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World Acceptance Corporation. (NASDAQ:WRLD)

F4Q10 (Qtr End 03/31/2010) Earnings Call

April 29, 2010 10:00 am ET

Executives

Sandy McLean - Chairman, CEO

Mark Roland - President and COO

Kelly Malson - CFO

Analysts

Rick Shane - Jefferies & Company

David Burtzlaff - Stephens Inc

John Rowan - Sidoti & Company

Henry Coffey - Sterne, Agee & Leach

Dan Bandi - Integrity Asset Management

Tom Kaplan - East Shore Partners

Bill Dezellem - Tieton Capital Management

Operator

Good morning, and welcome to the World Acceptance Corporation’s sponsored fourth quarter press release conference. Today’s call is being recorded. At this time, all participants have been placed on listen-only mode. A question and answer session will follow the presentations by the Corporation’s CEO and its officers.

Before we begin, the Corporation has requested that I make the following announcement. The comments made during this conference may contain certain forward-looking statements within the meaning of Section 27A of the Securities and Exchange Act that represent the Corporation’s expectations and beliefs concerning future events. Such forward-looking statements are about matters that are inherently subject to risks and uncertainties.

Factors that could cause actual results or performance to differ from the expectations expressed or implied in such forward-looking statements include changes in the timing, amount of revenues that may be recognized by the Corporation, changes in current revenue and expense trends, changes in the Corporation’s market and changes in the economy. Such factors are discussed in greater detail in the Corporation’s filings with the Securities and Exchange Commission.

At this time, it’s my pleasure to turn the floor over to your host, Sandy McLean, Chairman and CEO.

Sandy McLean

Thank you, operator. Welcome to the World Acceptance Corporation fourth quarter conference call. As operator said, I’m Sandy McLean, the company’s Chairman and CEO. With me are Mark Roland, our President and COO; and Kelly Malson, our Chief Financial Officer; along with other members of our management team. As we have done in the past, I will spend a few minutes reviewing the quarterly and annual results after which we will be happy to answer any questions.

Throughout fiscal 2010, we are seeing significant improvement in our operational performance when compared to fiscal 2009. We are very pleased that this trend continued during the fourth quarter as well. We are glad to be able to report the continued expansion of our office network, excellent growth in our receivable portfolio, ongoing control of our operating expenses as well as continued improvement in our loan loss ratios.

Net income for the recent fourth quarter was $29.7 million or $1.76 per diluted share, compared to $26.3 million or $1.63 per diluted share for the fourth quarter of fiscal 2009. This represents the 12.6% increase in net income and an 8.6% increase in net income per diluted share when comparing the two quarterly periods.

Net income and earnings per share for the fourth quarter of fiscal 2009 were revised from $428 million and $1.72 respectively due to its change in the accounting principles for the company’s convertible notes. Additionally, the fourth quarter of fiscal 2009 included approximately $2.6 million in gains from interest rates swaps and debt repurchases, whereas the current quarter had no significant gains of this nature.

If excluding these gains from both quarterly periods, net earnings in EPS would have increased by 19.8% and 15.9% respectively when comparing the two quarterly periods. For the full fiscal year, net income were $73.7 million or $4.45 per diluted share representing a 30.4% and 29.7% increase in net income and EPS respectively over the $56.5 million and $343 per share earned during fiscal 2009.

Fiscal 2009 earnings and EPS were revised from $60.7 million and $369 due to the accounting change. Additionally, fiscal 2010 earnings included $3.3 million in non-operating gains compared to $4.7 million in summer gains during the prior fiscal year. Gross loans amounted to $770.3 million at March 31, 2010; a 14.8% increase over the $671.3 million outstanding at March 31, 2009.

This is a substantial improvement in the year-over-year growth rate of 12.0% at the end of the prior fiscal year. Additionally, the 14.8% increase in outstanding loans resulted from an 8.6% increase in the number of loans outstanding compared with a 6.3% increase in the average balance of those loans. Well acquisitions continued to be an important factor in our overall growth strategy, the company did not make any significant purchases during fiscal 2010.

There were a number of small purchases amounting to 6269 accounts and $3.9 million in loan balances. These accounts were spread among 22 offices, one of which represented a new location. Well, for comparison purposes during fiscal 2009, the company purchased approximately 9000 accounts and $10.9 million in gross loans in 22 offices, of these 11 were new locations.

As planned and previously disclosed, we greatly reduced our branch office expansion during the fiscal 2010. We began fiscal 2010 with 944 offices; we opened 48 offices acquired one and merged three giving us a total of 990 offices at March 31, 2010. Of the 48 De Novo offices, 31 were in the US and 17 were in Mexico. Because of the accelerated office opens and acquisitions during the previous year a 106, a 106 and 112 net new offices in fiscal 2009, 2008, 2007 respectively.

We intentionally slowed this growth for fiscal 2010 to strengthen our middle management which has become somewhat stressed in recent periods. Our plans for fiscal 2011 are to open 55 offices in the US and 15 offices in Mexico, plus evaluate acquisitions as opportunities arise. Total revenue for the current quarter amounted to a $123.9 million, a 9.8% increase over the $112.8 million during the fourth quarter of fiscal 2009. For fiscal 2010, total revenue grew by 12.4% to $440.6 million compared to $393.2 million for fiscal 2009.

This corresponds to a 14.2% and 13.7% increase in average net loans when comparing to two quarterly and annual periods respectively. Revenues from the 834 offices opened throughout both annual periods increased by 8.1%. Revenues from our tax preparation business grew by 8.4% during the fourth quarter of fiscal 2010, although there were only a slight increase in the number of returns prepared. During the current tax season, we completed approximately 62,000 returns compared to approximately 61,000 returns during the prior year fourth quarter.

All this represents only 1% increase we consider this a big success as most preparers saw significant declines in the number of returns prepared. Net fees generated from our tax preparation amounted to $10.2 million during the recent quarter and 8.3% increase over the $9.4 million during the prior year quarter. As we have noted on numerous occasions, loan delinquencies and charge-offs will always remain a primary area of management concern and focus.

Accounts that were 61 days or more past due to the decrease from 2.7% to 3.4% on a recency basis and from 4.2% to 3.8% on a contractual basis when comparing the two year end statistics. During each quarter of the current fiscal year, we have seen a reduction in our year-over-year loan losses. Annualized net charge-offs as a percentage of average net loans decreased from 15.1% during the fourth quarter of fiscal 2009, 13.6% during the most recent quarter.

This is much more inline with historical fourth quarter charge-off ratios and in fact much lower than (historical). These ratios were 15.4%, 14.4%, 13.6% and 13.9% during the fourth quarter of fiscal 2002, 2003, 2004 and 2005 respectively. For the year ended March 31, 2010; net charge-offs to average net loans were 15.5% compared to 16.7% for the prior fiscal year. We believe that we will continue to see slight improvement in our loss ratios in the near future.

However, there is no assurance they will return to historical levels anytime soon. General and administrative expenses amounted $56.4 million in the fourth fiscal quarter, a 9.8% increase over the $51.3 million in the same quarter of 2009. As a percentage of revenues, they were 45.1% the same as they were during the prior year quarter. But the year ended March 31, 2010, G&A expenses increased by 8.4% to $217 million from $200.2 million for the prior year.

As a percentage of revenue, they decreased from 49.2% from 51.1% over the two yearly periods. Our G&A per average open office increased by only 0.8% when comparing to two fiscal years. Our expense ratios have benefited from our more moderate office expansion during the current year. During fiscal 2010, the company opened or acquired 49 new offices compared to 109 in fiscal 2009.

Highlights of our expansion in Mexico includes the following, 80 offices were opened as March 31, 2010; an increase of 15 during the current quarter and 17 during the year. At the year end, we had 77,225 accounts in approximately $33.1 million in gross loans outstanding; a 65.6% increase over the $20 million at March 31, 2009. Our gross and loan balances has measured a US dollar benefited from the change of the exchange rate as the value of the dollar declined against the Mexican peso during the year. This was a reversal of the trend that we experienced during fiscal 2009.

We had net charge-off of approximately $3 million during the year or 17.2% of average net loans. The increase in net charge-off during the year was primarily due to the management issues resulting from our rapid expansion primarily in moderate region that have been discussed in previous quarters. Steps have been taken to relive these issues that we expect our charge-off ratios in Mexico to return to reduced levels as we enter the new fiscal year.

At 61 plus day delinquencies were 3.7% and 4.8% on the recency and contractual basis respectively. During the current year, the Mexican subsidiary has evolved for approximately 154,000 which we believe is still very reasonable in a rapidly expanding market. We expect Mexico to provide a positive contribution in fiscal 2011 earnings. Finally, the company’s return on average assets of 12.7% and return on equity of 22.1% during the year remained consistent with the company’s historical trend.

Before opening the call to questions, I would like to give a brief overview of the regulatory of legislative landscape. As you know, legislative risks have always been our most significant company risk. This is a risk that we have successfully managed throughout our company’s history. At the state level, there is very little activity that would have a negative impact on our business. There is a bill that was introduced in Illinois Senate that would establish a capital interest rates but this would have only a limited impact of the long products we offer.

At the federal level, the company is uncertain of the impact that it purposed Consumer Financial Protection Agency will have on its future. As you know, the House passed the Financial Services Reform Bill several months ago. And the Senate is prepared to take up debate on Senator Dodd’s bill next week. Both of these bills provide for consumer protection agency which is likely to be created in some form. While the proposed bills do not currently provide the authority to establish rate caps. We do not know at this point, if this agency will ultimately limit in other ways our ability to offer small loan products to those customers detail.

We will continue to be active with American Financial Services Association and National Installment Lenders Association that were with this agency if created and other regulatory bodies to demonstrate the need for our products and services. At this time many of us would be more than happy to answer any questions. Operator?

Question-and-Answer Session

Operator

Thank you. The question and answer session will be conducted electronically. (Operator Instructions). We will take our first question from Rick Shane with Jefferies & Company.

Rick Shane - Jefferies & Company

Can we just look at Illinois a little bit more closely? You've made some sort of high level comments. There is a bill that's proposed. What do you think the legislative policy intent there is? And then if you can put, to the extent there is a rate cap, talk about where your rates are in Illinois versus the proposed cap?

Sandy McLean

I mean I can’t say that what the intent is, I suspect it is an ongoing attempt to more regulate the payday lending industry where a specific bill was passed in the past and a lot of those companies have begun to offer products under the normal installment loan (inaudible) as a way to get around that previous call but the bill has presented, does have a 99%, 100%, 99% maximum rate which really we don’t necessarily support rate caps but we are not necessarily opposed to that bills in the sense that we have very, very few loans that would exceed that rate. That would only be very small short-term loans.

So, we do not anticipate the bill is written to be a serious negative financial burden to us going forward. We are not happy with the proposed database that they are requiring but those of we have databases through our credit viewers and so forth. But that’s the direction that we are going into state and so be it. But anyway I hope that answers your question.

Rick Shane - Jefferies & Company

It does. So your conclusion is that this is an installment bill that is intended to eliminate some loopholes for ancillary products, not really your core product?

Sandy McLean

I will believe it’s their intend to eliminate the installment loan product in the sense that there was a lot of discussions that just place prior to the introduction of the bill and if it does discussions that and then which our freight association was involved. So, I don’t believe if we were the targets of that bill and we would be that actively involved in those discussions.

Rick Shane - Jefferies & Company

Got it. And my understanding and correct me if I'm wrong, is that the Trade Association is actually supporting that bill?

Sandy McLean

We are definitely not opposed to it. I am not sure to the extend how actively they are supporting it, but we are opposed.

Operator

Our next question comes from David Burtzlaff with Stephens.

David Burtzlaff - Stephens Inc

Few questions here. First, Sandy, can you talk a little bit about what's going at the South Carolina. Have they closed the loophole for payday lenders trying to go to the supervised lending law?

Sandy McLean

The bill has come out of the Senate and it is not yet been introduced in the House. But there seems to be an effort to do something similar to that.

David Burtzlaff - Stephens Inc

And then the occupancy costs in the fourth quarter were down like 10% sequentially from the third quarter, yet you're still opening stores. Is there something going on in that line item?

Sandy McLean

I am not prepared to answer that question. I am sorry. We are 6.7% on a year-over-year basis and I am talking after that. It does look little unusual, we did open very substantial number of offices in the fourth quarter but it was a lateral part of the fourth quarter.

I would like to give facts with you on that but I am not prepared to answer that at this point.

David Burtzlaff - Stephens Inc

Okay. And then finally in Mexico, your stores along the border, how are they still performing, I mean, given either the violence going on there or more customers maybe returning, going back home to the interior because of the recession and less jobs?

Sandy McLean

Well, of course our original point of entry was Juarez where there are certainly a great deal of turmoil that taking place and those offices are performing when you say more better than any other that we have. Our primary concerns, our issues have taken place in the moderate region where there is a lot more competition. So, there has not been an impact on our operations there as a result of the violence that’s taking place but we had more of an impact as a result of the unemployment that is taking place where the economy down there has been hit. It substantially, it probably worse than it has here.

David Burtzlaff - Stephens Inc

And that’s the Monterey.

Sandy McLean

That’s throughout.

Operator

Our next question comes from John Rowan with Sidoti & Company.

John Rowan - Sidoti & Company

Two quick question maybe, Kelly. What was the reason for the jump in the tax rate and what do you expect it going forward?

Kelly Malson

Regarding the tax rate between the third quarter and the fourth quarter, one of the deals was the 748 and basically how the accounting rules treat when you can with at least reserves related to that you expiring and when you add the 748 exposure to any new item.

Sandy McLean

In fact I want to add to that, that’s also when we do our state true-ups and it turned out this year that the state taxes because of the differences among the various state rates turned out to be a little higher than we expected.

John Rowan - Sidoti & Company

Okay. And what would you expected. Is that in your run rate or will it turn back down a little bit?

Sandy McLean

I would think for the full year, we would anticipate of the current annualized rate would be very close to what you should have anticipated yesterday this year and that’s 38.3% to 38.5% range.

John Rowan - Sidoti & Company

Okay. Sandy, you went over a couple of things and I didn't get them all down, but the 15% loan growth, I know you broke it up into a 6.2% increase in loan balance, but what was the rest of that?

Sandy McLean

I was just trying to give an idea of the how the mix before changed, but we had an 8.6% increase in the number of outstanding loans and customers and a 6.2% increase in the average balance of those loans.

Operator

We will move on Henry Coffey with Sterne, Agee.

Henry Coffey - Sterne, Agee & Leach

Thank you for pulling off quite a great year. You've been a big buyer of your converts. Can you do a couple of things for us on that? Tell us how much you bought back this year and what is both the accounting and the contractual balance of that security?

Kelly Malson

From a contractual standpoint we are getting balances $77 million year-to-date, we repurchase $18 million par value versus $15 million of par value in the prior year. And the net balance when you take into consideration APB 14-1 is roughly $71.5 million.

Sandy McLean

Last year at the beginning of this fiscal year we followed back quite a bit. A substantial gains but due to the change in our stock price and so for the current any purchases that we would do right now would end up in losses.

Henry Coffey - Sterne, Agee & Leach

No. What is your case for stock buybacks in this environment?

Sandy McLean

We have always felt that. Stock repurchases is a really good use of our funds available to access funds. We believe that with the current price and our expected earnings that these any purchases we do right now would be very accretive to earnings. We currently have a $13.5 million authorization by the board and I would anticipate going forward that we would be active in repurchasing stocks.

Henry Coffey – Sterne, Agee & Leach

Do you think they're likely to let you increase the buyback authorization above that 13 or how do they tend to manage that?

Sandy McLean

They have been able to resistant to it in the past when we requested additional authorization.

Operator

(Operator Instructions). And we will move to Dan Bandi with Integrity Asset Management.

Dan Bandi - Integrity Asset Management

I echo Henry's congratulations on the quarter and the year. And we certainly appreciate it. Sandy, I'm wondering, and I guess it's probably a hard question to answer, but when you look at the Consumer Financial Protection Act or your Trade Group maybe that's a fairer way to ask it, looks at that, what do they see as the biggest risk coming out of this? And then kind of what's their strategy to try to neutralize that?

Sandy McLean

Well, the biggest risk obviously is during debate in the Senate bill or in the reconciliation if and when the Senate bill passes and the reconciliation between the Senate, the House bill they are ultimately, the authority is given to this agency or bureau to set rates. And for some reason the head of this agency has the authority to do so without proper review and control then they're establishing some kind arbitrary rate of 36% or lower or higher. We have the experienced detrimental impact on that financial stability. So, that’s the worst case scenario.

Dan Bandi - Integrity Asset Management

And beyond that, I mean, if you assume, as it's currently written where there is no rate cap, I guess is there more concern that they just prohibit a product like yours?

Sandy McLean

Well, some much depends upon the nature and the authority that this agency has given. There are people out there that don’t necessarily like the products that we all because they don’t understand the nature of rates and the fact that only small loan with short-term you need APR to cover your fixed cost. And there are people that thank in regards to anything over certain percentages. It shouldn’t be allowed or the people should not given the choice to make that loan or not to take loan. And our concern is that this agency has created and it’s given the authority to do that and then that type of individual is put into position to make these decisions and at this level its national roll or allow our regulation and then there is no fighting it.

So, that’s your worst case scenario. Now, do I personally believe that’s going to take place. No, I do not but so much depends on what happens in the next few weeks in the Senate ultimately what happens in the reconciliation between the Senate and the House and we got a long way to go in this process.

Dan Bandi - Integrity Asset Management

And the Trade Group in terms of their strategy, I mean, I understand they're lobbying, but is there a certain angle they're taking on this to try to prevent that from happening?

Sandy McLean

Certainly, I mean to a lot of the people in Washington don’t even know that the small loan business exist. We are only operating certain states where the laws are there to provide the alternate rates that allow these small loans to also to people that really can’t get bank credit or under banks. So, it’s up to us to educate people on the service that we are provide, the products we provide and to convince them that these products are necessary and without a very large segment of population will not have access to credit and I think that would be very detrimental to the country going forward.

It’s our job to get with as many legislators and regulators to educate them about our company, our industry and our products.

Dan Bandi - Integrity Asset Management

Okay. And then on Mexico, I don't know if you've mentioned this or not. You mentioned the loss for the year, was Mexico profitable in Q4?

Sandy McLean

One second, it’s profitable on a pretax basis but because of the timing, issues and permanent issues and so forth down there, the tax is (inaudible) into a loss situation but there was actually profitability for the quarter. It was very just a small amount of money.

Kelly Malson

And for the fourth quarter the after tax loss was only $60,000.

Dan Bandi - Integrity Asset Management

Okay. So you're still running around breakeven then on a run rate?

Sandy McLean

That is correct and we would anticipate that change in this year.

Dan Bandi - Integrity Asset Management

And Sandy, you had talked about kind of addressing the management issues down there and maybe expecting credit losses to come down. Just curious, so it seems like your expansion plans are pulled back a little bit in Mexico, even on a numbers and also on a percentage of the basis. Is that purely do to the management and personnel?

Sandy McLean

It’s well if you think from a number standpoint we have rejected 15 last year and ended up opening 17. And we are projecting 15 again this year and the 15 is on the base of 80 and last year it was on the base of 63. So, from a percentage standpoint it is smaller but that is certainly as a result of the rapid expansion in and so forth. But we have hired a couple really good outside people from a high level Vice President to regional Vice President that we believe will help Javier quite a bit. He’s had quite a job as this thing is grown from zero to 80 offices in a mere four years.

So, I think that we are in a much better position in Mexico as we enter fiscal 2011 than we have been for sometime.

Dan Bandi - Integrity Asset Management

Okay. And just on the overall credit front across the firm, this quarter was, as you mentioned, better than some of the previous quarters, even kind of better than a normalized basis. Just I'm curious, one, any thoughts as to why you think that is with unemployment still at whatever it is. And I know things are always tough in kind of your customer space, but certainly there's been continued improvement there and we haven't seen improvement in unemployment, you haven't seen improvement really in gasoline prices, and many other factors.

So I'm curious of your thoughts there and then if you think that going forward that kind of indicates that maybe we could expect better than normalized credit next year, or as we're looking at it, just kind of expect maybe more normal type credit losses next year?

Sandy McLean

Those are the timing so forth. I wouldn’t put a whole lot of faith in any change in anyone given quarter and we are very, very encouraged that we have had four consecutive quarters of vast improvement. And we are very encouraged that our off ratios dropped from 16.7% in fiscal 2009 to 15.5 in fiscal 2010. But I’m not going to go a lot further than that, as I said in the comments earlier that we expect in the near term to see improvements that we would love to say and go back to historical levels of 14.5%. We are just starting to position to predict that and certainly don’t know if and when will that take place.

And why we've seen this improvement its something that we have had a lot of discussions about it internally and I think the best answer is that because of the short term nature of these loans, the unemployment has been half of quite sometime then, I don’t know its actually rising. But as we bring in new customers, the customers will look at have an income and they are of some sort, either fixed income or job and those who have lost their jobs it’s probably written off of our books last year or some other time. So, unless we continue to see a deteriorating unemployment picture which does it appear to be the case, all indications all that we are little bit this recession is behind us and then it may take sometime but employment is improving. And they would not anticipate, we certainly not making loans unemployed individuals.

So, I don’t know I have rambling or if that answers your question but that’s the best I can do.

Operator

From East Shore Partners we will take Tom Kaplan

Tom Kaplan - East Shore Partners

I just have a simple question on the expense line items, and I just do a calculation of recorder which kind of looks at personnel expense divided by average units. And I noticed that number, and you said to trust my math, was up almost 5.5% in the most recent quarter and was at the highest in about the last seven quarters. And I'm just wondering is there something going on in terms of manager salary at the office level or just if you could shed a little light on that?

Sandy McLean

This would be difficult. I can tell you that no there is not. We have not increased, I mean our management structure is very similar to what it has been forever. Our supervisor will manage nine to 11 offices, Vice President will manage state or in Texas or third of the state or whatever. So, and certainly we have not done any across the board to increase it. I think that they could be impacted because of the number of offices that we opened in the last quarter. I think of the 17 offices we opened in Mexico although one or two of them were opened during the fourth quarter.

So, I think somewhat to accelerate the timing issue and also I think its our bonus accruals during the quarter were up from prior year as well as earlier because we certainly ended up during the year on operational basis much better than we did last year and we anticipated it as we began this year.

So, I think it’s a combination of many factors, but those are the two that I think talk about the best right now.

Tom Kaplan - East Shore Partners

Okay, fair enough. It's just that I'm trying to get a sense of what the personnel run rate is and given that there was a 12% sequential increase versus a 1% increase in offices opened, I don't know what to do with that going forward. So I'm just looking for a little color. Is that 38 a good run rate?

Sandy McLean

If you look at our G&A to revenue it is consistently come down overtime. I mean necessarily we look at personal cost at all levels but I never have really thought about it in the terms you are saying, we think answer that question little bit for Don but.

Tom Kaplan - East Shore Partners

Okay. Only because it's the largest expense item by quite a bit.

Operator

(Operator Instructions). And we will move now to Bill Dezellem with Tieton Capital Management.

Bill Dezellem - Tieton Capital Management

Thank you. Interestingly, my first question actually dovetails on the last questioner's question and it seems as though the personnel cost goes up seasonally in the fourth quarter. In the Q4 of last year, it also jumped from the Q3. And so I guess my question is a little different angle, which is what is it that causes the personnel cost to increase on a seasonal basis into Q4?

Sandy McLean

Well, primarily that’s if you know that’s also the quarter we make the most money and that’s all of our management team gets a bonus based on the profitability of offices. So, as their profitability of the branch level increases not only from the number of payoffs that we get as a result of tax season but the tax season that go in there been that’s the most profitable time of the year at the branch level. So therefore, branch bonus is on the highest during that time of the year.

Bill Dezellem - Tieton Capital Management

And then the second question is following up relative to Mexico, it seems from your comments that you are feeling as though you have pretty well got your growing pains under control. Is that a fair interpretation, Sandy?

Sandy McLean

I think that might be an overstatement. I don’t know we have everything under control. I feel like that we have made a lot of progress through that end and we didn’t feel like we will make a lot of progress than we would not continue our office expansion as we planned it currently. But we believe with the additional personnel at the management level, senior and middle management level that we are in a much better position to manage this growth going forward.

Bill Dezellem - Tieton Capital Management

And Sandy, I tend to think of Mexico as just Mexico, but as you pointed out, Monterey is different than Juarez, and so with the 15 offices that you're planning on opening in fiscal '11, would it be fair to interpret that those openings are taking place in regions in Mexico that you are more comfortable with the management situation and the dynamics down there?

Sandy McLean

We are going into some new territories but we are never going to a place that we feel uncomfortable as we enter. And also as in the United States some offices turn out better than others as far as their growth and the time it takes to become profitable and so forth. But we always go through analysis and we feel like the locations we picked should be successful locations.

Bill Dezellem - Tieton Capital Management

Thank you. And then finally, relative to acquisitions, you had mentioned that you really didn't have much of significance in fiscal '10. As you look out to fiscal '11, do you see factors that either are or might be leading to additional pressure on sellers which, if we understand your business correctly, that's really where acquisitions come from is the sellers making the decision. So presumably, it's pressure on the seller in some fashion. Do you see some overriding factor that's worthy of mentioning there?

Sandy McLean

I think we are overwriting a factor that I could come up with I think would be what happens in the credit markets and the availability of funding for these small independent operators. Well, other banks have made it more difficult to lend and those that are lending are doing so at higher rates. Yes, in fact some of these smaller independent operators are having difficulty with their lending relationship or being squeezed because of the additional cost of money. And that certainly could lead to opportunities that we did not see last year but there is no indication at this point in time that’s going to take place.

Operator

(Operator Instructions). And we have a follow-up from Henry Coffey.

Henry Coffey - Sterne, Agee & Leach

Thank you. Going back to the regulatory level at the federal level, I'm sure you guys are sort of closer to these issues than we are, but the House version actually specifically prohibited rate cap. Do you get any feeling from your own organization what sort of compromises occurred in the sort of 48 hours that allowed the Republications to let the bill go forward, or is that IBC, it's all very micromanaged, but it's kind of interesting, the original House version prohibited rate cap, and you actually had people in the House with very positive payday loan regulation.

So it's hard to figure out where the compromises are right now. I was wondering if you had any kind of on-the-spot views or have heard anything in the last couple of days as to what triggered the Republicans to allow the bill to go forward?

Sandy McLean

Well, I think it certainly, we are very interested in what goes on and we are involved on hourly basis to make sure we know. But I don’t believe that the Republican solve that they could indefinitely prohibit this field going to the floor for discussion in hostile amendments and so forth. And I think that they did so initially to try to encourage more partners in discussion and I think those discussions took place. I think they were probably some things that were some compromises done on the derivatives front. And I certainly came begin to tell all of the items in the 1400 to 2000 page bill. But I think it got to the point that further compromise was not going to take place prior to forward discussion.

So, at that point in time I believe that the Republican will say okay, let’s go forward, take it to the poll and start discussing and see what we can do.

Operator

It appears we have no further questions at this time. I would like to turn the call back over to our speaker for any additional or closing remarks.

Sandy McLean

I just appreciate you being here today. Operator?

Operator

Thank you for your participation. Before concluding this morning’s teleconference, the Corporation has asked to again remind you that the comments made during this conference may contain certain forward-looking statements within the meaning of Section 27A of the Securities and Exchange Act that represents the Corporation’s expectations and beliefs concerning future events. Such forward-looking statements are about matters that are inherently subject to risks and uncertainties. Factors that could cause actual results or performance to differ from the expectations expressed or implied and such forward-looking statements include changes in the timing amount of revenue that may be recognized by the Corporation.

Changes in current revenue and expense trends, changes in the Corporation’s market and changes in the economy. Such factors are discussed in greater detail in the Corporation’s filing with the Securities and Exchange Commission. This concludes the World Acceptance Corporation quarterly teleconference.

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Source: World Acceptance Corporation F4Q10 (Qtr End 03/31/2010) Earnings Call Transcript
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