchase redeem capital stock dispose assets engage mergers consolidations make acquisitions investments redeem prepay subordinated debt amend subordinated debt documents make changes nature business engage transactions affiliates agreement also contains financial covenants including minimum consolidated net worth 3650 million december 30 2020 b 3750 million december 31 2020 ii minimum fixed charge coverage ratio 225 10 fiscal quarters ending march 31 2020 june 30 2020 september 30 2020 b 275 10 fiscal quarter thereafter iii maximum ratio total debt consolidated adjusted net worth 20 10 iv end fiscal quarter provision loan losses four fiscal quarters ending shall equal exceed net loan charge corresponding period shortfalls required deducted determination net income consolidated net worth v maximum collateral performance indicator 24 end calendar month agreement allows company incur subordinated debt matures termination date revolving credit facility contains specified subordination terms subject limitations amount imposed financial covenants agreement collateral performance indicator equal sum threemonth rolling average rate receivables least sixty days past due b eightmonth rolling average net chargeoff rate company compliance covenants march 31 2020 believe covenants materially limit business expansion strategy agreement contains events default including without limitation nonpayment principal interest obligations violation covenants misrepresentation crossdefault debt bankruptcy insolvency events judgments certain erisa events actual asserted invalidity loan documentation invalidity subordination provisions subordinated debt certain changes control company occurrence certain regulatory events including entry stay order judgment ruling similar event related company’s subsidiaries’ originating holding pledging collecting enforcing eligible finance receivables material company subsidiary remains unvacated undischarged unbonded unstayed appeal otherwise period 60 days date entry reasonably likely cause material adverse change determined violation fcpa occurred described part item 3 “legal proceedingsmexico investigation” violation may give rise event default credit agreement violation material adverse effect business operations properties assets condition financial otherwise amount settlement penalties fines payments resulted company failing satisfy financial covenants debt maturities march 31 2020 aggregate annual maturities notes payable five fiscal years subsequent march 31 2020 follows 7insurance income insurance income years ending march 31 2020 2019 2018 consist company whollyowned captive insurance subsidiary reinsures portion credit insurance sold connection loans made company certain coverages currently sold company behalf unaffiliated insurance carrier ceded carrier captive insurance subsidiary providing company additional source income derived earned reinsurance premiums insurance premiums ceded reinsurance subsidiary written revenue recognized life related insurance contracts march 31 2020 2019 2018 amount net written premiums reinsurance subsidiary 66 million 56 million 62 million respectively amount earned premiums 62 million 57 million 53 million respectively company maintains cash reserve claims amount determined ceding company march 31 2020 2019 cash reserves 47 million 38 million respectively 8nonfiling insurance company maintains nonfiling insurance coverage unaffiliated insurance company following summary nonfiling insurance activity years ended march 31 2020 2019 2018 9leases accounting policies matters requiring managements judgment determining economic life lease company adopts convention applying economic life equal useful life specified accounting policy refer note 1 “property equipment” annual report form 10k description companys accounting policy regarding useful lives company uses effective annual interest rate discount rate evaluating leases topic 842 management applies effective annual interest rate leases entered entirety subsequent year example fiscal 2019’s annual effective interest rate 67 used determination lease type well discount rate calculating present value lease payments leases entered fiscal 2020 new annual effective interest rate available application based historical practice company believes reasonably certain exercise given option associated given office space lease therefore company classifies lease options office space “reasonably certain” unless specific knowledge contrary given lease company believe reasonably certain exercise options associated office equipment leases periodic disclosures companys leases consist real estate leases office space well office equipment leases classified operating march 31 2020 real estate office equipment leases range three years five years generally contain options extend mirror original terms lease following table reports information companys lease cost year ended march 31 2020 following table reports information companys leases year ended march 31 2020 following table reports information maturity companys operating leases march 31 2020 company leases related parties march 31 2020 10income taxes december 22 2017 us government enacted comprehensive tax legislation commonly referred tcja included significant changes existing tax law including permanent reduction us federal corporate income tax rate 35 21 onetime repatriation tax deferred foreign income “transition tax” deductions credits businessrelated exclusions permanent reduction us federal corporate income tax rate 35 21 effective january 1 2018 federal tax rate changes fiscal year internal revenue code requires taxpayers compute weighted daily average rate fiscal year enactment result company calculated us federal statutory corporate income tax rate 21 fiscal years ended march 31 2020 2019 3155 fiscal year ended march 312018 impact changes federal tax rates deferred tax amounts effect transition tax significant unusual infrequent events recognized discrete items company’s income tax expense period event occurs company recorded 105 million increase tax expense related net impact revaluing us deferred tax assets liabilities third quarter fiscal 2018 adjustment made third quarter fiscal 2019 record 8500 thousand tax benefit related revaluing us deferred tax assets liabilities due additional analysis change estimate original calculation company also recorded increase tax expense 49 million related foreign transition tax final quarter fiscal 2018 first quarter fiscal 2019 former mexican subsidiaries paid company dividend 171 million transition tax companys tax basis greater book basis recognition basis difference upon sale mexican operations fiscal 2019 created capital loss company believe recognized carryforward period therefore full tax valuation allowance recorded recognized loss carryforward march 27 2020 coronavirus aid relief economic security act cares act enacted response covid19 pandemic cares act among things expands current benefits net operating losses increases allowable business interest deduction section 163j company expect cares act material impact income tax position income tax expense benefit continuing operations consists income tax expense continuing operations 68 million 160 million 478 million years ended march 31 2020 2019 2018 respectively differed amounts computed applying us federal income tax rate 21 fiscal years 2020 2019 3155 fiscal 2018 pretax income continuing operations result following income tax expense benefit discontinued operations 0 626583 243321 years ended march 31 2020 2019 2018 respectively differed amounts computed applying us federal income tax rate 21 fiscal years 2020 2019 3155 fiscal 2018 pretax income discontinued operations result following tax effects temporary differences continuing operations give rise significant portions deferred tax assets deferred tax liabilities march 31 2020 2019 presented march 31 2020 company state net operating loss carryforwards approximately 99 million deferred tax asset approximately 04 million recorded reflect benefit losses company expects recognized approximately 1000 state net operating loss carryforward expire 2025 remaining carryforward expiring 2036 2039 valuation allowance deferred tax assets decreased 72117 year ended march 31 2020 compared march 31 2019 valuation allowance march 31 2020 2019 110 million 111 million respectively valuation allowance total deferred tax assets march 31 2020 consisted 1274 related state colorado net operating loss carryforwards amount 54318 expire 2025 foreign tax credit carryforward 33 million arising relation section 965 calculation transition tax fiscal 2018 expires 2028 78 million related 371 million capital loss carryforward sale mexican operations fiscal 2019 expires 2024 company expect generate enough foreign source income capital gains future tax years realize tax attributes assessing realizability deferred tax assets management considers whether likely portion deferred tax assets realized ultimate realization deferred tax assets dependent upon generation future taxable income periods temporary differences become deductible management considers scheduled reversals deferred tax liabilities projected future taxable income tax planning strategies making assessment order fully realize deferred tax asset company need generate future taxable income prior expiration deferred tax assets governed tax code based upon level historical taxable income projections future taxable income periods related temporary differences deductible management believes likely company realize benefits deductible differences net existing valuation allowances march 31 2020 amount deferred tax asset considered realizable however could reduced near term estimates future taxable income carryforward period reduced march 31 2020 2019 2018 company 58 million 58 million 88 million total gross unrecognized tax benefits including interest respectively totals approximately 52 million 54 million 69 million respectively represents amount net unrecognized tax benefits permanent nature recognized would affect annual effective tax rate reconciliation beginning ending amount unrecognized tax benefits march 31 2020 2019 2018 presented march 31 2020 approximately 30 million gross unrecognized tax benefits expected resolved next 12 months settlements taxing authorities expiration statute limitations company’s continuing practice recognize interest penalties related income tax matters income tax expense march 31 2020 2019 2017 company 14 million 18 million 19 million accrued gross interest respectively 01 million 11 million 04 million represented current period expense periods ended march 31 2020 2019 2018 company subject us income tax well various state local jurisdictions exception states company longer subject us federal state local nonus income tax examinations tax authorities years 2015 although carryforward attributes generated prior 2015 may still adjusted upon examination taxing authorities either used future period 11earnings per share following reconciliation numerators denominators basic diluted eps continuing operations calculations options purchase 656347 592947 299455 shares common stock various prices outstanding years ended march 31 2020 2019 2018 respectively included computation diluted eps option exercise price antidilutive 12enefit plans retirement plan company provides defined contribution employee benefit plan 401k plan covering fulltime employees whereby employees invest maximum designated year company matches 50 employees contributions first 6 employees eligible compensation providing maximum employer contribution 3 compensation companys expense plan 16 million 15 million 14 million years ended march 31 2020 2019 2018 respectively supplemental executive retirement plan company instituted two supplemental executive retirement plans nonqualified executive benefit plans company agrees pay certain executives additional benefits future usually retirement return continued employment executives serps unfunded plans specific assets set aside company connection establishment plans executives rights agreements beyond general creditor company years ended march 31 2020 2019 2018 contributions 06 million 06 million 08 million respectively charged expense related serp unfunded liability included component accounts payable accrued expenses companys consolidated balance sheets 68 million 79 million march 31 2020 2019 respectively three years presented unfunded liability estimated using following assumptions annual salary increase 35 3 years discount rate 60 3 years retirement age 65 executive deferred compensation plan company executive deferral plan eligible executives directors may elect defer portion incentive compensation paid executive deferral plan march 31 2020 2019 executive director deferred compensation plan stock incentive plans company 2005 stock option plan 2008 stock option plan 2011 stock option plan 2017 stock incentive plan benefit certain directors officers key employees plans total 4350000 shares authorized common stock reserved issuance pursuant grants approved compensation stock option committee board directors stock options granted plans maximum duration ten years may subject certain vesting requirements generally three five years officers nonemployee directors key employees priced market value companys common stock options grant date march 31 2020 total 181789 shares common stock available grant plans stockbased compensation recognized provided fasb asc topic 71810 fasb asc topic 50550 fasb asc topic 71810 requires sharebased payments employees including grants employee stock options recognized compensation expense requisite service period generally vesting period consolidated financial statements based grant date fair values company applied blackscholes valuation model determining grant date fair value stock option awards compensation expense recognized options expected vest longterm incentive program nonemployee director awards october 15 2018 compensation committee board approved adopted new longterm incentive program seeks motivate reward certain employees align management’s interest shareholders’ focusing executives achievement longterm results program comprised four components service options performance options restricted stock performance shares pursuant program compensation committee approved certain grants service options performance options restricted stock performance shares world acceptance corporation 2011 stock option plan world acceptance corporation 2017 stock incentive plan certain employee directors vice presidents operations vice presidents senior vice presidents executive officers separately compensation committee approved certain grants service options restricted stock certain company’s nonemployee directors longterm incentive program 100 shares restricted stock subject performance shares shall vest based achievement two trailing earnings per share performance targets established compensation committee based earnings per share measured end calendar quarter commencing calendar quarter ending september 30 2019 previous four calendar quarters performance shares eligible vest performance share measurement period subject respective employee’s continued employment company last day applicable performance share measurement period otherwise provided terms applicable award agreement applicable employment agreement performance share performance targets set forth restricted stock awards vest six equal annual installments beginning first anniversary grant date subject respective employee’s continued employment company applicable vesting date otherwise provided terms applicable award agreement applicable employment agreement service options vest six equal annual installments beginning first anniversary grant date subject respective employee’s continued employment company applicable vesting date otherwise provided terms applicable award agreement applicable employment agreement option price equal fair market value common stock grant date service options shall 10year term performance options shall fully vest company attains trailing earnings per share target four consecutive calendar quarters occurring september 30 2018 march 31 2025 described performance target established compensation committee measured end calendar quarter commencing september 30 2019 performance options eligible vest option measurement period subject respective employee’s continued employment company last day option measurement period otherwise provided terms applicable award agreement applicable employment agreement option price equal fair market value common stock grant date performance options shall 10year term performance option performance target set forth stock options weightedaverage fair value grant date options issued years ended march 31 2020 2019 2018 5769 5350 3949 per share respectively fair value estimated grant date using weightedaverage assumptions listed expected stock price volatility based historical volatility company’s stock period approximating expected life expected life represents period time options expected outstanding grant date riskfree rate reflects interest rate grant date zero coupon us governmental bonds remaining life similar expected option term option activity year ended march 31 2020 follows aggregate intrinsic value reflected table represents total pretax intrinsic value difference closing stock price march 31 2020 exercise price multiplied number inthemoney options would received option holders option holders exercised options march 31 2020 amount change stocks market price changes total intrinsic value options exercised periods ended march 31 2020 2019 2018 follows march 31 2020 total unrecognized stockbased compensation expense related nonvested stock options amounted approximately 109 million expected recognized weightedaverage period approximately 42 years restricted stock fiscal 2020 company granted 11223 shares restricted stock equity classified certain vice presidents senior vice presidents executive officers nonemployee directors grant date weighted average fair value 9023 fiscal 2019 company granted 760420 shares restricted stock equity classified certain executive officers grant date weighted average fair value 10161 per share fiscal 2018 company granted 24456 shares restricted stock equity classified certain executive officers grant date weighted average fair value 10752 per share onethird awards vest anniversary grant date three years following grant date compensation expense related restricted stock based number shares expected vest fair market value common stock grant date company recognized compensation expense 234 million 136 million 31 million years ended march 31 2020 2019 2018 respectively included component general administrative expenses companys consolidated statements operations march 31 2020 approximately 435 million unrecognized compensation cost related unvested restricted stock awards expected recognized next 35 years based current estimates summary status company’s restricted stock march 31 2020 changes year ended march 31 2020 presented total stockbased compensation total stockbased compensation included component net income years ended march 31 2020 2019 2018 follows 13acquisitions company evaluates set assets activities acquires determine set meets definition business according fasb asc topic 8051055 acquisitions meeting definition business accounted business combination acquisitions accounted asset purchase following table sets forth acquisition activity company years ended march 31 2020 2019 2018 acquisitions accounted business combinations typically result one new branches cases company typically retains existing employees branch location acquisition purchase price allocated tangible assets intangible assets acquired based upon estimated fair values acquisition date remainder allocated goodwill following table describes companys business combination activity year ended march 31 2020 acquisitions accounted asset purchases typically limited acquisitions loan portfolios purchase price allocated tangible assets intangible assets acquired based upon estimated fair values acquisition date asset purchase goodwill recorded company’s acquisitions include tangible assets generally loans furniture equipment intangible assets generally noncompete agreements customer lists goodwill recorded fair values estimated pursuant processes described acquired loans valued net loan balance given shortterm nature loans generally eight months loans priced current rates management believes net loan balances approximate fair value furniture equipment valued specific purchase price agreed parties time acquisition management believes approximates fair values noncompete agreements valued stated amount paid party agreements company believes approximates fair value customer lists valued valuation model utilizes company’s historical data estimate value acquired customer lists customer lists allocated branch level evaluated impairment branch level triggering event occurs accordance fasb asc topic 3601005 triggering event occurs impairment loss customer list generally remaining unamortized customer list balance acquisitions original fair value customer list allocated office less 100000 management believes event triggering event occur impairment loss unamortized customer list would immaterial results acquisitions included company’s consolidated financial statements since respective acquisition date pro forma impact branches though acquired beginning periods presented would material effect results operations reported 14fair value fair value disclosures company may carry certain financial instruments derivative assets liabilities fair value recurring basis fair value defined price would received sell asset paid transfer liability orderly transaction market participants measurement date company determines fair values financial instruments based fair value hierarchy requires entity maximize use observable inputs minimize use unobservable inputs measuring fair value financial assets liabilities measured fair value grouped three levels prioritize inputs used measure fair value assets liabilities levels •level 1 quoted prices unadjusted active markets identical assets liabilities •level 2 inputs quoted prices observable assets liabilities either directly indirectly inputs include quoted prices similar assets liabilities active markets quoted prices identical similar assets liabilities markets less active •level 3 unobservable inputs assets liabilities reflecting reporting entity’s assumptions company’s financial instruments periods reported consist following cash equivalents loans receivable senior notes payable fair value approximates carrying value instruments loans receivable originated prevailing market rates average life approximately 8 months given shortterm nature loans continually repriced current market rates company’s revolving credit facility variable rate based margin libor reprices changes libor company also considered creditworthiness determination fair value carrying amounts estimated fair values amounts company measures fair value recurring basis summarized carrying amounts estimated fair values amounts company measures fair value nonrecurring basis limited companys assets held sale summarized company revalued corporate headquarters greenville sc march 31 2020 conjunction reclassification related assets held sale revaluation resulted impairment loss approximately 251000 included component expense companys consolidated statements operations observable inputs company used revaluation agreedupon prices sell assets significant assets liabilities measured fair value nonrecurring basis march 31 2020 2019 15quarterly information unaudited following sets forth selected quarterly operating data companys highest loan demand occurs generally october december third fiscal quarter loan demand generally lowest loan repayment highest january march fourth fiscal quarter consequently company experiences significant seasonal fluctuations operating results cash needs operating results companys third fiscal quarter generally lower quarters operating results fourth fiscal quarter generally higher quarters 16commitments contingencies mexico investigation previously disclosed company retained outside legal counsel forensic accountants conduct investigation operations mexico focusing legality fcpa certain local laws certain payments related loans maintenance company’s books records associated payments treatment compensation matters certain employees investigation addressed whether extent improper payments may violate fcpa local laws made approximately 2010 2017 behalf wac de mexico government officials mexico relating loans made unionized employees company voluntarily contacted sec doj june 2017 advise agencies internal investigation underway company intended cooperate agencies company continue cooperate agencies sec issued formal order investigation ongoing discussions sec regarding possible resolution matters discussions sec progressed point company reasonably estimate probable loss recorded aggregate accrual 217 million respect sec matters march 31 2020 discussions sec continuing assurance companys efforts reach final resolution sec successful timing terms resolution company offer settlement resolution doj time total amount company’s loss incurred connection investigation resolution thereof including amounts remain subject approval sec may higher amount accrual violations fcpa local laws occurred company could subject fines civil criminal penalties equitable remedies including profit disgorgement related interest injunctive relief addition disposition matters could adversely impact access debt financing capital funding result modifications business practices compliance programs disposition could also potentially require monitor appointed review future business practices goal ensuring compliance fcpa applicable laws company could also face fines sanctions penalties authorities mexico well thirdparty claims shareholders andor stakeholders company addition disclosure investigation could adversely affect company’s reputation ability obtain new business retain existing business current customers potential customers attract retain employees access capital markets determined violation fcpa laws occurred violation may give rise event default company’s credit agreement violation material adverse effect company’s business operations properties assets condition financial otherwise amount settlement penalties fines payments resulted company failing satisfy financial covenants additional potential fcpa violations laws regulations may uncovered investigation addition ultimate liability disgorgement related interest company believes could liable fines penalties company continuing discussions sec regarding matters investigation ultimate resolution could higher accrual event settlement reached assurance timing terms settlement general addition time company involved litigation matters relating claims arising operations normal course business estimating amount range possible losses resulting litigation government actions legal proceedings inherently difficult requires extensive degree judgment particularly matters involve indeterminate claims monetary damages may involve fines penalties damages discretionary amount involve large number claimants significant discretion regulatory authorities represent change regulatory policy interpretation present novel legal theories early stages proceedings subject appeal could result change business practices addition legal proceedings resolved extended periods time potential losses subject change due among things new developments changes legal strategy outcome intermediate procedural substantive rulings parties’ settlement posture evaluation strength weakness case us reasons currently unable predict ultimate timing outcome reasonably estimate possible losses range possible losses resulting matters described based information currently available company believe reasonably possible losses arising currently pending legal matters material company’s results operations financial conditions however light inherent uncertainties involved matters adverse outcome one matters could materially adversely affect company’s financial condition results operations cash flows particular reporting period 17assets held sale fourth quarter fiscal 2020 company moved corporate headquarters properties owned outright greenville sc leased office space downtown greenville sc asc 36010 properties met criteria classification held sale march 31 2020 conjunction classification properties held sale company recognized impairment loss approximately 251000 included component expense companys consolidated statements operations following table reconciles major classes assets held sale amounts presented consolidated balance sheets 18discontinued operations august 3 2018 company affiliates completed sale companys mexico operating segment entirety company sold issued outstanding capital stock equity interest wac de mexico swac purchasers effective july 1 2018 purchase price approximately 4436 million terms stock purchase agreement obligated indemnify purchasers claims liabilities relating certain investigations wac de mexico swac sellers doj sec commenced prior july 1 2018 additionally company provided limited paradata systems software training purchasers requested company involvement mexico operating segment subsequent sales effective date following table reconciles major classes line items constituting pretax income loss discontinued operations amounts presented consolidated statements operations following table presents operating investing financing cash flows company’s discontinued operations 19subsequent events covid19 pandemic covid19 pandemic caused significant economic disruption united states many state local governments including states operate ordered nonessential businesses close residents shelter place home resulted unprecedented slowdown economic activity related increase unemployment since covid19 pandemic 30 million people filed claims unemployment stock markets significantly declined value majority states operate considered essential business however spread covid19 caused us modify business practices including limiting branch hours employee travel implementing workfromhome initiatives employees possible cancelling physical participation meetings training sessions march 27 2020 us congress passed cares act provided several forms economic relief designed defray impact covid19 subsequent weeks company experienced decrease loan applications extent covid19 may impact financial condition results operations uncertain april 2020 company began deferring loan payments customers company evaluated march 31 2020 consolidated financial statements subsequent events date consolidated financial statements issued result spread covid19 response government authorities economic uncertainties arisen likely negatively impact operational financial performance extent impact covid19 operational financial performance depend certain developments including duration spread outbreak impact customers employees markets operate uncertain cannot predicted management aware significant events occurring subsequent balance sheet date would material effect financial statements thereby requiring adjustment disclosure management’s report internal control financial reporting responsible establishing maintaining adequate internal control financial reporting defined rule 13a 15f securities exchange act 1934 assessed effectiveness internal control financial reporting march 31 2020 assessment based criteria established internal control integrated framework 2013 issued committee sponsoring organizations treadway commission coso internal control financial reporting process designed provide reasonable assurance regarding reliability financial reporting preparation financial statements external purposes accordance generally accepted accounting principles internal control financial reporting includes policies procedures 1pertain maintenance records reasonable detail accurately fairly reflect transactions dispositions assets 2provide reasonable assurance transactions recorded necessary permit preparation financial statements accordance generally accepted accounting principles receipts expenditures made accordance authorizations management board directors 3provide reasonable assurance regarding prevention timely detection unauthorized acquisition use disposition assets could material effect financial statements inherent limitations internal control financial reporting may prevent detect misstatements also assumptions regarding internal control financial reporting future periods based evaluation effectiveness prior period subject risk controls may become inadequate changes conditions degree compliance policies procedures may deteriorate based using coso criteria believe internal control financial reporting march 31 2020 effective independent registered public accounting firm audited consolidated financial statements included annual report issued attestation report effectiveness internal control financial reporting stated report independent registered public accounting firm shareholders board directors world acceptance corporation subsidiaries opinion financial statements audited accompanying consolidated balance sheets world acceptance corporation subsidiaries company march 31 2020 2019 related consolidated statements operations comprehensive income shareholders equity cash flows three years period ended march 31 2020 related notes consolidated financial statements collectively financial statements opinion financial statements present fairly material respects financial position company march 31 2020 2019 results operations cash flows three years period ended march 31 2020 conformity accounting principles generally accepted united states america also audited accordance standards public company accounting oversight board united states pcaob companys internal control financial reporting march 31 2020 based criteria established internal control integrated framework issued committee sponsoring organizations treadway commission 2013 report dated may 29 2020 expressed unqualified opinion effectiveness companys internal control financial reporting basis opinion financial statements responsibility company’s management responsibility express opinion company’s financial statements based audits public accounting firm registered pcaob required independent respect company accordance us federal securities laws applicable rules regulations securities exchange commission pcaob conducted audits accordance standards pcaob standards require plan perform audits obtain reasonable assurance whether financial statements free material misstatement whether due error fraud audits included performing procedures assess risks material misstatement financial statements whether due error fraud performing procedures respond risks procedures included examining test basis evidence regarding amounts disclosures financial statements audits also included evaluating accounting principles used significant estimates made management well evaluating overall presentation financial statements believe audits provide reasonable basis opinion critical audit matters critical audit matters communicated matters arising current period audit financial statements communicated required communicated audit committee 1 relate accounts disclosures material financial statements 2 involved especially challenging subjective complex judgments communication critical audit matters alter way opinion financial statements taken whole communicating critical audit matters providing separate opinions critical audit matters accounts disclosures relate allowance loan losses described notes 1 2 consolidated financial statements company established allowance loan losses 965 million march 31 2020 estimated using quantitative qualitative factors company’s general reserve 425 gross loan portfolio specific reserve represents 100 gross loan balance loans 91 days past due recency basis including bankrupt accounts category management considered adequacy allowance loan losses evaluating growth loan portfolio current levels chargeoffs current levels delinquencies current economic factors additionally management uses recency movement model considers rolling twelve months delinquency basis date last payment made customer determine expected chargeoffs compared allowance determine adjustments needed management utilizes significant judgment determining probable incurred losses identifying evaluating qualitative factors identified company’s allowance loan losses critical audit matter auditing management’s judgments qualitative factors regarding allowance loan losses requires high degree auditor judgment increased extent audit effort audit procedures related company’s allowance loan losses include following among others •we obtained understanding relevant controls related allowance loan losses tested controls design operating effectiveness including controls validation data within movement model recency basis b loan chargeoff activity c management review approval computed allowance loan losses •we tested completeness accuracy data inputs recency movement model •we evaluated company’s ability estimate losses comparing historical estimates actual loss experience •we evaluated reasonableness management’s delinquency amounts used within recency movement model performing following procedures ◦testing loan system’s recency aging calculation sample loans ◦analytically reviewing delinquency trends •we evaluated appropriateness general specific reserve testing mathematical accuracy quantitative calculations used company •we evaluated key assumptions qualitative factors identified company reasonableness comparing internal external sources rsm us llp served companys auditor since 2014 las vegas nevada may 29 2020 report independent registered public accounting firm shareholders board directors world acceptance corporation subsidiaries opinion internal control financial reporting audited world acceptance corporation subsidiaries’ company internal control financial reporting march 31 2020 based criteria established internal control integrated framework issued committee sponsoring organizations treadway commission 2013 opinion company maintained material respects effective internal control financial reporting march 31 2020 based criteria established internal control integrated framework issued committee sponsoring organizations treadway commission 2013 also audited accordance standards public company accounting oversight board united states pcaob consolidated balance sheets company march 31 2020 2019 related consolidated statements operations comprehensive income shareholders’ equity cash flows three years period ended march 31 2020 report dated may 29 2020 expressed unqualified opinion basis opinion company’s management responsible maintaining effective internal control financial reporting assessment effectiveness internal control financial reporting accompanying management’s report internal control financial reporting responsibility express opinion company’s internal control financial reporting based audit public accounting firm registered pcaob required independent respect company accordance us federal securities laws applicable rules regulations securities exchange commission pcaob conducted audit accordance standards pcaob standards require plan perform audit obtain reasonable assurance whether effective internal control financial reporting maintained material respects audit included obtaining understanding internal control financial reporting assessing risk material weakness exists testing evaluating design operating effectiveness internal control based assessed risk audit also included performing procedures considered necessary circumstances believe audit provides reasonable basis opinion definition limitations internal control financial reporting companys internal control financial reporting process designed provide reasonable assurance regarding reliability financial reporting preparation financial statements external purposes accordance generally accepted accounting principles companys internal control financial reporting includes policies procedures 1 pertain maintenance records reasonable detail accurately fairly reflect transactions dispositions assets company 2 provide reasonable assurance transactions recorded necessary permit preparation financial statements accordance generally accepted accounting principles receipts expenditures company made accordance authorizations management directors company 3 provide reasonable assurance regarding prevention timely detection unauthorized acquisition use disposition companys assets could material effect financial statements inherent limitations internal control financial reporting may prevent detect misstatements also projections evaluation effectiveness future periods subject risk controls may become inadequate changes conditions degree compliance policies procedures may deteriorate rsm us llp las vegas nevada may 29 2020 item 9item 8 financial statements supplementary data consolidated financial statements company independent auditors’ report thereon contained annual report incorporated reference response item 8 item 9item 8 financial statements supplementary data consolidated balance sheets see accompanying notes consolidated financial statements consolidated statements operations see accompanying notes consolidated financial statements consolidated statements shareholders’ equity comprehensive income see accompanying notes consolidated financial statements consolidated statements cash flows see accompanying notes consolidated financial statements notes consolidated financial statements 1 summary significant accounting policies companys accounting reporting policies accordance us generally accepted accounting principles conform general practices within finance company industry following description significant policies used preparing consolidated financial statements nature operations company smallloan consumer finance company headquartered greenville south carolina offers shortterm small loans mediumterm larger loans related credit insurance products ancillary products services individuals limited access sources consumer credit also offers income tax return preparation services access refund anticipation loans third party bank customer base others company also markets computer software related services financial services companies paradata financial systems “paradata” subsidiary march 31 2009 company operated 881 offices south carolina georgia texas oklahoma louisiana tennessee missouri illinois new mexico kentucky alabama company also operated 63 offices mexico company subject numerous lending regulations vary jurisdiction principles consolidation consolidated financial statements include accounts world acceptance corporation wholly owned subsidiaries “company” subsidiaries consist operating entities various states mexico paradata software company acquired fiscal 1994 wac insurance company ltd captive reinsurance company established fiscal 1994 servicios world acceptance corporation de mexico service company established fiscal 2006 significant intercompany balances transactions eliminated consolidation financial statements company’s foreign subsidiaries mexico prepared using local currency functional currency assets liabilities subsidiaries translated us dollars current exchange rate income expense translated average exchange rate period resulting translation gains losses recognized component equity “accumulated comprehensive income loss” use estimates preparation financial statements preparation financial statements conformity us generally accepted accounting principles requires management make estimates assumptions affect reported amount assets liabilities disclosure contingent liabilities date financial statements reported amounts revenues expenses reporting period significant item subject estimates assumptions could materially change near term allowance loan losses actual results could differ estimates business segments company reports operating segments accordance sfas 131 “disclosures segments enterprise related information” “sfas 131” operating segments components enterprise separate financial information available evaluated regularly chief operating decision maker deciding allocate resources assess performance sfas 131 requires public enterprise report measure segment profit loss certain specific revenue expense items segment assets information way operating segments determined items company one reportable segment consumer finance company revenue generating activities company including sale insurance products income tax preparation buying club automobile club done existing branch network conjunction compliment lending operation discrete financial information available activities meet criteria sfas 131 reported separately paradata provides data processing systems 107 separate finance companies including company march 31 2009 2008 paradata total assets 17 million represented less 1 total consolidated assets fiscal year end total net revenues system sales support paradata years ended march 31 2009 2008 2007 20 million 22 million 25 million respectively represented less 1 consolidated revenue year although paradata operating segment sfas 131 meet criteria require separate disclosure cash equivalents purposes statement cash flows company considers highly liquid investments maturity three months less date original issuance cash equivalents loans interest income company licensed originate direct cash consumer loans states georgia south carolina texas oklahoma louisiana tennessee missouri illinois new mexico kentucky alabama addition company also originates direct cash consumer loans mexico fiscal 2009 2008 company originated loans generally ranging 3000 terms 24 months less experience indicates majority direct cash consumer loans refinanced company accounts refinancing new loan generally customer must make multiple payments order qualify refinancing furthermore company’s lending policy predetermined lending amounts cases refinancing result advancing additional funds company believes advancement additional funds constitutes minor modification terms existing loan present value cash flows terms new loan 10 present value remaining cash flows terms original loan fees received direct costs incurred origination loans deferred amortized interest income contractual lives loans unamortized amounts recognized income time loans refinanced paid full loans carried gross amount outstanding reduced unearned interest insurance income net deferred origination fees direct costs allowance loan losses company generally calculates interest revenue loans using rule 78’s recognizes interest revenue using collection method cash method recognizing revenue company believes combination two methods differ materially interest method accrual method recognizing revenue charges late payments credited income collected company generally offers loans prevailing statutory rates terms exceed 24 months management believes carrying value approximates fair value loan portfolio allowance loan losses company maintains allowance loan losses amount management’s opinion adequate cover losses inherent existing loan portfolio company charges current earnings provision loan losses amounts added allowance maintain levels expected cover probable losses principal establishing allowance loan losses company takes consideration growth loan portfolio mix loan portfolio current levels chargeoffs current levels delinquencies current economic factors allowance loan losses allocated unallocated component company uses historical current economic information net chargeoffs loan type average loan life loan type estimate allocated component allowance loan losses method based fact many customers refinance loans prior contractual maturity average contractual loan terms approximately nine months average loan life approximately four months allowance loan loss model also reserves 100 principal loans greater 90 days past due recency basis loans charged earlier loans deemed uncollectible six months elapsed since date last full contractual payment company’s chargeoff policy consistently applied significant changes made policy periods reported management considers chargeoff policy evaluating appropriateness allowance loan losses statement position 033 sop 033 “accounting certain loans debt securities acquired transfer” prohibits carryover creation valuation allowances initial accounting loans acquired transfer within scope sop company believes loans acquired since adoption sop 033 shown evidence deterioration credit quality since origination therefore within scope sop 033 therefore company records acquired loans within scope sop 033 fair value based current interest rates less allowance uncollectibility property equipment property equipment stated cost less accumulated depreciation amortization depreciation recorded using straightline method estimated useful life related asset follows building 40 years furniture fixtures 5 10 years equipment 3 7 years vehicles 3 years amortization leasehold improvements recorded using straightline method lesser estimated useful life asset term lease additions premises equipment major replacements improvements added cost maintenance repairs minor replacements charged operating expense incurred assets retired otherwise disposed cost accumulated depreciation removed accounts gain loss reflected statement operations operating leases company’s office leases typically lease term three years contain lessee renewal options cancellation clauses event regulatory changes company typically renews leases one option periods accordingly company amortizes leasehold improvements shorter economic lives generally five years lease term considers renewal periods reasonably assured assets include cash surrender value life insurance policies prepaid expenses debt issuance cost deposits derivatives hedging activities company uses interest rate swaps foreign currency options economically hedge variable cash flows associated 50 million liborbased borrowings currency fluctuations interest rate swap agreements foreign currency options carried fair value changes fair value recorded period component statement operations see note 9 discussion related interest rate swaps march 31 2009 company foreign currency option outstanding intangible assets goodwill intangible assets include cost acquiring existing customers value assigned noncompete agreements customer lists amortized straight line accelerated basis estimated period benefit ranging 5 20 years weighted average approximately 9 years noncompete agreements amortized straight line basis term agreement company evaluates goodwill annually impairment fourth quarter fiscal year using market valuebased approach company one reporting unit consumer finance company multiple components lowest level individual offices components aggregated impairment testing similar economic characteristics company writes goodwill closes office goodwill assigned march 31 2009 company 83 offices recorded goodwill impairment longlived assets company assess impairment longlived assets including property equipment intangible assets whenever changes events indicate carrying amount may recoverable company assesses impairment assets generally office level based operating cash flows office plans office closings company write assets fair value based analysis sum expected future undiscounted cash flows less carrying amount assets company record material impairment charges fiscal years 2009 2008 2007 fair value financial instruments sfas 107 disclosures fair value financial instruments requires disclosures fair value financial instruments whether recognized balance sheet practicable estimate value cases quoted market prices available fair values based estimates using present value valuation techniques company’s financial instruments consist following cash loans receivable senior notes payable convertible senior subordinated notes payable note payables foreign currency options interest rate swaps fair value approximates carrying value instruments except convertible subordinated notes payable loans receivable originated prevailing market rates average life approximately four months given shortterm nature loans continually repriced current market rates company’s revolving credit facility note payables variable rate based margin libor reprice changes libor fair value convertible subordinated notes payable based current quoted market price 61701550 88385000 march 31 2009 2008 respectively carrying value convertible subordinated notes payable 95000000 110000000 march 31 2009 2008 respectively swaps option valued based information third party broker insurance premiums insurance premiums credit life accident health property unemployment insurance written connection certain loans net refunds applicable advance insurance commissions retained company remitted monthly insurance company commissions credited unearned insurance commissions recognized income life related insurance contracts using method similar used recognition interest income nonfile insurance nonfile premiums charged certain loans lieu recording perfecting companys security interest assets pledged premiums remitted thirdparty insurance company insurance related insurance premiums claims recoveries reflected accompanying consolidated financial statements except reduction loan losses see note 11 certain losses related loans recoverable life accident health property unemployment insurance claims reimbursed nonfile insurance claims subject policy limitations remaining losses charged allowance loan losses income taxes income taxes accounted asset liability method deferred tax assets liabilities recognized future tax consequences attributable differences financial statement carrying amounts existing assets liabilities respective tax bases operating loss tax credit carryforwards deferred tax assets liabilities measured using enacted tax rates expected apply taxable income years temporary differences expected recovered settled effect deferred tax assets liabilities change tax rates recognized income period includes enactment date beginning adoption fasb interpretation 48 “accounting uncertainty income taxes” april 1 2007 company recognizes effect income tax positions likely sustained recognized income tax positions measured largest amount greater 50 likely realized changes recognition measurement reflected period change judgment occurs prior adoption fin 48 company recognized effect income tax positions probably sustained supplemental cash flow information years ended march 31 2009 2008 2007 company paid interest 9373237 10788530 9686128 respectively years ended march 31 2009 2008 2007 company paid income taxes 37302456 32018340 26478254 respectively supplemental noncash financing activities years ended march 31 2009 2008 2007 consist earnings per share earnings per share “eps” computed accordance sfas 128 “earnings per share” basic eps includes dilution computed dividing net income weightedaverage number common shares outstanding period diluted eps reflects potential dilution securities could share earnings company potential common stock included diluted eps computation consists stock options restricted stock warrants computed using treasury stock method potential common stock related convertible senior notes included diluted eps computation using method prescribed eitf 048 “the effect contingently convertible instruments dilutive earnings per share” reclassifications certain reclassification entries made fiscal 2008 2007 conform fiscal 2009 presentation impact shareholders’ equity net income previously reported result reclassifications stockbased compensation december 2004 financial accounting standards board “fasb” issued sfas 123r “sfas 123r” “sharebased payment” requires companies recognize income statement grantdate fair value stock options equitybased compensation issued employees sfas 123r amendment sfas 123 “sfas 123” “accounting stockbased compensation” related implementation guidance sfas 123r change accounting guidance sharebased payment transactions parties employees provided sfas 123 sfas 123r way award classified affect measurement compensation cost liabilityclassified awards remeasured fair value balancesheet date award settled equityclassified awards measured grantdate fair value amortized subsequent vesting period subsequently remeasured fair value nonvested stock awards purposes recognizing stockbased compensation expense market price stock grant date fair value options estimated grant date using blackscholes option pricing model see note 15 march 31 2009 company several sharebased employee compensation plans described fully note 15 effective april 1 2006 company adopted sfas 123r using modified prospective transition method transition compensation cost recognized fiscal years 2007 2008 2009 includes compensation cost sharebased payments granted prior yet vested april 1 2006 based grant date fair value estimated accordance original provisions sfas 123 b compensation cost sharebased payments granted subsequent april 1 2006 based grantdate fair value estimated accordance provisions sfas 123r since compensation cost based awards ultimately expected vest reduced estimated forfeitures sfas 123r requires forfeitures estimated time grant revised necessary subsequent periods actual forfeitures differ estimates company elected expense grants awards graded vesting straightline basis requisite service period separately vesting portion award comprehensive income total comprehensive income consists net income comprehensive income loss company’s comprehensive income loss accumulated comprehensive income loss comprised foreign currency translation adjustments concentration risk year ended march 31 2009 company operated 11 states united states well mexico years ended march 31 2009 2008 2007 total revenues within companys four largest states measured total revenues accounted approximately 59 62 respectively companys total revenues recently issued accounting pronouncements business combinations december 2007 financial accounting standards board issued sfas 141 revised 2007 “sfas 141r” business combinations replaces sfas 141 business combinations sfas 141r requires acquirer recognize assets acquired liabilities assumed noncontrolling interest acquiree acquisition date measured fair values date limited exceptions sfas 141r also requires acquisitionrelated costs restructuring costs acquirer expected obligated incur acquisition date recognized separately business combination addition sfas 141r amends sfas 109 accounting income taxes require acquirer recognize changes amount deferred tax benefits recognizable business combination either income continuing operations period combination directly contributed capital sfas 141r applies prospectively business combinations fiscal years beginning december 15 2008 would therefore impact accounting future acquisitions beginning fiscal 2010 disclosures derivative instruments hedging activities march 19 2008 fasb adopted statement financial accounting standards 161 “sfas 161” “disclosure derivative instruments hedging activities” amends fasb statement 133 accounting derivative instruments hedging activities “sfas 133” sfas 161 requires companies derivative instruments disclose information company uses derivative instruments derivative instruments related hedged items accounted sfas 133 derivative instruments related hedged items affect companys financial position financial performance cash flows required disclosures include fair value derivative instruments gains losses tabular format information creditriskrelated contingent features derivative agreements counterparty credit risk companys strategies objectives using derivative instruments sfas 161 expands current disclosure framework sfas 133 sfas 161 effective prospectively periods beginning november 15 2008 see note 9 instruments indexed entity’s stock june 2008 fasb ratified eitf issue 075 “determining whether instrument embedded feature indexed entity’s stock” “eitf 075” eitf 075 provides new twostep model applied freestanding financial instrument embedded feature characteristics derivative paragraphs 69 sfas 133 accounting derivative instruments hedging activities determining whether financial instrument embedded feature indexed issuer’s stock thus able qualify sfas 133 paragraph 11a scope exception also clarifies impact foreign currency denominated strike prices marketbased employee stock option valuation instruments evaluation eitf 075 also applies freestanding financial instrument potentially settled entity’s stock regardless whether instrument characteristics derivative paragraphs 69 sfas 133 purposes determining whether instrument within scope eitf 0019 accounting derivative financial instruments indexed potentially settled company’s stock eitf 075 effective financial statements issued fiscal years beginning december 15 2008 interim periods within fiscal years early adoption prohibited company process assessing effect adoption eitf 075 consolidated financial statements useful life intangible assets april 2008 fasb issued fasb staff position fas 1423 ”determination useful life intangible assets” “fsp fas 1423” fsp fas 1423 applies recognized intangible assets guidance restricted estimating useful life recognized intangible assets fsp fas 1423 effective first fiscal period beginning december 15 2008 must applied prospectively intangible assets acquired effective date company required adopt fsp fas 1423 intangible assets acquired beginning first quarter fiscal 2010 convertible debt instruments may 2008 fasb issued fasb staff position apb 141 “accounting convertible debt instruments may settled cash upon conversion” “fsp apb 141” fsp apb 141 specifies issuers convertible debt instruments may settled cash upon conversion including partial cash settlement separately account liability equity components manner reflect entity’s nonconvertible debt borrowing rate interest cost recognized subsequent periods fsp apb 141 effective company beginning april 1 2009 applied restrospectively periods presented impact fsp apb 141 company significant specifically company’s 30 convertible subordinated notes issued october 2006 total proceeds 110000000 fall scope fsp apb 141 due fact may settled cash shares company’s common stock combination cash shares company’s common stock company’s election result company bifurcate 30 convertible subordinated notes debt equity components accrete value debt back face value additional noncash interest expense company estimates result approximately 113 million additional interest expense recorded 2012 approximately 43 million recorded 2010 fair value measurements september 2006 fasb issued sfas 157 “fair value measurements” “sfas 157” defines fair value establishes framework measuring fair value expands disclosures fair value measurements sfas 157 clarifies fair value price would received sell asset price paid transfer liability principal advantageous market available entity orderly transaction market participants measurement date sfas 157 required applied whenever another financial accounting standard requires permits asset liability measured fair value sfas 157 expand use fair value new circumstances effective april 1 2008 first day fiscal 2009 company adopted statement financial accounting standards 159 sfas 159 “the fair value option financial assets financial liabilities” sfas 159 permits entities choose measure many financial instruments certain items fair value company elect fair value reporting option assets liabilities previously recorded fair value see note 17 “fair value” “notes consolidated financial statements” herein additional disclosures regarding fair value financial instruments 2 accumulated comprehensive loss company applies provision fasb statement financial accounting standards 130 “reporting comprehensive income” following summarizes accumulated comprehensive loss march 31 2009 2008 2007 3 allowance loan losses following summary changes allowance loan losses years ended march 31 2009 2008 2007 company follows statement position 033 sop 033 accounting certain loans debt securities acquired transfer prohibits carry creation valuation allowances initial accounting loans acquired transfer within scope sop management believes loan shown deterioration 60 days delinquent company believes loans acquired shown evidence deterioration credit quality since origination therefore within scope sop 033 company pay consideration record acquired loans 60 days delinquent loans acquired 60 days past due included scope sop 033 therefore subsequent refinances restructures loans would accounted new loan years ended march 31 2009 2008 2007 company recorded adjustments approximately 05 million 01 million 09 million respectively allowance loan losses connection acquisitions accordance generally accepted accounting principles adjustments represent allowance loan losses acquired loans meet scope sop 033 also see note 1 4 property equipment property equipment consist depreciation expense approximately 4784000 3760000 3058000 years ended march 31 2009 2008 2007 respectively 5 intangible assets following table provides gross carrying amount related accumulated amortization definitelived intangible assets estimated amortization expense intangible assets years ended march 31 follows 22 million 2010 17 million 2011 14 million 2012 11 million 2013 07 million 2014 aggregate 19 million years thereafter 6 goodwill following summarizes changes carrying amount goodwill year ended march 31 2009 2008 company performed annual impairment test march 31 2009 determined none recorded goodwill impaired 7 notes payable companys notes payable consist senior notes payable 187000000 revolving credit facility provides borrowings 187 million 113310000 outstanding march 31 2009 subject borrowing base formula additional 30 million available seasonal revolving credit commitment november 15 year march 31 immediately succeeding year cover increase loan demand period company may borrow option rate prime libor plus 180 march 31 2009 2008 company’s interest rate 325 525 respectively unused amount available revolver march 31 2009 737 million excluding 30 million dollar seasonal line expires march 31 revolving credit facility commitment fee 0375 per annum unused portion commitment borrowings revolving credit facility mature september 30 2010 member company’s board directors served director south financial group parent carolina first bank march 31 2009 carolina first bank committed fund 259 million credit facility including 36 million seasonal line substantially company’s assets pledged collateral borrowings revolving credit agreement convertible senior notes october 10 2006 company issued 110 million aggregate principal amount 30 convertible senior subordinated notes due october 1 2011 “convertible notes” qualified institutional brokers accordance rule 144a securities act 1933 interest convertible notes payable semiannually arrears april 1 october 1 year commencing april 1 2007 convertible notes company’s direct senior subordinated unsecured obligations rank equally right payment existing future unsecured senior subordinated debt company senior right payment company’s existing future subordinated debt junior company’s existing future senior debt convertible notes structurally junior liabilities company’s subsidiaries convertible notes convertible prior maturity subject certain conditions described initial conversion rate 160229 shares per 1000 principal amount notes represents initial conversion price approximately 6241 per share subject adjustment upon conversion company pay cash principal amount notes converted deliver shares common stock extent daily conversion value exceeds proportionate principal amount based 30 tradingday observation period holders may convert convertible notes prior july 1 2011 one following conditions satisfied • fiscal quarter commencing december 31 2006 last reported sale price common stock least 20 trading days period 30 consecutive trading days ending last trading day preceding fiscal quarter greater equal 120 applicable conversion price last trading day • five business day period ten consecutive trading day period trading price per note day ten consecutive trading day period less 98 product last reported sale price company’s common stock applicable conversion rate day • occurrence specified corporate transactions convertible notes converted connection certain fundamental changes occur prior october 1 2011 company may obligated pay additional makewhole premium respect convertible notes converted company undergoes certain fundamental changes holders convertible notes may require company purchase convertible notes price equal 100 principal amount convertible notes purchased plus accrued interest excluding purchase date holders may also surrender convertible notes conversion anytime july 1 2011 close business third business day immediately preceding maturity date regardless whether foregoing conditions satisfied contingent conversion feature required bifurcated accounted separately provisions sfas 133 “accounting derivative instruments hedging activities” aggregate underwriting commissions debt issuance costs incurred respect issuance convertible notes approximately 36 million amortized period convertible senior notes outstanding convertible notes hedge strategy concurrent connection sale convertible notes company purchased call options purchase shares company’s common stock equal conversion rate date options exercised convertible notes price 6241 per share cost call options totaled 246 million company also sold warrants counterparties purchase company aggregate 1762519 shares company’s common stock price 7397 per share received net proceeds sale warrants 162 million taken together call option warrant agreements increased effective conversion price convertible notes 7397 per share call options warrants must settled net shares date settlement market price per share company’s common stock 7397 per share company required deliver shares common stock representing value call options warrants excess 7397 per share warrants strike price 7397 generally exercisable anytime company issued sold warrants transaction exempt registration requirements securities act 1933 amended virtue section 42 thereof underwriting commissions discounts connection sale warrants accordance eitf 0019 “accounting derivative financial instruments indexed potentially settled company’s stock” company accounted call options warrants net reduction additional paid capital required recognize subsequent changes fair value call options warrants consolidated financial statements debt covenants various debt agreements contain restrictions amounts permitted indebtedness investments working capital repurchases common stock cash dividends march 31 2009 387 million available covenants payment cash dividends repurchase companys common stock repurchase subordinated debt addition agreements restrict liens assets sale transfer subsidiaries company compliance various debt covenants periods presented aggregate annual maturities notes payable fiscal years subsequent march 31 2009 follows 2010 0 2011 113310000 2012 95000000 2013 0 none thereafter 8 extinguishment debt december 2008 march 2009 company repurchased privately negotiated transactions aggregate principal amount 15 million convertible senior subordinated notes due october 11 2011 “convertible notes” average discount face value approximately 388 company spent approximately 92 million aggregate repurchases left 95 million principal amount convertible notes outstanding transactions treated extinguishment debt accounting purposes company recorded gain approximately 55 million repurchase convertible notes partially offset writeoff 300000 deferred financing costs associated repurchase cancellation convertible notes may 2009 company repurchased privately negotiated transaction 10 million average discount face value approximately 330 company spent approximately 68 million recorded gain approximately 23 million partially offset writeoff 165000 deferred financing cost associated repurchase cancellation convertible notes may 2009 850 million principal amount convertible notes outstanding 9 derivative financial instruments december 8 2008 company entered interest rate swap notional amount 20 million economically hedge portion cash flows floating rate revolving credit facility terms interest rate swap company pays fixed rate 24 20 million notional amount receives payments counterparty based 1 month libor rate term ending december 8 2011 interest rate differentials paid received swap agreement recognized adjustments interest expense october 5 2005 company entered interest rate swap notional amount 30 million economically hedge portion cash flows floating rate revolving credit facility terms interest rate swap company pay fixed rate 4755 30 million notional amount receive payments counterparty based 1 month libor rate term ending october 5 2010 interest rate differentials paid received swap agreement recognized adjustments interest expense may 15 2008 company entered 10 million foreign currency exchange option economically hedge foreign exchange risk relative mexican peso terms option contract company could exchange 10 million us dollars rate 110 mexican pesos per dollar option sold october 2008 company recorded 15 million net gain fair value company’s interest rate derivative instruments included consolidated balance sheets follows interest rate swaps currently liability positions therefore significant risk loss related counterparty credit risk gains losses recognized company’s consolidated statements operations result interest rate swaps foreign currency exchange option follows company enter derivative financial instruments trading speculative purposes purpose instruments reduce exposure variability future cash flows attributable portion liborbased borrowings reduce variability foreign cash flows company currently accounting derivative instruments using cash flow hedge accounting provisions sfas 133 therefore changes fair value swap option included earnings income expenses using derivative instruments company exposed credit market risk credit risk counterparty derivative instrument fail perform exists extent fair value gain derivative market risk adverse effect financial instruments change interest rates implied volatility exchange rates company manages market risk associated interest rate contracts currency options establishing monitoring limits types degree risk may undertaken market risk associated derivatives used interest rate foreign currency risk management activities fully incorporated company’s market risk sensitivity analysis 10 insurance commissions income insurance commissions income years ending march 31 2009 2008 2007 consist 11 nonfile insurance company maintains nonfile insurance coverage unaffiliated insurance company following summary nonfile insurance activity years ended march 31 2009 2008 2007 12 leases company conducts operations leased facilities except owned corporate office building companys leases typically lease term three years contain lessee renewal options majority leases provide lessee pays property taxes insurance common area maintenance costs expected normal course business expiring leases renewed companys option replaced leases acquisitions properties company’s leases operating leases future minimum lease payments noncancelable operating leases march 31 2009 follows rental expense cancelable noncancelable operating leases years ended march 31 2009 2008 2007 14257168 12198271 9555103 respectively 13 income taxes income tax expense benefit consists income tax expense 36920499 34721036 29274000 years ended march 31 2009 2008 2007 respectively differed amounts computed applying us federal income tax rate 35 pretax income continuing operations result following tax effects temporary differences give rise significant portions deferred tax assets deferred tax liabilities march 31 2009 2008 presented valuation allowance deferred tax assets march 31 2009 2008 1214 406639 respectively valuation allowance total deferred tax assets march 31 2009 2008 relates state net operating losses assessing realizability deferred tax assets management considers whether likely portion deferred tax assets realized ultimate realization deferred tax assets dependent upon generation future taxable income periods temporary differences become deductible management considers scheduled reversals deferred tax liabilities projected future taxable income tax planning strategies making assessment order fully realize deferred tax asset company need generate future taxable income prior expiration deferred tax assets governed tax code based upon level historical taxable income projections future taxable income periods deferred tax assets deductible management believes likely company realize benefits deductible differences net existing valuation allowances march 31 2009 amount deferred tax asset considered realizable however could reduced near term estimates future taxable income carryforward period reduced required assess whether earnings mexican foreign subsidiary permanently reinvested respective foreign jurisdiction previously untaxed foreign earnings company longer permanently reinvested thus become taxable united states march 31 2009 company determined 260996 cumulative undistributed net earnings well future net earnings mexican foreign subsidiary permanently reinvested company adopted provision financial standards accounting board interpretation 48 accounting uncertainty income taxes “fin 48” interpretation fasb statement 109 april 1 2007 result implementation interpretation 48 company recognized charge approximately 550000 april 1 2007 balance retained earnings march 31 2009 march 31 2008 company 4715681 8764255 total gross unrecognized tax benefits including interest respectively total approximately 2747945 2208734 respectively represents amount unrecognized tax benefits permanent nature recognized would affect annual effective tax rate reconciliation beginning ending amount unrecognized tax benefits follows company’s continuing practice recognize interest penalties related income tax matters income tax expense march 31 2009 company 843656 accrued gross interest 395679 current period benefit company determined possible total amount unrecognized tax benefits related various state examinations significantly increase decrease within twelve months reporting date however time reasonable estimate range possible change cannot made correspondence conducted state taxing authorities company subject us mexican income taxes well various state local jurisdictions exceptions company longer subject us federal state local nonus income tax examinations tax authorities years 2004 although carryforward attributes generated prior 2004 may still adjusted upon examination taxing authorities either used future period income tax returns 2001 2006 examination state authority completed examinations issued proposed assessment tax years 2001 2006 consideration proposed assessment total gross unrecognized tax benefit increased 27 million fiscal 2008 time early predict final outcome tax issue future recoverability charge tax issue resolved company expects accrue approximately 40000 per quarter interest 14 earnings per share following reconciliation numerators denominators basic diluted eps calculations options purchase 130583 183030 77556 shares common stock various prices outstanding years ended march 31 2009 2008 2007 respectively included computation diluted eps option exercise price greater average market price common shares related convertible senior notes payable 1762519 related warrants included computation diluted eps effect instruments antidilutive 15 benefit plans retirement plan company provides defined contribution employee benefit plan 401k plan covering fulltime employees whereby employees invest maximum designated year company makes matching contribution equal 50 employees contributions first 6 gross pay companys expense plan 1078987 1078896 948519 years ended march 31 2009 2008 2007 respectively supplemental executive retirement plan company instituted supplemental executive retirement plan “serp” nonqualified executive benefit plan company agrees pay executive additional benefits future usually retirement return continued employment executive company selects key executives participate serp unfunded plan means specific assets set aside company connection establishment plan executive rights agreement beyond general creditor company years ended march 31 2009 2008 2007 contributions 806792 836977 474865 respectively charged operations related serp unfunded liability 4722000 4000000 2989000 march 31 2009 2008 2007 respectively three years presented unfunded liability estimated using following assumptions annual salary increase 35 3 years discount rate 6 3 years retirement age 65 executive deferred compensation plan company executive deferral plan eligible executives may elect defer portion incentive compensation paid executive incentive plan march 31 2009 2008 balance outstanding 0 101123 respectively plan stock option plans company 1992 stock option plan 1994 stock option plan 2002 stock option plan 2005 stock option plan benefit certain directors officers key employees plans 6010000 shares authorized common stock reserved issuance pursuant grants approved compensation stock option committee board directors stock options granted plans maximum duration 10 years may subject certain vesting requirements generally one year directors five years officers key employees priced market value companys common stock date grant option march 31 2009 841700 shares available grant plans fair value company’s stock options granted estimated date grant using blackscholes optionpricing model requires input highly subjective assumptions changes materially affect fair value estimate assumptions include estimating length time employees retain vested stock options exercising estimated volatility common stock price expected term number options ultimately complete vesting requirements additionally may factors would otherwise significant effect value employee stock options granted considered model accordingly management believes blackscholes optionpricing model provides reasonable estimate fair value model necessarily provide precise single measure fair value company’s employee stock options weightedaverage fair value grant date options issued years ended march 31 2009 2008 2007 851 1441 2644 per share respectively following summary company’s weightedaverage assumptions used estimate weightedaverage per share fair value options granted date grant using blackscholes optionpricing model expected stock price volatility based historical volatility company’s stock period approximating expected life expected life represents period time options expected outstanding grant date riskfree interest rate reflects interest rate grant date zerocoupon us governmental bonds remaining life similar expected option term option activity year ended march 31 2009 follows aggregate intrinsic value reflected table represents total pretax intrinsic value difference closing stock price march 31 2009 exercise price multiplied number inthemoney options would received option holders option holders exercised options march 31 2009 amount change market price per share changes total intrinsic value options exercised periods ended march 31 2009 2008 2007 follows march 31 2009 total unrecognized stockbased compensation expense related nonvested stock options amounted approximately 63 million expected recognized weightedaverage period approximately 35 years following table summarizes information regarding stock options outstanding march 31 2009 restricted stock november 10 2008 company granted 50000 shares restricted stock equity classified grant date fair value 1685 per share certain executive officers onethird restricted stock grant vested immediately onethird vest first second anniversary grant date company granted additional 29100 shares restricted stock equity classified grant date fair value 1685 per share executive officers 29100 shares vest three years based company’s compounded annual eps growth according following schedule may 19 2008 company granted 12000 shares restricted stock equity classified grant date fair value 4367 per share independent directors certain officer onehalf restricted stock vested immediately half vest first anniversary grant november 28 2007 company granted 20800 shares restricted stock equity classified grant date fair value 3094 per share certain executive officers onethird restricted stock vested immediately onethird vest first second anniversary grant company granted additional 15150 shares restricted stock equity classified grant date fair value 3094 per share executive officers 15150 shares vest three years based company’s compounded annual eps growth according following schedule november 12 2007 company granted 8000 shares restricted stock equity classified grant date fair value 2819 per share certain officers onethird restricted stock vested immediately onethird vest first second anniversary grant compensation expense related restricted stock based number shares expected vest fair market value common stock grant date company recognized 17 million 16 million compensation expense years ended march 31 2009 2008 respectively related restricted stock included component general administrative expenses consolidated statements operations purposes accruing expense shares expected vest march 31 2009 approximately 12 million unrecognized compensation cost related unvested restricted stock awards granted expected recognized next two years summary status company’s restricted stock march 31 2009 changes year ended march 31 2009 presented total sharebased compensation included component net income years ended march 31 follows 16 acquisitions following table sets forth acquisition activity company last three fiscal years company evaluates acquisition determine transaction meets definition business combination transactions meet definition business combination accounted sfas 141 acquisitions accounted asset purchases acquisitions independent third parties acquisition results new office company records transaction business combination since office acquired continue generate loans company typically retains existing employees office location purchase price allocated estimated fair value tangible assets acquired estimated fair value identified intangible assets acquired generally noncompete agreements customer lists remainder allocated goodwill year ended march 31 2009 11 acquisitions recorded business combinations acquisition portfolio loans company records transaction asset purchase asset purchase goodwill recorded purchase price allocated estimated fair value tangible intangible assets acquired year ended march 31 2009 11 acquisitions recorded asset acquisitions company’s acquisitions include tangible assets generally loans furniture equipment intangible assets generally noncompete agreements customer lists goodwill recorded fair values estimated pursuant processes described acquired loans valued net loan balance given shortterm nature loans generally four months loans subject continual repricing current rates management believes net loan balances approximate fair value furniture equipment valued specific purchase price agreed parties time acquisition management believes approximates fair values noncompete agreements valued stated amount paid party agreements company believes approximates fair value fair value customer lists based valuation model utilizes company’s historical data estimate value acquired customer lists business combination remaining excess purchase price fair value tangible assets customer list noncompete agreements allocated goodwill offices company acquires small privately owned offices sufficient historical data determine attrition company believes customers acquired characteristics perform similarly customers therefore company utilized attrition patterns customers developing method reevaluated periodically customer lists allocated office level evaluated impairment office level triggering event occurs accordance sfas 144 triggering event occurs impairment loss customer list generally remaining unamortized customer list balance acquisitions original fair value customer list allocated office generally less 100000 management believes event triggering event occur impairment loss unamortized customer list would immaterial results acquisitions included company’s consolidated financial statements since respective acquisition dates pro forma impact purchases though acquired beginning periods presented would material effect results operations reported 17 fair value effective april 1 2008 first day fiscal 2009 company adopted provisions statement financial accounting standards 157 sfas 157 “fair value measurements” financial assets liabilities well assets liabilities carried fair value recurring basis financial statements sfas 157 defines fair value establishes framework measuring fair value expands disclosures fair value measurements sfas 157 applies accounting pronouncements financial accounting standards board fasb previously concluded fair value relevant measurement attribute accordingly sfas 157 require new fair value measurements company applied provisions fsp fas 1572 effective date fasb statement 157 defers provisions sfas 157 nonfinancial assets liabilities first fiscal period beginning november 15 2008 deferred nonfinancial assets liabilities include items goodwill nonamortizable intangibles company required adopt sfas 157 nonfinancial assets liabilities first quarter fiscal 2010 company’s management still evaluating impact company’s consolidated financial statements financial assets liabilities measured fair value grouped three levels prioritize inputs used measure fair value assets liabilities levels level 1 quoted prices unadjusted active markets identical assets liabilities level 2 inputs quoted prices observable assets liabilities either directly indirectly inputs include quoted prices similar assets liabilities active markets quoted prices identical similar assets liabilities market less active level 3 unobservable inputs assets liabilities reflecting reporting entity’s assumptions following financial liabilities measured fair value recurring basis march 31 2009 company’s interest rate swap valued using “income approach” valuation technique method used valuation techniques convert future amounts single present amount measurement based value indicated current market expectations future amounts 18 quarterly information unaudited following sets forth selected quarterly operating data 19 litigation march 31 2009 company certain subsidiaries named defendants various legal actions arising normal business activities damages various amounts claimed although amount ultimate liability respect matters cannot determined company believes liability material adverse effect company’s results operations financial condition taken whole management’s report internal control financial reporting responsible establishing maintaining adequate internal control financial reporting defined rules 13a 15f securities exchange act 1934 assessed effectiveness internal control financial reporting march 31 2009 assessment based criteria set forth committee sponsoring organizations treadway commission coso internal controlintegrated framework internal control financial reporting process designed provide reasonable assurance regarding reliability financial reporting preparation financial statements external purposes accordance generally accepted accounting principles internal control financial reporting includes policies procedures 1 pertain maintenance records reasonable detail accurately fairly reflect transactions dispositions assets 2 provide reasonable assurance transactions recorded necessary permit preparation financial statements accordance generally accepted accounting principles receipts expenditures made accordance authorizations management board directors 3 provide reasonable assurance regarding prevention timely detection unauthorized acquisition use disposition assets could material effect financial statements inherent limitations internal control financial reporting may prevent detect misstatements also assumptions regarding internal control financial reporting future periods based evaluation effectiveness prior period subject risk controls may become inadequate changes conditions degree compliance policies procedures may deteriorate based using coso criteria believe internal control financial reporting march 31 2009 effective independent registered public accounting firm audited consolidated financial statements included annual report issued attestation report effectiveness internal control financial reporting stated report mclean iii kelly malson mclean iii kelly malson chairman chief executive officer senior vice president chief financial officer report independent registered public accounting firm board directors world acceptance corporation audited world acceptance corporation subsidiaries’ “company’s” internal control financial reporting march 31 2009 based criteria established internal control integrated framework issued committee sponsoring organizations treadway commission coso company’s management responsible maintaining effective internal control financial reporting assessment effectiveness internal control financial reporting included accompanying management’s report internal control financial reporting responsibility express opinion company’s internal control financial reporting based audit conducted audit accordance standards public company accounting oversight board united states standards require plan perform audit obtain reasonable assurance whether effective internal control financial reporting maintained material respects audit included obtaining understanding internal control financial reporting assessing risk material weakness exists testing evaluating design operating effectiveness internal control based assessed risk audit also included performing procedures considered necessary circumstances believe audit provides reasonable basis opinion companys internal control financial reporting process designed provide reasonable assurance regarding reliability financial reporting preparation financial statements external purposes accordance generally accepted accounting principles companys internal control financial reporting includes policies procedures 1 pertain maintenance records reasonable detail accurately fairly reflect transactions dispositions assets company 2 provide reasonable assurance transactions recorded necessary permit preparation financial statements accordance generally accepted accounting principles receipts expenditures company made accordance authorizations management directors company 3 provide reasonable assurance regarding prevention timely detection unauthorized acquisition use disposition company’s assets could material effect financial statements inherent limitations internal control financial reporting may prevent detect misstatements also projections evaluation effectiveness future periods subject risk controls may become inadequate changes conditions degree compliance policies procedures may deteriorate opinion company maintained material respects effective internal control financial reporting march 31 2009 based criteria established internal control integrated framework issued committee sponsoring organizations treadway commission coso also audited accordance standards public company accounting oversight board united states consolidated balance sheets company march 31 2009 2008 related consolidated statements operations shareholders’ equity comprehensive income cash flows years threeyear period ended march 31 2009 report dated may 29 2009 expressed unqualified opinion consolidated financial statements greenville south carolina may 29 report independent registered public accounting firm board directors world acceptance corporation audited accompanying consolidated balance sheets world acceptance corporation subsidiaries “company” march 31 2009 2008 related consolidated statements operations shareholders’ equity comprehensive income cash flows years threeyear period ended march 31 2009 consolidated financial statements responsibility company’s management responsibility express opinion consolidated financial statements based audits conducted audits accordance standards public company accounting oversight board united states standards require plan perform audit obtain reasonable assurance whether financial statements free material misstatement audit includes examining test basis evidence supporting amounts disclosures financial statements audit also includes assessing accounting principles used significant estimates made management well evaluating overall financial statement presentation believe audits provide reasonable basis opinion consolidated financial statements referred present fairly material respects financial position world acceptance corporation subsidiaries march 31 2009 2008 results operations cash flows years threeyear period ended march 31 2009 conformity us generally accepted accounting principles discussed note 1 company adopted fasb interpretation 48 accounting uncertainty income taxes effective april 1 2007 also audited accordance standards public company accounting oversight board united states world acceptance corporation’s internal control financial reporting march 31 2009 based criteria established internal control integrated framework issued committee sponsoring organizations treadway commission coso report dated may 29 2009 expressed unqualified opinion effectiveness company’s internal control financial reporting greenville south carolina may 29 item 9item 8 financial statements supplementary data consolidated balance sheets see accompanying notes consolidated financial statements consolidated statements operations see accompanying notes consolidated financial statements consolidated statements comprehensive income see accompanying notes consolidated financial statements consolidated statements shareholders equity see accompanying notes consolidated financial statements consolidated statements cash flows see accompanying notes consolidated financial statements notes consolidated financial statements 1 summary significant accounting policies companys accounting reporting policies accordance gaap conform general practices within finance company industry following description significant policies used preparing consolidated financial statements nature operations company smalldollar consumer finance installment loan company headquartered greenville south carolina offers shortterm small loans mediumterm larger loans related credit insurance products ancillary products services individuals limited access sources consumer credit also offers income tax return preparation services customer base others march 31 2019 company operated 1193 branches alabama georgia idaho illinois indiana kentucky louisiana mississippi missouri new mexico oklahoma south carolina tennessee texas utah wisconsin branches aforementioned states operate one following names amicable finance colonial finance freeman finance general credit midwestern loans world acceptance world finance august 3 2018 company affiliates completed sale companys mexico operating segment entirety effective july 1 2018 thus company operated branches mexico march 31 2019 first quarter fiscal 2019 branches mexico operated name préstamos avance préstamos viva company subject numerous lending regulations vary jurisdiction principles consolidation consolidated financial statements include accounts world acceptance corporation whollyowned subsidiaries “company” subsidiaries consist operating entities various states paradata financial systems software company acquired fiscal 1994 wac insurance company ltd captive reinsurance company established fiscal 1994 significant intercompany balances transactions eliminated consolidation financial statements company’s former foreign subsidiaries mexico prepared using local currency functional currency assets liabilities subsidiaries translated us dollars thencurrent exchange rate income expense translated average exchange rate applicable period resulting translation gains losses recognized component equity “accumulated comprehensive loss net” use estimates preparation consolidated financial statements preparation financial statements conformity gaap requires management make estimates assumptions affect reported amount assets liabilities disclosure contingent liabilities date financial statements reported amounts revenue expenses reporting period actual results could differ estimates significant item subject estimates assumptions could materially change near term allowance loan losses reclassification certain prior period amounts reclassified conform current presentation reclassifications impact previously reported net income shareholders equity business segments company reports operating segments accordance fasb asc topic 280 operating segments components enterprise separate financial information available evaluated regularly chief operating decision maker deciding allocate resources assess performance fasb asc topic 280 requires public enterprise report measure segment profit loss certain specific revenue expense items segment assets information way operating segments determined items company one reportable segment revenue generating activities company including sale insurance products income tax preparation automobile club done within existing branch network conjunction complement lending operations discrete financial information available activities meet criteria fasb asc topic 280 considered operating segments cash equivalents purposes statement cash flows company considers highly liquid investments maturity three months less date original issuance cash equivalents march 31 2019 2018 company 51 million 55 million respectively restricted cash associated captive insurance subsidiary reinsures portion credit insurance sold connection loans made company loans interest fee income company licensed originate consumer loans states alabama georgia idaho illinois indiana kentucky louisiana mississippi missouri new mexico oklahoma south carolina texas tennessee utah wisconsin fiscal 2019 2018 2017 company originated loans generally ranging 4000 terms 48 months fewer experience indicates majority consumer loans refinanced company accounts majority refinancings new loans generally customer must make multiple payments order qualify refinancing furthermore companys lending policy predetermined lending amounts cases refinancing result advancing additional funds company believes advancement additional funds constitutes minor modification terms existing loan present value cash flows terms new loan 10 present value remaining cash flows terms original loan following table sets forth information loan products fiscal 2019 gross loans receivable march 31 2019 2018 consisted following fees received direct costs incurred origination loans deferred amortized interest income contractual lives loans using interest method unamortized amounts recognized income time loans refinanced paid full except refinancings constitute minor modification loans carried gross amount outstanding reduced unearned interest insurance income net deferred origination fees direct costs allowance loan losses company recognizes interest fee income using interest method charges late payments credited income collected exception tax advance loans interest free company offers loans prevailing statutory rates terms exceed 48 months management believes carrying value approximates fair value loan portfolio nonaccrual policy accrual interest discontinued loan 61 days past contractual due date interest accrual discontinued unpaid accrued interest reversed interest income loan nonaccrual status interest revenue recognized payment received loan moves nonaccrual status remains nonaccrual status paid charged refinanced allowance loan losses company maintains allowance loan losses amount managements opinion adequate provide incurred losses inherent existing loan portfolio company charges current earnings provision loan losses amounts added allowance maintain levels expected cover probable incurred losses principal establishing allowance loan losses company takes consideration growth loan portfolio current levels chargeoffs current levels delinquencies current economic factors company uses mathematical calculation determine initial allowance end reporting period calculation originated managements estimate future chargeoffs used allocate expenses branch level two components calculating allowance loan losses company refers general reserve specific reserve calculation starting point time needed additional provisions added determined management make allowance adequate general reserve 425 gross loan portfolio specific reserve represents 100 gross loan balance loans 91 days past due recency basis including bankrupt accounts category methodology based historical data showing collection loans 91 days past due remote process performed determine adequacy allowance loan losses considers trends current levels delinquencies chargeoff levels economic trends energy food prices primary tool used movement model recency basis considers rolling twelve months delinquency determine expected chargeoffs sum expected chargeoffs determined recency movement model plus amount delinquent refinancings compared allowance resulting mathematical calculation determine adjustments needed make allowance adequate management would also determine adjustments needed consolidated annual provision loan losses less total chargeoffs management uses precision level 5 allowance loan losses compared aforementioned recency movement model determining adjustments needed companys policy charge loans earlier loans deemed uncollectible six months elapsed since date last full contractual payment companys chargeoff policy consistently applied changes made periods reported companys historical annual chargeoff rate net chargeoffs percentage average net loans receivable past 10 years ranged 128 162 net loans management considers chargeoff policy evaluating appropriateness allowance loan losses impaired loans company defines impaired loans bankrupt accounts 91 days past due recency basis accordance company’s chargeoff policy loan deemed uncollectible 100 net investment charged except case borrower filed bankruptcy march 31 2019 bankrupt accounts charged approximately 61 million bankrupt accounts 91 days past due recency basis reserved 100 gross loan balance company also considers accounts 91 days past due recency basis impaired accounts reserved 100 gross loan balance delinquency primary credit quality indicator used determine credit quality companys receivables additional requirements asc 31010 disclosed note 2 property equipment property equipment stated cost less accumulated depreciation amortization depreciation recorded using straightline method estimated useful life related asset follows buildings 25 40 years furniture fixtures 5 10 years equipment 3 7 years vehicles 3 years amortization leasehold improvements recorded using straightline method lesser estimated useful life asset term lease additions premises equipment major replacements improvements added cost maintenance repairs minor replacements charged operating expense incurred assets retired otherwise disposed cost accumulated depreciation removed accounts gain loss reflected consolidated statement operations operating leases company’s branch leases typically lease term three five years contain lessee renewal options cancellation clauses event regulatory changes company typically renews leases one option periods accordingly company amortizes leasehold improvements shorter economic lives generally five years lease term considers renewal periods reasonably assured assets include cash surrender value life insurance policies prepaid expenses debt issuance costs deposits intangible assets goodwill intangible assets include cost acquiring existing customers customer lists fair value assigned noncompete agreements customer lists amortized straight line accelerated basis estimated period benefit ranging 8 230 years weighted average approximately 133 years noncompete agreements amortized straight line basis term agreement ranging 3 53 years weighted average approximately 48 years customer lists allocated branch level evaluated impairment branch level triggering event occurs accordance fasb asc topic 3601005 triggering event occurs impairment loss customer list generally remaining unamortized customer list balance acquisitions original fair value customer list allocated branch less 100000 management believes event triggering event occur impairment loss unamortized customer list would immaterial noncompete agreements valued stated amount paid party agreements company believes approximates fair value fair value customer lists based valuation model utilizes company’s historical data estimate value acquired customer lists business combination remaining excess purchase price fair value tangible assets customer list noncompete agreements allocated goodwill branches company acquires small privatelyowned branches sufficient historical data determine customer attrition company believes customers acquired characteristics perform similarly customers therefore company utilized attrition patterns customers developing estimate attrition acquired customers estimation method reevaluated periodically company evaluates goodwill annually impairment fourth quarter fiscal year using market valuebased approach company one reporting unit company multiple components lowest level individual branches company’s components aggregated impairment testing similar economic characteristics impairment longlived assets company assesses impairment longlived assets including property equipment intangible assets whenever changes events indicate carrying amount may recoverable company assesses impairment assets generally branch level based operating cash flows branch company’s plans branch closings company write assets fair value based analysis sum expected future undiscounted cash flows less carrying amount assets company record impairment charges fiscal year ended 2019 2018 2017 fair value financial instruments fasb asc topic 825 requires disclosures fair value financial instruments regardless whether financial instrument recognized balance sheet practicable estimate value cases quoted market prices available fair values based estimates using present value valuation techniques company’s financial instruments periods reported consist following cash equivalents loans receivable senior notes payable fair value approximates carrying value instruments loans receivable originated prevailing market rates average life approximately 8 months given shortterm nature loans continually repriced current market rates company’s revolving credit facility variable rate based margin libor reprices changes libor insurance premiums commissions insurance premiums credit life accident health property unemployment insurance written connection certain loans net refunds applicable advance insurance commissions retained company remitted monthly insurance company commissions credited unearned insurance commissions recognized income life related insurance contracts company recognizes insurance income using rule 78s method credit life decreasing term credit accident health unemployment insurance pro rata method credit life level term credit property nonfiling insurance nonfiling insurance premiums charged certain loans lieu recording perfecting companys security interest assets pledged premiums recoveries remitted third party insurance company reflected accompanying consolidated financial statements see note 8 claims paid third party insurance company result reduction loan losses certain losses related loans recoverable life accident health property unemployment insurance claims reimbursed nonfiling insurance claims subject policy limitations remaining losses charged allowance loan losses income taxes income taxes accounted asset liability method deferred tax assets liabilities recognized future tax consequences attributable differences financial statement carrying amounts existing assets liabilities respective tax bases operating loss tax credit carryforwards deferred tax assets liabilities measured using enacted tax rates expected apply taxable income years temporary differences expected recovered settled effect deferred tax assets liabilities change tax rates recognized income period includes enactment date company recognizes effect income tax positions likely sustained recognized income tax positions measured largest amount greater 50 likely realized changes recognition measurement reflected period change judgment related additional facts circumstances occurs earnings per share earnings per share “eps” computed accordance fasb asc topic 260 basic eps includes dilution computed dividing net income weightedaverage number common shares outstanding period diluted eps reflects potential dilution securities could share earnings company potential common stock included diluted eps computation consists stock options restricted stock computed using treasury stock method see note 11 reconciliation numerators denominators basic dilutive eps calculations stockbased compensation fasb asc topic 71810 requires companies recognize income statement grantdate fair value stock options equitybased compensation issued employees fasb asc topic 71810 change accounting guidance sharebased payment transactions parties employees provided fasb asc topic 71810 fasb asc topic 71810 way award classified affect measurement compensation cost liabilityclassified awards remeasured fair value balancesheet date award settled equityclassified awards measured grantdate fair value amortized subsequent vesting period subsequently remeasured fair value nonvested stock awards purposes recognizing stockbased compensation expense market price stock grant date fair value options estimated grant date using blackscholes option pricing model see note 12 march 31 2019 company several sharebased employee compensation plans described fully note 12 share repurchases december 16 2018 board directors authorized company repurchase 750 million company’s common stock inclusive amount remained available repurchases prior repurchase authorization 250 million announced march 11 2015 march 31 2019 company 05 million aggregate remaining repurchase capacity timing actual number shares common stock repurchased depend variety factors including stock price corporate regulatory requirements restrictions revolving credit agreement market economic conditions although repurchase authorization stated expiration date company’s stock repurchase program may suspended discontinued time company continues believe stock repurchases viable component company’s longterm financial strategy excellent use excess cash opportunity arises however revolving credit agreement limits share repurchases 50 consolidated adjusted net income fiscal year commencing fiscal year ending march 31 2017 without prior written consent lenders first priority ensure enough capital fund loan growth extent excess capital may resume repurchasing stock appropriate authorized board directors march 31 2019 debt outstanding 2519 million shareholders equity 5521 million resulting debttoequity ratio 0510 continue monitor debttoequity ratio committed maintaining debt level allow us continue execute business objectives putting undue stress consolidated balance sheet comprehensive income total comprehensive income consists net income comprehensive income loss company’s comprehensive income loss accumulated comprehensive income loss composed foreign currency translation adjustments concentration risk company generally serves individuals limited access sources consumer credit banks credit unions consumer finance businesses credit card lenders year ended march 31 2019 company operated sixteen states united states years ended march 31 2019 2018 2017 total revenue within companys four largest states texas georgia tennessee south carolina accounted approximately 57 53 respectively companys total revenues company maintains amounts bank accounts times may exceed federally insured limits company experienced losses accounts maintained large domestic banks management believes company’s exposure credit risk minimal accounts advertising costs advertising costs expensed incurred advertising costs approximately 225 million 212 million 166 million fiscal years 2019 2018 2017 respectively recently adopted accounting standards scope modification accounting may 2017 fasb issued asu 201709 scope modification accounting amendments update provide guidance changes terms conditions sharebased payment award require entity apply modification accounting topic 718 according asu 201709 entity account effects modification unless following met 1the fair value modified award fair value original award immediately original award modified 2the vesting conditions modified award vesting conditions original award immediately original award modified 3the classification modified award equity instrument liability instrument classification original award immediately original award modified amendments update effective entities annual periods interim periods within annual periods beginning december 15 2017 company adopted asu 201709 effective date april 1 2018 management reviewed provisions asu 201709 determined financial statement impact period since clarification current guidance company apply clarified guidance future change terms conditions sharebased payment awards revenue contracts customers identifying performance obligations licensing april 2016 fasb issued asu 201610 identifying performance obligations licensing amendments clarify following two aspects topic 606 identifying performance obligations b licensing implementation guidance amendments change core principle guidance topic 606 effective date transition requirements amendments effective date transition requirements topic 606 public entities apply amendments annual reporting periods beginning december 15 2017 including interim reporting periods therein company adopted asu 201610 effective date april 1 2018 management concluded new standard material impact companys consolidated financial statements recognition measurement financial assets financial liabilities january 2016 fasb issued asu 201601 updates certain aspects recognition measurement presentation disclosure financial instruments public entities apply amendments annual reporting periods beginning december 15 2017 including interim reporting periods therein company adopted asu 201601 effective date april 1 2018 companys current disclosures around financial instruments reflect instruments estimated fair market value exit price based management determined provisions asu 201601 financial statement impact period adoption revenue contracts customers may 2014 fasb issued asu 201409 supersedes revenue recognition requirements topic 605 revenue recognition industryspecific guidance asu 201409 based principle revenue recognized depict transfer goods services customers amount reflects consideration entity expects entitled exchange goods services asu 201409 also requires additional disclosure nature amount timing uncertainty revenue cash flows arising customer contracts including significant judgments changes judgments assets recognized costs incurred obtain fulfill contract asu 201409 amended asu 201514 asu 201620 asu 201713 effective fiscal years interim periods beginning december 15 2017 company adopted new guidance effective date april 1 2018 using modified retrospective method prior periods restated management evaluated revenue contracts customers concluded new standard material impact companys consolidated financial statements recently issued accounting standards adopted simplifying test goodwill impairment january 2017 fasb issued asu 201704 simplifying test goodwill impairment asu 201704 eliminates step 2 goodwill impairment test instead amendments update entity perform annual interim goodwill impairment test comparing fair value reporting unit carrying amount additionally entity consider income tax effects tax deductible goodwill carrying amount reporting unit measuring goodwill impairment loss applicable asu 201704 also eliminates requirements reporting unit zero negative carrying amount perform qualitative assessment fails qualitative test perform step 2 goodwill impairment test therefore impairment assessment applies reporting units amendments update effective public entities sec filers fiscal years beginning december 15 2018 early adoption permitted currently evaluating impact adoption guidance consolidated financial statements measurement credit losses financial instruments june 2016 fasb issued asu 201613 financial instruments credit losses update amended asu 201904 seeks provide financial statement users decisionuseful information expected credit losses financial instruments commitments extend credit held reporting entity reporting date achieve objective amendments asu replace incurred loss impairment methodology current gaap methodology reflects expected credit losses requires consideration broader range reasonable supportable information inform credit loss estimates public business entities amendments effective fiscal years beginning december 15 2019 including interim periods within fiscal years early adoption permitted fiscal years beginning december 15 2018 including interim periods within fiscal years currently evaluating impact adoption guidance consolidated financial statements adoption asu could material impact provision loan losses consolidated statements operations allowance loan losses consolidated balance sheets leases february 2016 fasb issued asu 201602 leases topic 842 asu 201602 amended asu 201801 asu 201810 require lessees recognize assets liabilities leases terms greater 12 months disclose information related amount timing uncertainty cash flows arising leases including various qualitative quantitative requirements amendments asu become effective annual periods interim periods within annual periods beginning december 15 2018 july 2018 fasb issued asu 201811 leases targeted improvements allows transition option adopt standard date initial application opposed modified retrospective approach plan make election adopt standard using transition relief upon adoption guidance april 1 2019 company recorded rightofuse asset 951 million lease liability net removal deferred rent expense balance 923 million current period adjustment retained earnings 28 million adoption standard impact companys consolidated statements operations adoption require company alter revolving credit facility remain compliance debt covenants reviewed newly issued accounting pronouncements concluded either applicable business expected material effect consolidated financial statements result future adoption 2 allowance loan losses credit quality indicators following summary changes allowance loan losses years ended march 31 2019 2018 2017 following summary loans individually collectively evaluated impairment periods indicated average net balance impaired loans 470 million 423 million 375 million respectively years ended march 31 2019 2018 2017 practicable compute amount interest earned impaired loans practicable compute interest income recognized using cashbasis method period loans impaired following assessment credit quality fiscal years indicated 1 loans nonaccrual status following summary past due receivables 3 property equipment property equipment consist depreciation expense approximately 66 million 73 million 69 million years ended march 31 2019 2018 2017 respectively 4 intangible assets following table provides gross carrying amount related accumulated amortization definitelived intangible assets estimated amortization expense intangible assets future years ended march 31 follows 23 million 2020 23 million 2021 23 million 2022 22 million 2023 20 million 2024 aggregate 42 million years thereafter 5 goodwill following summarizes changes carrying amount goodwill years ended march 31 2019 2018 company performed annual impairment test fourth quarters fiscal 2019 2018 determined none recorded goodwill impaired 6 notes payable senior notes payable revolving credit facility march 31 2019 companys notes payable consisted 4800 million senior revolving credit facility accordion feature permitting maximum aggregate commitments increase 6000 million provided certain conditions met march 31 2019 2519 million outstanding facility including 3000 thousand outstanding standby letter credit related workers compensation extent letter credit drawn upon disbursement funded credit facility amounts due related letter credit march 31 2019 letter credit expires december 31 2019 however automatically extends one year expiration date subject borrowing base formula company may borrow rate libor plus applicable margin 30 40 based certain ebitda related metrics set forth revolving credit agreement determined adjusted monthly basis minimum rate 40 revolving credit facility commitment fee 050 per annum unused portion commitment fees unused portion borrowing totaled 11 million 08 million 06 million years ended march 31 2019 2018 2017 respectively borrowings revolving credit facility mature june 15 2020 years ended march 31 2019 2018 2017 company’s effective interest rate including commitment fee 67 60 58 respectively unused amount available revolver march 31 2019 2278 million substantially companys assets pledged collateral borrowings revolving credit agreement debt covenants agreement governing company’s revolving credit facility contains affirmative negative covenants including covenants restrict ability company subsidiaries among things incur guarantee indebtedness incur liens pay dividends repurchase redeem capital stock dispose assets engage mergers consolidations make acquisitions investments redeem prepay subordinated debt amend subordinated debt documents make changes nature business engage transactions affiliates agreement also contains financial covenants including minimum consolidated net worth 3300 million plus 50 borrowers consolidated net income fiscal year beginning 2017 minimum fixed charge coverage ratio 25 10 maximum ratio total debt consolidated adjusted net worth 20 10 maximum ratio subordinated debt consolidated adjusted net worth 10 agreement allows company incur subordinated debt matures termination date revolving credit facility contains specified subordination terms subject limitations amount imposed financial covenants agreement addition agreement establishes maximum specified level collateral performance indicator collateral performance indicator equal sum threemonth rolling average rate receivables least sixty days past due b eightmonth rolling average net chargeoff rate company compliance covenants march 31 2019 believe covenants materially limit business expansion strategy agreement contains events default including without limitation nonpayment principal interest obligations violation covenants misrepresentation crossdefault debt bankruptcy insolvency events judgments certain erisa events actual asserted invalidity loan documentation invalidity subordination provisions subordinated debt certain changes control company occurrence certain regulatory events including entry stay order judgment ruling similar event related company’s subsidiaries’ originating holding pledging collecting enforcing eligible finance receivables material company subsidiary remains unvacated undischarged unbonded unstayed appeal otherwise period 60 days date entry reasonably likely cause material adverse change determined violation fcpa occurred described note 16 violation may give rise event default agreement violation material adverse effect company’s business operations properties assets condition financial otherwise amount settlement penalties fines payments resulted company failing satisfy financial covenants debt maturities march 31 2019 aggregate annual maturities notes payable five fiscal years subsequent march 31 2019 follows 7 insurance income insurance income years ending march 31 2019 2018 2017 consist company whollyowned captive insurance subsidiary reinsures portion credit insurance sold connection loans made company certain coverages currently sold company behalf unaffiliated insurance carrier ceded carrier captive insurance subsidiary providing company additional source income derived earned reinsurance premiums insurance premiums ceded reinsurance subsidiary written revenue recognized life related insurance contracts march 31 2019 2018 2017 amount net written premiums reinsurance subsidiary 56 million 62 million 45 million respectively amount earned premiums 57 million 53 million 40 million respectively company maintains cash reserve claims amount determined ceding company march 31 2019 2018 cash reserves 38 million 49 million respectively 8 nonfiling insurance company maintains nonfiling insurance coverage unaffiliated insurance company following summary nonfiling insurance activity years ended march 31 2019 2018 2017 9 leases company conducts operations leased facilities except owned corporate office building companys leases typically lease term three five years contain lessee renewal options majority leases provide lessee pays property taxes insurance common area maintenance costs expected normal course business expiring leases renewed companys option replaced leases acquisitions properties company’s leases operating leases future minimum lease payments noncancelable operating leases march 31 2019 follows rental expense cancelable noncancelable operating leases years ended march 31 2019 2018 2017 approximately 269 million 254 million 244 million respectively 10 income taxes december 22 2017 us government enacted comprehensive tax legislation commonly referred tax cuts jobs act “tcja” tcja included significant changes existing tax law including permanent reduction us federal corporate income tax rate 35 21 onetime repatriation tax deferred foreign income “transition tax” deductions credits businessrelated exclusions permanent reduction us federal corporate income tax rate 35 21 effective january 1 2018 federal tax rate changes fiscal year internal revenue code requires taxpayers compute weighted daily average rate fiscal year enactment result company calculated us federal statutory corporate income tax rate 3155 fiscal year ended march 31 2018 us corporate federal statutory rate 3155 weighted daily average rate preenactment federal statutory rate 35 postenactment federal statutory rate 21 impact changes federal tax rates deferred tax amounts effect transition tax significant unusual infrequent events recognized discrete items company’s income tax expense period event occurs company recorded 105 million increase tax expense related net impact revaluing us deferred tax assets liabilities third quarter fiscal 2018 adjustment made third quarter fiscal 2019 record 8500 thousand tax benefit related revaluing us deferred tax assets liabilities due additional analysis change estimate original calculation company also recorded increase tax expense 49 million related foreign “transition tax” final quarter fiscal 2018 first quarter fiscal 2019 former mexican subsidiaries paid company dividend 171 million company longer claim permanent reinvestment respective foreign jurisdiction transition tax companys tax basis greater book basis difference recognized first quarter fiscal 2019 foreign subsidiaries marked held sale recognition basis difference created capital loss company believe recognized carryforward period therefore full tax valuation allowance recorded recognized loss carryforward income tax expense benefit continuing operations consists income tax expense continuing operations 160 million 478 million 382 million years ended march 31 2019 2018 2017 respectively differed amounts computed applying us federal income tax rate 21 fiscal 2019 3155 fiscal 2018 35 fiscal year 2017 pretax income continuing operations result following income tax expense benefit discontinued operations 626583 243321 2239345 years ended march 31 2019 2018 2017 respectively differed amounts computed applying us federal income tax rate 21 fiscal 2019 3155 fiscal 2018 35 fiscal year 2017 pretax income discontinued operations result following tax effects temporary differences continuing operations give rise significant portions deferred tax assets deferred tax liabilities march 31 2019 2018 presented march 31 2019 company state net operating loss carryforwards approximately 259 million deferred tax asset approximately 10 million recorded reflect benefit losses company expects recognized approximately 1000 state net operating loss carryforward expire 2025 remaining carryforward expiring 2031 2038 valuation allowance deferred tax assets increased 79 million year ended march 31 2019 compared march 31 2018 valuation allowance march 31 2019 2018 111 million 33 million respectively valuation allowance total deferred tax assets march 31 2019 consisted 1274 related state colorado net operating loss carryforwards amount 54318 expire 2025 foreign tax credit carryforward 33 million arising relation section 965 calculation transition tax fiscal 2018 expires 2028 79 million related 374 million capital loss carryforward sale mexican operations fiscal 2019 expires 2024 company expect generate enough foreign source income capital gains future tax years realize tax attributes assessing realizability deferred tax assets management considers whether likely portion deferred tax assets realized ultimate realization deferred tax assets dependent upon generation future taxable income periods temporary differences become deductible management considers scheduled reversals deferred tax liabilities projected future taxable income tax planning strategies making assessment order fully realize deferred tax asset company need generate future taxable income prior expiration deferred tax assets governed tax code based upon level historical taxable income projections future taxable income periods related temporary differences deductible management believes likely company realize benefits deductible differences net existing valuation allowances march 31 2019 amount deferred tax asset considered realizable however could reduced near term estimates future taxable income carryforward period reduced march 31 2019 2018 2017 company 58 million 88 million 89 million total gross unrecognized tax benefits including interest respectively totals approximately 54 million 69 million 72 million respectively represents amount net unrecognized tax benefits permanent nature recognized would affect annual effective tax rate reconciliation beginning ending amount unrecognized tax benefits march 31 2019 2018 2017 presented march 31 2019 approximately 18 million gross unrecognized tax benefits expected resolved next 12 months settlements taxing authorities expiration statute limitations company’s continuing practice recognize interest penalties related income tax matters income tax expense march 31 2019 2018 2017 company 18 million 19 million 16 million accrued gross interest respectively 11 million 04 million 07 million represented current period expense periods ended march 31 2019 2018 2017 company subject us income tax well various state local jurisdictions exception states company longer subject us federal state local nonus income tax examinations tax authorities years 2014 although carryforward attributes generated prior 2014 may still adjusted upon examination taxing authorities either used future period 11 earnings per share following reconciliation numerators denominators basic diluted eps continuing operations calculations options purchase 592947 299455 733053 shares common stock various prices outstanding years ended march 31 2019 2018 2017 respectively included computation diluted eps option exercise price antidilutive 12 benefit plans retirement plan company provides defined contribution employee benefit plan 401k plan covering fulltime employees whereby employees invest maximum designated year company matches 50 employees contributions first 6 employees eligible compensation providing maximum employer contribution 3 compensation companys expense plan 15 million 14 million 14 million years ended march 31 2019 2018 2017 respectively supplemental executive retirement plan company instituted two supplemental executive retirement plans nonqualified executive benefit plans company agrees pay certain executives additional benefits future usually retirement return continued employment executives serps unfunded plans specific assets set aside company connection establishment plans executives rights agreements beyond general creditor company years ended march 31 2019 2018 2017 contributions 06 million 08 million 06 million respectively charged expense related serp unfunded liability included component accounts payable accrued expenses companys consolidated balance sheets 79 million 83 million march 31 2019 2018 respectively three years presented unfunded liability estimated using following assumptions annual salary increase 35 3 years discount rate 60 3 years retirement age 65 executive deferred compensation plan company executive deferral plan eligible executives directors may elect defer portion incentive compensation paid executive deferral plan march 31 2019 2018 executive director deferred compensation plan stock incentive plans company 2005 stock option plan 2008 stock option plan 2011 stock option plan 2017 stock incentive plan benefit certain directors officers key employees plans total 4350000 shares authorized common stock reserved issuance pursuant grants approved compensation stock option committee board directors stock options granted plans maximum duration ten years may subject certain vesting requirements generally three five years officers nonemployee directors key employees priced market value companys common stock options grant date march 31 2019 total 206541 shares common stock available grant plans stockbased compensation recognized provided fasb asc topic 71810 fasb asc topic 50550 fasb asc topic 71810 requires sharebased payments employees including grants employee stock options recognized compensation expense requisite service period generally vesting period consolidated financial statements based grant date fair values company applied blackscholes valuation model determining grant date fair value stock option awards compensation expense recognized options expected vest longterm incentive program nonemployee director awards october 15 2018 compensation committee board approved adopted new longterm incentive program seeks motivate reward certain employees align management’s interest shareholders’ focusing executives achievement longterm results program comprised four components service options performance options restricted stock performance shares pursuant program compensation committee approved certain grants service options performance options restricted stock performance shares world acceptance corporation 2011 stock option plan world acceptance corporation 2017 stock incentive plan certain employee directors vice presidents operations vice presidents senior vice presidents executive officers separately compensation committee approved certain grants service options restricted stock certain company’s nonemployee directors longterm incentive program 100 shares restricted stock subject performance shares shall vest based achievement two trailing earnings per share performance targets established compensation committee based earnings per share measured end calendar quarter commencing calendar quarter ending september 30 2019 previous four calendar quarters performance shares eligible vest performance share measurement period subject respective employee’s continued employment company last day applicable performance share measurement period otherwise provided terms applicable award agreement applicable employment agreement performance share performance targets set forth restricted stock awards vest six equal annual installments beginning first anniversary grant date subject respective employee’s continued employment company applicable vesting date otherwise provided terms applicable award agreement applicable employment agreement service options vest six equal annual installments beginning first anniversary grant date subject respective employee’s continued employment company applicable vesting date otherwise provided terms applicable award agreement applicable employment agreement option price equal fair market value common stock grant date service options shall 10year term performance options shall fully vest company attains trailing earnings per share target four consecutive calendar quarters occurring september 30 2018 march 31 2025 described performance target established compensation committee measured end calendar quarter commencing september 30 2019 performance options eligible vest option measurement period subject respective employee’s continued employment company last day option measurement period otherwise provided terms applicable award agreement applicable employment agreement option price equal fair market value common stock grant date performance options shall 10year term performance option performance target set forth stock options weightedaverage fair value grant date options issued years ended march 31 2019 2018 2017 5350 3949 2225 per share respectively fair value estimated grant date using weightedaverage assumptions listed expected stock price volatility based historical volatility company’s stock period approximating expected life expected life represents period time options expected outstanding grant date riskfree rate reflects interest rate grant date zero coupon us governmental bonds remaining life similar expected option term option activity year ended march 31 2019 follows aggregate intrinsic value reflected table represents total pretax intrinsic value difference closing stock price march 31 2019 exercise price multiplied number inthemoney options would received option holders option holders exercised options march 31 2019 amount change stocks market price changes total intrinsic value options exercised periods ended march 31 2019 2018 2017 follows march 31 2019 total unrecognized stockbased compensation expense related nonvested stock options amounted approximately 156 million expected recognized weightedaverage period approximately 52 years restricted stock fiscal 2019 company granted 760420 shares restricted stock equity classified certain vice presidents senior vice presidents executive officers nonemployee directors grant date weighted average fair value 10161 fiscal 2018 company granted 24456 shares restricted stock equity classified certain executive officers grant date weighted average fair value 10752 per share onethird awards vest anniversary grant date three years following grant date fiscal 2017 company granted 74490 shares restricted stock equity classified certain executive officers grant date weighted average fair value 5115 per share onethird awards vest anniversary grant date three years following grant date compensation expense related restricted stock based number shares expected vest fair market value common stock grant date company recognized compensation expense 136 million 31 million 16 million years ended march 31 2019 2018 2017 respectively included component general administrative expenses companys consolidated statements operations march 31 2019 approximately 659 million unrecognized compensation cost related unvested restricted stock awards expected recognized next 45 years based current estimates summary status company’s restricted stock march 31 2019 changes year ended march 31 2019 presented total stockbased compensation total stockbased compensation included component net income years ended march 31 2019 2018 2017 follows 13 acquisitions company evaluates set assets activities acquires determine set meets definition business according fasb asc topic 8051055 acquisitions meeting definition business accounted business combination acquisitions accounted asset purchase following table sets forth acquisition activity company years ended march 31 2019 2018 2017 acquisitions accounted business combinations typically result one new branches cases company typically retains existing employees branch location acquisition purchase price allocated tangible assets intangible assets acquired based upon estimated fair market values acquisition date remainder allocated goodwill following table describes companys business combination activity year ended march 31 2019 acquisitions accounted asset purchases typically limited acquisitions loan portfolios purchase price allocated tangible assets intangible assets acquired based upon estimated fair market values acquisition date asset purchase goodwill recorded company’s acquisitions include tangible assets generally loans furniture equipment intangible assets generally noncompete agreements customer lists goodwill recorded fair values estimated pursuant processes described acquired loans valued net loan balance given shortterm nature loans generally eight months loans priced current rates management believes net loan balances approximate fair value furniture equipment valued specific purchase price agreed parties time acquisition management believes approximates fair values noncompete agreements valued stated amount paid party agreements company believes approximates fair value customer lists valued valuation model utilizes company’s historical data estimate value acquired customer lists customer lists allocated branch level evaluated impairment branch level triggering event occurs accordance fasb asc topic 3601005 triggering event occurs impairment loss customer list generally remaining unamortized customer list balance acquisitions original fair value customer list allocated office less 100000 management believes event triggering event occur impairment loss unamortized customer list would immaterial results acquisitions included company’s consolidated financial statements since respective acquisition date pro forma impact branches though acquired beginning periods presented would material effect results operations reported 14 fair value fair value disclosures company may carry certain financial instruments derivative assets liabilities fair value recurring basis fair value defined price would received sell asset paid transfer liability orderly transaction market participants measurement date company determines fair values financial instruments based fair value hierarchy requires entity maximize use observable inputs minimize use unobservable inputs measuring fair value financial assets liabilities measured fair value grouped three levels prioritize inputs used measure fair value assets liabilities levels • level 1 quoted prices unadjusted active markets identical assets liabilities • level 2 inputs quoted prices observable assets liabilities either directly indirectly inputs include quoted prices similar assets liabilities active markets quoted prices identical similar assets liabilities market less active • level 3 unobservable inputs assets liabilities reflecting reporting entity’s assumptions company’s financial instruments periods reported consist following cash equivalents loans receivable senior notes payable fair value approximates carrying value instruments loans receivable originated prevailing market rates average life approximately 8 months given shortterm nature loans continually repriced current market rates company’s revolving credit facility variable rate based margin libor reprices changes libor company also considered creditworthiness determination fair value carrying amounts estimated fair values amounts company measures fair value recurring basis summarized significant assets liabilities measured fair value nonrecurring basis march 31 2019 2018 15 quarterly information unaudited following sets forth selected quarterly operating data companys highest loan demand occurs generally october december third fiscal quarter loan demand generally lowest loan repayment highest january march fourth fiscal quarter consequently company experiences significant seasonal fluctuations operating results cash needs operating results companys third fiscal quarter generally lower quarters operating results fourth fiscal quarter generally higher quarters 16 commitments contingencies mexico investigation previously disclosed company retained outside legal counsel forensic accountants conduct investigation operations mexico focusing legality fcpa certain local laws certain payments related loans maintenance company’s books records associated payments treatment compensation matters certain employees investigation continues address whether extent improper payments may violate fcpa local laws made approximately 2010 2017 behalf wac de mexico government officials mexico relating loans made unionized employees company voluntarily contacted sec doj june 2017 advise agencies internal investigation underway company intended cooperate agencies company continue cooperate agencies sec issued formal order investigation conclusion cannot drawn time potential remedies agencies may seek company cannot determine time ultimate effect investigation remedial measures financial condition results operations violations fcpa local laws occurred company could subject fines civil criminal penalties equitable remedies including profit disgorgement related interest injunctive relief addition disposition matters could adversely impact access debt financing capital funding result modifications business practices compliance programs disposition could also potentially require monitor appointed review future business practices goal ensuring compliance fcpa applicable laws company could also face fines sanctions penalties authorities mexico well thirdparty claims shareholders andor stakeholders company addition disclosure investigation could adversely affect company’s reputation ability obtain new business retain existing business current customers potential customers attract retain employees access capital markets determined violation fcpa occurred violation may give rise event default company’s credit agreement violation material adverse effect company’s business operations properties assets condition financial otherwise amount settlement penalties fines payments resulted company failing satisfy financial covenants additional potential fcpa violations laws regulations may uncovered investigation addition ultimate liability disgorgement related interest company believes could liable fines penalties company continuing discussions doj sec regarding matters investigation company cannot reasonably estimate amount fine penalty may pay part possible settlement assess potential liability might incurred settlement reached government litigate matter based information available time additional liability related matter reasonably estimable company continue evaluate amount liability pending final resolution investigation related discussions government general addition time company involved litigation matters relating claims arising operations normal course business including matters damages various amounts claimed estimating amount range possible losses resulting litigation government actions legal proceedings inherently difficult requires extensive degree judgment particularly matters involve indeterminate claims monetary damages may involve fines penalties damages discretionary amount involve large number claimants significant discretion regulatory authorities represent change regulatory policy interpretation present novel legal theories early stages proceedings subject appeal could result change business practices addition legal proceedings resolved extended periods time potential losses subject change due among things new developments changes legal strategy outcome intermediate procedural substantive rulings parties’ settlement posture evaluation strength weakness case us reasons currently unable predict ultimate timing outcome reasonably estimate possible losses range possible losses resulting matters described based information currently available company believe reasonably possible losses arising currently pending legal matters material company’s results operations financial conditions however light inherent uncertainties involved matters adverse outcome one matters could materially adversely affect company’s financial condition results operations cash flows particular reporting period 17 discontinued operations august 3 2018 company affiliates completed sale companys mexico operating segment entirety company sold issued outstanding capital stock equity interest wac de mexico swac purchasers effective july 1 2018 purchase price approximately 4436 million terms stock purchase agreement obligated indemnify purchasers claims liabilities relating certain investigations wac de mexico swac sellers doj sec commenced prior july 1 2018 additionally company provided may continue provide limited paradata systems software training purchasers requested company involvement mexico operating segment subsequent sales effective date following table reconciles major classes assets liabilities discontinued operations amounts presented consolidated balance sheet march 31 2018 following table reconciles major classes line items constituting pretax income loss discontinued operations amounts presented consolidated statements operations following table presents operating investing financing cash flows company’s discontinued operations 18 subsequent events acquisition loans company purchased approximately 450 million loans competitor first quarter fiscal 2020 purchase qualify significant amount assets management aware significant events occurring subsequent balance sheet date would material effect financial statements thereby requiring adjustment disclosure management’s report internal control financial reporting responsible establishing maintaining adequate internal control financial reporting defined rule 13a 15f securities exchange act 1934 assessed effectiveness internal control financial reporting march 31 2019 assessment based criteria established internal control integrated framework 2013 issued committee sponsoring organizations treadway commission coso internal control financial reporting process designed provide reasonable assurance regarding reliability financial reporting preparation financial statements external purposes accordance generally accepted accounting principles internal control financial reporting includes policies procedures 1 pertain maintenance records reasonable detail accurately fairly reflect transactions dispositions assets 2 provide reasonable assurance transactions recorded necessary permit preparation financial statements accordance generally accepted accounting principles receipts expenditures made accordance authorizations management board directors 3 provide reasonable assurance regarding prevention timely detection unauthorized acquisition use disposition assets could material effect financial statements inherent limitations internal control financial reporting may prevent detect misstatements also assumptions regarding internal control financial reporting future periods based evaluation effectiveness prior period subject risk controls may become inadequate changes conditions degree compliance policies procedures may deteriorate based using coso criteria believe internal control financial reporting march 31 2019 effective independent registered public accounting firm audited consolidated financial statements included annual report issued attestation report effectiveness internal control financial reporting stated report independent registered public accounting firm shareholders board directors world acceptance corporation subsidiaries opinion financial statements audited accompanying consolidated balance sheets world acceptance corporation subsidiaries company march 31 2019 2018 related consolidated statements operations comprehensive income shareholders equity cash flows three years period ended march 31 2019 related notes consolidated financial statements collectively financial statements opinion financial statements present fairly material respects financial position company march 31 2019 2018 results operations cash flows three years period ended march 31 2019 conformity accounting principles generally accepted united states america also audited accordance standards public company accounting oversight board united states pcaob companys internal control financial reporting march 31 2019 based criteria established internal control integrated framework issued committee sponsoring organizations treadway commission 2013 report dated may 24 2019 expressed unqualified opinion effectiveness companys internal control financial reporting basis opinion financial statements responsibility company’s management responsibility express opinion company’s financial statements based audits public accounting firm registered pcaob required independent respect company accordance us federal securities laws applicable rules regulations securities exchange commission pcaob conducted audits accordance standards pcaob standards require plan perform audits obtain reasonable assurance whether financial statements free material misstatement whether due error fraud audits included performing procedures assess risks material misstatement financial statements whether due error fraud performing procedures respond risks procedures included examining test basis evidence regarding amounts disclosures financial statements audits also included evaluating accounting principles used significant estimates made management well evaluating overall presentation financial statements believe audits provide reasonable basis opinion rsm us llp served companys auditor since 2014 raleigh north carolina may 24 2019 report independent registered public accounting firm shareholders board directors world acceptance corporation subsidiaries opinion internal control financial reporting audited world acceptance corporation subsidiaries’ company internal control financial reporting march 31 2019 based criteria established internal control integrated framework issued committee sponsoring organizations treadway commission 2013 opinion company maintained material respects effective internal control financial reporting march 31 2019 based criteria established internal control integrated framework issued committee sponsoring organizations treadway commission 2013 also audited accordance standards public company accounting oversight board united states pcaob consolidated balance sheets company march 31 2019 2018 related consolidated statements operations comprehensive income shareholders’ equity cash flows three years period ended march 31 2019 report dated may 24 2019 expressed unqualified opinion basis opinion company’s management responsible maintaining effective internal control financial reporting assessment effectiveness internal control financial reporting accompanying management’s report internal control financial reporting responsibility express opinion company’s internal control financial reporting based audit public accounting firm registered pcaob required independent respect company accordance us federal securities laws applicable rules regulations securities exchange commission pcaob conducted audit accordance standards pcaob standards require plan perform audit obtain reasonable assurance whether effective internal control financial reporting maintained material respects audit included obtaining understanding internal control financial reporting assessing risk material weakness exists testing evaluating design operating effectiveness internal control based assessed risk audit also included performing procedures considered necessary circumstances believe audit provides reasonable basis opinion definition limitations internal control financial reporting companys internal control financial reporting process designed provide reasonable assurance regarding reliability financial reporting preparation financial statements external purposes accordance generally accepted accounting principles companys internal control financial reporting includes policies procedures 1 pertain maintenance records reasonable detail accurately fairly reflect transactions dispositions assets company 2 provide reasonable assurance transactions recorded necessary permit preparation financial statements accordance generally accepted accounting principles receipts expenditures company made accordance authorizations management directors company 3 provide reasonable assurance regarding prevention timely detection unauthorized acquisition use disposition companys assets could material effect financial statements inherent limitations internal control financial reporting may prevent detect misstatements also projections evaluation effectiveness future periods subject risk controls may become inadequate changes conditions degree compliance policies procedures may deteriorate rsm us llp raleigh north carolina may 24 2019 item 9item 8 financial statements supplementary data consolidated balance sheets see accompanying notes consolidated financial statements consolidated statements operations see accompanying notes consolidated financial statements consolidated statements shareholders’ equity comprehensive income see accompanying notes consolidated financial statements consolidated statements cash flows see accompanying notes consolidated financial statements notes consolidated financial statements 1 summary significant accounting policies companys accounting reporting policies accordance us generally accepted accounting principles conform general practices within finance company industry following description significant policies used preparing consolidated financial statements nature operations company smallloan consumer finance company headquartered greenville south carolina offers shortterm small loans mediumterm larger loans related credit insurance products ancillary products services individuals limited access sources consumer credit also offers income tax return preparation services access refund anticipation loans third party bank customer base others company also markets computer software related services financial services companies paradata financial systems “paradata” subsidiary march 31 2006 company operated 617 offices south carolina georgia texas oklahoma louisiana tennessee missouri illinois new mexico kentucky alabama company also operated three offices mexico company subject numerous lending regulations vary state principles consolidation consolidated financial statements include accounts world acceptance corporation wholly owned subsidiaries “company” subsidiaries consist operating entities various states paradata software company acquired fiscal 1994 wac insurance company ltd captive reinsurance company established fiscal 1994 significant intercompany balances transactions eliminated consolidation financial statements company’s foreign subsidiaries mexico prepared using local currency functional currency assets liabilities subsidiaries translated us dollars current exchange rate income expense translated average exchange rate period resulting translation gains losses recognized component equity “accumulated comprehensive income loss” use estimates preparation financial statements preparation financial statements conformity us generally accepted accounting principals requires management make estimates assumptions affect reported amount assets liabilities disclosure contingent liabilities date financial statements reported amounts revenues expenses reporting period actual results could differ estimates business segments company reports operating segments accordance sfas 131 “disclosures segments enterprise related information” “sfas 131” operating segments components enterprise separate financial information available evaluated regularly chief operating decision maker deciding allocate resources assess performance sfas 131 requires public enterprise report measure segment profit loss certain specific revenue expense items segment assets information way operating segments determined items company one reportable segment consumer finance company revenue generating activities company including sale insurance products income tax preparation buying club automobile club done existing branch network conjunction compliment lending operation discrete financial information available activities meet criteria sfas 131 reported separately paradata provides data processing systems 114 separate finance companies including company march 31 2006 2005 paradata total assets 2308000 1904000 respectively represented less 1 total consolidated assets fiscal year end total net revenues system sales support paradata years ended march 31 2006 2005 2004 2333000 2332000 2251000 respectively represented approximately 1 consolidated revenue year years ended march 31 2006 2005 2004 paradata income taxes 308000 332000 288000 respectively although paradata operating segment sfas 131 meet criteria require separate disclosure cash equivalents purposes statement cash flows company considers highly liquid investments maturity three months less date original issuance cash equivalents loans interest income company licensed originate direct cash consumer loans states georgia south carolina texas oklahoma louisiana tennessee missouri illinois new mexico kentucky alabama fiscal 2006 2005 company originated loans generally ranging 3000 terms 24 months less experience indicates majority direct cash consumer loans renewed company accounts refinancing new loan generally customer must make payment order qualify renewal furthermore lending policy predetermined lending amounts cases renewal result advancing additional funds company believes advancement additional funds constitutes minor modification terms existing loan present value cash flows terms new loan 10 present value remaining cash flows terms original loan fees received direct costs incurred origination loans deferred amortized interest income contractual lives loans unamortized amounts recognized income time loans renewed paid full loans carried gross amount outstanding reduced unearned interest insurance income net deferred origination fees direct costs allowance loan losses company generally calculates interest revenue loans using rule 78’s recognizes interest revenue using collection method cash method recognizing revenue company believes combination two methods differ materially interest method accrual method recognizing revenue charges late payments credited income collected company generally offers loans prevailing statutory rates terms exceed 24 months management believes carrying value approximates fair value loan portfolio allowance loan losses company maintains allowance loan losses amount management’s opinion adequate cover losses inherent existing loan portfolio company charges current earnings provision loan losses amounts added allowance maintain levels expected cover probable losses principal establishing allowance loan losses company takes consideration growth loan portfolio mix loan portfolio current levels chargeoffs current levels delinquencies current economic factors allowance loan losses allocated unallocated component company uses historical information net chargeoffs loan type average loan life loan type estimate allocated component allowance loan losses methodology based fact many customers renew loans prior contractual maturity average contractual loan terms approximately nine months average loan life approximately four months allowance loan loss model also reserves 100 principal loans greater days past due recency basis loans charged earlier loans deemed uncollectible six months elapsed since date last full contractual payment company’s chargeoff policy consistently applied significant changes made policy periods reported management considers chargeoff policy evaluating appropriateness allowance loan losses statement position 033 sop 033 “accounting certain loans debt securities acquired transfer” prohibits carryover creation valuation allowances initial accounting loans acquired transfer within scope sop company believes loans acquired since adoption sop 033 shown evidence deterioration credit quality since origination therefore within scope sop 033 therefore company records acquired loans within scope sop 033 fair value based current interest rates less allowance uncollectibility property equipment property equipment stated cost less accumulated depreciation amortization depreciation recorded using straightline method estimated useful life related asset follows building 40 years furniture fixtures 5 10 years equipment 3 7 years vehicles 3 years amortization leasehold improvements recorded using straightline method lesser estimated useful life asset term lease additions premises equipment major replacements improvements added cost maintenance repairs minor replacements charged operating expense incurred assets retired otherwise disposed cost accumulated depreciation removed accounts gain loss reflected statement operations assets include cash surrender value life insurance policies prepaid expenses deposits derivatives hedging activities company currently uses interest rate swap economically hedge variable cash flows associated 30 million liborbased borrowings interest rate swap agreement carried fair value changes fair value recorded period component statement operations intangible assets goodwill intangible assets include cost acquiring existing customers value assigned noncompete agreements customer lists noncompete agreements amortized estimated useful lives 9 years terms agreements respectively evaluate goodwill annually impairment fourth quarter fiscal year using market valuebased approach one reporting unit consumer finance company multiple components lowest level individual offices components aggregated impairment testing similar economic characteristics writeoff goodwill close office goodwill assigned march 31 2006 offices recorded goodwill impairment longlived assets assess impairment longlived assets including property equipment intangible assets whenever changes events indicate carrying amount may recoverable assess impairment assets generally office level based operating cash flows office plans office closings write assets fair value based analysis sum expected future undiscounted cash flows less carrying amount assets record material impairment charges fiscal years 2006 2005 2004 fair value financial instruments sfas 107 disclosures fair value financial instruments requires disclosures fair value financial instruments whether recognized balance sheet practicable estimate value cases quoted market prices available fair values based estimates using present value valuation techniques company’s financial instruments consist following cash loans receivable senior notes payable note payable interest rate swaps fair value approximates carrying value instruments loans receivable originated prevailing market rates average life approximately four months given shortterm nature loans continually repriced current market rates company’s revolving credit facility note payable variable rate based margin libor reprice changes libor swap valued based information third party broker reflects instrument’s current settlement value insurance premiums insurance premiums credit life accident health property unemployment insurance written connection certain loans net refunds applicable advance insurance commissions retained company remitted monthly insurance company commissions credited unearned insurance commissions recognized income life related insurance contracts using method similar used recognition interest income nonfile insurance nonfile premiums charged certain loans inception renewal lieu recording perfecting companys security interest assets pledged certain loans remitted thirdparty insurance company nonfile insurance coverage insurance related insurance premiums claims recoveries reflected accompanying consolidated financial statements except reduction loan losses see note 8 certain losses related loans recoverable life accident health property unemployment insurance claims reimbursed nonfile insurance claims subject policy limitations remaining losses charged allowance loan losses income taxes income taxes accounted asset liability method deferred tax assets liabilities recognized future tax consequences attributable differences financial statement carrying amounts existing assets liabilities respective tax bases operating loss tax credit carryforwards deferred tax assets liabilities measured using enacted tax rates expected apply taxable income years temporary differences expected recovered settled effect deferred tax assets liabilities change tax rates recognized income period includes enactment date supplemental cash flow information years ended march 31 2006 2005 2004 company paid interest 6958983 4529445 3747688 respectively years ended march 31 2006 2005 2004 company paid income taxes 9928505 16600328 15457676 respectively supplemental noncash financing activities years ended march 31 2006 2005 2004 consist earnings per share earnings per share “eps” computed accordance sfas 128 “earnings per share” basic eps includes dilution computed dividing income available common shareholders weightedaverage number common shares outstanding period diluted eps reflects potential dilution securities could share earnings company potential common stock included diluted eps computation consists stock options computed using treasury stock method reclassifications certain reclassification entries made fiscal 2005 2004 conform fiscal 2006 presentation impact shareholders’ equity net income previously reported result reclassifications stockbased compensation march 31 2006 company four stockbased employee compensation stock option plans described fully note 12 company accounts stock option plans recognition measurement principles apb opinion 25 “accounting stock issued employees” related interpretations “apb opinion 25” stockbased employee compensation cost reflected net income related plans options granted plans exercise price equal greater market value underlying common stock date grant following table illustrates effect net income earnings per share company applied fair value recognition provisions sfas 123 “accounting stock based compensation” “sfas 123” stockbased employee compensation option plans years ended march 31 see note 12 discussion benefit plans new accounting pronouncements accounting certain loans debt securities acquired transfer effective april 1 2005 company adopted statement position 033 sop 033 accounting certain loans debt securities acquired transfer prohibits carry creation valuation allowances initial accounting loans acquired transfer within scope sop management believes loan shown deterioration days delinquent company believes loans acquired since adoption sop 033 shown evidence deterioration credit quality since origination therefore within scope sop 033 pay consideration record acquired loans 60 days delinquent years ended march 31 2006 2005 2004 company recorded adjustments approximately 04 million 14 million 13 million respectively allowance loan losses connection acquisitions accordance generally accepted accounting principles adjustments represent allowance loan losses acquired loans meet scope sop 033 sharebased payment december 2004 fasb issued sfas 123r sfas 123r sharebased payment requires companies recognize income statement grantdate fair value stock options equitybased compensation issued employees sfas 123r amendment sfas 123 related implementation guidance sfas 123r change accounting guidance sharebased payment transactions parties employees provided sfas 123 sfas 123r way award classified affect measurement compensation cost liabilityclassified awards remeasured fair value balancesheet date award settled equityclassified awards measured grantdate fair value amortized subsequent vesting period subsequently remeasured company adopt sfas april 1 2006 accounting conditional asset retirement obligations march 2005 fasb issued fasb interpretation 47 fin 47 “accounting conditional asset retirement obligations” interpretation clarifies term “conditional asset retirement obligations” used sfas 143 “accounting asset retirement obligations” refers legal obligation perform asset retirement activity timing andor method settlement conditional future event may within control entity accordingly interpretation requires recognition liability fair value conditional asset retirement obligation incurred fair value liability reasonably estimated interpretation also clarifies sufficient information available reasonable estimated fair value asset retirement obligation company began applying interpretation fourth quarter fiscal year 2006 application interpretation significant impact results operations financial position 2 accumulated comprehensive loss company applies provision financial accounting standards board’s fasb statement financial accounting standards sfas 130 “reporting comprehensive income” following summarizes accumulated comprehensive loss march 31 2006 3 allowance loan losses following summary changes allowance loan losses years ended march 31 2006 2005 2004 years ended march 31 2006 2005 2004 company recorded adjustments approximately 04 million 14 million 13 million respectively allowance loan losses connection acquisitions accordance generally accepted accounting principles adjustments represent allowance loan losses acquired loans meet scope sop 033 also see note 1 4 property equipment summaries property equipment follow depreciation expense 2372000 2074000 1757000 years ended march 31 2006 2005 2004 respectively 5 intangible assets intangible assets net accumulated amortization consist estimated amortization expense intangible assets years ended march 31 follows 2611716 2007 2147624 2008 1825296 2009 1531120 2010 1223004 2011 aggregate 2807248 years thereafter 6 goodwill following summarizes changes carrying amount goodwill year ended march 31 2006 august 2005 company closed jefferson georgia branch time goodwill associated branch determined impaired subsequently written company performed annual impairment test march 31 2006 determined none recorded goodwill impaired 7 notes payable summaries companys notes payable follow senior notes payable 167000000 revolving credit facility provides borrowings 1670 million 998 million outstanding march 31 2006 subject borrowing base formula company may borrow option rate prime libor plus 190 march 31 2006 company’s interest rate 67 unused amount available revolver 672 million revolving credit facility commitment fee 0375 per annum unused portion commitment borrowings revolving credit facility mature september 30 2007 member company’s board directors serves executive vice president south financial group parent carolina first bank march 31 2006 carolina first bank committed fund 200 million credit facility note payable company also 800000 note payable carolina first bank bearing interest libor plus 200 payable monthly repaid four annual installments 200000 ending may 1 2009 various debt agreements contain restrictions amounts permitted indebtedness investments working capital repurchases common stock cash dividends march 31 2006 588 million available covenants payment cash dividends repurchase companys common stock addition agreements restrict liens assets sale transfer subsidiaries company compliance various debt covenants periods presented aggregate annual maturities notes payable fiscal years subsequent march 31 2006 follows 2007 200000 2008 100000000 2009 200000 2010 200000 none thereafter interest rate swap october 5 2005 company entered interest rate swap notional amount 30 million economically hedge portion cash flows floating rate revolving credit facility terms interest rate swap company pay fixed rate 4755 30 million notional amount receive payments counterparty based 1 month libor rate term ending october 5 2010 interest rate differentials paid received swap agreement recognized adjustments interest expense company enter derivative financial instruments trading speculative purposes purpose instrument reduce exposure variability future cash flows attributable portion liborbased borrowings fair value interest rate swap recorded consolidated balance sheets asset liability company currently accounting derivative instrument using cash flow hedge accounting provisions sfas 133 therefore changes fair value swap included earnings income expense march 31 2006 company recorded asset related interest rate swap 492000 represented fair value interest rate swap date corresponding unrealized gain 492000 recorded income fiscal year 2006 interest expense increased 66000 result net disbursements terms interest rate swap using derivative instruments company exposed credit market risk credit risk counterparty derivative instrument fail perform exists extent fair value gain derivative credit risk created fair value derivative contract positive since generally indicates counterparty owes company fair value derivative negative credit risk exists since company would owe counterparty market risk adverse effect financial instrument change interest rates implied volatility rates company manages market risk associated interest rate contracts establishing monitoring limits types degree risk may undertaken market risk associated derivatives used interest rate risk management activities fully incorporated company’s market risk sensitivity analysis 8 nonfile insurance company maintains nonfile insurance coverage unaffiliated insurance company following summary nonfile insurance activity years ended march 31 2006 2005 2004 9 leases company conducts operations leased facilities except owned corporate office building expected normal course business expiring leases renewed companys option replaced leases acquisitions properties company’s leases operating leases future minimum lease payments noncancelable operating leases march 31 2006 follows rental expense cancelable noncancelable operating leases years ended march 31 2006 2005 2004 7730647 6857274 5460005 respectively 10 income taxes income tax expense benefit consists income tax expense 23080000 19868000 16650000 years ended march 31 2006 2005 2004 respectively differed amounts computed applying us federal income tax rate 35 pretax income continuing operations result following tax effects temporary differences give rise significant portions deferred tax assets deferred tax liabilities march 31 2006 2005 presented valuation allowance deferred tax assets march 31 2006 2005 535000 516000 respectively valuation allowance total deferred tax assets march 31 2006 2005 relates state net operating losses assessing realizability deferred tax assets management considers whether likely portion deferred tax assets realized ultimate realization deferred tax assets dependent upon generation future taxable income periods temporary differences become deductible management considers scheduled reversals deferred tax liabilities projected future taxable income tax planning strategies making assessment order fully realize deferred tax asset company need generate future taxable income prior expiration deferred tax assets governed tax code based upon level historical taxable income projections future taxable income periods deferred tax assets deductible management believes likely company realize benefits deductible differences net existing valuation allowances march 31 2006 amount deferred tax asset considered realizable however could reduced near term estimates future taxable income carryforward period reduced internal revenue service examined company’s federal income tax returns fiscal years 2003 2004 tax returns fiscal 2005 subject examination taxing authorities 11 earnings per share following reconciliation numerators denominators basic diluted eps calculations options purchase 133000 0 50000 shares common stock various prices outstanding years ended march 31 2006 2005 2004 respectively included computation diluted eps option exercise price greater average market price common shares 12 benefit plans retirement plan company provides defined contribution employee benefit plan 401k plan covering fulltime employees whereby employees invest 15 gross pay company makes matching contribution equal 50 employees contributions first 6 gross pay companys expense plan 619433 610536 594430 years ended march 31 2006 2005 2004 respectively supplemental executive retirement plan company instituted supplemental executive retirement plan “serp” nonqualified executive benefit plan company agrees pay executive additional benefits future usually retirement return continued employment executive company selects key executives participate serp unfunded plan means specific assets set aside company connection establishment plan executive rights agreement beyond general creditor company years ended march 31 2006 2005 2004 contributions 454165 317882 588021 respectively charged operations related serp unfunded liability 2707000 2253000 1676000 march 31 2006 2004 respectively three years presented unfunded liability estimated using following assumptions annual salary increase 35 3 years discount rate 75 2004 2005 6 2006 retirement age 65 executive deferred compensation plan company executive deferral plan eligible executives may elect defer portion incentive compensation paid executive incentive plan march 31 2006 2005 285000 deferred plan stock option plans company 1992 stock option plan 1994 stock option plan 2002 stock option plan 2005 stock option plan benefit certain directors officers key employees plans 4350000 shares authorized common stock reserved issuance pursuant grants approved compensation stock option committee board directors options maximum duration 10 years may subject certain vesting requirements priced market value companys common stock date grant option company applies apb opinion 25 accounting stock option plans described preceding paragraph accordingly compensation expense recognized stockbased option plans fair value option granted estimated date grant using blackscholes optionpricing model following assumptions used grants 2006 2005 2004 respectively dividend yield zero expected volatility 482 413 415 riskfree interest rate 47 33 32 expected lives 8 years plans three years fair values options granted 1493 2006 1260 2005 846 2004 option activity years ended march 31 follows following table summarized information regarding stock options outstanding march 31 2006 13 acquisitions following table sets forth acquisition activity company last three fiscal years acquisitions made independent third parties company evaluates acquisition determine acquired enterprise meets definition business acquired enterprises meet definition business accounted business combination sfas 141 acquisitions accounted asset purchases acquisition results new office company records transaction business combination since office acquired continue generate loans typically retain existing employees office location purchase price allocated estimated fair value tangible assets acquired estimated fair value identified intangible assets acquired generally noncompete agreements customer lists remainder allocated goodwill fiscal year ended march 31 2006 3 acquisitions recorded business combinations acquisition portfolio loans company records transaction asset purchase asset purchase goodwill recorded purchase price allocated estimated fair value tangible intangible assets acquired fiscal year ended march 31 2006 acquisitions recorded asset acquisitions include tangible assets generally loans furniture equipment intangible assets generally noncompete agreements customer lists goodwill recorded fair values estimated pursuant processes described acquired loans valued net loan balance given shortterm nature loans generally 4 months loans subject continual repricing current rates management believes net loan balances approximate fair value furniture equipment valued specific purchase price agreed parties time acquisition management believes approximates fair values intangible assets difference total purchase price fair value tangible assets acquired noncompete agreements valued stated amount paid party arrangements company believes approximates fair value customer lists valued using information provided independent third party specialist goodwill recorded business combinations excess purchase price fair value net assets acquired including intangible assets results acquisitions included company’s consolidated financial statements since respective acquisition dates pro forma impact purchases though acquired beginning periods presented would material effect results operations reported 14 quarterly information unaudited following sets forth selected quarterly operating data 15 litigation march 31 2006 company certain subsidiaries named defendants various legal actions arising normal business activities damages various amounts claimed although amount ultimate liability respect matters cannot determined company believes liability material adverse effect company’s results operations financial condition taken whole 16 commitments company entered employment agreement key executive employee employment agreement term three years calls aggregate minimum annual base salary 268180 adjusted annually determined compensation stock option committee company’s board directors agreement also provide annual incentive bonus based achievement certain predetermined operational goals management’s report internal control financial reporting responsible establishing maintaining adequate internal control financial reporting defined rules 13a 15f securities exchange act 1934 assessed effectiveness internal control financial reporting march 31 2006 assessment based criteria set forth committee sponsoring organizations treadway commission coso internal controlintegrated framework internal control financial reporting process designed provide reasonable assurance regarding reliability financial reporting preparation financial statements external purposes accordance generally accepted accounting principles internal control financial reporting includes policies procedures 1 pertain maintenance records reasonable detail accurately fairly reflect transactions dispositions assets 2 provide reasonable assurance transactions recorded necessary permit preparation financial statements accordance generally accepted accounting principles receipts expenditures made accordance authorizations management board directors 3 provide reasonable assurance regarding prevention timely detection unauthorized acquisition use disposition assets could material effect financial statements inherent limitations internal control financial reporting may prevent detect misstatements also assumptions regarding internal control financial reporting future periods based evaluation effectiveness prior period subject risk controls may become inadequate changes conditions degree compliance policies procedures may deteriorate based using coso criteria believe internal control financial reporting march 31 2006 effective independent registered public accounting firm audited consolidated financial statements included annual report issued attestation report management’s assessment internal control financial reporting well effectiveness internal control financial reporting stated report included elsewhere herein mclean iii kelly malson snape mclean iii kelly malson snape chief executive officer vice president chief financial officer june 14 june 14 report independent registered public accounting firm board directors world acceptance corporation audited accompanying consolidated balance sheets world acceptance corporation subsidiaries “company” march 31 2006 2005 related consolidated statements operations shareholders’ equity comprehensive income cash flows years threeyear period ended march 31 2006 consolidated financial statements responsibility company’s management responsibility express opinion consolidated financial statements based audits conducted audits accordance standards public company accounting oversight board united states standards require plan perform audit obtain reasonable assurance whether financial statements free material misstatement audit includes examining test basis evidence supporting amounts disclosures financial statements audit also includes assessing accounting principles used significant estimates made management well evaluating overall financial statement presentation believe audits provide reasonable basis opinion consolidated financial statements referred present fairly material respects financial position world acceptance corporation subsidiaries march 31 2006 2005 results operations cash flows years threeyear period ended march 31 2006 conformity us generally accepted accounting principles also audited accordance standards public company accounting oversight board united states effectiveness company’s internal control financial reporting march 31 2006 based criteria established internal controlintegrated framework issued committee sponsoring organizations treadway commission coso report dated june 14 2006 expressed unqualified opinion management’s assessment effective operation internal control financial reporting greenville south carolina june 14 report independent registered public accounting firm board directors world acceptance corporation audited managements assessment included accompanying management’s report internal control financial reporting world acceptance corporation’s “company” internal control financial reporting effective march 31 2006 based criteria established internal controlintegrated framework issued committee sponsoring organizations treadway commission coso company’s management responsible maintaining effective internal control financial reporting assessment effectiveness internal control financial reporting responsibility express opinion managements assessment opinion effectiveness company’s internal control financial reporting based audit conducted audit accordance standards public company accounting oversight board united states standards require plan perform audit obtain reasonable assurance whether effective internal control financial reporting maintained material respects audit included obtaining understanding internal control financial reporting evaluating managements assessment testing evaluating design operating effectiveness internal control performing procedures considered necessary circumstances believe audit provides reasonable basis opinion companys internal control financial reporting process designed provide reasonable assurance regarding reliability financial reporting preparation financial statements external purposes accordance generally accepted accounting principles companys internal control financial reporting includes policies procedures 1 pertain maintenance records reasonable detail accurately fairly reflect transactions dispositions assets company 2 provide reasonable assurance transactions recorded necessary permit preparation financial statements accordance generally accepted accounting principles receipts expenditures company made accordance authorizations management directors company 3 provide reasonable assurance regarding prevention timely detection unauthorized acquisition use disposition company’s assets could material effect financial statements inherent limitations internal control financial reporting may prevent detect misstatements also projections evaluation effectiveness future periods subject risk controls may become inadequate changes conditions degree compliance policies procedures may deteriorate opinion managements assessment company’s internal control financial reporting effective march 31 2006 fairly stated material respects based criteria established internal controlintegrated framework issued committee sponsoring organizations treadway commission coso also opinion company maintained material respects effective internal control financial reporting march 31 2006 based criteria established internal controlintegrated framework issued committee sponsoring organizations treadway commission coso also audited accordance standards public company accounting oversight board united states consolidated balance sheets company march 31 2006 2005 related consolidated statements operations shareholders’ equity comprehensive income cash flows years threeyear period ended march 31 2006 report dated june 14 2006 expressed unqualified opinion consolidated financial statements greenville south carolina june 14 item 9item 8 financial statements supplementary data consolidated balance sheets see accompanying notes consolidated financial statements consolidated statements operations see accompanying notes consolidated financial statements consolidated statements shareholders’ equity comprehensive income see accompanying notes consolidated financial statements consolidated statements cash flows see accompanying notes consolidated financial statements notes consolidated financial statements 1 summary significant accounting policies companys accounting reporting policies accordance us generally accepted accounting principles conform general practices within finance company industry following description significant policies used preparing consolidated financial statements nature operations company smallloan consumer finance company headquartered greenville south carolina offers shortterm small loans mediumterm larger loans related credit insurance products ancillary products services individuals limited access sources consumer credit also offers income tax return preparation services access refund anticipation loans third party bank customer base others company also markets computer software related services financial services companies paradata financial systems “paradata” subsidiary march 31 2007 company operated 717 offices south carolina georgia texas oklahoma louisiana tennessee missouri illinois new mexico kentucky alabama company also operated 15 offices mexico company subject numerous lending regulations vary state principles consolidation consolidated financial statements include accounts world acceptance corporation wholly owned subsidiaries “company” subsidiaries consist operating entities various states mexico paradata software company acquired fiscal 1994 wac insurance company ltd captive reinsurance company established fiscal 1994 significant intercompany balances transactions eliminated consolidation financial statements company’s foreign subsidiaries mexico prepared using local currency functional currency assets liabilities subsidiaries translated us dollars current exchange rate income expense translated average exchange rate period resulting translation gains losses recognized component equity “accumulated comprehensive income loss” use estimates preparation financial statements preparation financial statements conformity us generally accepted accounting principals requires management make estimates assumptions affect reported amount assets liabilities disclosure contingent liabilities date financial statements reported amounts revenues expenses reporting period actual results could differ estimates business segments company reports operating segments accordance sfas 131 “disclosures segments enterprise related information” “sfas 131” operating segments components enterprise separate financial information available evaluated regularly chief operating decision maker deciding allocate resources assess performance sfas 131 requires public enterprise report measure segment profit loss certain specific revenue expense items segment assets information way operating segments determined items company one reportable segment consumer finance company revenue generating activities company including sale insurance products income tax preparation buying club automobile club done existing branch network conjunction compliment lending operation discrete financial information available activities meet criteria sfas 131 reported separately paradata provides data processing systems 117 separate finance companies including company march 31 2007 2006 paradata total assets 2664000 2308000 respectively represented less 1 total consolidated assets fiscal year end total net revenues system sales support paradata years ended march 31 2007 2006 2005 2499000 2333000 2332000 respectively represented approximately 1 consolidated revenue year years ended march 31 2007 2006 2005 paradata income taxes 112000 308000 332000 respectively although paradata operating segment sfas 131 meet criteria require separate disclosure cash equivalents purposes statement cash flows company considers highly liquid investments maturity three months less date original issuance cash equivalents loans interest income company licensed originate direct cash consumer loans states georgia south carolina texas oklahoma louisiana tennessee missouri illinois new mexico kentucky alabama fiscal 2007 2006 company originated loans generally ranging 3000 terms 24 months less experience indicates majority direct cash consumer loans renewed company accounts refinancing new loan generally customer must make payment order qualify renewal furthermore lending policy predetermined lending amounts cases renewal result advancing additional funds company believes advancement additional funds constitutes minor modification terms existing loan present value cash flows terms new loan 10 present value remaining cash flows terms original loan fees received direct costs incurred origination loans deferred amortized interest income contractual lives loans unamortized amounts recognized income time loans renewed paid full loans carried gross amount outstanding reduced unearned interest insurance income net deferred origination fees direct costs allowance loan losses company generally calculates interest revenue loans using rule 78’s recognizes interest revenue using collection method cash method recognizing revenue company believes combination two methods differ materially interest method accrual method recognizing revenue charges late payments credited income collected company generally offers loans prevailing statutory rates terms exceed 24 months management believes carrying value approximates fair value loan portfolio allowance loan losses company maintains allowance loan losses amount management’s opinion adequate cover losses inherent existing loan portfolio company charges current earnings provision loan losses amounts added allowance maintain levels expected cover probable losses principal establishing allowance loan losses company takes consideration growth loan portfolio mix loan portfolio current levels chargeoffs current levels delinquencies current economic factors allowance loan losses allocated unallocated component company uses historical information net chargeoffs loan type average loan life loan type estimate allocated component allowance loan losses methodology based fact many customers renew loans prior contractual maturity average contractual loan terms approximately nine months average loan life approximately four months allowance loan loss model also reserves 100 principal loans greater days past due recency basis loans charged earlier loans deemed uncollectible six months elapsed since date last full contractual payment company’s chargeoff policy consistently applied significant changes made policy periods reported management considers chargeoff policy evaluating appropriateness allowance loan losses statement position 033 sop 033 “accounting certain loans debt securities acquired transfer” prohibits carryover creation valuation allowances initial accounting loans acquired transfer within scope sop company believes loans acquired since adoption sop 033 shown evidence deterioration credit quality since origination therefore within scope sop 033 therefore company records acquired loans within scope sop 033 fair value based current interest rates less allowance uncollectibility property equipment property equipment stated cost less accumulated depreciation amortization depreciation recorded using straightline method estimated useful life related asset follows building 40 years furniture fixtures 5 10 years equipment 3 7 years vehicles 3 years amortization leasehold improvements recorded using straightline method lesser estimated useful life asset term lease additions premises equipment major replacements improvements added cost maintenance repairs minor replacements charged operating expense incurred assets retired otherwise disposed cost accumulated depreciation removed accounts gain loss reflected statement operations assets include cash surrender value life insurance policies prepaid expenses debt issuance cost deposits derivatives hedging activities company currently uses interest rate swap foreign currency option economically hedge variable cash flows associated 30 million liborbased borrowings mexican peso expenditures interest rate swap agreement foreign currency option carried fair value changes fair value recorded period component statement operations intangible assets goodwill intangible assets include cost acquiring existing customers value assigned noncompete agreements customer lists amortized straight line accelerated basis estimated weighted average useful life 9 years noncompete agreements amortized term agreement evaluate goodwill annually impairment fourth quarter fiscal year using market valuebased approach one reporting unit consumer finance company multiple components lowest level individual offices components aggregated impairment testing similar economic characteristics writeoff goodwill close office goodwill assigned march 31 2007 offices recorded goodwill impairment longlived assets assess impairment longlived assets including property equipment intangible assets whenever changes events indicate carrying amount may recoverable assess impairment assets generally office level based operating cash flows office plans office closings write assets fair value based analysis sum expected future undiscounted cash flows less carrying amount assets record material impairment charges fiscal years 2007 2006 2005 fair value financial instruments sfas 107 disclosures fair value financial instruments requires disclosures fair value financial instruments whether recognized balance sheet practicable estimate value cases quoted market prices available fair values based estimates using present value valuation techniques company’s financial instruments consist following cash loans receivable senior notes payable convertible senior subordinated notes payable note payable foreign currency options interest rate swaps fair value approximates carrying value instruments except convertible subordinated notes payable loans receivable originated prevailing market rates average life approximately four months given shortterm nature loans continually repriced current market rates company’s revolving credit facility note payable variable rate based margin libor reprice changes libor convertible subordinated notes payable fair value based current quoted market price 103537500 march 31 2007 swap option valued based information third party broker insurance premiums insurance premiums credit life accident health property unemployment insurance written connection certain loans net refunds applicable advance insurance commissions retained company remitted monthly insurance company commissions credited unearned insurance commissions recognized income life related insurance contracts using method similar used recognition interest income nonfile insurance nonfile premiums charged certain loans inception renewal lieu recording perfecting companys security interest assets pledged certain loans remitted thirdparty insurance company nonfile insurance coverage insurance related insurance premiums claims recoveries reflected accompanying consolidated financial statements except reduction loan losses see note 9 certain losses related loans recoverable life accident health property unemployment insurance claims reimbursed nonfile insurance claims subject policy limitations remaining losses charged allowance loan losses income taxes income taxes accounted asset liability method deferred tax assets liabilities recognized future tax consequences attributable differences financial statement carrying amounts existing assets liabilities respective tax bases operating loss tax credit carryforwards deferred tax assets liabilities measured using enacted tax rates expected apply taxable income years temporary differences expected recovered settled effect deferred tax assets liabilities change tax rates recognized income period includes enactment date supplemental cash flow information years ended march 31 2007 2006 2005 company paid interest 9686128 6958983 4529445 respectively years ended march 31 2007 2006 2005 company paid income taxes 26478254 9928505 16600328 respectively supplemental noncash financing activities years ended march 31 2007 2006 2005 consist earnings per share earnings per share “eps” computed accordance sfas 128 “earnings per share” basic eps includes dilution computed dividing income available common shareholders weightedaverage number common shares outstanding period diluted eps reflects potential dilution securities could share earnings company potential common stock included diluted eps computation consists stock options restricted stock warrants computed using treasury stock method potential common stock related convertible senior notes included diluted eps computation using method prescribed eitf 048 “the effect contingently convertible instruments dilutive earnings per share” reclassifications certain reclassification entries made fiscal 2006 2005 conform fiscal 2007 presentation impact shareholders’ equity net income previously reported result reclassifications stockbased compensation december 2004 financial accounting standards board “fasb” issued sfas 123r “sfas 123r” “sharebased payment” requires companies recognize income statement grantdate fair value stock options equitybased compensation issued employees sfas 123r amendment sfas 123 “sfas 123” “accounting stockbased compensation” related implementation guidance sfas 123r change accounting guidance sharebased payment transactions parties employees provided sfas 123 sfas 123r way award classified affect measurement compensation cost liabilityclassified awards remeasured fair value balancesheet date award settled equityclassified awards measured grantdate fair value amortized subsequent vesting period subsequently remeasured fair value nonvested stock awards purposes recognizing stockbased compensation expense market price stock grant date fair value options estimated grant date using blackscholes option pricing model see note 13 march 31 2007 company several sharebased employee compensation plans described fully note 13 prior april 1 2006 company accounted option plans recognition measurement principles apb opinion 25 “accounting stock issued employees” related interpretations “apb opinion 25” permitted sfas 123 stockbased employee compensation cost recognized net income related stock options years ended march 31 2006 2005 options granted plans exercise price equal market value underlying common stock date grant effective april 1 2006 company adopted sfas 123r using modified prospective transition method transition compensation cost recognized 2007 includes compensation cost sharebased payments granted prior yet vested april 1 2006 based grant date fair value estimated accordance original provisions sfas 123 b compensation cost sharebased payments granted subsequent april 1 2006 based grantdate fair value estimated accordance provisions statement 123r since compensation cost based awards ultimately expected vest reduced estimated forfeitures sfas 123r requires forfeitures estimated time grant revised necessary subsequent periods actual forfeitures differ estimates prior adoption sfas 123r company recorded forfeitures occurred results change material company elected expense future grants awards graded vesting graded vesting basis requisite service period entire award results prior periods restated result applying provisions sfas 123r fiscal 2007 company recognized additional sharebased compensation expense related stock options restricted stock 45 million 28 million net tax increase sharebased compensation expense resulted 015 decrease basic earnings per share diluted earnings per share fiscal 2007 prior adoption sfas 123r company presented tax benefits resulting sharebased compensation cash flows operating activities consolidated statements cash flows sfas 123r requires cash flows resulting tax deductions excess grantdate fair value sharebased awards included cash flows financing activities cash flows financing activities fiscal 2007 included 2937122 million cash inflows excess tax benefits related stock compensation following table provides pro forma net income earnings per share information company applied fair value recognition provisions sfas 123r stockbased employee compensation option plans periods presented dollars thousands except per share data comprehensive income total comprehensive income consists net income comprehensive income loss company’s comprehensive income loss accumulated comprehensive income loss comprised foreign currency translation adjustments new accounting pronouncements accounting certain hybrid financial instruments february 2006 financial accounting standards board “fasb” issued statement financial accounting standards 155 “accounting certain hybrid financial instruments amendment fasb statements 133 140” “sfas 155” sfas 155 permits entity measure fair value financial instrument contains embedded derivative otherwise would required bifurcated accounted separately sfas 133 sfas 155 effective fiscal years beginning september 15 2006 company expect impact adoption sfas 155 material consolidated financial statements accounting uncertainty income taxes july 2006 fasb interpretation 48 “accounting uncertainty income taxes interpretation fasb statement 109” “fin 48” issued clarifies accounting uncertainty income taxes recognized entity’s financial statements accordance statement financial accounting standards 109 “accounting income taxes” prescribing minimum recognition threshold measurement attribute tax position taken expected taken tax return required meet recognized financial statements fin 48 also provides guidance derecognition measurement classification interest penalties accounting interim periods disclosure transition management expect impact fin 48 material must implemented effective april 1 2007 may 2007 fasb issued fsp fin 481 “definition settlement fasb interpretation 48” fsp fin 481 provides guidance company determine whether tax position effectively settled purpose recognizing previously unrecognized tax benefits fsp fin 481 effective upon initial adoption fin 48 company adopt first quarter fiscal 2008 indicated fair value measurements september 2006 fasb issued statement financial accounting standards 157 fair value measurements “sfas 157”” sfas 157 provides common definition fair value framework measuring assets liabilities fair values particular standard prescribes addition statement prescribes enhanced disclosure fair value measures requires expanded disclosure nonmarket data used assess fair values required sfas 157 adopt new accounting standard effective april 1 2008 management currently reviewing impact sfas 157 financial statements considering effects prior year misstatements quantifying misstatements current year financial statements september 2006 securities exchange commission issued staff accounting bulletin 108 “sab 108” “considering effects prior year misstatements quantifying misstatements current year financial statements” provides interpretive guidance consideration effects prior year misstatements quantifying current year misstatements purpose materially assessment sab 108 requires registrants quantify misstatements using balance sheet income statement approaches evaluate whether either approach results quantifying error material based relevant quantitative qualitative factors guidance effective first fiscal period ending november 15 2006 company required adopt fourth quarter fiscal 2007 impact adopting sab 108 consolidated financial statements fair value option financial assets financial liabilities february 15 2007 fasb issued sfas 159 “sfas 159” “the fair value option financial assets financial liabilities” allows entity irrevocable option elect fair value initial subsequent measurement certain financial assets liabilities contractbycontract basis subsequent changes fair value financial assets liabilities would recognized earnings occur sfas 159 establishes certain additional disclosure requirements sfas 159 effective company’s financial statements year beginning april 1 2008 company expect effect adopting standard material consolidated financial statements accounting purchases life insurance september 2006 fasb ratified consensus reached eitf issue 065 “accounting purchases life insurance determining amount could realized accordance fasb technical bulletin 854 accounting purchases life insurance” fasb technical bulletin 854 requires amount could realized insurance contract date statement financial position reported asset since issuance fasb technical bulletin 854 diversity practice calculation amount could realized insurance contracts issue 065 concludes company consider additional amounts eg cash stabilization reserves deferred acquisition cost taxes included contractual terms insurance policy cash surrender value determining amount could realized accordance fasb technical bulletin 854 company adopt interpretation first quarter fiscal 2008 expect adoption interpretation significant impact shareholders’ equity results operations 2 accumulated comprehensive loss company applies provision financial accounting standards board’s fasb statement financial accounting standards sfas 130 “reporting comprehensive income” following summarizes accumulated comprehensive loss march 31 2006 3 allowance loan losses following summary changes allowance loan losses years ended march 31 2007 2006 2005 effective april 1 2005 company adopted statement position 033 sop 033 accounting certain loans debt securities acquired transfer prohibits carry creation valuation allowances initial accounting loans acquired transfer within scope sop management believes loan shown deterioration days delinquent company believes loans acquired since adoption sop 033 shown evidence deterioration credit quality since origination therefore within scope sop 033 company pay consideration record acquired loans 60 days delinquent loans acquired 60 days past due included scope sop 033 therefore subsequent refinances restructures loans would accounted new loan years ended march 31 2007 2006 2005 company recorded adjustments approximately 09 million 04 million 14 million respectively allowance loan losses connection acquisitions accordance generally accepted accounting principles adjustments represent allowance loan losses acquired loans meet scope sop 033 also see note 1 4 property equipment summaries property equipment follow depreciation expense 3058000 2372000 2074000 years ended march 31 2007 2006 2005 respectively 5 intangible assets intangible assets net accumulated amortization consist estimated amortization expense intangible assets years ended march 31 follows 24 million 2008 21 million 2009 18 million 2010 15 million 2011 12 million 2012 aggregate 21 million years thereafter 6 goodwill following summarizes changes carrying amount goodwill year ended march 31 2007 2006 august 2006 january 2007 company closed san antonio texas tallassee alabama branches respectively time goodwill associated branches determined impaired subsequently written august 2005 company closed jefferson georgia branch time goodwill associated branch determined impaired subsequently written company performed annual impairment test march 31 2007 determined none recorded goodwill impaired 7 notes payable summaries companys notes payable follow senior notes payable 167000000 revolving credit facility provides borrowings 1670 million 606 million outstanding march 31 2007 subject borrowing base formula additional 15 million available seasonal revolving credit commitment november 15 year march 31 immediately succeeding year cover increase loan demand period company may borrow option rate prime libor plus 185 march 31 2007 company’s interest rate 825 unused amount available revolver 1064 million revolving credit facility commitment fee 0375 per annum unused portion commitment borrowings revolving credit facility mature september 30 2008 member company’s board directors served executive vice president south financial group parent carolina first bank december 2006 march 31 2007 carolina first bank committed fund 20 million credit facility substantially company’s assets pledged collateral borrowings revolving credit agreement second amendment amended restated credit agreement company entered second amendment amended restated credit agreement dated october 2 2006 “amendment” amends company’s amended restated revolving credit agreement dated july 20 2005 amended “credit agreement” among company banks party thereto “banks” jpmorgan chase bank coagent harris na agent banks amendment permits company incur 110000000 aggregate principal amount indebtedness convertible notes defined convertible senior notes section terms including subordination terms set forth offering memorandum convertible notes dated october 3 2006 also described company’s registration statement form s3 filed december 18 2006 sec file 333139445 confirms notes constitute subordinated indebtedness defined credit agreement addition amendment modifies consolidated net worth fixed charge coverage ratio financial covenants credit agreement adjusts indebtedness negative covenant credit agreement amended prohibits incurrence senior debt defined credit agreement consolidated basis exceeds 375 sum consolidated adjusted net worth aggregate unpaid principal amount subordinated debt ii subordinated debt exceeds 150 consolidated adjusted net worth amendment eliminates current restricted payments negative covenant credit agreement replaces covenant requiring obligations credit agreement constitute senior debt agreement covering subordinated debt obligations constitute designated senior debt indenture convertible notes ii restricting amendments subordinated debt amendments respect interest rates deferral repayments matters adverse senior lenders iii restricting voluntary prepayments redemptions cash payments upon conversion subordinated debt except payments pro forma basis create default event default defined credit agreement amendment also permits convertible note hedge warrant transactions described convertible senior notes section provides default company convertible note hedge warrant transactions also constitute event default credit agreement convertible senior notes october 10 2006 company issued 110 million aggregate principal amount 30 convertible senior subordinated notes due october 1 2011 “convertible notes” qualified institutional brokers accordance rule 144a securities act 1933 interest convertible notes payable semiannually arrears april 1 october 1 year commencing april 1 2007 convertible notes company’s direct senior subordinated unsecured obligations rank equally right payment existing future unsecured senior subordinated debt company senior right payment company’s existing future subordinated debt junior company’s existing future senior debt convertible notes structurally junior liabilities company’s subsidiaries convertible notes convertible prior maturity subject certain conditions described initial conversion rate 160229 shares per 1000 principal amount notes represents initial conversion price approximately 6241 per share subject adjustment upon conversion company pay cash principal amount notes converted deliver shares common stock extent daily conversion value exceeds proportionate principal amount based 30 tradingday observation period holders may convert convertible notes prior july 1 2011 one following conditions satisfied • fiscal quarter commencing december 31 2006 last reported sale price common stock least 20 trading days period 30 consecutive trading days ending last trading day preceding fiscal quarter greater equal 120 applicable conversion price last trading day • five business day period ten consecutive trading day period trading price per note day ten consecutive trading day period less 98 product last reported sale price company’s common stock applicable conversion rate day • occurrence specified corporate transactions convertible notes converted connection certain fundamental changes occur prior october 1 2011 company may obligated pay additional makewhole premium respect convertible notes converted company undergoes certain fundamental changes holders convertible notes may require company purchase convertible notes price equal 100 principal amount convertible notes purchased plus accrued interest excluding purchase date holders may also surrender convertible notes conversion anytime july 1 2011 close business third business day immediately preceding maturity date regardless whether foregoing conditions satisfied contingent conversion feature required bifurcated accounted separately provisions fas 133 “accounting derivative instruments hedging activities” aggregate underwriting commissions debt issuance costs incurred respect issuance convertible notes approximately 36 million amortized period convertible senior notes outstanding convertible notes hedge strategy concurrent connection sale convertible notes company purchased call options purchase shares company’s common stock equal conversion rate date options exercised convertible notes price 6241 per share cost call options totaled 246 million company also sold warrants counterparties purchase company aggregate 1762519 shares company’s common stock price 7397 per share received net proceeds sale increasing warrants 162 million taken together call option warrant agreements increased effective conversion price convertible notes 7397 per share call options warrants must settled net shares date settlement market price per share company’s common stock 7397 per share company required deliver shares common stock representing value call options warrants excess 7397 per share warrants strike price 7397 generally exercisable anytime company issued sold warrants transaction exempt registration requirements securities act 1933 amended virtue section 42 thereof underwriting commissions discounts connection sale warrants accordance eitf 0019 “accounting derivative financial instruments indexed potentially settled company’s stock” company accounted call options warrants net reduction additional paid capital required recognize subsequent changes fair value call options warrants consolidated financial statements note payable company also 600000 note payable carolina first bank bearing interest libor plus 200 payable monthly repaid three remaining annual installments 200000 ending may 1 2009 debt covenants various debt agreements contain restrictions amounts permitted indebtedness investments working capital repurchases common stock cash dividends march 31 2007 351 million available covenants payment cash dividends repurchase companys common stock addition agreements restrict liens assets sale transfer subsidiaries company compliance various debt covenants periods presented aggregate annual maturities notes payable fiscal years subsequent march 31 2007 follows 2008 60800000 2009 200000 2010 200000 2011 110000000 none thereafter 8 derivative financial instruments october 5 2005 company entered interest rate swap notional amount 30 million economically hedge portion cash flows floating rate revolving credit facility terms interest rate swap company pay fixed rate 4755 30 million notional amount receive payments counterparty based 1 month libor rate term ending october 5 2010 interest rate differentials paid received swap agreement recognized adjustments interest expense april 28 2006 company entered 1 million foreign exchange currency option economically hedge foreign exchange risk relative mexican peso terms option contract company exchange 1 million us dollars rate 1136 mexican pesos april 30 2007 fair value option march 31 2007 immaterial march 31 2007 company recorded asset related interest rate swap 92000 represented fair value interest rate swap date corresponding unrealized loss 400000 recorded income year ended march 31 2007 year ended march 31 2007 interest expense decreased approximately 150000 result net disbursements terms interest rate swap company enter derivative financial instruments trading speculative purposes purpose instruments reduce exposure variability future cash flows attributable portion liborbased borrowings reduce variability foreign cash flows fair value interest rate swap option recorded consolidated balance sheets asset liability company currently accounting derivative instruments using cash flow hedge accounting provisions sfas 133 therefore changes fair value swap option included earnings income expenses using derivative instruments company exposed credit market risk credit risk counterparty derivative instrument fail perform exists extent fair value gain derivative credit risk created fair value derivative contract positive since generally indicates counterparty owes company fair value derivative negative credit risk exists since company would owe counterparty market risk adverse effect financial instruments change interest rates implied volatility exchange rates company manages market risk associated interest rate contracts currency options establishing monitoring limits types degree risk may undertaken market risk associated derivatives used interest rate foreign currency risk management activities fully incorporated company’s market risk sensitivity analysis 9 nonfile insurance company maintains nonfile insurance coverage unaffiliated insurance company following summary nonfile insurance activity years ended march 31 2007 2006 2005 10 leases company conducts operations leased facilities except owned corporate office building expected normal course business expiring leases renewed companys option replaced leases acquisitions properties company’s leases operating leases future minimum lease payments noncancelable operating leases march 31 2007 follows rental expense cancelable noncancelable operating leases years ended march 31 2007 2006 2005 9555103 7730647 6857274 respectively 11 income taxes income tax expense benefit consists income tax expense 29273701 23080000 19868000 years ended march 31 2007 2006 2005 respectively differed amounts computed applying us federal income tax rate 35 pretax income continuing operations result following tax effects temporary differences give rise significant portions deferred tax assets deferred tax liabilities march 31 2007 2006 presented valuation allowance deferred tax assets march 31 2007 2006 742000 535000 respectively valuation allowance total deferred tax assets march 31 2007 2006 relates state net operating losses assessing realizability deferred tax assets management considers whether likely portion deferred tax assets realized ultimate realization deferred tax assets dependent upon generation future taxable income periods temporary differences become deductible management considers scheduled reversals deferred tax liabilities projected future taxable income tax planning strategies making assessment order fully realize deferred tax asset company need generate future taxable income prior expiration deferred tax assets governed tax code based upon level historical taxable income projections future taxable income periods deferred tax assets deductible management believes likely company realize benefits deductible differences net existing valuation allowances march 31 2007 amount deferred tax asset considered realizable however could reduced near term estimates future taxable income carryforward period reduced internal revenue service examined company’s federal income tax returns fiscal year 2004 tax returns fiscal 2005 2006 subject examination taxing authorities 12 earnings per share following reconciliation numerators denominators basic diluted eps calculations options purchase 77556 133000 0 shares common stock various prices outstanding years ended march 31 2007 2006 2005 respectively included computation diluted eps option exercise price greater average market price common shares related convertible senior notes payable 1762519 related warrants included computation diluted eps effect instruments antidilutive 13 benefit plans retirement plan company provides defined contribution employee benefit plan 401k plan covering fulltime employees whereby employees invest 15 gross pay company makes matching contribution equal 50 employees contributions first 6 gross pay companys expense plan 948519 619433 610536 years ended march 31 2007 2006 2005 respectively supplemental executive retirement plan company instituted supplemental executive retirement plan “serp” nonqualified executive benefit plan company agrees pay executive additional benefits future usually retirement return continued employment executive company selects key executives participate serp unfunded plan means specific assets set aside company connection establishment plan executive rights agreement beyond general creditor company years ended march 31 2007 2006 2005 contributions 474865 454165 317882 respectively charged operations related serp unfunded liability 2989000 2707000 2253 000 march 31 2007 2005 respectively three years presented unfunded liability estimated using following assumptions annual salary increase 35 3 years discount rate 75 2005 6 2006 6 2007 retirement age 65 executive deferred compensation plan company executive deferral plan eligible executives may elect defer portion incentive compensation paid executive incentive plan march 31 2007 2006 balance outstanding 217480 320396 respectively plan stock option plans company 1992 stock option plan 1994 stock option plan 2002 stock option plan 2005 stock option plan benefit certain directors officers key employees plans 4350000 shares authorized common stock reserved issuance pursuant grants approved compensation stock option committee board directors stock options granted plans maximum duration 10 years may subject certain vesting requirements generally one year directors five years officers key employees priced market value companys common stock date grant option march 31 2007 643516 shares available grant plans fair value company’s stock options granted estimated date grant using blackscholes optionpricing model requires input highly subjective assumptions changes materially affect fair value estimate additionally may factors would otherwise significant effect value employee stock options granted considered model accordingly management believes blackscholes optionpricing model provides reasonable estimate fair value model necessarily provide best single measure fair value company’s employee stock options assumptions include estimating length time employees retain vested stock options exercising estimated volatility common stock price expected term number options ultimately complete vesting requirements weightedaverage fair value grant date options issued years ended march 31 2007 2006 2005 2644 1493 1260 per share respectively following summary company’s weightedaverage assumptions used estimate weightedaverage per share fair value options granted date grant using blackscholes optionpricing model expected stock price volatility based historical volatility company’s stock period approximating expected life expected life represents period time options expected outstanding grant date riskfree interest rate reflects interest rate grant date zerocoupon us governmental bonds remaining life similar expected option term option activity year ended march 31 2007 follows aggregate intrinsic value reflected table represents total pretax intrinsic value difference closing stock price march 31 2007 exercise price multiplied number inthemoney options would received option holders option holders exercised options march 31 2007 amount change stock’s market price changes total intrinsic value options exercised period ended march 31 2007 2006 follows march 31 2007 total unrecognized stockbased compensation expense related nonvested stock options amounted approximately 67 million expected recognized weightedaverage period approximately 31 years following table summarizes information regarding stock options outstanding march 31 2007 restricted stock may 2 2006 company granted 8000 shares restricted stock equity classified grant date fair value 2896 per share independent directors onehalf restricted stock vested immediately half vest first anniversary grant compensation expense related shares based number shares expected vest fair market value common stock grant date company recognized 222025 compensation expense year ended march 31 2007 related restricted stock included component general administrative expenses consolidated statements operations shares expected vest november 24 2006 company granted 37500 shares restricted stock equity classified grant date fair value 4621 per share certain executive officers onethird restricted stock vested immediately onethird vest first second anniversary grant compensation expense related shares based number shares expected vest fair market value common stock grant date company recognized 866362 compensation expense year ended march 31 2007 related restricted stock included component general administrative expenses consolidated statements operations shares expected vest march 31 2007 approximately 876139 unrecognized compensation cost related unvested restricted stock awards granted expected recognized next two years summary status restricted stock march 31 2007 changes year ended march 31 2007 presented total sharebased compensation included component net income march 31 2007 follows 14 acquisitions following table sets forth acquisition activity company last three fiscal years company evaluates acquisition determine transaction meets definition business combination transactions meet definition business combination accounted sfas 141 acquisitions accounted asset purchases acquisitions independent third parties titan acquisition october 13 2006 company purchased assets consisting primarily loans receivable titan financial group ii llc certain affiliated companies approximately 135 million cash assets included approximately 125 million net loan receivable portfolios 117000 fixed assets acquisition recorded business combination management determined fair value customer list exceeded excess purchase price paid fair value tangible assets therefore excess recorded customer list goodwill recorded titan office locations across georgia south carolina company kept open 39 69 titan offices consolidated remaining titan offices existing operations results acquisition included company’s consolidated financial statement since acquisition date pro forma impact purchase though acquired beginning periods presented would material effect results operations reported acquisitions acquisition results new office company records transaction business combination since office acquired continue generate loans company typically retains existing employees office location noncompete agreements valued stated amount paid party agreements company believes approximates fair value business combination remaining excess purchase price fair value tangible assets noncompete agreements allocated twothirds goodwill onethird customer list generally acquired offices small privately owned sufficient historical data determine attrition management believes customers acquired characteristics perform similarly customers company therefore management utilized attrition patterns company’s customers developing methodology determined fiscal 2002 reevaluated fiscal 2006 year ended march 31 2007 acquisitions recorded business combinations acquisition portfolio loans company records transaction asset purchase asset purchase goodwill recorded purchase price allocated estimated fair value tangible intangible assets acquired year ended march 31 2007 36 acquisitions recorded asset acquisitions include tangible assets generally loans furniture equipment intangible assets generally noncompete agreements customer lists goodwill recorded fair values estimated pursuant processes described acquired loans valued net loan balance given shortterm nature loans generally four months loans subject continual repricing current rates management believes net loan balances approximate fair value furniture equipment valued specific purchase price agreed parties time acquisition management believes approximates fair values customer lists allocated office level evaluated impairment office level accordance sfas 144 “accounting impairment disposed long lived assets” impairment occurs impairment loss customer list generally remaining unamortized customer list balance results acquisitions included company’s consolidated financial statements since respective acquisition dates pro forma impact purchases though acquired beginning periods presented would material effect results operations reported 15 quarterly information unaudited following sets forth selected quarterly operating data 16 litigation march 31 2007 company certain subsidiaries named defendants various legal actions arising normal business activities damages various amounts claimed although amount ultimate liability respect matters cannot determined company believes liability material adverse effect company’s results operations financial condition taken whole 17 commitments subsequent event may 21 2007 company entered employment agreements key executive employees employment agreements term three years calls aggregate minimum annual base salary approximately 500000 adjusted annually determined compensation stock option committee company’s board directors agreement also provides annual incentive bonus based achievement certain predetermined operational goals management’s report internal control financial reporting management’s annual report internal control financial reporting responsible establishing maintaining adequate internal control financial reporting defined rules 13a 15f securities exchange act 1934 assessed effectiveness internal control financial reporting march 31 2007 assessment based criteria set forth committee sponsoring organizations treadway commission coso internal controlintegrated framework internal control financial reporting process designed provide reasonable assurance regarding reliability financial reporting preparation financial statements external purposes accordance generally accepted accounting principles internal control financial reporting includes policies procedures 1 pertain maintenance records reasonable detail accurately fairly reflect transactions dispositions assets 2 provide reasonable assurance transactions recorded necessary permit preparation financial statements accordance generally accepted accounting principles receipts expenditures made accordance authorizations management board directors 3 provide reasonable assurance regarding prevention timely detection unauthorized acquisition use disposition assets could material effect financial statements inherent limitations internal control financial reporting may prevent detect misstatements also assumptions regarding internal control financial reporting future periods based evaluation effectiveness prior period subject risk controls may become inadequate changes conditions degree compliance policies procedures may deteriorate based using coso criteria believe internal control financial reporting march 31 2007 effective independent registered public accounting firm audited consolidated financial statements included annual report issued attestation report management’s assessment internal control financial reporting well effectiveness internal control financial reporting stated report included elsewhere herein mclean iii kelly malson snape mclean iii kelly malson snape chief executive officer vice president chief financial officer report independent registered public accounting firm board directors world acceptance corporation audited accompanying consolidated balance sheets world acceptance corporation subsidiaries “company” march 31 2007 2006 related consolidated statements operations shareholders’ equity comprehensive income cash flows years threeyear period ended march 31 2007 consolidated financial statements responsibility company’s management responsibility express opinion consolidated financial statements based audits conducted audits accordance standards public company accounting oversight board united states standards require plan perform audit obtain reasonable assurance whether financial statements free material misstatement audit includes examining test basis evidence supporting amounts disclosures financial statements audit also includes assessing accounting principles used significant estimates made management well evaluating overall financial statement presentation believe audits provide reasonable basis opinion consolidated financial statements referred present fairly material respects financial position world acceptance corporation subsidiaries march 31 2007 2006 results operations cash flows years threeyear period ended march 31 2007 conformity us generally accepted accounting principles discussed note 1 company adopted statement financial accounting standard 123 revised 2004 sharebased payment effective april 1 2006 also audited accordance standards public company accounting oversight board united states effectiveness company’s internal control financial reporting march 31 2007 based criteria established internal controlintegrated framework issued committee sponsoring organizations treadway commission coso report dated may 25 2007 expressed unqualified opinion management’s assessment effective operation internal control financial reporting greenville south carolina may 25 report independent registered public accounting firm board directors world acceptance corporation audited managements assessment included accompanying management’s report internal control financial reporting world acceptance corporation “company” maintained effective internal control financial reporting march 31 2007 based criteria established internal controlintegrated framework issued committee sponsoring organizations treadway commission coso company’s management responsible maintaining effective internal control financial reporting assessment effectiveness internal control financial reporting responsibility express opinion managements assessment opinion effectiveness company’s internal control financial reporting based audit conducted audit accordance standards public company accounting oversight board united states standards require plan perform audit obtain reasonable assurance whether effective internal control financial reporting maintained material respects audit included obtaining understanding internal control financial reporting evaluating managements assessment testing evaluating design operating effectiveness internal control performing procedures considered necessary circumstances believe audit provides reasonable basis opinion companys internal control financial reporting process designed provide reasonable assurance regarding reliability financial reporting preparation financial statements external purposes accordance generally accepted accounting principles companys internal control financial reporting includes policies procedures 1 pertain maintenance records reasonable detail accurately fairly reflect transactions dispositions assets company 2 provide reasonable assurance transactions recorded necessary permit preparation financial statements accordance generally accepted accounting principles receipts expenditures company made accordance authorizations management directors company 3 provide reasonable assurance regarding prevention timely detection unauthorized acquisition use disposition company’s assets could material effect financial statements inherent limitations internal control financial reporting may prevent detect misstatements also projections evaluation effectiveness future periods subject risk controls may become inadequate changes conditions degree compliance policies procedures may deteriorate opinion managements assessment company maintained effective internal control financial reporting march 31 2007 fairly stated material respects based criteria established internal controlintegrated framework issued committee sponsoring organizations treadway commission coso also opinion company maintained material respects effective internal control financial reporting march 31 2007 based criteria established internal controlintegrated framework issued committee sponsoring organizations treadway commission coso also audited accordance standards public company accounting oversight board united states consolidated balance sheets company march 31 2007 2006 related consolidated statements operations shareholders’ equity comprehensive income cash flows years threeyear period ended march 31 2007 report dated may 25 2007 expressed unqualified opinion consolidated financial statements greenville south carolina may 25 item 9item 8 financial statements supplementary data consolidated balance sheets see accompanying notes consolidated financial statements consolidated statements operations see accompanying notes consolidated financial statements consolidated statements comprehensive income see accompanying notes consolidated financial statements consolidated statements shareholders equity see accompanying notes consolidated financial statements consolidated statements cash flows see accompanying notes consolidated financial statements notes consolidated financial statements 1 summary significant accounting policies companys accounting reporting policies accordance us generally accepted accounting principlesgaap conform general practices within finance company industry following description significant policies used preparing consolidated financial statements nature operations company smallloan consumer finance company headquartered greenville south carolina offers shortterm small loans mediumterm larger loans related credit insurance products ancillary products services individuals limited access sources consumer credit also offers income tax return preparation services customer base others company also markets computer software related services financial services companies paradata financial systems “paradata” subsidiary march 31 2014 company operated 1138 offices alabama georgia illinois indiana kentucky louisiana mississippi missouri new mexico oklahoma south carolina tennessee texas wisconsin company also operated 133 offices mexico company subject numerous lending regulations vary jurisdiction principles consolidation consolidated financial statements include accounts world acceptance corporation whollyowned subsidiaries “company” subsidiaries consist operating entities various states mexico paradata software company acquired fiscal 1994 wac insurance company ltd captive reinsurance company established fiscal 1994 servicios world acceptance corporation de mexico service company established fiscal 2006 significant intercompany balances transactions eliminated consolidation financial statements company’s foreign subsidiaries mexico prepared using local currency functional currency assets liabilities subsidiaries translated us dollars current exchange rate income expense translated average exchange rate period resulting translation gains losses recognized component equity “accumulated comprehensive lossincome” use estimates preparation consolidated financial statements preparation financial statements conformity gaap requires management make estimates assumptions affect reported amount assets liabilities disclosure contingent liabilities date financial statements reported amounts revenue expenses reporting period significant item subject estimates assumptions could materially change near term allowance loan losses actual results could differ estimates business segments company reports operating segments accordance financial accounting standards board fasb accounting standards codification asc topic 280 operating segments components enterprise separate financial information available evaluated regularly chief operating decision maker deciding allocate resources assess performance fasb asc topic 280 requires public enterprise report measure segment profit loss certain specific revenue expense items segment assets information way operating segments determined items company one reportable segment consumer finance company revenue generating activities company including sale insurance products income tax preparation buying club automobile club done existing branch network conjunction complement lending operation discrete financial information available activities meet criteria fasb asc topic 280 reported separately paradata provides data processing systems 102 separate finance companies including company march 31 2014 2013 paradata total assets 13 million 09 million represented less 1 total consolidated assets fiscal year end total net revenues system sales support paradata years ended march 31 2014 2013 2012 24 million 21 million 23 million respectively represented less 1 consolidated revenue year although paradata operating segment fasb asc topic 280 meet criteria require separate disclosure cash equivalents purposes statement cash flows company considers highly liquid investments maturity three months less date original issuance cash equivalents loans interest income company licensed originate consumer loans states georgia south carolina texas oklahoma louisiana tennessee missouri illinois new mexico kentucky alabama wisconsin indiana mississippi addition company also originates consumer loans mexico fiscal 2014 2013 company originated loans generally ranging 4000 terms 42 months less experience indicates majority consumer loans refinanced company accounts majority refinancing new loan generally customer must make multiple payments order qualify refinancing furthermore companys lending policy predetermined lending amounts cases refinancing result advancing additional funds company believes advancement additional funds constitutes minor modification terms existing loan present value cash flows terms new loan 10 present value remaining cash flows terms original loan fees received direct costs incurred origination loans deferred amortized interest income contractual lives loans unamortized amounts recognized income time loans refinanced paid full loans carried gross amount outstanding reduced unearned interest insurance income net deferred origination fees direct costs allowance loan losses fiscal year ended march 31 2012 company recognized interest revenue loans using rule 78s collection method cash method recognizing revenue combination using rule 78s cash collections method recognize interest revenue approximated actuarial accrual method required us generally accepted accounting principles march 31 2013 company converted actuarial accrual method recognizing revenue charges late payments credited income collected company generally offers loans prevailing statutory rates terms exceed 42 months management believes carrying value approximates fair value loan portfolio nonaccrual policy accrual interest discontinued loan 60 days past contractual due date interest accrual discontinued unpaid accrued interest reversed interest income loan nonaccrual status interest revenue recognized allowance loan losses company maintains allowance loan losses amount managements opinion adequate provide losses inherent existing loan portfolio company charges current earnings provision loan losses amounts added allowance maintain levels expected cover probable losses principal establishing allowance loan losses company takes consideration growth loan portfolio current levels chargeoffs current levels delinquencies current economic factors company uses mathematical calculation determine initial allowance end reporting period calculation originated managements estimate future chargeoffs used allocate expenses branch level two components calculating allowance loan losses company refers general reserve specific reserve calculation starting point time needed additional provisions added determined management make allowance adequate general reserve 425 gross loan portfolio specific reserve represents 100 loans 91 days past due recency basis including bankrupt accounts category methodology based historical data showing collection loans 91 days past due bankrupt accounts remote process performed determine adequacy allowance loan losses well considering trends current levels delinquencies chargeoff levels economic trends energy food prices primary tool used movement model contractual recency basis considers rolling twelve months delinquency determine expected chargeoffs sum expected chargeoffs determined movement model contractual recency basis plus amount delinquent refinancings compared allowance resulting mathematical calculation determine adjustments needed make allowance adequate management would also determine adjustments needed consolidated annual provision loan losses less total chargeoffs management uses precision level 5 allowance loan losses compared aforementioned movement model determining adjustments needed companys policy charge earlier loans deemed uncollectible six months elapsed since date last full contractual payment however companys practice charge account earlier account deemed uncollectible 120 days past due recency basis companys chargeoff policy practice consistently applied changes made periods reported companys historical annual chargeoff rate past 11 years ranged 133 167 net loans management considers chargeoff policy evaluating appropriateness allowance loan losses fasb asc topic 310 prohibits carryover creation valuation allowances initial accounting loans acquired transfer within scope authoritative literature company believes loans acquired since adoption fasb asc topic 310 shown evidence deterioration credit quality since origination therefore within scope fasb asc topic 310 therefore company records acquired loans within scope fasb asc topic 310 fair value impaired loans company defines impaired loans bankrupt accounts 90 days past due accordance company’s chargeoff policy loan deemed uncollectible 100 net investment charged except case borrower filed bankruptcy march 31 2014 bankrupt accounts charged approximately 59 million bankrupt accounts 91 days past due reserved 100 company also considers accounts 91 days past due impaired accounts reserved 100 additional requirements asu 201020 credit quality company’s receivables disclosed note 2 property equipment property equipment stated cost less accumulated depreciation amortization depreciation recorded using straightline method estimated useful life related asset follows building 40 years furniture fixtures 5 10 years equipment 3 7 years vehicles 3 years amortization leasehold improvements recorded using straightline method lesser estimated useful life asset term lease additions premises equipment major replacements improvements added cost maintenance repairs minor replacements charged operating expense incurred assets retired otherwise disposed cost accumulated depreciation removed accounts gain loss reflected consolidated statement operations operating leases company’s office leases typically lease term three five years contain lessee renewal options cancellation clauses event regulatory changes company typically renews leases one option periods accordingly company amortizes leasehold improvements shorter economic lives generally five years lease term considers renewal periods reasonably assured assets include cash surrender value life insurance policies prepaid expenses debt issuance costs deposits derivatives hedging activities company used interest rate swaps foreign currency options economically hedge variable cash flows currency fluctuations respectively interest rate swap agreements carried fair value changes fair value recorded period component consolidated statement operations see note 7 discussion related interest rate swaps march 31 2014 2013 company foreign currency options interest rate swaps outstanding intangible assets goodwill intangible assets include cost acquiring existing customers fair value assigned noncompete agreements customer lists amortized straight line accelerated basis estimated period benefit ranging 5 20 years weighted average approximately 11 years noncompete agreements amortized straight line basis term agreement company evaluates goodwill annually impairment fourth quarter fiscal year using market valuebased approach company one reporting unit consumer finance company multiple components lowest level individual offices company’s components aggregated impairment testing similar economic characteristics company writes goodwill closes office goodwill assigned march 31 2014 company 90 offices recorded goodwill impairment longlived assets company assesses impairment longlived assets including property equipment intangible assets whenever changes events indicate carrying amount may recoverable company assesses impairment assets generally office level based operating cash flows office company’s plans office closings company write assets fair value based analysis sum expected future undiscounted cash flows less carrying amount assets company record impairment charges fiscal year ended 2014 2013 2012 fair value financial instruments fasb asc topic 825 requires disclosures fair value financial instruments whether recognized balance sheet practicable estimate value cases quoted market prices available fair values based estimates using present value valuation techniques company’s financial instruments periods reported consist following cash equivalents loans receivable senior notes payable fair value approximates carrying value instruments loans receivable originated prevailing market rates average life approximately eight months given shortterm nature loans continually repriced current market rates company’s revolving credit facility variable rate based margin libor reprices changes libor insurance premiums insurance premiums credit life accident health property unemployment insurance written connection certain loans net refunds applicable advance insurance commissions retained company remitted monthly insurance company commissions credited unearned insurance commissions recognized income life related insurance contracts using method similar used recognition interest fee income nonfiling insurance nonfiling insurance premiums charged certain loans lieu recording perfecting companys security interest assets pledged premiums recoveries remitted third party insurance company reflected accompanying consolidated financial statements see note 9 claims paid third party insurance company result reduction loan losses certain losses related loans recoverable life accident health property unemployment insurance claims reimbursed nonfiling insurance claims subject policy limitations remaining losses charged allowance loan losses income taxes income taxes accounted asset liability method deferred tax assets liabilities recognized future tax consequences attributable differences financial statement carrying amounts existing assets liabilities respective tax bases operating loss tax credit carryforwards deferred tax assets liabilities measured using enacted tax rates expected apply taxable income years temporary differences expected recovered settled effect deferred tax assets liabilities change tax rates recognized income period includes enactment date company recognizes effect income tax positions likely sustained recognized income tax positions measured largest amount greater 50 likely realized changes recognition measurement reflected period change judgment occurs supplemental cash flow information years ended march 31 2014 2013 2012 company paid interest 19922148 16028399 11076970 respectively years ended march 31 2014 2013 2012 company paid income taxes 67404899 66921031 60760661 respectively earnings per share earnings per share “eps” computed accordance fasb asc topic 260 basic eps includes dilution computed dividing net income weightedaverage number common shares outstanding period diluted eps reflects potential dilution securities could share earnings company potential common stock included diluted eps computation consists stock options restricted stock warrants computed using treasury stock method potential common stock related companys formerly outstanding convertible senior notes included diluted eps computation using method prescribed fasb asc topic 2601045 see note 12 reconciliation numerators denominators basic dilutive eps calculations stockbased compensation fasb asc topic 71810 requires companies recognize income statement grantdate fair value stock options equitybased compensation issued employees fasb asc topic 71810 change accounting guidance sharebased payment transactions parties employees provided fasb asc topic 71810 fasb asc topic 71810 way award classified affect measurement compensation cost liabilityclassified awards remeasured fair value balancesheet date award settled equityclassified awards measured grantdate fair value amortized subsequent vesting period subsequently remeasured fair value nonvested stock awards purposes recognizing stockbased compensation expense market price stock grant date fair value options estimated grant date using blackscholes option pricing model see note 13 march 31 2014 company several sharebased employee compensation plans described fully note 13 company uses modified prospective transition method accordance fasb asc topic 718 method transition compensation cost recognized fiscal years 2012 2013 2014 based grantdate fair value estimated accordance provisions fasb asc topic 718 since compensation cost based awards ultimately expected vest reduced estimated forfeitures fasb asc topic 718 requires forfeitures estimated time grant revised necessary subsequent periods actual forfeitures differ estimates company elected expense grants awards graded vesting straightline basis requisite service period separately vesting portion award comprehensive income total comprehensive income consists net income comprehensive income loss company’s comprehensive income loss accumulated comprehensive income loss comprised foreign currency translation adjustments concentration risk year ended march 31 2014 company operated fourteen states united states well mexico years ended march 31 2014 2013 2012 total revenue within companys four largest states measured total revenues accounted approximately 58 56 respectively companys total revenues advertising costs advertising costs expensed incurred advertising costs approximately 161 million 148 million 142 million fiscal years 2014 2013 2012 respectively new accounting pronouncements adopted comprehensive income february 2013 fasb issued asu 201302 comprehensive income topic 220 reporting amounts reclassified accumulated comprehensive income improve reporting reclassifications accumulated comprehensive income loss amendments require entity present either face statement net income presented notes effect significant reclassifications accumulated comprehensive income loss respective line items net income amount reclassified required gaap reclassified entirety net income amounts required gaap reclassified entirety net income reporting period entity required crossreference disclosures required gaap provide additional detail amounts amendments asu became effective prospectively company fiscal year beginning april 1 2013 adoption asu material effect consolidated statements financial condition results operations cash flows accounting standards adopted reviewed significant newly issued accounting pronouncements concluded either applicable business material effect expected financial statements result future adoption 2 allowance loan losses credit quality indicators following summary changes allowance loan losses years ended march 31 2014 2013 2012 following summary loans individually collectively evaluated impairment period indicated following assessment credit quality period indicated following summary past due receivables 3 property equipment property equipment consist depreciation expense approximately 63 million 64 million 65 million years ended march 31 2014 2013 2012 respectively 4 intangible assets following table provides gross carrying amount related accumulated amortization definitelived intangible assets estimated amortization expense intangible assets future years ended march 31 follows 07 million 2015 05 million 2016 04 million 2017 04 million 2018 03 million 2019 aggregate 15 million years thereafter 5 goodwill following summarizes changes carrying amount goodwill year ended march 31 2014 2013 company performed annual impairment test fourth quarter fiscal 2014 2013 determined none recorded goodwill impaired 6 notes payable senior notes payable 680000000 revolving credit facility provides borrowings 6800 million 5055 million outstanding march 31 2014 subject borrowing base formula company may borrow rate libor plus 30 minimum 40 march 31 2014 march 31 2013 company’s effective interest rate including commitment fee 44 46 respectively unused amount available revolver march 31 2014 889 million company also 856 million may become available revolving credit facility grows net eligible finance receivables revolving credit facility commitment fee 040 per annum unused portion commitment borrowings revolving credit facility mature november 19 2015 substantially company’s assets pledged collateral borrowings revolving credit agreement junior subordinated note payable september 17 2010 company entered 750 million junior subordinated note payable wells fargo preferred capital inc “wells fargo” providing nonrevolving line credit maturing september 17 2015 wells fargo also lender revolving credit agreement company repaid junior subordinated note may 2012 debt covenants debt agreement contain restrictions amounts permitted indebtedness investments working capital cash dividends addition agreements restrict liens assets sale transfer subsidiaries debt maturities march 31 2014 aggregate annual maturities notes payable fiscal years subsequent march 31 2014 follows 7 derivative financial instruments december 8 2008 company entered interest rate swap notional amount 200 million economically hedge portion cash flows floating rate revolving credit facility terms interest rate swap company paid fixed rate 24 200 million notional amount received payments counterparty based 1 month libor rate term ended december 8 2011 interest rate differentials paid received swap agreement recognized adjustments interest expense march 31 2014 2013 company interest rate derivative instruments gains losses recognized company’s consolidated statements operations result interest rate swaps follows company enter derivative financial instruments trading speculative purposes purpose instruments reduce exposure variability future cash flows attributable portion liborbased borrowings company currently accounting derivative instruments using cash flow hedge accounting provisions fasb asc topic 8151015 therefore changes fair value swaps included earnings income expense using derivative instruments company exposed credit market risk credit risk counterparty derivative instrument fail perform exists extent fair value gain derivative market risk adverse effect financial instruments change interest rates company manages market risk associated interest rate contracts establishing monitoring limits types degree risk may undertaken market risk associated derivatives used interest rate risk management activities fully incorporated company’s market risk sensitivity analysis 8 insurance commissions income insurance commissions income years ending march 31 2014 2013 2012 consist 9 nonfiling insurance company maintains nonfiling insurance coverage unaffiliated insurance company following summary nonfiling insurance activity years ended march 31 2014 2013 2012 10 leases company conducts operations leased facilities except owned corporate office building companys leases typically lease term three five years contain lessee renewal options majority leases provide lessee pays property taxes insurance common area maintenance costs expected normal course business expiring leases renewed companys option replaced leases acquisitions properties company’s leases operating leases future minimum lease payments noncancelable operating leases march 31 2014 follows rental expense cancelable noncancelable operating leases years ended march 31 2014 2013 2012 approximately 239 million 219 million 200 million respectively 11income taxes income tax expense benefit consists income tax expense 63636273 62201083 59178898 years ended march 31 2014 2013 2012 respectively differed amounts computed applying us federal income tax rate 35 pretax income continuing operations result following tax effects temporary differences give rise significant portions deferred tax assets deferred tax liabilities march 31 2014 2013 presented valuation allowance deferred tax assets march 31 2014 2013 1274 valuation allowance total deferred tax assets march 31 2014 2013 relates state net operating losses assessing realizability deferred tax assets management considers whether likely portion deferred tax assets realized ultimate realization deferred tax assets dependent upon generation future taxable income periods temporary differences become deductible management considers scheduled reversals deferred tax liabilities projected future taxable income tax planning strategies making assessment order fully realize deferred tax asset company need generate future taxable income prior expiration deferred tax assets governed tax code based upon level historical taxable income projections future taxable income periods deferred tax assets deductible management believes likely company realize benefits deductible differences net existing valuation allowances march 31 2014 amount deferred tax asset considered realizable however could reduced near term estimates future taxable income carryforward period reduced company required assess whether earnings companys mexican foreign subsidiary permanently reinvested respective foreign jurisdiction previously untaxed foreign earnings company longer permanently reinvested thus become taxable united states earnings ever repatriated united states company would required accrue pay taxes cumulative undistributed earnings march 31 2014 company determined approximately 155 million cumulative undistributed net earnings well future net earnings mexican foreign subsidiaries permanently reinvested march 31 2014 2013 company 64 million 32 million total gross unrecognized tax benefits including interest respectively totals approximately 46 million 16 million respectively represents amount net unrecognized tax benefits permanent nature recognized would affect annual effective tax rate reconciliation beginning ending amount unrecognized tax benefits follows march 31 2014 approximately 37 million gross unrecognized tax benefits expected resolved next 12 months settlements taxing authorities expiration statute limitations company’s continuing practice recognize interest penalties related income tax matters income tax expense march 31 2014 company 614279 accrued gross interest 379417 current period expense company subject us mexican income taxes well various state local jurisdictions exceptions company longer subject us federal state local nonus income tax examinations tax authorities years 2010 although carryforward attributes generated prior 2010 may still adjusted upon examination taxing authorities either used future period 12 earnings per share following reconciliation numerators denominators basic diluted eps calculations options purchase 404421 403123 86578 shares common stock various prices outstanding years ended march 31 2014 2013 2012 respectively included computation diluted eps option exercise price antidilutive 13 benefit plans retirement plan company provides defined contribution employee benefit plan 401k plan covering fulltime employees whereby employees invest maximum designated year company makes matching contribution equal 50 employees contributions first 6 gross pay companys expense plan 1483712 1432170 1290659 years ended march 31 2014 2013 2012 respectively supplemental executive retirement plan company instituted supplemental executive retirement plan “serp” nonqualified executive benefit plan company agrees pay executive additional benefits future usually retirement return continued employment executive serp unfunded plan specific assets set aside company connection establishment plan executive rights agreement beyond general creditor company may 2009 company instituted second supplemental executive retirement plan provide one executive type benefits original serp would qualified due age second serp also unfunded plan specific assets set aside company connection plan years ended march 31 2014 2013 2012 contributions 909466 1022979 971779 respectively charged expense related serp expense year ended march 31 2014 offset reversal 904138 expense accrued two executives resigned year unfunded liability 7186076 7470918 6732123 march 31 2014 2013 2012 respectively three years presented unfunded liability estimated using following assumptions annual salary increase 35 3 years discount rate 60 3 years retirement age 65 executive deferred compensation plan company executive deferral plan eligible executives directors may elect defer portion incentive compensation paid executive deferral plan march 31 2014 2013 executive deferred compensation plan stock option plans company 2002 stock option plan 2005 stock option plan 2008 stock option plan 2011 stock option plan benefit certain directors officers key employees plans 4100000 shares authorized common stock reserved issuance pursuant grants approved compensation stock option committee board directors stock options granted plans maximum duration 10 years may subject certain vesting requirements generally five years officers directors key employees priced market value companys common stock date grant option march 31 2014 345699 shares available grant plans stockbased compensation recognized provided fasb asc topic 71810 fasb asc topic 50550 fasb asc topic 71810 requires sharebased payments employees including grants employee stock options recognized compensation expense requisite service period generally vesting period financial statements based grant date fair values impact forfeitures may occur prior vesting also estimated considered amount recognized company applied blackscholes valuation model determining grant date fair value stock option awards compensation expense recognized options expected vest forfeitures estimated based historical experience future expectations weightedaverage fair value grant date options issued years ended march 31 2014 2013 2012 4380 3606 3594 per share respectively following summary company’s weightedaverage assumptions used estimate weightedaverage per share fair value options granted date grant using blackscholes optionpricing model expected stock price volatility based historical volatility company’s stock period approximating expected life expected life represents period time options expected outstanding grant date riskfree interest rate reflects interest rate grant date zerocoupon us governmental bonds remaining life similar expected option term option activity year ended march 31 2014 follows aggregate intrinsic value reflected table represents total pretax intrinsic value difference closing stock price march 31 2014 exercise price multiplied number inthemoney options would received option holders option holders exercised options march 31 2014 amount change market price per share changes total intrinsic value options exercised periods ended march 31 2014 2013 2012 follows march 31 2014 total unrecognized stockbased compensation expense related nonvested stock options amounted approximately 209 million expected recognized weightedaverage period approximately 36 years restricted stock fiscal 2014 2013 company granted 8590 70800 group performance based restricted stock awards certain officers march 31 2014 62390 remain unforfeited group awards vest april 30 2015 based companys achievement following performance goals march 31 2015 fiscal 2014 2013 company granted 56660 443700 group b performance based restricted stock awards certain officers march 31 2014 386360 remain unforfeited group b awards vest follows company achieves following performance goals successive trailing four quarters measurement period ending march 31 2017 november 7 2011 company granted 15077 shares restricted stock equity classified grant date fair value 6770 per share certain executive officers onethird restricted stock vested immediately onethird vested november 7 2012 3249 vested november 7 2013 respectively date company granted additional 24200 shares restricted stock equity classified grant date fair value 6770 per share certain officers onethird restricted stock vested november 7 2012 onethird restricted stock vested november 7 2013 onethird restricted stock vest november 7 2014 respectively date company granted additional 11139 shares restricted stock equity classified grant date fair value 6770 per share certain executive officers remaining unforfeited 7275 shares vested april 30 2014 based company’s compounded annual eps growth according following schedule compensation expense related restricted stock based number shares expected vest fair market value common stock grant date company recognized 60 million 48 million 29 million compensation expense years ended march 31 2014 2013 2012 respectively related restricted stock included component general administrative expenses consolidated statements operations march 31 2014 approximately 169 million unrecognized compensation cost related unvested restricted stock awards granted expected recognized next 26 years addition approximately 66 million unrecognized compensation cost related unvested restricted stock awards granted expected vest based current estimates change 66 million could expensed future periods summary status company’s restricted stock march 31 2014 changes year ended march 31 2014 presented total sharebased compensation included component net income years ended march 31 2014 2013 2012 follows 14 acquisitions following table sets forth acquisition activity company last three fiscal years thousands company evaluates acquisition determine transaction meets definition business combination transactions meet definition business combination accounted fasb asc topic 80510 acquisitions accounted asset purchases acquisitions independent third parties acquisition results new office company records transaction business combination since office acquired continue generate loans company typically retains existing employees office location purchase price allocated estimated fair value tangible assets acquired estimated fair value identified intangible assets acquired generally noncompete agreements customer lists remainder allocated goodwill year ended march 31 2014 one acquisition recorded business combination acquisition portfolio loans company records transaction asset purchase asset purchase goodwill recorded purchase price allocated estimated fair value tangible intangible assets acquired year ended march 31 2014 six acquisitions recorded asset acquisitions company’s acquisitions include tangible assets generally loans furniture equipment intangible assets generally noncompete agreements customer lists goodwill recorded fair values estimated pursuant processes described acquired loans valued net loan balance given shortterm nature loans generally eight months loans subject continual repricing current rates management believes net loan balances approximate fair value furniture equipment valued specific purchase price agreed parties time acquisition management believes approximates fair values noncompete agreements valued stated amount paid party agreements company believes approximates fair value fair value customer lists based valuation model utilizes company’s historical data estimate value acquired customer lists business combination remaining excess purchase price fair value tangible assets customer list noncompete agreements allocated goodwill offices company acquires small privatelyowned offices sufficient historical data determine attrition company believes customers acquired characteristics perform similarly customers therefore company utilized attrition patterns customers developing method reevaluated periodically customer lists allocated office level evaluated impairment office level triggering event occurs accordance fasb asc topic 3601005 triggering event occurs impairment loss customer list generally remaining unamortized customer list balance acquisitions original fair value customer list allocated office generally less 100000 management believes event triggering event occur impairment loss unamortized customer list would immaterial results acquisitions included company’s consolidated financial statements since respective acquisition dates proforma impact purchases though acquired beginning periods presented would material effect results operations reported 15 fair value fair value disclosures company may carry certain financial instruments fair value recurring basis fair value defined price would received sell asset paid transfer liability orderly transaction market participants measurement date company determines fair values financial instruments based fair value hierarchy requires entity maximize use observable inputs minimize use unobservable inputs measuring fair value financial assets liabilities measured fair value grouped three levels prioritize inputs used measure fair value assets liabilities levels •level 1 quoted prices unadjusted active markets identical assets liabilities •level 2 inputs quoted prices observable assets liabilities either directly indirectly inputs include quoted prices similar assets liabilities active markets quoted prices identical similar assets liabilities market less active •level 3 unobservable inputs assets liabilities reflecting reporting entity’s assumptions march 31 2014 2013 company significant financial assets liabilities measured fair value fair value debt book value estimated fair value debt follows thousands carrying value senior notes payable approximated fair value notes payable variable interest rate assets liabilities measured fair value nonrecurring basis fiscal 2014 fiscal 2013 16 quarterly information unaudited following sets forth selected quarterly operating data 17 litigation previously disclosed march 12 2014 company received civil investigative demand “cid” consumer financial protection bureau “cfpb” cid states “the purpose investigation determine whether finance companies unnamed persons engaging unlawful acts practices connection marketing offering extension credit violation sections 1031 1036 consumer financial protection act 12 usc §§ 5531 5536 truth lending act 15 usc §§ 1601 et seq regulation z 12 cfr pt 1026 federal consumer financial law” “also determine whether bureau action obtain legal equitable relief would public interest” cid contains broad requests production documents answers interrogatories written reports related loans made company numerous aspects company’s business company provided information believes requested cid within deadlines specified cid company currently received response cfpb information provided company believes marketing lending practices lawful assurance cfpbs ongoing investigation future exercise enforcement regulatory discretionary powers result findings alleged violations federal consumer financial protection laws could lead enforcement actions proceedings litigation imposition damages fines penalties restitution monetary liabilities sanctions settlements changes company’s business practices operations could material adverse effect company’s business financial condition results operations eliminate altogether companys ability operate business profitably terms substantially similar currently operates see note 18 discussion certain litigation initiated subsequent fiscal year ended march 31 2014 addition time company involved routine litigation matters relating claims arising operations normal course business including matters damages various amounts claimed estimating amount range possible losses resulting litigation government actions legal proceedings inherently difficult requires extensive degree judgment particularly matters involve indeterminate claims monetary damages may involve fines penalties damages discretionary amount involve large number claimants significant discretion regulatory authorities represent change regulatory policy interpretation present novel legal theories early stages proceedings subject appeal could result change business practices addition legal proceedings resolved extended periods time potential losses subject change due among things new developments changes legal strategy outcome intermediate procedural substantive rulings parties’ settlement posture evaluation strength weakness case us reasons currently unable predict ultimate timing outcome reasonably estimate possible losses range possible losses resulting matters described based information currently available company believe reasonably possible losses arising currently pending legal matters material company’s results operations financial conditions however light inherent uncertainties involved matters adverse outcome one matters could materially adversely affect company’s financial condition results operations cash flows particular reporting period 18 subsequent events april 22 2014 shareholder filed putative class action complaint edna selan epstein v world acceptance corporation et al united states district court district south carolina case number 614cv01606 company certain current former officers behalf persons purchased otherwise acquired company’s common stock april 25 2013 march 12 2014 complaint alleges company made false misleading statements various sec reports public statements violation federal securities laws preceding company’s disclosure form 8k filed march 13 2014 received civil investigative demand consumer financial protection bureau march 12 2014 complaint seeks class certification unspecified monetary damages costs attorneys’ fees company believes complaint without merit intends vigorously defend matter management’s report internal control financial reporting responsible establishing maintaining adequate internal control financial reporting defined rules 13a 15f securities exchange act 1934 assessed effectiveness internal control financial reporting march 31 2014 assessment based criteria established internal control integrated framework 1992 issued committee sponsoring organizations treadway commission coso internal control financial reporting process designed provide reasonable assurance regarding reliability financial reporting preparation financial statements external purposes accordance generally accepted accounting principles internal control financial reporting includes policies procedures 1 pertain maintenance records reasonable detail accurately fairly reflect transactions dispositions assets 2 provide reasonable assurance transactions recorded necessary permit preparation financial statements accordance generally accepted accounting principles receipts expenditures made accordance authorizations management board directors 3 provide reasonable assurance regarding prevention timely detection unauthorized acquisition use disposition assets could material effect financial statements inherent limitations internal control financial reporting may prevent detect misstatements also assumptions regarding internal control financial reporting future periods based evaluation effectiveness prior period subject risk controls may become inadequate changes conditions degree compliance policies procedures may deteriorate based using coso criteria believe internal control financial reporting march 31 2014 effective independent registered public accounting firm audited consolidated financial statements included annual report issued attestation report effectiveness internal control financial reporting stated report mclean iii john l calmes jr mclean iii john l calmes jr chairman chief executive officer vice president chief financial officer report independent registered public accounting firm board directors world acceptance corporation audited accompanying consolidated balance sheets world acceptance corporation subsidiaries company march 31 2014 2013 related consolidated statements operations comprehensive income shareholders’ equity cashflows years threeyear period ended march 31 2014 consolidated financial statements responsibility company’s management responsibility express opinion consolidated financial statements based audits conducted audits accordance standards public company accounting oversight board united statesthose standards require plan perform audit obtain reasonable assurance whether financial statements free material misstatement audit includes examining test basis evidence supporting amounts disclosures financial statements audit also includes assessing accounting principles used significant estimates made management well evaluating overall financial statement presentation believe audits provide reasonable basis opinion consolidated financial statements referred present fairly material respects financial position world acceptance corporation subsidiaries march 31 2014 2013 results operations cash flows years threeyear period ended march 31 2014 conformity us generally accepted accounting principles also audited accordance standards public company accounting oversight board united states world acceptance corporation’s internal control financial reporting march 31 2014 based criteria established internal control integrated framework 1992 issued committee sponsoring organizations treadway commission coso report dated june 12 2014 expressed unqualified opinion effectiveness company’s internal control financial reporting kpmg greenville south carolina june 12 2014 report independent registered public accounting firm board directors world acceptance corporation audited world acceptance corporation subsidiaries company internal control financial reporting march 31 2014 based criteria established internal control integrated framework 1992 issued committee sponsoring organizations treadway commission coso companys management responsible maintaining effective internal control financial reporting assessment effectiveness internal control financial reporting included accompanying management’s report internal control financial reporting item 9a responsibility express opinion company’s internal control financial reporting based audit conducted audit accordance standards public company accounting oversight board united states standards require plan perform audit obtain reasonable assurance whether effective internal control financial reporting maintained material respects audit included obtaining understanding internal control financial reporting assessing risk material weakness exists testing evaluating design operating effectiveness internal control based assessed risk audit also included performing procedures considered necessary circumstances believe audit provides reasonable basis opinion companys internal control financial reporting process designed provide reasonable assurance regarding reliability financial reporting preparation financial statements external purposes accordance generally accepted accounting principles companys internal control financial reporting includes policies procedures 1 pertain maintenance records reasonable detail accurately fairly reflect transactions dispositions assets company 2 provide reasonable assurance transactions recorded necessary permit preparation financial statements accordance generally accepted accounting principles receipts expenditures company made accordance authorizations management directors company 3 provide reasonable assurance regarding prevention timely detection unauthorized acquisition use disposition company’s assets could material effect financial statements inherent limitations internal control financial reporting may prevent detect misstatements also projections evaluation effectiveness future periods subject risk controls may become inadequate changes conditions degree compliance policies procedures may deteriorate opinion world acceptance corporation subsidiaries maintained material respects effective internal control financial reporting march 31 2014 based criteria established internal control integrated framework 1992 issued committee sponsoring organizations treadway commission also audited accordance standards public company accounting oversight board united states consolidated balance sheets world acceptance corporation subsidiaries march 31 2014 march 31 2013 related consolidated statements income comprehensive income shareholders’ equity cash flows fiscal years threeyear period ended march 31 2014 report dated june 12 2014 expressed unqualified opinion consolidated financial statements kpmg llp greenville south carolina june 12 2014 item 9item 8 financial statements supplementary data consolidated balance sheets see accompanying notes consolidated financial statements consolidated statements operations see accompanying notes consolidated financial statements consolidated statements comprehensive income see accompanying notes consolidated financial statements consolidated statements shareholders equity see accompanying notes consolidated financial statements consolidated statements cash flows see accompanying notes consolidated financial statements notes consolidated financial statements 1 summary significant accounting policies companys accounting reporting policies accordance us generally accepted accounting principles gaap conform general practices within finance company industry following description significant policies used preparing consolidated financial statements nature operations company smallloan consumer finance company headquartered greenville south carolina offers shortterm small loans mediumterm larger loans related credit insurance products ancillary products services individuals limited access sources consumer credit also offers income tax return preparation services customer base others march 31 2017 company operated 1169 branches alabama georgia idaho illinois indiana kentucky louisiana mississippi missouri new mexico oklahoma south carolina tennessee texas wisconsin branches aforementioned states operate one following names amicable finance capitol loans colonial finance freeman finance general credit local loans midwestern financial midwestern loans personal credit peoples finance world acceptance world finance company also operated 158 branches mexico branches mexico operate name préstamos avance préstamos viva company subject numerous lending regulations vary jurisdiction principles consolidation consolidated financial statements include accounts world acceptance corporation whollyowned subsidiaries “company” subsidiaries consist operating entities various states mexico paradata financial systems software company acquired fiscal 1994 wac insurance company ltd captive reinsurance company established fiscal 1994 servicios world acceptance corporation de mexico service company established fiscal 2006 significant intercompany balances transactions eliminated consolidation financial statements company’s foreign subsidiaries mexico prepared using local currency functional currency assets liabilities subsidiaries translated us dollars current exchange rate income expense translated average exchange rate period resulting translation gains losses recognized component equity “accumulated comprehensive loss” use estimates preparation consolidated financial statements preparation financial statements conformity gaap requires management make estimates assumptions affect reported amount assets liabilities disclosure contingent liabilities date financial statements reported amounts revenue expenses reporting period significant item subject estimates assumptions could materially change near term allowance loan losses actual results could differ estimates reclassification certain prior period amounts reclassified conform current presentation reclassifications impact previously reported net income shareholders equity business segments company reports operating segments accordance financial accounting standards board fasb accounting standards codification asc topic 280 operating segments components enterprise separate financial information available evaluated regularly chief operating decision maker deciding allocate resources assess performance fasb asc topic 280 requires public enterprise report measure segment profit loss certain specific revenue expense items segment assets information way operating segments determined items company two reportable segments us mexico operating segments revenue generating activities company including sale insurance products income tax preparation automobile club done existing branch network conjunction complement lending operations discrete financial information available activities meet criteria fasb asc topic 280 considered operating segments march 31 2017 2016 companys mexico operations accounted approximately 87 82 total consolidated assets total revenues years ended march 31 2017 2016 2015 409 million 422 million 524 million respectively represented 77 76 86 consolidated revenues respectively additional financial information regarding results two reportable segments last three fiscal years refer note 17segments item 8 “financial statements supplementary data” annual report form 10k cash equivalents purposes statement cash flows company considers highly liquid investments maturity three months less date original issuance cash equivalents march 31 2017 2016 company 39 million 22 million restricted cash associated captive insurance subsidiary reinsures portion credit insurance sold connection loans made company loans interest fee income company licensed originate consumer loans states south carolina georgia texas oklahoma louisiana tennessee illinois missouri new mexico kentucky alabama wisconsin indiana mississippi idaho addition company also originates consumer loans mexico fiscal 2017 2016 2015 company originated loans generally ranging 4000 terms 42 months less experience indicates majority consumer loans refinanced company accounts majority refinancings new loan generally customer must make multiple payments order qualify refinancing furthermore companys lending policy predetermined lending amounts cases refinancing result advancing additional funds company believes advancement additional funds constitutes minor modification terms existing loan present value cash flows terms new loan 10 present value remaining cash flows terms original loan gross loans receivable march 31 2017 2016 consisted following fees received direct costs incurred origination loans deferred amortized interest income contractual lives loans using interest method unamortized amounts recognized income time loans refinanced paid full except refinancings constitute minor modification loans carried gross amount outstanding reduced unearned interest insurance income net deferred origination fees direct costs allowance loan losses company recognizes interest fee income using interest method charges late payments credited income collected company generally offers loans prevailing statutory rates terms generally exceed 42 months management believes carrying value approximates fair value loan portfolio nonaccrual policy accrual interest discontinued loan 61 days past contractual due date interest accrual discontinued unpaid accrued interest reversed interest income loan nonaccrual status interest revenue recognized payment received loan moves nonaccrual status remains nonaccrual status paid charged refinanced allowance loan losses company maintains allowance loan losses amount managements opinion adequate provide incurred losses inherent existing loan portfolio company charges current earnings provision loan losses amounts added allowance maintain levels expected cover probable incurred losses principal establishing allowance loan losses company takes consideration growth loan portfolio current levels chargeoffs current levels delinquencies current economic factors company uses mathematical calculation determine initial allowance end reporting period calculation originated managements estimate future chargeoffs used allocate expenses branch level two components calculating allowance loan losses company refers general reserve specific reserve calculation starting point time needed additional provisions added determined management make allowance adequate general reserve 425 gross loan portfolio specific reserve represents 100 gross loan balance loans 91 days past due 151 days past due payroll deduct loans recency basis including bankrupt accounts category methodology based historical data showing collection loans 91 days past due bankrupt accounts remote process performed determine adequacy allowance loan losses well considering trends current levels delinquencies chargeoff levels economic trends energy food prices primary tool used movement model contractual recency basis considers rolling twelve months delinquency determine expected chargeoffs sum expected chargeoffs determined movement model contractual recency basis plus amount delinquent refinancings compared allowance resulting mathematical calculation determine adjustments needed make allowance adequate management would also determine adjustments needed consolidated annual provision loan losses less total chargeoffs management uses precision level 5 allowance loan losses compared aforementioned movement model determining adjustments needed companys policy charge loans earlier loans deemed uncollectible six months elapsed since date last full contractual payment companys chargeoff policy consistently applied changes made periods reported companys historical annual chargeoff rate net chargeoffs percentage average net loans receivable past 10 years ranged 129 167 net loans management considers chargeoff policy evaluating appropriateness allowance loan losses fasb asc topic 31030 prohibits carryover creation valuation allowances initial accounting loans acquired transfer within scope authoritative literature company believes loans acquired since adoption fasb asc topic 31030 shown evidence deterioration credit quality since origination therefore within scope fasb asc topic 31030 impaired loans company defines impaired loans bankrupt accounts 91 days past due 151 days past due payroll deduct loans accordance company’s chargeoff policy loan deemed uncollectible 100 net investment charged except case borrower filed bankruptcy march 31 2017 bankrupt accounts charged approximately 60 million bankrupt accounts 91 days past due reserved 100 gross loan balance company also considers accounts 91 days past due 151 days past due payroll deduct loans impaired accounts reserved 100 gross loan balance delinquency primary credit quality indicator used determine credit quality companys receivables additional requirements asc 31010 disclosed note 2 property equipment property equipment stated cost less accumulated depreciation amortization depreciation recorded using straightline method estimated useful life related asset follows buildings 25 40 years furniture fixtures 5 10 years equipment 3 7 years vehicles 3 years amortization leasehold improvements recorded using straightline method lesser estimated useful life asset term lease additions premises equipment major replacements improvements added cost maintenance repairs minor replacements charged operating expense incurred assets retired otherwise disposed cost accumulated depreciation removed accounts gain loss reflected consolidated statement operations operating leases company’s branch leases typically lease term three five years contain lessee renewal options cancellation clauses event regulatory changes company typically renews leases one option periods accordingly company amortizes leasehold improvements shorter economic lives generally five years lease term considers renewal periods reasonably assured assets include cash surrender value life insurance policies prepaid expenses debt issuance costs deposits intangible assets goodwill intangible assets include cost acquiring existing customers customer lists fair value assigned noncompete agreements customer lists amortized straight line accelerated basis estimated period benefit ranging 2 23 years weighted average approximately 11 years noncompete agreements amortized straight line basis term agreement ranging 3 5 years weighted average approximately 49 years customer lists allocated branch level evaluated impairment branch level triggering event occurs accordance fasb asc topic 3601005 triggering event occurs impairment loss customer list generally remaining unamortized customer list balance acquisitions original fair value customer list allocated branch less 100000 management believes event triggering event occur impairment loss unamortized customer list would immaterial noncompete agreements valued stated amount paid party agreements company believes approximates fair value fair value customer lists based valuation model utilizes company’s historical data estimate value acquired customer lists business combination remaining excess purchase price fair value tangible assets customer list noncompete agreements allocated goodwill branches company acquires small privatelyowned branches sufficient historical data determine customer attrition company believes customers acquired characteristics perform similarly customers therefore company utilized attrition patterns customers developing attrition acquired customers method reevaluated periodically company evaluates goodwill annually impairment fourth quarter fiscal year using market valuebased approach company two reporting units us mexico company multiple components lowest level individual branches company’s components aggregated impairment testing similar economic characteristics impairment longlived assets company assesses impairment longlived assets including property equipment intangible assets whenever changes events indicate carrying amount may recoverable company assesses impairment assets generally branch level based operating cash flows branch company’s plans branch closings company write assets fair value based analysis sum expected future undiscounted cash flows less carrying amount assets company record impairment charges fiscal year ended 2017 2016 2015 fair value financial instruments fasb asc topic 825 requires disclosures fair value financial instruments whether recognized balance sheet practicable estimate value cases quoted market prices available fair values based estimates using present value valuation techniques company’s financial instruments periods reported consist following cash equivalents loans receivable senior notes payable fair value approximates carrying value instruments loans receivable originated prevailing market rates average life approximately 8 months given shortterm nature loans continually repriced current market rates company’s revolving credit facility variable rate based margin libor reprices changes libor insurance premiums commissions insurance premiums credit life accident health property unemployment insurance written connection certain loans net refunds applicable advance insurance commissions retained company remitted monthly insurance company commissions credited unearned insurance commissions recognized income life related insurance contracts company recognizes insurance income using rule 78s method credit life decreasing term credit accident health unemployment insurance pro rata method credit life level term credit property nonfiling insurance nonfiling insurance premiums charged certain loans lieu recording perfecting companys security interest assets pledged premiums recoveries remitted third party insurance company reflected accompanying consolidated financial statements see note 8 claims paid third party insurance company result reduction loan losses certain losses related loans recoverable life accident health property unemployment insurance claims reimbursed nonfiling insurance claims subject policy limitations remaining losses charged allowance loan losses income taxes income taxes accounted asset liability method deferred tax assets liabilities recognized future tax consequences attributable differences financial statement carrying amounts existing assets liabilities respective tax bases operating loss tax credit carryforwards deferred tax assets liabilities measured using enacted tax rates expected apply taxable income years temporary differences expected recovered settled effect deferred tax assets liabilities change tax rates recognized income period includes enactment date company recognizes effect income tax positions likely sustained recognized income tax positions measured largest amount greater 50 likely realized changes recognition measurement reflected period change judgment related additional facts circumstances occurs earnings per share earnings per share “eps” computed accordance fasb asc topic 260 basic eps includes dilution computed dividing net income weightedaverage number common shares outstanding period diluted eps reflects potential dilution securities could share earnings company potential common stock included diluted eps computation consists stock options restricted stock computed using treasury stock method see note 11 reconciliation numerators denominators basic dilutive eps calculations stockbased compensation fasb asc topic 71810 requires companies recognize income statement grantdate fair value stock options equitybased compensation issued employees fasb asc topic 71810 change accounting guidance sharebased payment transactions parties employees provided fasb asc topic 71810 fasb asc topic 71810 way award classified affect measurement compensation cost liabilityclassified awards remeasured fair value balancesheet date award settled equityclassified awards measured grantdate fair value amortized subsequent vesting period subsequently remeasured fair value nonvested stock awards purposes recognizing stockbased compensation expense market price stock grant date fair value options estimated grant date using blackscholes option pricing model see note 12 march 31 2017 company several sharebased employee compensation plans described fully note 12 company uses modified prospective transition method accordance fasb asc topic 718 method transition compensation cost recognized fiscal years 2015 2016 2017 based grantdate fair value estimated accordance provisions fasb asc topic 718 since compensation cost based awards ultimately expected vest reduced estimated forfeitures fasb asc topic 718 requires forfeitures estimated time grant revised necessary subsequent periods actual forfeitures differ estimates company elected expense grants awards graded vesting straightline basis requisite service period separately vesting portion award share repurchases march 10 2015 board directors authorized company repurchase 250 million company’s common stock march 31 2017 company 65 million aggregate remaining repurchase capacity march 10 2015 repurchase authorization timing actual number shares repurchased depend variety factors including stock price corporate regulatory requirements market economic conditions although repurchase authorization stated expiration date company’s stock repurchase program may suspended discontinued time company continues believe stock repurchases viable component company’s longterm financial strategy excellent use excess cash opportunity arises however amended credit facility limits share repurchases 50 consolidated adjusted net income fiscal year commencing fiscal year ending march 31 2017 first priority ensure enough capital fund loan growth extent excess capital may continue repurchasing stock appropriate authorized board directors march 31 2017 debt outstanding 2951 million shareholders equity 4611 million resulting debttoequity ratio 0610 continue monitor debttoequity ratio committed maintaining debt level allow us continue execute business objectives putting undue stress consolidated balance sheet comprehensive income total comprehensive income consists net income comprehensive income loss company’s comprehensive income loss accumulated comprehensive income loss comprised foreign currency translation adjustments concentration risk company generally serves individuals limited access sources consumer credit banks credit unions consumer finance businesses credit card lenders year ended march 31 2017 company operated fifteen states united states well mexico years ended march 31 2017 2016 2015 total revenue within companys four largest states texas tennessee georgia south carolina accounted approximately 53 54 respectively companys total revenues company maintains amounts bank accounts times may exceed federally insured limits company experienced losses accounts maintained large domestic banks management believes company’s exposure credit risk minimal accounts advertising costs advertising costs expensed incurred advertising costs approximately 179 million 169 million 173 million fiscal years 2017 2016 2015 respectively recently adopted accounting standards accounting changes january 2017 financial accounting standards board issued accounting standards update asu 201703 among things requires entities make certain disclosures regarding adoption asus 201409 201602 201613 update directs entities evaluate asus question yet adopted determine appropriate financial statement disclosures potential material effects asus financial statements adopted entity know cannot reasonably estimate impact adoption asus expected financial statements addition making statement effect entity consider additional qualitative financial statement disclosures assist reader assessing significance impact standard adopted additional qualitative disclosures may include description effect accounting policies entity expects apply determined comparison entity’s current accounting policies entity also describe status process implement new standards significant implementation matters yet addressed asu 201703 adopted march 31 2017 impact consolidated financial statements except addition certain disclosures required disclosures shortduration contracts may 2015 financial accounting standards board issued accounting asu 201509 requires insurance entities disclose annual reporting periods following information liability unpaid claims claim adjustment expenses 1incurred paid claims development information accident year net basis risk mitigation reinsurance number years claims incurred typically remain outstanding 2a reconciliation incurred paid claims development information aggregate carrying amount liability unpaid claims claim adjustment expenses 3for accident year presented incurred claims development information total incurredbutnotreported liabilities plus expected development reported claims included liability unpaid claims claim adjustment expenses 4for accident year presented incurred claims development information quantitative information claim frequency unless impracticable accompanied qualitative description methodologies used determining claim frequency information 5for claims except health insurance claims average annual percentage payout incurred claims age history claims duration number accident years presented 3 4 asu 201509 adopted march 31 2017 impact consolidated financial statements simplifying presentation debt issuance costs april 2015 financial accounting standards board issued accounting asu 201503 requires entity present debt issuance costs balance sheet direct deduction related debt liability opposed asset amortization costs continue reported interest expense august 2015 fasb issued asu 201515 presentation subsequent measurement debt issuance costs associated lineofcredit arrangements amendments sec paragraphs pursuant staff announcement june 18 2015 eitf meeting asu 201515 allows debt issuance costs related lineofcredit agreements presented balance sheet asset asu 201503 201515 adopted april 1 2016 impact consolidated financial statements disclosure uncertainties entity’s ability continue going concern august 2014 financial accounting standards board issued asu 201415 requires management evaluate whether substantial doubt entity’s ability continue going concern provide related footnote disclosures certain circumstances asu 201415 adopted september 30 2016 impact consolidated financial statements recently issued accounting standards adopted scope modification accounting may 2017 financial accounting standards board issued asu 201709 scope modification accounting amendments update provide guidance changes terms conditions sharebased payment award require entity apply modification accounting topic 718 according asu 201709 entity account effects modification unless following met 1the fair value modified award fair value original award immediately original award modified 2the vesting conditions modified award vesting conditions original award immediately original award modified 3the classification modified award equity instrument liability instrument classification original award immediately original award modified amendments update effective entities annual periods interim periods within annual periods beginning december 15 2017 early adoption permitted currently evaluating impact adoption guidance consolidated financial statements simplifying test goodwill impairment january 2017 financial accounting standards board issued asu 201704 simplifying test goodwill impairment asu 201704 eliminates step 2 goodwill impairment test instead amendments update entity perform annual interim goodwill impairment test comparing fair value reporting unit carrying amount additionally entity consider income tax effects tax deductible goodwill carrying amount reporting unit measuring goodwill impairment loss applicable asu 201704 also eliminates requirements reporting unit zero negative carrying amount perform qualitative assessment fails qualitative test perform step 2 goodwill impairment test therefore impairment assessment applies reporting units amendments update effective public entities sec filers fiscal years beginning december 15 2018 early adoption permitted currently evaluating impact adoption guidance consolidated financial statements clarifying definition business january 2017 financial accounting standards board issued asu 201701 clarifying definition business current gaap specify minimum inputs processes required set assets activities meet definition business lack clarity led broad interpretations definition business amendments update provide robust framework use determining set assets activities business public business entities amendments effective fiscal years beginning december 15 2018 including interim periods within fiscal years early adoption permitted currently evaluating impact adoption guidance consolidated financial statements restricted cash november 2016 financial accounting standards board issued asu 201618 restricted cash gaap currently include specific guidance address classify present changes restricted cash restricted cash equivalents occur transfers cash equivalents restricted cash restricted cash equivalents direct cash receipts restricted cash restricted cash equivalents direct cash payments made restricted cash restricted cash equivalents amendments update require statement cash flows explain change period total cash equivalents amounts generally described restricted cash restricted cash equivalents therefore amounts generally described restricted cash restricted cash equivalents included cash equivalents reconciling beginningofperiod endofperiod total amounts shown statement cash flows amendments update provide definition restricted cash restricted cash equivalents public business entities amendments effective fiscal years beginning december 15 2017 including interim periods within fiscal years early adoption permitted including adoption interim period currently evaluating impact adoption guidance consolidated financial statements intraentity transfers assets inventory october 2016 financial accounting standards board issued asu 201616 intraentity transfers assets inventory current gaap prohibits recognition current deferred income taxes intraentity asset transfer asset sold outside party prohibition recognition exception principle comprehensive recognition current deferred income taxes gaap amendments update eliminate exception intraentity transfer asset inventory public business entities amendments effective fiscal years beginning december 15 2017 including interim periods within fiscal years early adoption permitted beginning annual reporting period financial statements interim annual issued made available issuance currently evaluating impact adoption guidance consolidated financial statements classification certain cash receipts cash payments august 2016 financial accounting standards board issued asu 201615 classification certain cash receipts cash payments amendment addresses following eight specific cash flow issues objective reducing existing diversity practice •debt prepayment debt extinguishment costs •settlement zerocoupon debt instruments debt instruments coupon interest rates insignificant relation effective interest rate borrowing •contingent consideration payments made business combination •proceeds settlement insurance claims •proceeds settlement corporateowned life insurance policies including bankowned life insurance policies •distributions received equity method investees •beneficial interests securitization transactions •separately identifiable cash flows application predominance principle public business entities amendments effective fiscal years beginning december 15 2017 including interim periods within fiscal years early adoption permitted including adoption interim period currently evaluating impact adoption guidance consolidated financial statements measurement credit losses financial instruments june 2016 financial accounting standards board issued asu 201613 financial instruments credit losses amendment seeks provide financial statement users decisionuseful information expected credit losses financial instruments commitments extend credit held reporting entity reporting date achieve objective amendments asu replace incurred loss impairment methodology current gaap methodology reflects expected credit losses requires consideration broader range reasonable supportable information inform credit loss estimates public business entities amendments effective fiscal years beginning december 15 2019 including interim periods within fiscal years early adoption permitted fiscal years beginning december 15 2018 including interim periods within fiscal years currently evaluating impact adoption guidance consolidated financial statements adoption asu could material impact provision loan losses consolidated statements operations allowance loan losses consolidated balance sheets revenue contracts customers identifying performance obligations licensing april 2016 financial accounting standards board issued asu 201610 identifying performance obligations licensing amendments clarify following two aspects topic 606 identifying performance obligations b licensing implementation guidance amendments change core principle guidance topic 606 effective date transition requirements amendments effective date transition requirements topic 606 public entities apply amendments annual reporting periods beginning december 15 2017 including interim reporting periods therein early application public entities permitted annual reporting periods beginning december 15 2016 including interim reporting periods within reporting period currently evaluating impact adoption guidance consolidated financial statements improvements employee sharebased payment accounting march 2016 financial accounting standards board issued asu 201609 improvements employee sharebased payment accounting simplifies accounting sharebased payment transactions income tax consequences classification awards either equity liabilities classification statement cash flows amendment asu becomes effective modified retrospective transition accounting tax benefits recognized retrospectively accounting related presentation employee taxes paid prospective accounting related recognition excess tax benefits either prospective retrospective method accounting related presentation excess employee tax benefits annual periods interim periods within annual periods beginning december 15 2016 adopted new standard effective april 1 2017 currently evaluating impact adoption guidance consolidated financial statements principal versus agent considerations reporting revenue gross versus net march 2016 financial accounting standards board issued asu 201608 principal versus agent considerations clarifies implementation guidance principal versus agent considerations asu 201409 revenue contracts customers asu 201608 change core principle guidance asu 201409 rather clarifies distinction principal versus agent considerations implementing asu 201409 technical corrections improvements believe asu material effect consolidated financial statements leases february 2016 financial accounting standards board issued asu 201602 leases topic 842 asu require lessees recognize assets liabilities leases terms greater 12 months disclose information related amount timing uncertainty cash flows arising leases including various qualitative quantitative requirements amendments asu become effective annual periods interim periods within annual periods beginning december 15 2018 currently evaluating impact adoption guidance consolidated financial statements expect standard impact assets liabilities addition rightofuse assets lease liabilities expect material impact results operations liquidity recognition measurement financial assets financial liabilities january 2016 financial accounting standards board issued asu 201601 updates certain aspects recognition measurement presentation disclosure financial instruments asu 201601 effective company beginning first quarter 2019 early adoption permitted currently evaluating impact adoption guidance consolidated financial statements revenue contracts customers may 2014 financial accounting standards board issued asu 201409 supersedes revenue recognition requirements topic 605 revenue recognition industryspecific guidance asu 201409 based principle revenue recognized depict transfer goods services customers amount reflects consideration entity expects entitled exchange goods services asu 201409 also requires additional disclosure nature amount timing uncertainty revenue cash flows arising customer contracts including significant judgments changes judgments assets recognized costs incurred obtain fulfill contract asu 201409 amended asu 201514 asu 201620 effective fiscal years interim periods beginning december 15 2017 early adoption permitted annual reporting periods beginning december 15 2016 currently evaluating overall impact adoption guidance consolidated financial statements believe adoption update material impact consolidated financial statements due interest fees income scope update reviewed newly issued accounting pronouncements concluded either applicable business expected material effect consolidated financial statements result future adoption 2 allowance loan losses credit quality indicators following summary changes allowance loan losses years ended march 31 2017 2016 2015 following summary loans individually collectively evaluated impairment period indicated average net balance impaired loans 422 million 412 million 363 million respectively years ended march 31 2017 2016 2015 practicable compute amount interest earned impaired loans practicable compute interest income recognized using cashbasis method period loans impaired following assessment credit quality fiscal years indicated 1 loans nonaccrual status following summary past due receivables 3 property equipment property equipment consist depreciation expense approximately 69 million 65 million 65 million years ended march 31 2017 2016 2015 respectively 4 intangible assets following table provides gross carrying amount related accumulated amortization definitelived intangible assets estimated amortization expense intangible assets future years ended march 31 follows 24 million 2018 24 million 2019 04 million 2020 03 million 2021 03 million 2022 aggregate 08 million years thereafter february 28 2017 company completed acquisition fourteen branches mathes management enterprises inc march 31 2017 accounting related acquisition preliminary final determination fair value customer lists goodwill completed within twelve month measurement period date acquisition required fasb asc topic 8051025 see part ii item 8 footnote 13 acquisitions discussion companys acquisitions 5 goodwill following summarizes changes carrying amount goodwill years ended march 31 2017 2016 company performed annual impairment test fourth quarters fiscal 2017 2016 determined none recorded goodwill impaired however company merge one branch fiscal 2017 goodwill associated goodwill associated branch immaterial consolidated level written february 28 2017 company completed acquisition fourteen branches mathes management enterprises inc march 31 2017 accounting related acquisition preliminary final determination fair value customer lists goodwill completed within twelve month measurement period date acquisition required fasb asc topic 8051025 see part ii item 8 footnote 13 acquisitions discussion companys acquisitions 6 notes payable senior notes payable revolving credit facility march 31 2017 companys notes payable consist 3700 million senior revolving credit facility borrowings 2951 million outstanding 06 million standby letters credit related workers compensation outstanding extent letter credit drawn upon disbursement funded credit facility amounts due related letters credit march 31 2017 expire december 31 2017 letters credit automatically extended one year expiration date subject borrowing base formula company may borrow rate libor plus 40 minimum 50 years ended march 31 2017 2016 2015 company’s effective interest rate including commitment fee 58 56 43 respectively unused amount available revolver march 31 2017 743 million revolving credit facility commitment fee 050 per annum unused portion commitment borrowings revolving credit facility mature june 15 2018 may 2017 credit facility amended among things extend term june 15 2019 increase aggregate commitments 4800 million additional information may 2017 amendment credit facility see part ii item 8 footnote 18 subsequent events notes consolidated financial statements year ended march 31 2017 substantially companys assets excluding assets companys mexican subsidiaries pledged collateral borrowings revolving credit agreement debt covenants agreement governing company’s revolving credit facility contains affirmative negative covenants including covenants restrict ability company subsidiaries among things incur guarantee indebtedness incur liens pay dividends repurchase redeem capital stock dispose assets engage mergers consolidations make acquisitions investments redeem prepay subordinated debt amend subordinated debt documents make changes nature business engage transactions affiliates agreement also contains financial covenants including minimum consolidated net worth 2650 million minimum fixed charge coverage ratio 25 10 maximum ratio total debt consolidated adjusted net worth 275 10 maximum ratio subordinated debt consolidated adjusted net worth 10 agreement allows company incur subordinated debt matures termination date revolving credit facility contains specified subordination terms subject limitations amount imposed financial covenants agreement addition agreement establishes maximum specified level collateral performance indicator collateral performance indicator equal sum threemonth rolling average rate receivables least sixty days past due b eightmonth rolling average net chargeoff rate company compliance covenants march 31 2017 believe covenants materially limit business expansion strategy agreement contains events default including without limitation nonpayment principal interest obligations violation covenants misrepresentation crossdefault debt bankruptcy insolvency events judgments certain erisa events actual asserted invalidity loan documentation invalidity subordination provisions subordinated debt certain changes control company occurrence certain regulatory events including entry stay order judgment ruling similar event related company’s subsidiaries’ originating holding pledging collecting enforcing eligible finance receivables material company subsidiary remains unvacated undischarged unbonded unstayed appeal otherwise period 60 days date entry reasonably likely cause material adverse change determined violation fcpa occurred described note 16 violation may give rise event default agreement violation material adverse effect company’s business operations properties assets condition financial otherwise amount settlement resulted company failing satisfy financial covenants debt maturities march 31 2017 aggregate annual maturities notes payable five fiscal years subsequent march 31 2017 follows 7 insurance income insurance income years ending march 31 2017 2016 2015 consist 8 nonfiling insurance company maintains nonfiling insurance coverage unaffiliated insurance company following summary nonfiling insurance activity years ended march 31 2017 2016 2015 9 leases company conducts operations leased facilities except owned corporate office building companys leases typically lease term three five years contain lessee renewal options majority leases provide lessee pays property taxes insurance common area maintenance costs expected normal course business expiring leases renewed companys option replaced leases acquisitions properties company’s leases operating leases future minimum lease payments noncancelable operating leases march 31 2017 follows rental expense cancelable noncancelable operating leases years ended march 31 2017 2016 2015 approximately 269 million 271 million 260 million respectively 10income taxes income tax expense benefit consists income tax expense 40396837 50492907 65196880 years ended march 31 2017 2016 2015 respectively differed amounts computed applying us federal income tax rate 35 pretax income continuing operations result following tax effects temporary differences give rise significant portions deferred tax assets deferred tax liabilities march 31 2017 2016 presented valuation allowance deferred tax assets march 31 2017 2016 1274 valuation allowance total deferred tax assets march 31 2017 2016 relates state colorado net operating losses amount 54318 expires 2025 assessing realizability deferred tax assets management considers whether likely portion deferred tax assets realized ultimate realization deferred tax assets dependent upon generation future taxable income periods temporary differences become deductible management considers scheduled reversals deferred tax liabilities projected future taxable income tax planning strategies making assessment order fully realize deferred tax asset company need generate future taxable income prior expiration deferred tax assets governed tax code based upon level historical taxable income projections future taxable income periods related temporary differences deductible management believes likely company realize benefits deductible differences net existing valuation allowances march 31 2017 amount deferred tax asset considered realizable however could reduced near term estimates future taxable income carryforward period reduced company required assess whether earnings companys mexican foreign subsidiary permanently reinvested respective foreign jurisdiction previously untaxed foreign earnings company longer permanently reinvested thus become taxable united states earnings ever repatriated united states company would required accrue pay taxes cumulative undistributed earnings march 31 2017 company determined approximately 261 million cumulative undistributed net earnings well future net earnings mexican foreign subsidiaries permanently reinvested march 31 2017 unrecognized taxable temporary difference amount 82 million related investment mexican subsidiaries march 31 2017 2016 2015 company 89 million 107 million 86 million total gross unrecognized tax benefits including interest respectively totals approximately 72 million 82 million 66 million respectively represents amount net unrecognized tax benefits permanent nature recognized would affect annual effective tax rate reconciliation beginning ending amount unrecognized tax benefits march 31 2017 2016 2015 presented march 31 2017 approximately 44 million gross unrecognized tax benefits expected resolved next 12 months settlements taxing authorities expiration statute limitations company’s continuing practice recognize interest penalties related income tax matters income tax expense march 31 2017 2016 company 1641916 1312129 accrued gross interest respectively 658891 599136 474484 represented current period expense periods ended march 31 2017 2016 2015 company subject us mexican income taxes well various state local jurisdictions exception states company longer subject us federal state local nonus income tax examinations tax authorities years 2013 although carryforward attributes generated prior 2013 may still adjusted upon examination taxing authorities either used future period 11 earnings per share following reconciliation numerators denominators basic diluted eps calculations options purchase 733053 825505 543879 shares common stock various prices outstanding years ended march 31 2017 2016 2015 respectively included computation diluted eps option exercise price antidilutive 12 benefit plans retirement plan company provides defined contribution employee benefit plan 401k plan covering fulltime employees whereby employees invest maximum designated year company matches 50 employees contributions first 6 employees eligible compensation providing maximum employer contribution 3 compensation companys expense plan 1377371 1453468 1470600 years ended march 31 2017 2016 2015 respectively supplemental executive retirement plan company instituted supplemental executive retirement plan “serp” nonqualified executive benefit plan company agrees pay executive additional benefits future usually retirement return continued employment executive serp unfunded plan specific assets set aside company connection establishment plan executive rights agreement beyond general creditor company may 2009 company instituted second supplemental executive retirement plan provide one executive type benefits original serp would qualified due age second serp also unfunded plan specific assets set aside company connection plan years ended march 31 2017 2016 2015 contributions 618013 1796998 642710 respectively charged expense related serp unfunded liability 8447283 8886195 7516249 march 31 2017 2016 2015 respectively three years presented unfunded liability estimated using following assumptions annual salary increase 35 3 years discount rate 60 3 years retirement age 65 executive deferred compensation plan company executive deferral plan eligible executives directors may elect defer portion incentive compensation paid executive deferral plan march 31 2017 2016 executive director deferred compensation plan stock option plans company 2002 stock option plan 2005 stock option plan 2008 stock option plan 2011 stock option plan benefit certain directors officers key employees plans total 4100000 shares authorized common stock reserved issuance pursuant grants approved compensation stock option committee board directors stock options granted plans maximum duration ten years may subject certain vesting requirements generally three five years officers directors key employees priced market value companys common stock grant date option march 31 2017 total 441499 shares available grant plans stockbased compensation recognized provided fasb asc topic 71810 fasb asc topic 50550 fasb asc topic 71810 requires sharebased payments employees including grants employee stock options recognized compensation expense requisite service period generally vesting period consolidated financial statements based grant date fair values impact forfeitures may occur prior vesting also estimated considered amount recognized company applied blackscholes valuation model determining grant date fair value stock option awards compensation expense recognized options expected vest forfeitures estimated based historical experience future expectations weightedaverage fair value grant date options issued years ended march 31 2017 2016 2015 2225 1082 3450 per share respectively fair value estimated grant date using weightedaverage assumptions listed expected stock price volatility based historical volatility company’s stock period approximating expected life expected life represents period time options expected outstanding grant date riskfree rate reflects interest rate grant date zero coupon us governmental bonds remaining life similar expected option term option activity year ended march 31 2017 follows aggregate intrinsic value reflected table represents total pretax intrinsic value difference closing stock price march 31 2017 exercise price multiplied number inthemoney options would received option holders option holders exercised options march 31 2017 amount change stocks market price changes total intrinsic value options exercised periods ended march 31 2017 2016 2015 follows march 31 2017 total unrecognized stockbased compensation expense related nonvested stock options amounted approximately 52 million expected recognized weightedaverage period approximately 20 years restricted stock fiscal 2017 company granted 74490 shares restricted stock equity classified certain executive officers grant date weighted average fair value 5115 onethird awards vest anniversary grant date next three years fiscal 2014 2013 company granted 8590 70800 group performance based restricted stock awards certain officers group awards vested april 30 2015 based companys achievement following performance goals march 31 2015 fiscal 2014 2013 company granted 56660 443700 group b performance based restricted stock awards certain officers march 31 2017 group b awards remain unforfeited outstanding group b awards would vested follows company achieved following performance goals successive trailing four quarters measurement period ending march 31 2017 fiscal 2016 company determined earnings per share targets associated group b stock awards achievable measurement period ended march 31 2017 subsequently compensation stock option committee board directors amended awards allowing 25 group b awards vest certain officers required forfeit remaining group b shares part amendment fasb topic asc 718 defines grant modification change terms conditions stockbased compensation award include accelerated vesting company determined since group b awards would otherwise vested premodification accelerated vesting qualified type iii modification year ended march 31 2016 company released approximately 97 million compensation expense associated group b awards including 29 million related type iii modification compensation expense related restricted stock based number shares expected vest fair market value common stock grant date company recognized compensation expense 16 million net reduction compensation expense 80 million compensation expense 81 million years ended march 31 2017 2016 2015 respectively included component general administrative expenses companys consolidated statements operations march 31 2017 approximately 33 million unrecognized compensation cost related unvested restricted stock awards expected recognized next 23 years based current estimates summary status company’s restricted stock march 31 2017 changes year ended march 31 2017 presented total sharebased compensation included component net income years ended march 31 2017 2016 2015 follows 13 acquisitions company evaluates set assets activities acquires determine set meets definition business according fasb asc topic 8051055 acquisitions meeting definition business accounted business combination acquisitions accounted asset purchases following table sets forth acquisition activity company years ended march 31 2017 2016 2015 acquisitions accounted business combinations typically result one new branches cases company typically retains existing employees branch location acquisition purchase price allocated tangible assets intangible assets acquired based upon estimated fair market values acquisition date remainder allocated goodwill year ended march 31 2017 company acquired fourteen branches one business combination described acquisitions accounted asset purchases typically limited acquisitions loan portfolios purchase price allocated tangible assets intangible assets acquired based upon estimated fair market values acquisition date asset purchase goodwill recorded year ended march 31 2017 company record acquisitions asset purchases company’s acquisitions include tangible assets generally loans furniture equipment intangible assets generally noncompete agreements customer lists goodwill recorded fair values estimated pursuant processes described acquired loans valued net loan balance given shortterm nature loans generally 8 months loans priced current rates management believes net loan balances approximate fair value furniture equipment valued specific purchase price agreed parties time acquisition management believes approximates fair values noncompete agreements valued stated amount paid party agreements company believes approximates fair value customer lists valued valuation model utilizes company’s historical data estimate value acquired customer lists customer lists allocated branch level evaluated impairment branch level triggering event occurs accordance fasb asc topic 3601005 triggering event occurs impairment loss customer list generally remaining unamortized customer list balance acquisitions original fair value customer list allocated office less 100000 management believes event triggering event occur impairment loss unamortized customer list would immaterial business combination remaining excess purchase price fair value tangible assets customer lists noncompete agreements allocated goodwill february 28 2017 company completed acquisition fourteen branches mathes management enterprises inc acquisition consistent companys strategy expansion areas demographic profiles state regulations attractive acquired branches located state georgia based evaluation agreement consistent framework described company accounted acquisition business combination conjunction acquisition company allocated purchase price tangible assets intangible assets among acquired branches based fair values respective acquired assets march 31 2017 accounting related acquisition preliminary final determination fair value customer lists goodwill completed within twelve month measurement period date acquisition required fasb asc topic 8051025 company recorded goodwill preliminary accounting acquisition results acquisitions included company’s consolidated financial statements since respective acquisition date pro forma impact branches though acquired beginning periods presented would material effect results operations reported 14 fair value fair value disclosures company may carry certain financial instruments derivative assets liabilities fair value recurring basis fair value defined price would received sell asset paid transfer liability orderly transaction market participants measurement date company determines fair values financial instruments based fair value hierarchy requires entity maximize use observable inputs minimize use unobservable inputs measuring fair value financial assets liabilities measured fair value grouped three levels prioritize inputs used measure fair value assets liabilities levels •level 1 quoted prices unadjusted active markets identical assets liabilities •level 2 inputs quoted prices observable assets liabilities either directly indirectly inputs include quoted prices similar assets liabilities active markets quoted prices identical similar assets liabilities market less active •level 3 unobservable inputs assets liabilities reflecting reporting entity’s assumptions company’s financial instruments periods reported consist following cash equivalents loans receivable senior notes payable fair value approximates carrying value instruments loans receivable originated prevailing market rates average life approximately 8 months given shortterm nature loans continually repriced current market rates company’s revolving credit facility variable rate based margin libor reprices changes libor company also considered creditworthiness determination fair value carrying amount estimated fair values company’s financial instruments summarized level follows significant assets liabilities measured fair value nonrecurring basis march 31 2017 2016 15 quarterly information unaudited following sets forth selected quarterly operating data companys highest loan demand occurs generally october december third fiscal quarter loan demand generally lowest loan repayment highest january march fourth fiscal quarter consequently company experiences significant seasonal fluctuations operating results cash needs operating results companys third fiscal quarter generally lower quarters operating results fourth fiscal quarter generally higher quarters 16 litigation internal investigation company conducting internal investigation operations mexico focusing legality fcpa certain local laws certain payments related loans maintenance company’s books records associated payments treatment compensation matters certain employees internal investigation continues address whether extent improper payments may violate fcpa local laws made approximately 2010 2017 behalf wac de méxico sofom subsidiary company government officials mexico relating loans made unionized employees company voluntarily contacted sec doj advise agencies internal investigation underway company intends cooperate agencies conclusion cannot drawn time whether either agency open proceeding investigate matter proceeding opened potential remedies agencies may seek addition although management seek avoid disruption operations mexico company cannot determine time ultimate effect investigation remedial measures operations violations fcpa local laws occurred company could subject fines civil criminal penalties equitable remedies including profit disgorgement related interest injunctive relief addition disposition matters could adversely impact ability collect outstanding loans result modifications business practices compliance programs including significant restructuring curtailment operations mexico disposition could also potentially require monitor appointed review future business practices goal ensuring compliance fcpa applicable laws company could also face fines sanctions penalties authorities mexico well thirdparty claims shareholders andor stakeholders company addition disclosure investigation could adversely affect company’s reputation ability obtain new business retain existing business current clients potential clients attract retain employees access capital markets determined violation fcpa occurred violation may give rise event default company’s credit agreement violation material adverse effect company’s business operations properties assets condition financial otherwise amount settlement resulted company failing satisfy financial covenants additional potential fcpa violations laws regulations may uncovered investigation june 2017 held discussions doj sec regarding potential resolution matter discussions government early stage company currently unable assess whether government accept voluntary settlement terms would acceptable company addition ultimate liability disgorgement related interest company believes could liable fines penalties part settlement time company able reasonably estimate amount fine penalty may pay part possible settlement furthermore company cannot currently assess potential liability might incurred settlement reached government litigate matter based information available time additional liability related matter reasonably estimable company continue evaluate amount liability pending final resolution investigation related settlement discussions government amount actual liability fines penalties disgorgement interest may recorded connection final settlement could significantly higher liability accrued date updated appropriate pending recognition accruals cfpb investigation previously disclosed march 12 2014 company received cid consumer financial protection bureau cfpb stated purpose cid determine whether company “engaging unlawful acts practices connection marketing offering extension credit violation sections 1031 1036 consumer financial protection act 12 usc §§ 5531 5536 truth lending act 15 usc §§ 1601 et seq regulation z 12 cfr pt 1026 federal consumer financial law” “also determine whether bureau action obtain legal equitable relief would public interest” company responded within deadlines specified cid broad requests production documents answers interrogatories written reports related loans made company numerous aspects company’s business also previously disclosed august 7 2015 company received letter cfpb’s enforcement office notifying company accordance cfpb’s discretionary notice opportunity respond advise “nora” process staff cfpb’s enforcement office considering recommending cfpb take legal action company “nora letter” nora letter states staff cfpb’s enforcement office expects allege company violated consumer financial protection act 2010 12 usc §5536 nora letter confirms company opportunity make nora submission written statement setting forth reasons law policy company believes cfpb take legal action company understands nora letter intended ensure potential subjects enforcement actions opportunity present positions cfpb enforcement action recommended commenced company made nora submissions cfpbs enforcement office company expects continue additional requests demands information cfpb ongoing interactions cfpb company counsel part investigation currently unable predict ultimate timing outcome cfpb investigation company believes marketing lending practices lawful assurance cfpbs ongoing investigation future exercise enforcement regulatory discretionary powers result findings alleged violations federal consumer financial protection laws could lead enforcement actions proceedings litigation imposition damages fines penalties restitution monetary liabilities sanctions settlements changes company’s business practices operations could material adverse effect company’s business financial condition results operations eliminate altogether companys ability operate business profitably terms substantially similar currently operates see part item 1 “businessgovernment regulationfederal legislation” discussion matters federal regulations company’s operations subject part item 1a”risk factors” information regarding regulations related risks shareholder complaints previously disclosed april 22 2014 shareholder filed putative class action complaint edna selan epstein v world acceptance corporation et al united states district court district south carolina case number 614cv01606 “edna epstein putative class action” company certain current former officers behalf persons purchased otherwise acquired company’s common stock april 25 2013 march 12 2014 two amended complaints filed plaintiffs several motions filed proceedings complaint currently amended alleges company made false misleading statements various sec reports public statements violation federal securities laws preceding company’s disclosure form 8k filed march 13 2014 received abovereferenced cid cfpb ii company’s loan growth volume figures inflated weakness company’s internal controls relating accounting treatment certain smalldollar loan refinancings iii additional allegations regarding among things company’s receipt notice opportunity respond advise letter cfpb august 7 2015 complaint seeks class certification class consisting persons purchased otherwise acquired company’s common stock january 30 2013 august 10 2015 unspecified monetary damages costs attorneys’ fees company denied claims merit opposed certification proposed class june 7 2017 courtordered mediation parties reached agreement principle settle edna epstein putative class action settlement resolve claims asserted defendants action terms agreed upon parties contemplate settlement payment class 16 million funded company’s directors officers liability insurance carriers settlement subject formal documentation court approval neither company present former officers admitted wrongdoing liability connection settlement previously disclosed july 15 2015 shareholder filed putative derivative complaint irwin j lipton et al v mclean et al united states district court district south carolina case number 615cv02796mgl “lipton derivative action” behalf company certain current former officers directors september 21 2015 another shareholder filed putative derivative complaint paul parshall et al v mclean et al united states district court district south carolina case number 615cv03779mgl “parshall derivative action” asserting substantially similar claims behalf company certain current former officers directors october 14 2015 court entered order consolidating lipton derivative action parshall derivative action world acceptance corp derivative litigation lead case 615cv02796mgl plaintiffs subsequently filed amended complaint amended consolidated complaint alleges among things defendants breached fiduciary duties disseminating false misleading information company’s shareholders regarding company’s loan growth loan renewals allowances loan losses revenue sources revenue growth compliance us generally accepted accounting principles gaap sufficiency company’s internal controls accounting procedures ii defendants breached fiduciary duties failing ensure company maintained adequate internal controls iii defendants breached fiduciary duties failing exercise prudent oversight supervision company’s officers employees ensure conformity applicable laws regulations iv defendants unjustly enriched result compensation received allegedly breaching fiduciary duties owed company v defendants wasted corporate assets paying excessive compensation certain company’s executive officers awarding selfinterested stock options certain company’s officers directors incurring legal liability legal costs defend defendants’ unlawful actions authorizing repurchase company stock artificially inflated prices vi certain defendants breached fiduciary duty company selling shares company’s stock artificially inflated prices possession material nonpublic information regarding company’s financial condition vii defendants violated section 10b securities exchange act 1934 making false misleading statements regarding company’s practices regarding loan renewals loan modifications accounting loans viii defendants violated section 14a securities exchange act 1934 failing disclose alleged material facts company’s 2014 2015 proxy statements ix allegations similar made connection edna epstein putative class action described consolidated complaint seeks among things unspecified monetary damages order directing company take steps reform improve corporate governance internal procedures comply applicable laws protect company shareholders future wrongdoing described consolidated complaint february 28 2017 court entered order dismissing derivative litigation plaintiffs filed notice appeal us court appeals fourth circuit march 27 2017 june 14 2017 following mediation parties reached agreement principle settle derivative litigation settlement resolve claims asserted defendants action settlement provides company adopt certain corporate governance practices pay plaintiffs’ attorney’s fees expenses amount approved court exceed 475000 fees expenses funded company’s directors officers liability insurance carriers settlement subject formal documentation court approval neither company present former directors officers admitted wrongdoing liability connection settlement general addition time company involved routine litigation matters relating claims arising operations normal course business including matters damages various amounts claimed estimating amount range possible losses resulting litigation government actions legal proceedings inherently difficult requires extensive degree judgment particularly matters involve indeterminate claims monetary damages may involve fines penalties damages discretionary amount involve large number claimants significant discretion regulatory authorities represent change regulatory policy interpretation present novel legal theories early stages proceedings subject appeal could result change business practices addition legal proceedings resolved extended periods time potential losses subject change due among things new developments changes legal strategy outcome intermediate procedural substantive rulings parties’ settlement posture evaluation strength weakness case us reasons currently unable predict ultimate timing outcome reasonably estimate possible losses range possible losses resulting matters described based information currently available company believe reasonably possible losses arising currently pending legal matters material company’s results operations financial conditions however light inherent uncertainties involved matters adverse outcome one matters could materially adversely affect company’s financial condition results operations cash flows particular reporting period 17 segments company evaluates segment reporting accordance fasb accounting standards codification 280 segment reporting period including evaluating reporting package reviewed chief operation decision maker “codm” company concluded chief executive officer qualifies codm management believes four possible approaches consider determining company’s operating segments nationality division business line function approaches present total 13 unique entity components 13 unique entity components management determined us mexico components meet tests asc 28010501 classified operating segments us component housed within nationality approach mexico component shared nationality division approaches march 31 2017 us operating segment meets one quantitative thresholds trigger separately disclosed reporting however management believes separately disclosed information mexico operating segment would useful readers financial statements therefore company two reportable segments us mexico components following table presents operating results company’s two reportable segments 1 accordance transfer pricing agreements segments mexico segment reimburses us segment personnelrelated administrative costs incurred us benefit mexico fiscal years 2017 2016 2015 charges totaled 04 million 27 million 28 million respectively 2 accordance companys revolving credit facility substantially company’s assets excluding company’s mexico subsidiaries pledged collateral working capital contributions made us mexico treated contributions capital therefore mexico segment incurs interest expense following table presents longlived assets financial instruments longterm customer relationships financial institution mortgage servicing rights deferred policy acquisition costs deferred tax assets company’s two reportable segments following table presents total assets company’s two reportable segments 18 subsequent events eleventh amendment amended restated revolving credit facility may 8 2017 company entered eleventh amendment “eleventh amendment” amended restated revolving credit agreement originally dated september 17 2010 cumulatively amended “revolving credit agreement” among company lenders named therein wells fargo bank national association successor administrative agent successor collateral agent eleventh amendment amends revolving credit agreement among things extend maturity date revolving credit agreement june 15 2018 june 15 2019 ii increase commitments revolving credit agreement 3700 million 4800 million iii reduce maximum permissible ratio total debt consolidated adjusted net worth 275 10 20 10 iv narrow definition “eligible finance receivables” v expand circumstances company may make restricted payments allowing certain share repurchases aggregate amount 50 consolidated adjusted net income fiscal year commencing fiscal year ending march 31 2017 vi restrict certain bulk purchases finance receivables company addition pursuant eleventh amendment bank united na became lender revolving credit agreement management’s report internal control financial reporting responsible establishing maintaining adequate internal control financial reporting defined rule 13a 15f securities exchange act 1934 assessed effectiveness internal control financial reporting march 31 2017 assessment based criteria established internal control integrated framework 2013 issued committee sponsoring organizations treadway commission coso internal control financial reporting process designed provide reasonable assurance regarding reliability financial reporting preparation financial statements external purposes accordance generally accepted accounting principles internal control financial reporting includes policies procedures 1 pertain maintenance records reasonable detail accurately fairly reflect transactions dispositions assets 2 provide reasonable assurance transactions recorded necessary permit preparation financial statements accordance generally accepted accounting principles receipts expenditures made accordance authorizations management board directors 3 provide reasonable assurance regarding prevention timely detection unauthorized acquisition use disposition assets could material effect financial statements inherent limitations internal control financial reporting may prevent detect misstatements also assumptions regarding internal control financial reporting future periods based evaluation effectiveness prior period subject risk controls may become inadequate changes conditions degree compliance policies procedures may deteriorate based using coso criteria believe internal control financial reporting march 31 2017 effective independent registered public accounting firm audited consolidated financial statements included annual report issued attestation report effectiveness internal control financial reporting stated report janet lewis matricciani john l calmes jr janet lewis matricciani john l calmes jr chief executive officer senior vice president chief financial officer report independent registered public accounting firm board directors shareholders world acceptance corporation audited accompanying consolidated balance sheets world acceptance corporation subsidiaries march 31 2017 2016 related consolidated statements operations comprehensive income shareholders equity cash flows three years period ended march 31 2017 financial statements responsibility companys management responsibility express opinion financial statements based audits conducted audits accordance standards public company accounting oversight board united states standards require plan perform audit obtain reasonable assurance whether financial statements free material misstatement audit includes examining test basis evidence supporting amounts disclosures financial statements audit also includes assessing accounting principles used significant estimates made management well evaluating overall financial statement presentation believe audits provide reasonable basis opinion consolidated financial statements referred present fairly material respects financial position world acceptance corporation subsidiaries march 31 2017 2016 results operations cash flows three years period ended march 31 2017 conformity us generally accepted accounting principles also audited accordance standards public company accounting oversight board united states world acceptance corporation subsidiaries’ internal control financial reporting march 31 2017 based criteria established internal control integrated framework issued committee sponsoring organizations treadway commission 2013 report dated june 29 2017 expressed opinion world acceptance corporation subsidiaries maintained effective internal control financial reporting march 31 2017 based criteria established internal control integrated framework issued committee sponsoring organizations treadway commission 2013 rsm us llp raleigh north carolina june 29 2017 report independent registered public accounting firm board directors shareholders world acceptance corporation subsidiaries audited world acceptance corporation subsidiaries’ internal control financial reporting march 31 2017 based criteria established internal control integrated framework issued committee sponsoring organizations treadway commission 2013 world acceptance corporation subsidiaries’ management responsible maintaining effective internal control financial reporting assessment effectiveness internal control financial reporting included accompanying management’s report internal control financial reporting responsibility express opinion companys internal control financial reporting based audit conducted audit accordance standards public company accounting oversight board united states standards require plan perform audit obtain reasonable assurance whether effective internal control financial reporting maintained material respects audit included obtaining understanding internal control financial reporting assessing risk material weakness exists testing evaluating design operating effectiveness internal control based assessed risk audit also included performing procedures considered necessary circumstances believe audit provides reasonable basis opinion companys internal control financial reporting process designed provide reasonable assurance regarding reliability financial reporting preparation financial statements external purposes accordance generally accepted accounting principles companys internal control financial reporting includes policies procedures pertain maintenance records reasonable detail accurately fairly reflect transactions dispositions assets company b provide reasonable assurance transactions recorded necessary permit preparation financial statements accordance generally accepted accounting principles receipts expenditures company made accordance authorizations management directors company c provide reasonable assurance regarding prevention timely detection unauthorized acquisition use disposition companys assets could material effect financial statements inherent limitations internal control financial reporting may prevent detect misstatements also projections evaluation effectiveness future periods subject risk controls may become inadequate changes conditions degree compliance policies procedures may deteriorate material weakness deficiency combination deficiencies internal control financial reporting reasonable possibility material misstatement companys annual interim financial statements prevented detected timely basis following material weaknesses identified included managements assessment control design gaps company’s accounts payable environment related vendor management payment processes mexico company’s entity level control environment related adherence us foreign laws regulations including fcpa corporate governance mexico operations material weaknesses considered determining nature timing extent audit tests applied audit march 31 2017 consolidated financial statements report affect report dated june 29 2017 consolidated financial statements opinion effect material weaknesses described achievement objectives control criteria world acceptance corporation subsidiaries maintained effective internal control financial reporting march 31 2017 based criteria established internal control integrated framework issued committee sponsoring organizations treadway commission 2013 also audited accordance standards public company accounting oversight board united states consolidated balance sheets world acceptance corporation subsidiaries march 31 2017 2016 related consolidated statements operations comprehensive income shareholders’ equity cash flows three years period ended march 31 2017 report dated june 29 2017 expressed unqualified opinion rsm us llp raleigh north carolina june 29 2017 item 9 nannannannannannanitem 15 exhibits financial statement schedules reports form 8k 1 following consolidated financial statements company report independent registered public accounting firm filed herewith consolidated financial statements consolidated balance sheets march 31 2004 2003 consolidated statements operations years ended march 31 2004 2003 2002 consolidated statements shareholders’ equity years ended march 31 2004 2003 2002 consolidated statements cash flows years ended march 31 2004 2003 2002 notes consolidated financial statements report independent registered public accounting firm 2 financial statement schedules provision made applicable accounting regulations securities exchange commission required related instructions inapplicable required information included elsewhere consolidated financial statements 3 exhibits following exhibits filed part report indicated previously filed incorporated herein reference management contract compensatory plan required filed item 14© report item 601 regulation sk securities exchange commission pursuant interim guidance provided sec release 338212 certification accompanies shall deemed filed part annual report form 10k 4 reports form 8k company furnished one report form 8k quarter ended march 31 2004 report furnished january 20 2004 attached terms company’s earnings press release quarter ended december 31 2003 signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized world acceptance corporation alexander mclean iii alexander mclean iii executive vice president cfo date june 4 2004 pursuant requirements securities exchange act 1934 report signed following persons behalf registrant capacities dates indicated signature douglas r jones douglas r jones president chief executive officer principal executive officer director date june 4 2004 alexander mclean iii alexander mclean iii executive vice president chief financial officer principal financial officer principal accounting officer director date june 4 2004 charles walters charles walters chairman board directors date june 4 2004 william hummers iii william hummers iii director date june 4 2004item 15 exhibits financial statement schedules reports form 8k 1 following consolidated financial statements company report independent registered public accounting firm filed herewith consolidated financial statements consolidated balance sheets march 31 2005 2004 consolidated statements operations years ended march 31 2005 2004 2003 consolidated statements shareholders’ equity years ended march 31 2005 2004 2003 consolidated statements cash flows years ended march 31 2005 2004 2003 reports independent registered public accounting firm 2 financial statement schedules provision made applicable accounting regulations securities exchange commission required related instructions inapplicable required information included elsewhere consolidated financial statements 3 exhibits following exhibits filed part report indicated previously filed incorporated herein reference management contract compensatory plan required filed item 14c report item 601 regulation 5k securities exchange commission signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized world acceptance corporation alexander mclean iii alexander mclean iii executive vice president cfo date june 9 2005 pursuant requirements securities exchange act 1934 report signed following persons behalf registrant capacities dates indicated signature douglas r jones douglas r jones president chief executive officer principal executive officer director date june 9 2005 alexander mclean iii alexander mclean iii executive vice president chief financial officer principal financial officer principal accounting officer director date june 9 2005 ken r bramlett ken r bramlett director date june 9 2005 charles way charles way director date june 9 2005item 15 exhibits financial statement schedules 1 following consolidated financial statements company report independent registered public accounting firm filed herewith consolidated financial statements consolidated balance sheets march 31 2008 consolidated statements operations years ended march 31 2008 2007 consolidated statements shareholders equity comprehensive income years ended march 31 2008 2007 2006 consolidated statements cash flows years ended march 31 2008 2007 notes consolidated financial statements reports independent registered public accounting firm 2 financial statement schedules provision made applicable accounting regulations securities exchange commission required related instructions inapplicable required information included elsewhere consolidated financial statements 3 exhibits following exhibits filed part report indicated previously filed incorporated herein reference filed herewith previously filed incorporated company exhibit reference previous registration number description exhibit number report 31 second amended restated articles incorporation company amended 31 333107426 32 fourth amended restated bylaws company 991 80307 8k 41 specimen share certificate 41 3342879 42 articles 3 4 5 form companys second amended restated articles incorporation amended 31 333107426 43 article ii section 9 company’s fourth amended restated bylaws 991 80307 8k 44 amended restated credit agreement dated july 20 2005 44 63005 10q 45 first amendment amended restated revolving credit agreement dated august 4 2006 44 63006 10q 46 second amendment amended restated revolving credit agreement dated october 2 2006 101 100406 8k 47 third amendment amended restated revolving credit agreement dated august 31 2007 101 90707 8k 47 subsidiary security agreement dated june 30 1997 amended july 20 2005 45 93005 10q 48 company security agreement dated june 20 1997 amended july 20 2005 46 93005 10q 49 fourth amendment subsidiary amended restated security agreement pledge indenture trust ie subsidiary security agreement 47 63005 10q 410 fourth amendment amended restated security agreement pledge indenture trust ie company security agreement 410 93004 10q 411 fifth amendment amended restated security agreement pledge indenture trust ie company security agreement 49 63005 10q 412 form 300 convertible senior subordinated note due 2011 41 101206 8k 413 indenture dated october 10 2006 company us bank national association trustee 42 101206 8k 101 employment agreement alexander mclean iii effective may 21 2007 103 10k 102 employment agreement mark c roland effective may 21 2007 104 10k filed herewith previously filed incorporated company exhibit reference previous registration number description exhibit number report 103 employment agreement kelly malson effective august 27 2007 991 82907 8k 104 securityholders agreement dated september 19 1991 company certain securityholders 105 3342879 105 supplemental income plan 107 10k 106 second amendment company’s supplemental income plan 1015 123107 10q 107 board directors deferred compensation plan 106 10k 108 second amendment company’s board directors deferred compensation plan 2000 1013 123107 10q 109 stock option plan company 3352166 1010 stock option plan company amended 106 10k 1011 first amendment company’s 1992 1994 stock option plans 1010 123107 10q 1012 stock option plan company appendix definitive proxy statement schedule 14a 2002 annual meeting 1013 first amendment company’s 2002 stock option plan 1011 123107 10q 1014 stock option plan company appendix b definitive proxy statement schedule 14a 2005 annual meeting 1015 first amendment company’s 2005 stock option plan 1012 123107 10q 1016 company’s executive incentive plan 106 10k 1017 company’s retirement savings plan 41 33314399 1018 executive deferral plan 1012 10k 1019 second amendment company’s executive deferral plan 1014 123107 10q 1020 first amended restated board directors 2005 deferred compensation plan 1016 123107 10q 1021 first amended restated 2005 executive deferral plan 1017 123107 10q filed herewith previously filed incorporated company exhibit reference previous registration number description exhibit number report 1022 second amended restated world acceptance corporation supplemental income plan 1018 123107 10q code ethics 10k schedule company’s subsidiaries consent kpmg llp 311 rule 13a14a15d14a certification chief executive officer 312 rule 13a14a15d14a certification chief financial officer 321 section 1350 certification chief executive officer 322 section 1350 certification chief financial officer management contract compensatory plan required filed item 14c report item 601 regulation 5k securities exchange commission signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized pursuant requirements securities exchange act 1934 report signed following persons behalf registrant capacities dates indicated signature alexander mclean iii ken r bramlett jr alexander mclean iii chairman board ken r bramlett jr director chief executive officer principal executive officer date may 30 2008 date may 30 2008 kelly malson james r gilreath kelly malson vice president chief financial james r gilreath director officer principal financial accounting officer date may 30 2008 date may 30 2008 william hummers charles way william hummers iii director charles way director date may 30 2008 date may 30 2008 mark c roland darrell whitaker mark c roland president coo director darrell whitaker director date may 30 2008 date may 30 2008item 15 exhibits financial statement schedules 1 following consolidated financial statements company report independent registered public accounting firm filed herewith consolidated financial statements consolidated balance sheets march 31 2010 consolidated statements operations years ended march 31 2010 2009 consolidated statements shareholders equity comprehensive income years ended march 31 2010 2009 2008 consolidated statements cash flows years ended march 31 2010 2009 notes consolidated financial statements reports independent registered public accounting firm 2 financial statement schedules provision made applicable accounting regulations securities exchange commission required related instructions inapplicable required information included elsewhere consolidated financial statements 3 exhibits following exhibits filed part report indicated previously filed incorporated herein reference filed herewith previously filed incorporated company exhibit reference previous registration number description exhibit number report 31 second amended restated articles incorporation company amended 31 333107426 32 fourth amended restated bylaws company 991 80307 8k 41 specimen share certificate 41 3342879 42 articles 3 4 5 form companys second amended restated articles incorporation amended 31 333107426 43 article ii section 9 company’s fourth amended restated bylaws 991 80307 8k 44 amended restated credit agreement dated july 20 2005 44 63005 10q 45 first amendment amended restated revolving credit agreement dated august 4 2006 44 63006 10q 46 second amendment amended restated revolving credit agreement dated october 2 2006 101 100406 8k 47 third amendment amended restated revolving credit agreement dated august 31 2007 101 90707 8k 48 fourth amendment amended restated revolving credit agreement dated august 4 2008 48 63008 10q 49 fifth amendment amended restated revolving credit agreement dated january 28 2009 49 123108 10qa 410 sixth amendment amended restated credit agreement dated july 31 410 63009 10q 411 subsidiary security agreement dated june 30 1997 amended july 20 45 93005 10q 412 revised listing bank commitments effective november 13 2009 pursuant sixth amendment amended restated credit agreement dated july 31 2009 “sixth amendment” listing updates information previously disclosed schedule 11 sixth amendment previously filed exhibit 410 company’s report form 10q quarter ended june 30 2009 411 123109 10q 413 company security agreement dated june 20 1997 amended july 20 46 93005 10q filed herewith incorporated company exhibit reference previous registration number description exhibit number report 414 fourth amendment subsidiary amended restated security agreement pledge indenture trust ie subsidiary security agreement 47 63005 10q 415 fourth amendment amended restated security agreement pledge indenture trust dated june 30 1997 ie company security agreement 410 93004 10q 416 fifth amendment amended restated security agreement pledge indenture trust ie company security agreement 49 63005 10q 417 form 300 convertible senior subordinated note due 2011 41 101206 8k 418 indenture dated october 10 2006 company us bank national association trustee 42 101206 8k 419 amended restated guaranty agreement dated june 30 1997 ie subsidiary guaranty agreement 417 10k 420 first amendment subsidiary guaranty agreement dated august 4 418 10k 101 employment agreement alexander mclean iii effective may 21 103 10k 102 employment agreement mark c roland effective may 21 2007 104 10k 103 employment agreement kelly malson effective august 27 991 82907 8k 104 employment agreement javier sauza effective june 1 2008 104 10k 105 securityholders agreement dated september 19 1991 company certain securityholders 105 3342879 106 supplemental income plan 107 10k 107 second amendment company’s supplemental income plan 1015 123107 10q 108 board directors deferred compensation plan 106 10k 109 second amendment company’s board directors deferred compensation plan 2000 1013 123107 10q 1010 stock option plan company amended 106 10k 1011 first amendment company’s 1992 1994 stock option plans 1010 123107 10q filed herewith previously filed incorporated company exhibit reference previous registration number description exhibit number report 1012 stock option plan company appendix definitive proxy statement schedule 14a 2002 annual meeting 1013 first amendment company’s 2002 stock option plan 1011 123107 10q 1014 stock option plan company appendix b definitive proxy statement schedule 14a 2005 annual meeting 1015 first amendment company’s 2005 stock option plan 1012 123107 10q 1016 company’s executive incentive plan 106 10k 1017 company’s retirement savings plan 41 33314399 1018 company retirement savings plan fifth amendment 101 123108 10q 1019 executive deferral plan 1012 10k 1020 second amendment company’s executive deferral plan 1014 123107 10q 1021 first amended restated board directors 2005 deferred compensation plan 1016 123107 10q 1022 first amended restated 2005 executive deferral plan 1017 123107 10q 1023 second amended restated company 2005 supplemental income plan 1018 123107 10q 1024 stock option plan company appendix definitive proxy statement schedule 14a 2008 annual meeting code ethics 10k schedule company’s subsidiaries consent kpmg llp 311 rule 13a14a15d14a certification chief executive officer 312 rule 13a14a15d14a certification chief financial officer filed herewith previously filed incorporated company exhibit reference previous registration number description exhibit number report 321 section 1350 certification chief executive officer 322 section 1350 certification chief financial officer management contract compensatory plan required filed item 15 report item 601 regulation sk securities exchange commission signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized pursuant requirements securities exchange act 1934 report signed following persons behalf registrant capacities dates indicated signature alexander mclean iii ken r bramlett jr alexander mclean iii chairman board ken r bramlett jr director chief executive officer principal executive officer date june 8 2010 date june 8 2010 kelly malson james r gilreath kelly malson senior vice president chief james r gilreath director financial officer principal financial accounting officer date june 8 2010 date june 8 2010 william hummers charles way william hummers iii director charles way director date june 8 2010 date june 8 2010 mark c roland darrell whitaker mark c roland president coo director darrell whitaker director date june 8 2010 date june 8 2010item 15 exhibits financial statement schedules 1 following consolidated financial statements company report independent registered public accounting firm filed herewith consolidated financial statements consolidated balance sheets march 31 2011 2010 consolidated statements operations years ended march 31 2011 2010 2009 consolidated statements shareholders equity comprehensive income years ended march 31 2011 2010 2009 consolidated statements cash flows years ended march 31 2011 2010 2009 notes consolidated financial statements reports independent registered public accounting firm 2 financial statement schedules provision made applicable accounting regulations securities exchange commission required related instructions inapplicable required information included elsewhere consolidated financial statements 3 exhibits following exhibits filed part report indicated previously filed incorporated herein reference management contract compensatory plan required filed item 15 report item 601 regulation sk securities exchange commission signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized pursuant requirements securities exchange act 1934 report signed following persons behalf registrant capacities dates indicated signature alexander mclean iii ken r bramlett jr alexander mclean iii chairman board ken r bramlett jr director chief executive officer principal executive officer date june 3 2011 date june 3 2011 kelly malson james r gilreath kelly malson senior vice president chief james r gilreath director financial officer principal financial accounting officer date june 3 2011 date june 3 2011 william hummers charles way william hummers iii director charles way director date june 3 2011 date june 3 2011 mark c roland darrell whitaker mark c roland president coo director darrell whitaker director date june 3 2011 date june 3 2011item 15 exhibits financial statement schedules 1 following consolidated financial statements company report independent registered public accounting firm filed herewith consolidated financial statements consolidated balance sheets march 31 2012 2011 consolidated statements operations years ended march 31 2012 2011 2010 consolidated statements shareholders equity comprehensive income years ended march 31 2012 2011 2010 consolidated statements cash flows years ended march 31 2012 2011 2010 notes consolidated financial statements reports independent registered public accounting firm 2 financial statement schedules provision made applicable accounting regulations securities exchange commission required related instructions inapplicable required information included elsewhere consolidated financial statements 3 exhibits following exhibits filed part report indicated previously filed incorporated herein reference submitted electronically herewith management contract compensatory plan required filed item 15 report item 601 regulation sk securities exchange commission signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized kelly malson kelly malson senior vice president chief financial officer date may 29 2012 pursuant requirements securities exchange act 1934 report signed following persons behalf registrant capacities dates indicated signature alexander mclean iii ken r bramlett jr alexander mclean iii chairman board ken r bramlett jr director chief executive officer principal executive officer date may 29 2012 date may 29 2012 kelly malson james r gilreath kelly malson senior vice president chief james r gilreath director financial officer principal financial accounting officer date may 29 2012 date may 29 2012 william hummers charles way william hummers iii director charles way director date may 29 2012 date may 29 2012 scott j vassalluzzo darrell whitaker scott j vassalluzzo director darrell whitaker director date may 29 2012 date may 29 2012item 15 exhibits financial statement schedules 3 exhibits following exhibits filed part report indicated previously filed incorporated herein reference submitted electronically herewith management contract compensatory plan required filed item 15 report item 601 regulation sk securities exchange commission signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized world acceptance corporation alexander mclean iii alexander mclean iii chairman chief executive officer date june 14 2013 pursuant requirements securities exchange act 1934 report signed following persons behalf registrant capacities dates indicated signatureitem 15 exhibits financial statement schedules 1 following consolidated financial statements company report independent registered public accounting firm filed herewith consolidated financial statements consolidated balance sheets march 31 2015 2014 consolidated statements operations fiscal years ended march 31 2015 2014 2013 consolidated statements comprehensive income fiscal years ended march 31 2015 2014 2013 consolidated statements shareholders equity fiscal years ended march 31 2015 2014 2013 consolidated statements cash flows fiscal years ended march 31 2015 2014 2013 notes consolidated financial statements reports independent registered public accounting firms 2 financial statement schedules provision made applicable accounting regulations securities exchange commission required related instructions inapplicable required information included elsewhere consolidated financial statements 3 exhibits following exhibits filed part report indicated previously filed incorporated herein reference submitted electronically herewith management contract compensatory plan required filed item 15 report item 601 regulation sk securities exchange commission signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized world acceptance corporation alexander mclean iii alexander mclean iii chairman chief executive officer date june 1 2015 pursuant requirements securities exchange act 1934 report signed following persons behalf registrant capacities dates indicated signatureitem 15 exhibits financial statement schedules 1 following consolidated financial statements company report independent registered public accounting firm filed herewith consolidated financial statements consolidated balance sheets march 31 2016 2015 consolidated statements operations fiscal years ended march 31 2016 2015 2014 consolidated statements comprehensive income fiscal years ended march 31 2016 2015 2014 consolidated statements shareholders equity fiscal years ended march 31 2016 2015 2014 consolidated statements cash flows fiscal years ended march 31 2016 2015 2014 notes consolidated financial statements reports independent registered public accounting firms 2 financial statement schedules provision made applicable accounting regulations securities exchange commission required related instructions inapplicable required information included elsewhere consolidated financial statements 3 exhibits following exhibits filed part report indicated previously filed incorporated herein reference submitted electronically herewith management contract compensatory plan required filed item 15 report item 601 regulation sk securities exchange commission signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized world acceptance corporation janet lewis matricciani janet lewis matricciani chief executive officer date june 1 2016 pursuant requirements securities exchange act 1934 report signed following persons behalf registrant capacities dates indicateditem 15 exhibits financial statement schedules a1 following consolidated financial statements company report independent registered public accounting firm filed part annual report item 8 consolidated financial statements consolidated balance sheets march 31 2018 2017 consolidated statements operations fiscal years ended march 31 2018 2017 2016 consolidated statements comprehensive income fiscal years ended march 31 2018 2017 2016 consolidated statements shareholders equity fiscal years ended march 31 2018 2017 2016 consolidated statements cash flows fiscal years ended march 31 2018 2017 2016 notes consolidated financial statements reports independent registered public accounting firm a2 financial statement schedules provision made applicable accounting regulations sec required related instructions inapplicable required information included elsewhere consolidated financial statements a3 exhibits list exhibits filed part form 10k set forth exhibit index immediately preceding signatures form 10k incorporated reference item 15a3 b exhibits listed accompanying exhibit index filed part annual report form 10k c separate financial statements schedules financial statement schedules omitted since required information included consolidated financial statements contained item 8 annual report form 10k none exhibit index submitted electronically herewith management contract compensatory plan required filed item 15 report item 601 regulation sk securities exchange commission signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized pursuant requirements securities exchange act 1934 report signed following persons behalf registrant capacities dates indicateditem 15 exhibits financial statement schedules a1 following consolidated financial statements company report independent registered public accounting firm filed part annual report item 8 consolidated financial statements consolidated balance sheets march 31 2020 2019 consolidated statements operations fiscal years ended march 31 2020 2019 2018 consolidated statements comprehensive income fiscal years ended march 31 2020 2019 2018 consolidated statements shareholders equity fiscal years ended march 31 2020 2019 2018 consolidated statements cash flows fiscal years ended march 31 2020 2019 2018 notes consolidated financial statements reports independent registered public accounting firm a2 financial statement schedules provision made applicable accounting regulations sec required related instructions inapplicable required information included elsewhere consolidated financial statements a3 exhibits list exhibits filed part form 10k set forth exhibit index immediately preceding signatures form 10k incorporated reference item 15a3 b exhibits listed accompanying exhibit index filed part annual report form 10k c separate financial statements schedules financial statement schedules omitted since required information included consolidated financial statements contained item 8 annual report form 10k none exhibit index submitted electronically herewith management contract compensatory plan required filed item 15 report item 601 regulation sk securities exchange commission signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized pursuant requirements securities exchange act 1934 report signed following persons behalf registrant capacities dates indicateditem 15 exhibits financial statement schedules reports form 8k 1 following consolidated financial statements company independent auditors’ report contained annual report incorporated herein reference consolidated financial statements consolidated balance sheets march 31 2003 2002 consolidated statements operations years ended march 31 2003 2002 2001 consolidated statements shareholders’ equity years ended march 31 2003 2002 2001 consolidated statements cash flows years ended march 31 2003 2002 2001 notes consolidated financial statements independent auditors’ report 2 financial statement schedules provision made applicable accounting regulations securities exchange commission required related instructions inapplicable required information included elsewhere consolidated financial statements 3 exhibits following exhibits filed part report indicated previously filed incorporated herein reference management contract compensatory plan required filed item 14c report item 601 regulation sk securities exchange commission pursuant interim guidance provided sec release 338212 certification accompanies shall deemed filed part annual report form 10k 4 reports form 8k fiscal quarter ended march 31 2003 reports filed form 8k signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized pursuant requirements securities exchange act 1934 report signed following persons behalf registrant capacities dates indicated signature charles walters charles walters chairman chief executive officer principal executive officer director date june 27 2003 alexander mclean iii alexander mclean iii executive vice president chief financial officer principal financial officer principal accounting officer director date june 27 2003 william hummers iii william hummers iii director date june 27 2003 charles way charles way director date june 27 2003 certifications charles walters certify 1 reviewed annual report form 10k world acceptance corporation 2 based knowledge annual report contain untrue statement material fact omit state material fact necessary make statements made light circumstances statements made misleading respect period covered annual report 3 based knowledge financial statements financial information included annual report fairly present material respects financial condition results operations cash flows registrant periods presented annual report 4 registrant’s certifying officer responsible establishing maintaining disclosure controls procedures defined exchange act rules 13a14 15d14 registrant designed disclosure controls procedures ensure material information relating registrant including consolidated subsidiaries made known us others within entities particularly period annual report prepared b evaluated effectiveness registrant’s disclosure controls procedures date within 90 days prior filing date annual report “evaluation date” c presented annual report conclusions effectiveness disclosure controls procedures based evaluation date 5 registrant’s certifying officer disclosed based recent evaluation registrant’s auditors audit committee registrant’s board directors persons performing equivalent function significant deficiencies design operation internal controls could adversely affect registrant’s ability record process summarize report financial data identified registrant’s auditors material weaknesses internal controls b fraud whether material involves management employees significant role registrant’s internal controls 6 registrant’s certifying officer indicated annual report whether significant changes internal controls factors could significantly affect internal controls subsequent date recent evaluation including corrective actions regard significant deficiencies material weaknesses dated june 27 2003 c walters c walters chairman ceo aa mclean iii certify 1 reviewed annual report form 10k world acceptance corporation 2 based knowledge annual report contain untrue statement material fact omit state material fact necessary make statements made light circumstances statements made misleading respect period covered annual report 3 based knowledge financial statements financial information included annual report fairly present material respects financial condition results operations cash flows registrant periods presented annual report 4 registrant’s certifying officer responsible establishing maintaining disclosure controls procedures defined exchange act rules 13a14 15d14 registrant designed disclosure controls procedures ensure material information relating registrant including consolidated subsidiaries made known us others within entities particularly period annual report prepared b evaluated effectiveness registrant’s disclosure controls procedures date within 90 days prior filing date annual report “evaluation date” c presented annual report conclusions effectiveness disclosure controls procedures based evaluation date 5 registrant’s certifying officer disclosed based recent evaluation registrant’s auditors audit committee registrant’s board directors persons performing equivalent function significant deficiencies design operation internal controls could adversely affect registrant’s ability record process summarize report financial data identified registrant’s auditors material weaknesses internal controls b fraud whether material involves management employees significant role registrant’s internal controls 6 registrant’s certifying officer indicated annual report whether significant changes internal controls factors could significantly affect internal controls subsequent date recent evaluation including corrective actions regard significant deficiencies material weaknesses dated june 27 2003 mclean iii aa mclean iii executive vice president cfoitem 15 exhibits financial statement schedules 1 following consolidated financial statements company report independent registered public accounting firm filed herewith consolidated financial statements consolidated balance sheets march 31 2009 consolidated statements operations years ended march 31 2009 2008 consolidated statements shareholders equity comprehensive income years ended march 31 2009 2008 2007 consolidated statements cash flows years ended march 31 2009 2008 notes consolidated financial statements reports independent registered public accounting firm 2 financial statement schedules provision made applicable accounting regulations securities exchange commission required related instructions inapplicable required information included elsewhere consolidated financial statements 3 exhibits following exhibits filed part report indicated previously filed incorporated herein reference filed herewith incorporated company exhibit reference previous registration number description exhibit number report 416 indenture dated october 10 2006 company us bank national association trustee 42 101206 8k 417 amended restated guaranty agreement dated june 30 1997 ie subsidiary guaranty agreement 418 first amendment subsidiary guaranty agreement dated august 4 2008 101 employment agreement alexander mclean iii effective may 21 2007 103 10k 102 employment agreement mark c roland effective may 21 2007 104 10k 103 employment agreement kelly malson effective august 27 2007 991 82907 8k 104 employment agreement javier sauza effective june 1 2008 105 securityholders agreement dated september 19 1991 company certain securityholders 105 3342879 106 supplemental income plan 107 10k 107 second amendment company’s supplemental income plan 1015 123107 10q 108 board directors deferred compensation plan 106 10k 109 second amendment company’s board directors deferred compensation plan 2000 1013 123107 10q 1010 stock option plan company 3352166 1011 stock option plan company amended 106 10k 1012 first amendment company’s 1992 1994 stock option plans 1010 123107 10q 1013 stock option plan company appendix definitive proxy statement schedule 14a 2002 annual meeting 1014 first amendment company’s 2002 stock option plan 1011 123107 10q 1015 stock option plan company appendix b definitive proxy statement schedule 14a 2005 annual meeting 1016 first amendment company’s 2005 stock option plan 1012 123107 10q filed herewith previously filed incorporated company exhibit reference previous registration number description exhibit number report 1017 company’s executive incentive plan 106 10k 1018 company’s retirement savings plan 41 33314399 1019 company retirement savings plan fifth amendment 101 123108 10q 1020 executive deferral plan 1012 10k 1021 second amendment company’s executive deferral plan 1014 123107 10q 1022 first amended restated board directors 2005 deferred compensation plan 1016 123107 10q 1023 first amended restated 2005 executive deferral plan 1017 123107 10q 1024 second amended restated company 2005 supplemental income plan 1018 123107 10q 1025 stock option plan company appendix definitive proxy statement schedule 14a 2008 annual meeting code ethics 10k schedule company’s subsidiaries consent kpmg llp 311 rule 13a14a15d14a certification chief executive officer 312 rule 13a14a15d14a certification chief financial officer 321 section 1350 certification chief executive officer 322 section 1350 certification chief financial officer management contract compensatory plan required filed item 14c report item 601 regulation 5k securities exchange commission signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized pursuant requirements securities exchange act 1934 report signed following persons behalf registrant capacities dates indicated signature alexander mclean iii ken r bramlett jr alexander mclean iii chairman board ken r bramlett jr director chief executive officer principal executive officer date may 29 2009 date may 29 2009 kelly malson james r gilreath kelly malson senior vice president chief james r gilreath director financial officer principal financial accounting officer date may 29 2009 date may 29 2009 william hummers charles way william hummers iii director charles way director date may 29 2009 date may 29 2009 mark c roland darrell whitaker mark c roland president coo director darrell whitaker director date may 29 2009 date may 29item 15 exhibits financial statement schedules a1 following consolidated financial statements company report independent registered public accounting firm filed part annual report item 8 consolidated financial statements consolidated balance sheets march 31 2019 2018 consolidated statements operations fiscal years ended march 31 2019 2018 2017 consolidated statements comprehensive income fiscal years ended march 31 2019 2018 2017 consolidated statements shareholders equity fiscal years ended march 31 2019 2018 2017 consolidated statements cash flows fiscal years ended march 31 2019 2018 2017 notes consolidated financial statements reports independent registered public accounting firm a2 financial statement schedules provision made applicable accounting regulations sec required related instructions inapplicable required information included elsewhere consolidated financial statements a3 exhibits list exhibits filed part form 10k set forth exhibit index immediately preceding signatures form 10k incorporated reference item 15a3 b exhibits listed accompanying exhibit index filed part annual report form 10k c separate financial statements schedules financial statement schedules omitted since required information included consolidated financial statements contained item 8 annual report form 10k none exhibit index submitted electronically herewith management contract compensatory plan required filed item 15 report item 601 regulation sk securities exchange commission signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized pursuant requirements securities exchange act 1934 report signed following persons behalf registrant capacities dates indicateditem 15 exhibits financial statement schedules reports form 8k 1 following consolidated financial statements company report independent registered public accounting firm filed herewith consolidated financial statements consolidated balance sheets march 31 2006 consolidated statements operations years ended march 31 2006 2005 consolidated statements shareholders equity comprehensive income years ended march 31 2006 2005 2004 consolidated statements cash flows years ended march 31 2006 2005 notes consolidated financial statements reports independent registered public accounting firm 2 financial statement schedules provision made applicable accounting regulations securities exchange commission required related instructions inapplicable required information included elsewhere consolidated financial statements 3 exhibits following exhibits filed part report indicated previously filed incorporated herein reference filed herewith previously filed incorporated company exhibit reference previous registration number description exhibit number report 31 second amended restated articles incorporation 31 333107426 company amended 32 third amended restated bylaws company 993 32906 8k 41 specimen share certificate 41 3342879 42 articles 3 4 5 form companys second 31 333107426 amended restated articles incorporation amended 43 article ii section 9 company’s second amended restated bylaws 32 3342879 44 amended restated credit agreement dated july 20 2005 44 63005 10q 45 subsidiary security agreement dated june 30 1997 amended july 20 2005 45 93005 10q 46 company security agreement dated june 20 1997 46 93005 10q amended july 20 2005 47 fourth amendment subsidiary amendment restated 47 63005 10q security agreement pledge indenture trust ie subsidiary agreement 48 amended restated security agreement pledge indenture 48 93097 10q trust dated june 30 1997 company harris trust savings bank security trustee 49 third amendment amended restated security 49 93004 10q agreement pledge indenture trust dated august 27 2004 subsidiary security agreement 410 fourth amendment amended restated security agreement 410 93004 10q pledge indenture trust dated august 27 2004 company security agreement 101 amended restated employment agreement 101 63003 10q charles walters effective june 1 2003 102 amended agreement amended restated employment 102 63004 10q agreement charles walters effective january 28 2004 filed herewith previously filed incorporated company exhibit reference previous registration number description exhibit number report 1023 employment agreement alexander mclean iii effective 102 10k april 1 1994 104 first amendment employment agreement alexander 103 63003 10q mclean iii effective june 1 2003 105 amended restated employment agreement 104 63003 10q douglas r jones effective june 1 2003 106 securityholders agreement dated september 19 1991 105 3342879 company certain securityholders 107 world acceptance corporation supplemental 107 10k income plan 108 board directors deferred compensation plan 106 10k 109 stock option plan company 3352166 1010 stock option plan company amended 106 10k 1011 stock option plan company appendix definitive proxy statement schedule 14a 2002 annual meeting 1012 stock option plan company appendix b definitive proxy statement schedule 14a 2005 annual meeting 1013 companys executive incentive plan 106 10k 1014 world acceptance corporation retirement savings plan 41 33314399 1015 executive deferral plan 1012 10k code ethics 10k schedule company’s subsidiaries consent kpmg llp 311 rule 13a14a15d14a certification chief executive officer 312 rule 13a14a15d14a certification chief financial officer 321 section 1350 certification chief executive officer 322 section 1350 certification chief financial officer management contract compensatory plan required filed item 14c report item 601 regulation 5k securities exchange commission signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized pursuant requirements securities exchange act 1934 report signed following persons behalf registrant capacities dates indicated signature alexander mclean iii ken r bramlett jr alexander mclean iii chief executive officer ken r bramlett jr director date june 14 2006 date june 14 2006 kelly malson snape james r gilreath kelly malson snape chief financial officer james r gilreath director date june 14 2006 date june 14 2006 charles walters charles way charles walters chairman board directors charles way director date june 14 2006 date june 14 2006 william hummers william hummers iii director date june 14 2006item 15 exhibits financial statement schedules 1 following consolidated financial statements company report independent registered public accounting firm filed herewith consolidated financial statements consolidated balance sheets march 31 2007 2006 consolidated statements operations years ended march 31 2007 2006 consolidated statements shareholders equity comprehensive income years ended march 31 2007 2006 2005 consolidated statements cash flows years ended march 31 2007 2006 notes consolidated financial statements reports independent registered public accounting firm 2 financial statement schedules provision made applicable accounting regulations securities exchange commission required related instructions inapplicable required information included elsewhere consolidated financial statements 3 exhibits following exhibits filed part report indicated previously filed incorporated herein reference signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized pursuant requirements securities exchange act 1934 report signed following persons behalf registrant capacities dates indicated signature alexander mclean iii ken r bramlett jr alexander mclean iii chief executive officer director ken r bramlett jr director date may 25 2007 date may 25 2007 kelly malson snape james r gilreath kelly malson snape chief financial officer james r gilreath director date may 25 date may 25 charles walters charles way charles walters chairman board directors charles way director date may 25 date may 25 william hummers william hummers iii director date may 25item 15 exhibits financial statement schedules 1 following consolidated financial statements company report independent registered public accounting firm filed herewith consolidated financial statements consolidated balance sheets march 31 2014 2013 consolidated statements operations fiscal years ended march 31 2014 2013 2012 consolidated statements comprehensive income fiscal years ended march 31 2014 2013 2012 consolidated statements shareholders equity fiscal years ended march 31 2014 2013 2012 consolidated statements cash flows fiscal years ended march 31 2014 2013 2012 notes consolidated financial statements reports independent registered public accounting firm 2 financial statement schedules provision made applicable accounting regulations securities exchange commission required related instructions inapplicable required information included elsewhere consolidated financial statements 3 exhibits following exhibits filed part report indicated previously filed incorporated herein reference submitted electronically herewith management contract compensatory plan required filed item 15 report item 601 regulation sk securities exchange commission signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized world acceptance corporation alexander mclean iii alexander mclean iii chairman chief executive officer date june 12 2014 pursuant requirements securities exchange act 1934 report signed following persons behalf registrant capacities dates indicated signatureitem 15 exhibits financial statement schedules a1 following consolidated financial statements company report independent registered public accounting firm filed part annual report item 8 consolidated financial statements consolidated balance sheets march 31 2017 2016 consolidated statements operations fiscal years ended march 31 2017 2016 2015 consolidated statements comprehensive income fiscal years ended march 31 2017 2016 2015 consolidated statements shareholders equity fiscal years ended march 31 2017 2016 2015 consolidated statements cash flows fiscal years ended march 31 2017 2016 2015 notes consolidated financial statements reports independent registered public accounting firms a2 financial statement schedules provision made applicable accounting regulations sec required related instructions inapplicable required information included elsewhere consolidated financial statements a3 exhibits list exhibits filed part form 10k set forth exhibit index immediately preceding exhibits incorporated reference item 15a3 b exhibits listed accompanying exhibit index filed part annual report form 10k c separate financial statements schedules financial statement schedules omitted since required information included consolidated financial statements contained item 8 annual report form 10k none signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized pursuant requirements securities exchange act 1934 report signed following persons behalf registrant capacities dates indicated exhibit index submitted electronically herewith management contract compensatory plan required filed item 15 report item 601 regulation sk securities exchange commission