UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1999
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT of 1934
For the transition period from to
---------------------- ---------------------
Commission File Number: 0-19599
WORLD ACCEPTANCE CORPORATION
-------------------------------------------------------
(Exact name of registrant as specified in its charter.)
South Carolina 57-0425114
--------------------------------- -------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
108 Frederick Street
Greenville, South Carolina 29607
----------------------------------------
(Address of principal executive offices)
(Zip Code)
(864) 298-9800
----------------------------------------------------
(registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for shorter period than the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
[X] Yes [ ] No
Indicate the number of shares outstanding of each of issuer's classes of common
stock, as of the latest practicable date, February 9, 2000.
Common Stock, no par value 19,025,573
- ------------------------------ ----------------------
(Class) (Outstanding)
1
<PAGE>
WORLD ACCEPTANCE CORPORATION
AND SUBSIDIARIES
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
PAGE
<S> <C> <C>
Item 1. Consolidated Financial Statements (unaudited):
Consolidated Balance Sheets as of December 31,
1999, and March 31, 1999 3
Consolidated Statements of Operations for the
three-month periods and nine-month periods ended
December 31, 1999, and December 31, 1998 4
Consolidated Statements of Shareholders' Equity
for the year ended March 31, 1999, and the nine-month
period ended December 31, 1999 5
Consolidated Statements of Cash Flows for the three-month periods
and nine-month periods ended December 31, 1999, and
December 31, 1998 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations for the three-month
periods and nine-month periods ended December 31, 1999,
and December 31, 1998 8
Item 3. Quantitive and Qualitative Disclosures about market risk 12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Changes in Securities 13
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 16
</TABLE>
2
<PAGE>
WORLD ACCEPTANCE CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, March 31,
1999 1999
------------- ---------
ASSETS (Unaudited)
<S> <C> <C>
Cash $ 3,027,347 1,236,207
Gross loans receivable 182,899,686 149,570,861
Less:
Unearned interest and fees (41,184,665) (32,231,831)
Allowance for loan losses (10,465,721) (8,769,367)
-------------- --------------
Loans receivable, net 131,249,300 108,569,663
Property and equipment, net 6,761,016 6,299,662
Other assets, net 8,281,177 7,536,987
Intangible assets, net 10,040,929 9,827,885
------------ -------------
$ 159,359,769 133,470,404
============ ===========
LIABILITIES & SHAREHOLDERS' EQUITY
Liabilities:
Senior notes payable 90,250,000 71,150,000
Other note payable 482,000 482,000
Income taxes payable 292,950 1,940,091
Accounts payable and accrued expenses 4,839,399 5,206,483
---------- -------------
Total liabilities 95,864,349 78,778,574
------------ -------------
Shareholders' equity:
Common stock, no par value - -
Additional paid-in capital 968,666 935,921
Retained earnings 62,526,754 53,755,909
------------ -------------
Total shareholders' equity 63,495,420 54,691,830
------------ -------------
$ 159,359,769 133,470,404
============ =============
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
WORLD ACCEPTANCE CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended Nine months ended
December 31, December 31,
------------------------------- -------------------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Interest and fee income $ 22,701,793 20,784,775 64,728,962 58,524,057
Insurance and other income 4,228,754 3,051,166 12,041,417 7,727,586
------------ ------------- ------------ -------------
Total revenues 26,930,547 23,835,941 76,770,379 66,251,643
------------ ------------- ------------ -------------
Expenses:
Provision for loan losses 5,540,330 4,261,642 13,152,128 9,733,276
------------ ------------- ------------ -------------
General and administrative expenses:
Personnel 9,605,213 9,013,178 29,111,530 26,965,675
Occupancy and equipment 1,745,307 1,629,300 5,154,222 4,821,281
Data processing 387,004 344,975 1,117,031 1,065,645
Advertising 1,660,173 1,643,864 3,226,004 3,376,122
Legal 175,451 98,288 352,421 5,785,468
Amortization of intangible assets 378,153 335,007 1,092,756 962,084
Other 1,934,255 1,947,729 5,855,837 5,656,821
------------ ------------- ------------ -------------
15,885,556 15,012,341 45,909,801 48,633,096
------------ ------------- ------------ -------------
Interest expense 1,582,876 1,456,033 4,401,605 4,083,371
------------ ------------- ------------ -------------
Total expenses 23,008,762 20,730,016 63,463,534 62,449,743
------------ ------------- ------------ -------------
Income before income taxes 3,921,785 3,105,925 13,306,845 3,801,900
Income taxes 1,336,000 1,052,000 4,536,000 1,285,000
------------ ------------- ------------ -------------
Net income $ 2,585,785 2,053,925 8,770,845 2,516,900
============ ============= ============ =============
Net income per common share:
Basic $ .14 .11 .46 .13
============ ============= ============ =============
Diluted $ .14 .11 .46 .13
============ ============= ============ =============
Weighted average common shares outstanding:
Basic 19,019,703 19,016,573 19,017,616 19,008,861
============ ============= ============ =============
Diluted 19,140,205 19,181,261 19,177,901 19,206,356
============ ============= ============ =============
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
WORLD ACCEPTANCE CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
Additional
Paid-in Retained
Capital Earnings Total
----------- --------- --------
<S> <C> <C> <C>
Balances at March 31, 1998 $ 864,968 46,436,312 47,301,280
Proceeds from exercise of stock options (18,000 shares),
including tax benefit of $18,453 70,953 - 70,953
Net income - 7,319,597 7,319,597
----------- ------------ -----------
Balances at March 31, 1999 $ 935,921 53,755,909 54,691,830
----------- ---------- ----------
Proceeds from exercise of stock options (9,000 shares),
including tax benefit of $6,495 32,745 - 32,745
Net income for the nine months - 8,770,845 8,770,845
----------- ------------ -----------
Balances at December 31, 1999 $ 968,666 62,526,754 63,495,420
=========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
WORLD ACCEPTANCE CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended Nine months ended
December 31, December 31,
-------------------------- -------------------------
1999 1998 1999 1998
---- ---- ---- ----
Cash flows from operating activities:
<S> <C> <C> <C> <C>
Net income $ 2,585,785 2,053,925 8,770,845 2,516,900
Adjustments to reconcile net income
to net cash provided by operating activities:
Provision for loan losses 5,540,330 4,261,642 13,152,128 9,733,276
Amortization of intangible assets 378,153 335,007 1,092,756 962,084
Amortization of loan costs and discounts 24,076 29,524 73,918 90,217
Depreciation 390,039 344,058 1,095,649 1,054,302
Change in accounts:
Other assets, net (156,588) 104,880 (818,108) 19,960
Income taxes payable (562,970) 1,736,291 (1,640,646) -
Accounts payable and accrued expenses 547,655 (719,341) (367,084) 2,849,046
----------- ------------ ------------ -----------
Net cash provided by operating activities 8,746,480 8,145,986 21,359,458 17,225,785
----------- ----------- ----------- -----------
Cash flows from investing activities:
Increase in loans, net (18,234,709) (18,969,750) (32,608,353) (30,206,973)
Net assets acquired from office acquisitions,
primarily loans (706,473) (2,655,063) (3,256,510) (3,640,338)
Purchases of premises and equipment (357,464) (314,100) (1,523,905) (1,315,177)
Purchases of intangible assets (185,000) (895,298) (1,305,800) (1,272,748)
----------- ----------- ----------- -----------
Net cash used by investing activities (19,483,646) (22,834,211) (38,694,568) (36,435,236)
----------- ----------- ------------ -----------
Cash flows from financing activities:
Proceeds of senior notes payable, net 16,200,000 18,900,000 23,100,000 23,450,000
Repayment of senior term notes (4,000,000) (4,000,000) (4,000,000) (4,000,000)
Proceeds from exercise of stock options 26,250 - 26,250 52,500
----------- ----------- ----------- -----------
Net cash provided by financing activities 12,226,250 14,900,000 19,126,250 19,502,500
----------- ----------- ----------- -----------
Increase in cash 1,489,084 211,775 1,791,140 293,049
Cash, beginning of period 1,538,263 1,293,885 1,236,207 1,212,611
----------- ----------- ----------- -----------
Cash, end of period $ 3,027,347 1,505,660 3,027,347 1,505,660
=========== =========== =========== ===========
Supplemental disclosure of cash flow information:
Cash paid for interest expense $ 1,226,879 1,474,498 4,075,510 4,248,206
Cash paid for income taxes 1,898,970 295,500 6,176,646 4,048,885
Supplemental schedule of noncash financing activities:
Tax benefits from exercise of stock options 6,495 - 6,495 18,453
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE>
WORLD ACCEPTANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
NOTE 1 - BASIS OF PRESENTATION
The consolidated financial statements of the Company at December 31, 1999,
and for the periods then ended were prepared in accordance with the instructions
for Form 10-Q and are unaudited; however, in the opinion of management, all
adjustments (consisting only of items of a normal recurring nature) necessary
for a fair presentation of the financial position at December 31, 1999, and the
results of operations and cash flows for the three and nine-month periods then
ended, have been included. The results for the three and nine-month periods
ended December 31, 1999, are not necessarily indicative of the results that may
be expected for the full year or any other interim period.
These consolidated financial statements do not include all disclosures
required by generally accepted accounting principles and should be read in
conjunction with the Company's audited financial statements and related notes
for the year ended March 31, 1999, included in the Company's 1999 Annual Report
to Shareholders.
NOTE 2 - COMPREHENSIVE INCOME
The Company applies the provision of Financial Accounting Standards Board's
(FASB) Statement of Financial Accounting Standards (SFAS) No. 130 "Reporting
Comprehensive Income." The Company has no items of other comprehensive income;
therefore, net income equals comprehensive income.
NOTE 3 - ALLOWANCE FOR LOAN LOSSES
The following is a summary of the changes in the allowance for loan losses
for the periods indicated (unaudited):
<TABLE>
<CAPTION>
Three months Nine months
ended December 31, ended December 31,
--------------------------- --------------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Balance at beginning of period $ 9,602,961 8,908,102 8,769,367 8,444,563
Provision for loan losses 5,540,330 4,261,642 13,152,128 9,733,276
Loan losses (5,046,411) (3,450,666) (12,518,389) (8,930,531)
Recoveries 332,346 317,770 975,775 972,288
Allowance on acquired loans,
net of specific charge-offs 36,495 38,467 86,840 (144,281)
----------- ---------- ----------- -----------
Balance at end of period $ 10,465,721 10,075,315 10,465,721 10,075,315
=========== ========== ========== ==========
</TABLE>
7
<PAGE>
WORLD ACCEPTANCE CORPORATION
AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
The following table sets forth certain information derived from the
Company's consolidated statements of operations and balance sheets, as well as
operating data and ratios, for the periods indicated (unaudited):
<TABLE>
<CAPTION>
Three months Nine months
ended December 31, ended December 31,
------------------ --------------------
1999 1998 1999 1998
---- ---- ---- ----
(Dollars in thousands)
<S> <C> <C> <C> <C>
Average gross loans receivable (1) $ 169,244 150,585 161,532 141,326
Average loans receivable (2) 130,663 116,578 124,930 109,938
Expenses as a % of total revenue:
Provision for loan losses 20.6% 17.9% 17.1% 14.7%
General and administrative (3) 59.0% 63.0% 59.8% 73.4%
Total interest expense 5.9% 6.1% 5.7% 6.2%
Operating margin (4) 20.4% 19.1% 23.1% 11.9%
Return on average assets (annualized) 6.8% 6.1% 8.1% 2.6%
Offices opened or acquired, net 5 9 25 23
Total offices (at period end) 404 383 404 383
</TABLE>
- ----------
(1) Average gross loans receivable have been determined by averaging month-end
gross loans receivable over the indicated period.
(2) Average loans receivable have been determined by averaging month-end gross
loans receivable less unearned interest and deferred fees over the
indicated period.
(3) Includes $5.4 million charge for a legal settlement for the nine-month
period ended December 31, 1998. Excluding this one time charge, the ratio
would have been 65.3% for the nine-month period.
(4) Operating margin is computed as total revenues less provision for loan
losses and general and administrative expenses, as a percentage of total
revenues. Excluding the $5.4 million charge for the legal settlement, the
operating margin for the nine-month period ended December 31, 1998 would
have been 20.1%.
Comparison of Three Months Ended December 31, 1999, Versus
Three Months Ended December 31, 1998
Net income amounted to $2.6 million for the three months ended December 31,
1999, a 25.9% increase over the $2.1 million earned during the corresponding
three-month period of the previous year. This increase resulted from an increase
in operating income (revenues less provision for loan losses and general and
administrative expenses) of $943,000 , or 20.7% offset by an increase in
interest expense and income taxes.
Interest and fee income for the quarter ended December 31, 1999, increased
by $1.9 million, or 9.2%, over the same period of the prior year. This increase
resulted primarily from the $14.1 million increase, or 12.1%, in average loans
receivables over the two corresponding periods. The increase in interest and
fees was slightly less than the increase in average balances outstanding due to
a slight reduction in the overall yield in the loan portfolio, which was due to
lower interest rates charged on larger loans made in select offices of the
Company. Insurance commissions and other income increased by $1.2 million, or
38.6%, when comparing the two quarterly periods. Insurance commissions increased
by $678,000, or 46.0%, primarily due to the growth in the larger loan portfolio,
which generally has various credit related insurance products offered in
conjunction with these loans. Other income increased by 31.7% primarily as a
result of improved performance from the ParaData subsidiary, whose gross profit
increased from $483,000 for the quarter ended December 31, 1998, to $914,000
during the most recent quarter.
8
<PAGE>
WORLD ACCEPTANCE CORPORATION
MANAGEMENTS' DISCUSSION AND ANALYSIS, CONTINUED
Total revenues rose to $26.9 million during the quarter ended December 31,
1999, a 13.0% increase over the $23.8 million in total revenues for the same
quarter of the prior year. Revenues from the 346 offices open throughout both
three-month periods increased by approximately 6.2%. At December 31, 1999, the
Company had 404 offices in operation, a net increase of 5 offices during the
current quarter, and 25 offices since the beginning of the fiscal year.
The provision for loan losses amounted to $5.5 million during the quarter
ended December 31, 1999, representing a 30.0% increase over the $4.3 million
during the same quarter of the prior fiscal year. The increase resulted
primarily from increased levels of net loans charged off. During the quarter
ended December 31, 1999, net charge-offs as a percentage of average net loans
increased to 14.4% on an annualized basis from 10.7% from the corresponding
quarter of the prior year. Although the Company's management remains concerned
over the rise in the level of charge-offs and continues to focus on strict
adherence to the Company's lending and collection guidelines and policies by all
branch personnel, there can be no assurance that this trend will not continue,
or that earnings will not be negatively affected as a result in future quarters.
General and administrative expenses for the quarter ended December 31,
1999, increased by $873,000, or 5.8%, over the same quarter of fiscal 1999. This
increase resulted primarily from the additional expenses associated with the 29
new offices opened or acquired between December 31, 1998, and December 31, 1999.
During the same 12-month period, the Company has also sold or merged 8 offices
with other existing offices. These were offices that had not grown as expected
to a profitable size within a reasonable period of time. As a percentage of
total revenues, total general and administrative expenses decreased from 63.0%
for the quarter ended December 31, 1998, to 59.0% for the most recent quarter.
Additionally, excluding the expenses associated with ParaData, overall general
and administrative expenses when divided by the average open offices decreased
by .3% when comparing the two periods.
Interest expense increased by $127,000, or 8.7%, when comparing the two
corresponding quarterly periods. This increase resulted from an increase in the
level of debt, which grew from $83.6 million at December 31, 1998, to $90.7
million at December 31, 1999.
Comparison of Nine Months Ended December 31, 1999,
Versus Nine Months Ended December 31, 1998
For the nine-month period ended December 31, 1999, net income amounted to
$8.8 million. The results for the prior year period were greatly affected by an
accrual for legal expenses resulting from a settlement of certain litigation
(see Legal Proceedings). Excluding the effects of this $5.4 million legal
settlement and related income tax benefit, net income amounted to $6.0 million
for the nine-month period ended December 31, 1998. This represents a $2.8
million, or 47.0% increase over the two corresponding nine-month periods.
Operating income, excluding the prior year legal settlement, increased by $4.4
million, or 33.3%, over the two periods. This increase was offset by increases
in both interest expense and income taxes.
Total revenues amounted to $76.8 million during the current nine-month
period, an increase of $10.5 million, or 15.9%, over the prior-year period. This
increase resulted from an increase in interest and fee income of 10.6% combined
with an increase in insurance and other income of 55.8%. Revenues from the 346
offices open throughout both nine-month periods increased approximately 9.3%.
Interest and fee income rose by $6.2 million, or 10.6%, during the two
corresponding nine-month periods primarily as a result of increases in loan
balances outstanding. Average loans receivable were $124.9 million during the
nine months ended December 31, 1999, representing a 13.6% increase over the
average balances of the prior year. Other income increased by 55.8% due to
increased insurance commissions, as well as increased gross profits from
ParaData ($1.7 million or 123%).
The provision for loan losses increased by $3.4 million, or 35.1%, during
the current nine-month period when compared to the same period of fiscal 1999.
This increase is due primarily to the increased level of loan charge-offs
experienced during recent quarters. As a percentage of average loans receivable,
net charge-offs on an annualized basis increased from 9.7% for the nine-months
ended December 31, 1998 to 12.3% for the most recent nine-month period.
Addressing this rise in loan losses remain a high priority within the Company,
but should this trend continue, earnings will be adversely affected in future
quarters.
9
<PAGE>
WORLD ACCEPTANCE CORPORATION
MANAGEMENTS' DISCUSSION AND ANALYSIS, CONTINUED
General and administrative expenses, excluding the legal settlement from
the prior year period, increased by $2.7 million, or 6.2%, during the most
recent nine-month period. As a percentage of total revenues, these expenses
decreased from 65.3% during the prior year nine-month period to 59.8% during the
current period. The Company's expense ratios have benefited from the merger or
sale of eight unprofitable offices during the year, as well as excellent same
office revenue growth during the current fiscal year. Excluding the expenses
associated with ParaData, overall general and administrative expenses, when
divided by the average open offices, increased by only .1% when comparing the
two nine-month periods.
Interest expense increased by $318,000 when comparing the two nine-month
periods, an increase of 7.8%. This increase reflects the 8.5% increase in the
level of debt outstanding when comparing the two December period ending dates.
The effective income tax rate increased slightly during the current
nine-month period to 34.1% from 33.8% for the prior year period primarily as a
result of the legal settlement in the prior period.
Liquidity and Capital Resources
The Company's primary sources of funds are cash flow from operations and
borrowings under its revolving credit agreement. The Company's primary ongoing
cash requirements are funding the opening and operation of new offices, funding
overall growth of loans outstanding (including acquisitions), the repurchase of
its common stock and the repayment of existing debt.
The Company has a $85.0 million revolving credit agreement, and $10.0
million of subordinated notes.
The revolving credit facility expires on September 30, 2001, and bears
interest, at the Company's option, at the agent's prime rate or LIBOR plus
1.60%. At December 31, 1999, the interest rate under the facility was 8.03%, and
the Company's outstanding balance was $80.25 million, leaving $4.75 million in
borrowing availability under existing borrowing base limitations (based on
eligible loans receivable).
The subordinated notes provide for interest payments to be made quarterly
at a fixed rate of 10.0%. Annual principal payments of $2.0 million will be due
beginning June 1, 2000, with a final maturity date of June 1, 2004.
Borrowings under the revolving credit agreement, the senior term notes, and
the subordinated notes are secured by a lien on substantially all the tangible
and intangible assets of the Company and its subsidiaries pursuant to various
security agreements.
The Company believes that cash flow from operations and borrowings under
its revolving credit facility will be adequate to fund the principal payments
due under the subordinated notes and to fund any anticipated common stock
repurchases, as well as funding the expected costs of opening and operating new
offices, including funding initial operating losses of new offices, and funding
loans receivable originated by those offices and the Company's other offices.
Inflation
The Company does not believe that inflation has a material adverse effect
on its financial condition or results of operations. The primary impact of
inflation on the operations of the Company is reflected in increased operating
costs. While increases in operating costs would adversely affect the Company's
operations, the consumer lending laws of three of the six states in which the
Company currently operates allow indexing of maximum loan amounts to the
Consumer Price Index. These provisions will allow the Company to make larger
loans at existing interest rates, which could partially offset the effect of
inflationary increases in operating costs.
10
<PAGE>
WORLD ACCEPTANCE CORPORATION
MANAGEMENTS' DISCUSSION AND ANALYSIS, CONTINUED
Quarterly Information and Seasonality
The Company's loan volume and corresponding loans receivable follow
seasonal trends. The Company's highest loan demand occurs each year from October
through December, its third fiscal quarter. Loan demand is generally the lowest
and loan repayment is highest from January to March, its fourth fiscal quarter.
Loan volume and average balances remain relatively level during the remainder of
the year. This seasonal trend causes fluctuations in the Company's cash needs
and quarterly operating performance through corresponding fluctuations in
interest and fee income and insurance commissions earned, since unearned
interest and insurance income are accreted to income on a collection method.
Consequently, operating results for the Company's third fiscal quarter are
significantly lower than in other quarters and operating results for its fourth
fiscal quarter are generally higher than in other quarters.
11
<PAGE>
WORLD ACCEPTANCE CORPORATION
MANAGEMENTS' DISCUSSION AND ANALYSIS, CONTINUED
Forward-Looking Information
This report on Form 10-Q, including "Management's Discussion and Analysis
of Financial Condition and Results of Operations," may contain various
"forward-looking statements," within the meaning of Section 21E of the
Securities Exchange Act of 1934, that are based on management's belief and
assumptions, as well as information currently available to management.
Specifically, management's statements of expectations with respect to the
litigation described below in "Legal Proceedings," may be deemed forward-looking
statements. When used in this document, the words "anticipate," "estimate,"
"expect," and similar expressions may identify forward-looking statements.
Although the Company believes that the expectations reflected in any such
forward-looking statements are reasonable, it can give no assurance that such
expectations will prove to be correct. Any such statements are subject to
certain risks, uncertainties and assumptions. Should one or more of these risks
or uncertainties materialize, or should underlying assumptions prove incorrect,
the Company's actual financial results, performance or financial condition may
vary materially from those anticipated, estimated or expected. Among the key
factors that could cause the Company's actual financial results, performance or
condition to differ from the expectations expressed or implied in such
forward-looking statements are the following: changes in interest rates; risks
inherent in making loans, including repayment risks and value of collateral;
recently-enacted or proposed legislation; the occurrence of non-filing claims at
historical levels in circumstances validated by the Settlement; the timing and
amount of revenues that may be recognized by the Company; changes in current
revenue and expense trends (including trends affecting charge-offs); changes in
the Company's markets and general changes in the economy (particularly in the
markets served by the Company); the unpredictable nature of litigation; and
other matters discussed in this Report and the Company's other filings with the
Securities and Exchange Commission.
The Company is a party to certain legal proceedings. See Part II, Item 1.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company's outstanding debt under its revolving credit facility
was $80.25 million at December 31, 1999. Interest on borrowings under
this facility is based, at the Company's option, on the prime rate or
LIBOR plus 1.60%. Based on the outstanding balance at December 31,
1999, a change of 1% in the interest rate would cause a change in
interest expense of approximately $802,500 on an annual basis.
12
<PAGE>
WORLD ACCEPTANCE CORPORATION
AND SUBSIDIARIES
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Since April 1995, the Company and several of its subsidiaries have
been parties to litigation challenging the Company's non-filing
insurance practices. Non-filing insurance is an insurance product
that lenders like the Company can purchase in lieu of filing a UCC
financing statement covering the collateral of their borrowers. The
litigation against the Company was consolidated with other litigation
against other finance companies, jewelry and furniture retailers, and
insurance companies in a purported nationwide class action in the
U.S. District Court in Alabama under the caption In re: Consolidated
"Non-filing Insurance" Fee Litigation (Multidistrict Litigation
Docket No. 1130), U.S. District Court, Middle District of Alabama,
Northern Division). On November 11, 1998, the Company and its
subsidiaries named in this action entered into a settlement agreement
(the "Settlement"). Pursuant to the Settlement, the Company agreed to
settle all claims alleged in the litigation involving it and its
subsidiaries for an aggregate cash payment of $5 million, which was
funded in the fourth quarter of fiscal 1999. In addition, the terms
of the Settlement will curtail certain non-filing practices by the
Company and its subsidiaries and allows the court to approve criteria
defining those circumstances in which the Company's subsidiaries can
make non-filing insurance claims going forward. As a result of the
Settlement, non-filing insurance fees charged to borrowers will be
reduced by 25%. The Settlement, which includes the settlement by
several other defendants in the litigation, including the Company's
insurer, was approved by the court on July 16, 1999, as fair and
reasonable to the plaintiff class.
The Company is named as a defendant in an action, TURNER V. WORLD
ACCEPTANCE CORP. ET. AL., filed May 20, 1997, in the Fourteenth
Judicial District, Tulsa County, Oklahoma (CJ-97-1921), hereinafter
referred to as the "Tulsa Case." The Company is also a co-plaintiff
in an action, INDEPENDENT FINANCE INSTITUTE, ET. AL., filed February
27, 1997, in the District Court of Oklahoma County, Oklahoma
(CJ-97-1394) hereinafter referred to as the "Administrator's Case."
The Tulsa Case challenges the validity of the Oklahoma Consumer
Credit Code (OCCC) provisions under which the Company operates and
alleges that the Company and other consumer finance defendants have
collected excess finance charges in connection with refinanced loans.
In the Administrator's Case, the Company and other members of the
consumer finance industry sought a declaratory judgement invalidating
and enjoining the application of an opinion by the Oklahoma Attorney
General regarding consumer loan refinancing under the OCCC. Summary
judgement favorable to the Company was issued in both cases and both
cases were appealed to the Oklahoma Supreme Court. While the cases
were pending in the lower courts, the Oklahoma Legislature enacted
legislation, effective August 29, 1999, which validates the prior
practices followed by the Company and which should eliminate
challenges to the Company's practice from that point forward. On May
11, 1999, the Oklahoma Supreme Court issued an opinion in the
Administrator's Case reversing the summary judgement issued by the
trial court. That opinion included language regarding the decision's
retroactive applicability that, if allowed to stand, could have
resulted in extremely adverse consequences in the Tulsa Case. The
Company and other consumer finance companies sought relief by way of
reconsideration from the Oklahoma Supreme Court and, on November 4,
1999, that Court issued its Order modifying favorably to the Company
that portion of the Court's original decision that related to its
retroactive application. The decision in the Administrator's case, as
now modified, limits its applicability to the period from March 3,
1999, through August 29, 1999. The appeal from the Tulsa case remains
pending before the Oklahoma Supreme Court. Because of these recent
developments, the Company expects that, even if the appeal in the
Tulsa Case is decided adversely, the results, although possibly
including a material monetary award, would not materially affect the
Company's financing practices in Oklahoma. The Company intends to
continue to defend itself vigorously in the Tulsa Case.
From time to time the Company is involved in other routine litigation
relating to claims arising out of its operations in the normal course
of business. The Company believes that it is not presently a party to
any such other pending legal proceedings that would have a material
adverse effect on its financial condition.
Item 2. Changes in Securities
The Company's credit agreements contain certain restrictions on the
payment of cash dividends on its capital stock.
13
<PAGE>
WORLD ACCEPTANCE CORPORATION
AND SUBSIDIARIES
PART II. OTHER INFORMATION, CONTINUED
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
<TABLE>
<CAPTION>
Filed
Herewith (*) or
Previous Company
Exhibit Exhibit Registration
Number Description Number No. or Report
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
3.1 Second Amended and Restated Articles of Incorporation of the 3.1 1992 10-K
Company
3.2 First Amendment to Second Amended and Restated Articles 3.2 1995 10-K
of Incorporation
3.3 Amended Bylaws of the Company 3.4 33-42879
4.1 Specimen Share Certificate 4.1 33-42879
4.2 Articles 3, 4 and 5 of the Form of Company's Second 3.1, 3.2 1995 10-K
Amended and Restated Articles of Incorporation (as amended)
4.3 Article II, Section 9 of the Company's Second Amended 3.2 1995 10-K
and Restated Bylaws
4.4 Amended and Restated Revolving Credit Agreement, dated as 4.4 9-30-97 10-Q
of June 30, 1997, between Harris Trust and Savings Bank,
the Banks signatory thereto from time to time and the Company
4.5 Amended and Restated Note Agreement, dated as of June 30, 1997, 4.5 9-30-97 10-Q
between Jefferson-Pilot Life Insurance Company and the Company
4.6# Amended and Restated Note Agreement, dated as of June 30, 1997, 4.6 9-30-97 10-Q
between Principal Mutual Life Insurance Company and the Company
4.7 Note Agreement, dated as of June 30, 1997, between Principal 4.7 9-30-97 10-Q
Mutual Life Insurance Company and the Company re: 10%
Senior Subordinated Secured Notes
4.8 Amended and Restated Security Agreement, Pledge and Indenture 4.8 9-30-97 10-Q
of Trust, dated as of June 30, 1997, between the Company and
Harris Trust and Savings Bank, as Security Trustee
10.1 Employment Agreement of Charles D. Walters, effective April 1, 10.1 1994 10-K
1994
10.2 Employment Agreement of A. Alexander McLean, III, effective 10.2 1994 10-K
April 1, 1994
10.3 Employment Agreement of Douglas R. Jones, effective August *
16, 1999
10.4 Settlement Agreement dated as of April 1, 1999, between the 10.3 1999 10-K
Company and R. Harold Owens,
14
<PAGE>
10.5 Securityholders' Agreement, dated as of September 19, 1991, 10.5 33-42879
between the Company and certain of its securityholders
10.6 1992 Stock Option Plan of the Company 4 33-52166
10.7 1994 Stock Option Plan of the Company, as amended 10.6 1995 10-K
10.8 The Company's Executive Incentive Plan 10.6 1994 10-K
27 Financial Data Schedule (for SEC purposes only)
</TABLE>
# Omitted from filing -- substantially identical to immediately preceding
exhibits, except for the parties thereto and the principal amount involved.
(b) Reports on Form 8-K.
There were no reports filed on Form 8-K during the quarter ended December
31, 1999.
15
<PAGE>
WORLD ACCEPTANCE CORPORATION
AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WORLD ACCEPTANCE CORPORATION
Dated: February 9, 2000 /s/ C. D. Walters
---------------------
C. D. Walters, Chief Executive Officer
Dated: February 9, 2000 /s/ A. A. McLean III
------------------------
A. A. McLean III, Executive Vice President
and Chief Financial Officer
16
EMPLOYMENT AGREEMENT
This Agreement is effective as of August 16, 1999, by and between World
Acceptance Corporation (the "Company"), a South Carolina corporation and Douglas
R. Jones (the "Executive").
The Company has determined that it would be in its best interests to
retain the services of the Executive for the Period of Employment (as defined in
Section III 3.1 below) and upon the terms provided in this Agreement. The
Executive is willing to serve in the employ of the Company on a full time basis
for said Period of Employment and upon such other terms and conditions as
provided in this Agreement.
In consideration of the mutual covenants and promises contained in this
Agreement, the parties hereby agree as follows:
SECTION I
EMPLOYMENT
The Company agrees to employ the Executive and the Executive agrees to
be employed by the Company, for the Period of Employment as defined in Section
III 3.1 below, and based upon the terms and conditions provided in the
Agreement.
SECTION II
POSITION AND RESPONSIBILITIES
The Executive agrees to serve as the Company's PRESIDENT AND CHIEF
OPERATING OFFICER and to be responsible for the general affairs of the Company,
reporting only to the Chairman and Chief Executive Officer during the Period of
Employment, as defined in Section III 3.1 below. The Executive also agrees to
serve, if elected, during the Period of Employment as defined in Section III 3.1
below as an Officer of any subsidiary, affiliate, or parent corporation
("Affiliates") of the Company which the Board feels is appropriate.
SECTION III
TERMS AND DUTIES
3.1 PERIOD OF EMPLOYMENT
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<PAGE>
For purposes of this Agreement, the Period of Employment will commence
on August 16, 1999, and shall continue for a period of three (3) years, subject
to extension or termination as provided in this Agreement. At the end of the
initial three-year period commencing from the effective date of this Agreement,
the Company shall review the performance of the Executive, and this Agreement
shall be deemed to be approved and extended automatically for an additional one
(1) year period on the same terms and conditions, unless either the Company or
the Executive gives contrary written notice to the other no less than ninety
(90) days prior to the date on which this Agreement would otherwise be extended.
3.2 DUTIES
During the Period of Employment and except for illness, incapacity, and
reasonable vacation and holiday periods, the Executive shall devote all of his
business time, attention, and skill exclusively to the business and affairs of
the Company and its Affiliates. The Executive will not engage in any other
business activity, and will perform faithfully the duties which may be assigned
to him from time to time by the Chief Executive Officer of the Company.
Notwithstanding the above, nothing in this Agreement shall preclude the
Executive from devoting time during reasonable periods required for:
3.2.I. Serving, with prior approval of the Chief Executive Officer
of the Company, as a Director or member of a committee or
organization involving no actual or potential conflict of
interest with the Company;
3.2.II Delivering lectures and fulfilling speaking engagements;
3.2.III. Engaging in charitable and community activities; or
3.2.IV. Investing his personal assets in investments or business
entities in such form or manner that will not violate this
Agreement or require services on the part of the Executive
in the operation of affairs of the business entities in
which those investments are made. These activities will be
allowed as long as they do not materially affect or
interfere with the performance of the Executive's duties and
obligations to the Company.
SECTION IV
COMPENSATION, BENEFITS, AND PERQUISITES
For all services rendered by the Executive in any capacity during the
Period of Employment, including services as an Executive, Officer, or Committee
Member, the Executive shall be compensated as follows:
4.1 BASE SALARY
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<PAGE>
The Company shall pay the Executive a fixed base salary ("Base Salary")
at such annual rate as the Compensation Committee deems appropriate; provided,
however, that the fixed Base Salary may not be less than $175,000.00 per year.
Increases in Base Salary, once granted by the Committee, shall not be subject to
reduction. Base Salary shall be payable according to the customary payroll
practices of the Company. In no event shall Base Salary be payable less
frequently than once per calendar month.
4.2 ANNUAL INCENTIVE AWARDS
The Company may pay the Executive annual cash incentive compensation
payments provided that such annual incentive compensation payments are based on
certain pre-established performance criteria. At the beginning of each fiscal
year, the Board or Committee will establish appropriate criteria for making such
payments following the end of such fiscal year. The terms and conditions of such
incentive awards are set out more fully in the Company's "Executive Incentive
Plan" Plan Document. For purposes of this agreement the Annual Incentive Plan
payment amount for the fiscal year ending March 31, 2000, will be the actual
amount earned calculated on a full year basis or $120,000.00 whichever is
greater. Thereafter such payments will be made in accordance with actual earned
amounts per the Executive Annual Incentive Plan.
4.3 OTHER COMPENSATION/BENEFITS
The Compensation Committee may from time to time grant such other
compensation, stock options, or other long-term benefits as it may deem
appropriate commensurate with the executive's position, duties, and performance.
The intent of such other compensation awards is to motivate the achievement of
longer range and strategic goals.
4.4 BENEFITS AND PERQUISITES
4.4.I SALARIED EMPLOYEE BENEFITS
Executive will be entitled to participate in all compensation
and employee benefit plans and programs and receive all benefits and
perquisites for which any salaried employee of the Company is eligible
under any plan or program now or later established by the Company for
salaried employees. The Executive will participate to the extent
permissible under the terms and provisions of such plans or programs.
Nothing in this Agreement will preclude the Company from amending or
terminating any of the plans or programs applicable to salaried
employees as long as such amendment or termination is applicable to all
similarly situated salaried employees.
4.4.II SUPPLEMENTAL BENEFITS
The Company also will provide long-term disability insurance
which provides a benefit to the Executive of 60% of the Executive's
Base Salary in effect at the time of disability.
In the event a group long-term disability benefit is provided
by the Company for which the Executive becomes eligible, the
Executive's long-term disability benefits under this Agreement will be
offset by the benefits payable under the group policy such that
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<PAGE>
combined long-term disability benefits payable under the two plans do
not exceed 60% of the Executive's then current Base Salary.
4.5 AUTOMOBILE
The Company will provide an automobile (including maintenance and
insurance expense) of a value commensurate with his position for use by the
Executive.
SECTION V
BUSINESS EXPENSES
The Company will reimburse the Executive for all reasonable travel,
entertainment, business, and other expenses incurred by the Executive in
connection with the performance of his duties and obligations under this
Agreement.
SECTION VI
DISABILITY
6.1 In the event of disability of the Executive during the Period of Employment,
the Company will continue to pay the Executive in accordance with the
compensation provisions of this Agreement during the period of his disability.
However, in the event the Executive is disabled for a continuous period of
ninety (90) days or more, the Company may terminate the employment of the
Executive pursuant to this Agreement, and make payments to the Executive under
the terms of the long-term disability provisions of this Agreement. In the event
the Company terminates the employment of the Executive pursuant to this Section
VI, the Company will have no further compensation obligations to the Executive,
except for earned but unpaid Base Salary.
6.2 During the period the Executive is receiving payments, either regular
compensation or disability payments as described in this Agreement, and as long
as he is physically and mentally able to do so, the Executive will furnish
information and assistance to the Company and from time to time will make
himself available to the Company to undertake assignments consistent with his
prior position with the Company and his physical and mental health. During the
disability period, the Executive is responsible for reporting directly to the
Chief Executive Officer. If the Company fails to make a payment or provide a
benefit required as part of the Agreement, the Executive's obligation to fulfill
information and assistance will end.
6.3 The term "disability" will have the same meaning as under the disability
benefits to be provided pursuant to this Agreement, or such group disability
plan as may be in effect for similarly situated employees at that time. In the
event the definition of disability is not consistent, the definition contained
in the plan document of such group plan shall control.
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<PAGE>
SECTION VII
DEATH
In the event of the death of the Executive during the Period of
Employment, the Company's obligation to make payments under this Agreement shall
cease as of the date of death, except for Base Salary through the end of the
Company's normal payroll period prorated to the date of death. The Executive's
designated beneficiary will be entitled to receive the proceeds of any life or
other insurance or other death benefit programs provided in this Agreement.
SECTION VIII
EFFECT OF TERMINATION OF EMPLOYMENT
Except as otherwise set forth in Sections VI, VII, and IX:
8.1 If the Executive's employment terminates due to either a Without Cause
Termination or a Constructive Discharge, as hereafter defined in this Agreement,
the Company will pay the Executive, or in the event of his death, his
beneficiary or beneficiaries, severance pay at the annual rate of 100% of his
Base Salary as in effect at the time of termination for the remaining period of
the original term of this agreement or the remaining period of any subsequent
renewal term. In addition, the Company will pay any earned but unpaid Base
Salary through the date of termination and any earned but unpaid annual
incentive compensation payments. All other benefits and perquisites provided for
in Section IV 4.4 of this Agreement will be continued for the remaining period
of the original term of the agreement or the remaining period of any subsequent
renewal term whichever is applicable.
If the Executive is entitled to receive cash compensation subject to
federal income taxation, or to deferred compensation which would be taxable if
not deferred, for other employment or a consulting position with another Company
during the above-described period, the payments described in this Agreement will
be reduced respectively to the extent that benefits of the kind required by this
Agreement are paid as a result of the other employment. In addition, the
benefits resulting from the other employment shall be deemed primary coverage
for the purposes of coordination of benefits.
8.2 If the Executive's employment terminates due to a Termination for Cause, as
hereafter defined, the Company will pay to the Executive the Base Salary as then
in effect through the date of termination. No other payments will be made and
the Company will not be obligated to provide any other benefits to or on behalf
of the Executive.
8.3 If the Executive resigns from employment with the Company or gives notice of
non-renewal in accordance with Section III.3.1 hereof, the Company will pay his
Base Salary through the date of termination and any earned but unpaid annual
incentive compensation payments. No
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<PAGE>
other payments will be made and the Company will not be obligated to provide any
other benefits to or on behalf of the Executive.
8.4 Except as otherwise expressly provided in this Agreement and except for any
long-term incentive payments to which Executive may be entitled, upon
termination of the Executive's employment hereunder, the Company's obligation to
make payments or provide benefits under this Agreement will cease.
SECTION IX
DEFINITIONS
For this Agreement, the following terms have the following meanings:
9.1 Termination for Cause means termination of the Executive's employment by the
Company, by written notice to the Executive, specifying the event relied upon
for such termination, due to I. the Participant's gross misconduct in respect of
his duties for the Company, II. conviction for a felony or perpetration of a
common law fraud, III. failure to comply with applicable laws with respect to
the execution of the Company's business operations, IV. theft, fraud,
embezzlement, dishonesty or other conduct which has resulted or is likely to
result in material economic damage to the Company or any of its Affiliates, or
V. substantial dependence on or addiction to alcohol or use of drugs except
those legally prescribed by and administered pursuant to the directions of a
practitioner licensed to do so under the laws of the state or country of
licensure.
9.2 Constructive Discharge means termination of the Executive's employment by
the Executive due to a failure of the Company to fulfill its obligations under
this Agreement in any material respect, including any reduction of the
Executive's Base Salary, failure to appoint or reappoint the Executive to the
office of President and Chief Operating Officer or other material change by the
Company in the functions, duties, or responsibilities of the position which
would reduce the ranking or level, responsibility, importance, or scope of the
position. This would also include any assignment or reassignment by the Company
of the Executive to a place of employment other than the Company's present
headquarters in Greenville, South Carolina. The Executive will provide the
Company a written notice which describes the circumstances being relied on for
the Constructive Discharge with respect to the Agreement within ninety (90) days
after the event giving rise to the notice. The Company will have thirty (30)
days to remedy the situation prior to the Termination for Constructive
Discharge.
9.3 Without Cause Termination means termination of the Executive's employment by
the Company other than due to death or disability and other than Termination for
Cause and includes, without limitation, termination of the Executive's
employment by the Company's giving notice of non-renewal in accordance with
Section III.3.1 hereof.
-6-
<PAGE>
SECTION X
OTHER DUTIES OF THE EXECUTIVE DURING AND
AFTER THE PERIOD OF EMPLOYMENT
During the Period of Employment and for 12 months thereafter:
10.1 The Executive will, with reasonable notice, furnish information as may be
in his possession and cooperate with the Company as may reasonably be requested
in connection with any claim or legal actions in which the Company is or may
become a party.
10.2 The Executive recognizes and acknowledges that all information pertaining
to the affairs, business, clients, customers, or other relationships of the
Company is confidential and is a unique and valuable asset of the Company.
Access to and knowledge of this information are essential to the performance of
the Executive's duties under this Agreement.
10.3 The Executive will not, except to the extent reasonably necessary in
performance of the duties under this Agreement or except as required by law,
give to any person, firm, company, corporation or governmental agency any
information concerning the affairs, business, clients, customers, or other
relationships of the Company. The Executive will not make use of this type of
information for his own purposes or for the benefit of any person or
organization other than the Company. The Executive will also use his best
efforts to prevent the disclosure of this information by others.
10.4 All records, memoranda, etc. relating to the business of the Company
whether made by the Executive or otherwise coming into his possession are
confidential and will remain the property of the Company.
10.5 The Executive will not use his status with the Company to obtain loans,
goods, or services from another organization on terms that would not be
available to him in the absence of his relationship with the Company.
10.6 The Executive will not make any statements or perform any acts intended to
advance the interest of any existing or prospective competitors of the Company
in any way that will injure the interest of the Company.
10.7 The Executive, without prior express written approval by the Board, will
not directly or indirectly own or hold any proprietary interest in, be employed
by, or receive compensation from any party engaged in the same business in the
same geographic areas where the Company or its affiliates conduct business. For
the purposes of this Agreement, proprietary interest means legal or equitable
ownership, whether through stock holdings or otherwise of an equity interest in
any privately owned business firm or entity or ownership of more than 5% of any
class of equity interest in a publicly-held corporation.
-7-
<PAGE>
10.8 The Executive, without express written approval from the Board, will not
solicit any of the then current clients or employees of the Company or its
affiliates or discuss with any employee of the Company or its affiliates
information or operation of any business intended to compete with the Company.
Executive agrees that any obligation of the Company to make any
payments to the Executive under the terms of this Agreement or the Executive
Incentive Plan, will cease upon any violation of the preceding paragraphs.
The parties desire that the provisions of Section X be enforced to the
fullest extent permissible under the laws and public policies applied in the
jurisdictions in which enforcement is sought, and agree that the Company may
specifically enforce the terms hereof. If any portion of Section X is judged to
be invalid or unenforceable, Section X will be amended to conform to the legal
changes so that the remainder of the Agreement remains in effect.
SECTION XI
EFFECTS OF CHANGE OF CONTROL
11.1 In the event there is a Change of Control (as hereafter defined) of the
ownership of the Company, the Executive may at any time immediately resign upon
written notice to the Company. In this event, the Company will pay the
Executive's Base Salary through the date of termination.
11.2 In the event there is a Change of Control of the Company and the
Executive's employment is terminated within one year of such Change of Control
due to a Without Cause termination or Constructive Discharge, the Company will
pay the Executive severance pay at the annual rate equal to the highest Base
Salary of the Executive in effect at any time during the period beginning on the
date immediately preceding the occurrence of the Change of Control and ending on
the date the Executive's employment is terminated. Such severance payments shall
commence immediately after termination and shall be payable over a period of
twelve (12) calendar months, or the remaining term of the Agreement, whichever
period is greater. In addition, the Company will pay any earned but unpaid Base
Salary and annual incentive compensation payments prorated to the date of
termination. All other benefits and perquisites described in this Agreement will
be continued in accordance with the Agreement for twelve (12) calendar months
from the date of termination of employment.
11.3 Notwithstanding any of the above provisions to the contrary, in no event
shall the payment in connection with the Change in Control exceed 2.99 times the
Executive's "base period compensation" as that term is defined in section 280G
of the Internal Revenue Code. In the event such payments to the Executive on
account of a Change of Control would exceed 2.99 times the Executive's "base
period compensation" then such payments shall be reduced to the extent necessary
to avoid any penalty which may be imposed by virtue of section 280G.
11.4 A Change of Control shall be deemed to have occurred if I. a tender offer
shall be made and consummated resulting in a change in the ownership of 25% or
more of the outstanding
-8-
<PAGE>
voting securities of the Company, II. the Company shall be merged or
consolidated with another corporation and as a result of such merger or
consolidation less than 75% of the outstanding voting securities of the
surviving or resulting corporation shall be owned in the aggregate by the former
shareholders of the Company, other than affiliates (within the meaning of the
Securities Exchange Act of 1934) of any party to such merger or consolidation,
III. the Company shall sell substantially all of its assets to another
corporation which is not a wholly owned subsidiary, or IV. a person, within the
meaning of Section 3(a)(9) or of Section 13(d)(3) (as in effect on the date
hereof) of the Securities Exchange Act of 1934, as amended, shall acquire 25% or
more of the outstanding voting securities of the Company (whether directly,
indirectly, beneficially or of record). For purposes hereof, ownership of voting
securities shall take into account and shall include ownership as determined by
applying the provisions of Rule 13d-3(d)(1)(i) (as in effect on the date hereof)
pursuant to the Securities Exchange Act of 1934, as amended.
SECTION XII
WITHHOLDING TAXES
The Company may directly or indirectly withhold from any payments under
this Agreement all federal, state, city, or other taxes that shall be required
to be withheld pursuant to any law or governmental regulation.
SECTION XIII
EFFECTS OF PRIOR AGREEMENTS
This Agreement contains the entire understanding between the Company
and the Executive with respect to the subject matter and supersedes any prior
Employment Agreement between the Company and the Executive, except that this
Agreement shall not affect or operate to reduce any benefits or compensation
inuring to the Executive of a kind elsewhere provided and not expressly provided
in this Agreement.
SECTION XIV
CONSOLIDATION, MERGER, OR SALE OF ASSETS
Nothing in this Agreement shall preclude the Company from consolidating
or merging into or with, or transferring all or substantially all of its assets
to another corporation or person which assumes this Agreement and all
obligations and undertakings of the Company hereunder. Upon such a
Consolidation, Merger, or Sale of Assets the term "the Company" as used will
mean the other corporation and this Agreement shall continue in full force and
effect.
-9-
<PAGE>
SECTION XV
MODIFICATION
This Agreement may not be modified or amended except in writing signed
by both parties. No term or condition of this Agreement will be deemed to have
been waived except in writing by the party charged with waiver. A waiver shall
operate only as to the specific term or condition waived and will not constitute
a waiver for the future or act on anything other than that which is specifically
waived.
SECTION XVI
GOVERNING LAW
This Agreement has been executed and delivered in the STATE OF SOUTH
CAROLINA and its validity, interpretation, performance, and enforcement shall be
governed by the laws of that state.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed as of August 16, 1999, by its duly authorized officers and Executive
has hereunto set his/her hand.
WORLD ACCEPTANCE CORPORATION
By:
-----------------------------
Title: Chairman and CEO
--------------------------
--------------------------------
Douglas R. Jones
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<PERIOD-START> APR-01-1999 APR-01-1999 APR-01-1999
<PERIOD-END> JUN-30-1999 SEP-30-1999 DEC-31-1999
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<CURRENT-ASSETS> 116,276 119,386 134,276
<PP&E> 6,341 6,794 6,761
<DEPRECIATION> 0 0 0
<TOTAL-ASSETS> 140,142 144,563 159,360
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