0001000045
2010-04-01
2010-06-30
0001000045
2011-03-31
0001000045
2011-04-01
2011-06-30
0001000045
2011-06-30
0001000045
2011-07-27
0001000045
2010-03-31
0001000045
2010-06-30
xbrli:shares
iso4217:USD
iso4217:USD
xbrli:shares
NICHOLAS FINANCIAL INC
0001000045
NICK
Yes
No
--03-31
Accelerated Filer
11956335000
10-Q
2011-06-30
false
2011
Q1
2017540
2988840
230163854
234687519
1055140
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<div><p style="margin-top:12px;margin-bottom:0px;" ><font style="font-family:times new roman;" ><b>1. Basis of Presentation
</b>
</font>
</p><p style="margin-top:6px;margin-bottom:0px;" ><font style="font-family:times new roman;" >The accompanying condensed consolidated balance sheet as of March 31, 2011, which has been derived from audited financial statements, and the accompanying unaudited interim condensed consolidated financial statements of Nicholas Financial, Inc. (including its subsidiaries, the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q pursuant to the Securities and Exchange Act of 1934, as amended in Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete consolidated financial statements, although the Company believes that the disclosures made are adequate to ensure the information is not misleading. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for interim periods are not necessarily indicative of the results that may be expected for the year ending March 31, 2012. It is suggested that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements and accompanying notes thereto included in the Company’s Annual Report on Form 10-K for the year ended March 31, 2011 as filed with the Securities and Exchange Commission on June 14, 2011. The March 31, 2011 condensed consolidated balance sheet included herein has been derived from the March 31, 2011 audited consolidated balance sheet included in the aforementioned Form 10-K.
</font>
</p><p style="margin-top:12px;margin-bottom:0px;" ><font style="font-family:times new roman;" >The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for credit losses on finance receivables, and the net realizable value of assets held for resale.
</font>
</p>
</div>
<div><p style="margin-top:18px;margin-bottom:0px;" ><font style="font-family:times new roman;" ><b>2. Revenue Recognition
</b>
</font>
</p><p style="margin-top:6px;margin-bottom:0px;" ><font style="font-family:times new roman;" >Finance receivables consist of automobile finance installment contracts (“Contracts”) and direct consumer loans (“direct loans”). Interest income on finance receivables is recognized using the interest method. Accrual of interest income on finance receivables is suspended when a loan is contractually delinquent for 60 days or more or the collateral is repossessed, whichever is earlier.
</font>
</p><p style="margin-top:12px;margin-bottom:0px;" ><font style="font-family:times new roman;" >The amount of future unearned income is computed as the product of the Contract rate, the Contract term, and the Contract amount.
</font>
</p><p style="margin-top:12px;margin-bottom:0px;" ><font style="font-family:times new roman;" >Deferred revenues consist primarily of commissions received from the sale of ancillary products. These products include automobile warranties, roadside assistance programs, accident and health insurance, credit life insurance and forced placed automobile insurance. These commissions are amortized over the life of the contract using the interest method.
</font>
</p><p style="margin-top:12px;margin-bottom:0px;" ><font style="font-family:times new roman;" >The Company’s net fees charged for processing a loan are recognized as an adjustment to the yield and are amortized over the life of the loan using the interest method.
</font>
</p><p style="margin-top:12px;margin-bottom:0px;" ><font style="font-family:times new roman;" >The Company attributes its entire dealer discount to a reserve for credit losses. A dealer discount represents the difference between the finance receivable, net of unearned interest of a Contract, and the amount of money the Company actually paid for the Contract. After the analysis of purchase date accounting is complete, any uncollectable amounts would be contemplated in estimating the allowance for loan losses.
</font>
</p><p style="margin-top:12px;margin-bottom:0px;" ><font style="font-family:times new roman;" >Sales relate principally to telephone support agreements and the sale of business forms to small businesses located primarily in the Southeast United States. The aforementioned sales of the Nicholas Data Services, Inc. subsidiary, (“NDS”) represent less than 1% of the Company’s consolidated revenues.
</font>
</p>
</div>
<div><p style="margin-top:0px;margin-bottom:0px;" ><font style="font-family:times new roman;" ><b>3. Earnings Per Share
</b>
</font>
</p><p style="margin-top:6px;margin-bottom:0px;" ><font style="font-family:times new roman;" >Basic earnings per share is calculated by dividing the reported net income for the period by the weighted average number of shares of common stock outstanding. Diluted earnings per share includes the effect of dilutive options and other share awards. Basic and diluted earnings per share have been computed as follows:
</font>
</p><p style="margin-top:0px;margin-bottom:0px;font-size:12px;" > 
</p><table border="0" cellspacing="0" cellpadding="0" width="76%" style="border-collapse:collapse;text-align:left;" ><tr><td width="72%" >
</td><td valign="bottom" width="5%" >
</td><td>
</td><td>
</td><td>
</td><td valign="bottom" width="5%" >
</td><td>
</td><td>
</td><td>
</td>
</tr><tr><td valign="bottom" ><font> 
</font>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="bottom" colspan="6" style="border-bottom:#000000 1px solid;text-align:left;" ><font style="font-family:times new roman;" ><b>Three months ended
</b>
</font><br />
<font style="font-family:times new roman;" ><b>June 30,
</b>
</font>
</td><td valign="bottom" ><font> 
</font>
</td>
</tr><tr><td valign="bottom" ><font> 
</font>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="bottom" colspan="2" style="border-bottom:#000000 1px solid;text-align:left;" ><font style="font-family:times new roman;" ><b>2011
</b>
</font>
</td><td valign="bottom" ><font> 
</font>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="bottom" colspan="2" style="border-bottom:#000000 1px solid;text-align:left;" ><font style="font-family:times new roman;" ><b>2010
</b>
</font>
</td><td valign="bottom" ><font> 
</font>
</td>
</tr><tr style="background-color:#cceeff;" ><td valign="top" ><p style="text-indent:-1em;margin-left:1em;" ><font style="font-family:times new roman;" >Numerator for earnings per share – net income
</font>
</p>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="bottom" ><font style="font-family:times new roman;" >$
</font>
</td><td valign="bottom" style="text-align:right;" ><font style="font-family:times new roman;" >5,302,793
</font>
</td><td valign="bottom" nowrap="nowrap" ><font style="font-family:times new roman;" >  
</font>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="bottom" ><font style="font-family:times new roman;" >$
</font>
</td><td valign="bottom" style="text-align:right;" ><font style="font-family:times new roman;" >3,575,838
</font>
</td><td valign="bottom" nowrap="nowrap" ><font style="font-family:times new roman;" >  
</font>
</td>
</tr><tr style="font-size:1px;" ><td valign="bottom" >
</td><td valign="bottom" >  
</td><td valign="bottom" ><p style="border-top:#000000 3px double;" > 
</p>
</td><td valign="bottom" ><p style="border-top:#000000 3px double;" > 
</p>
</td><td> 
</td><td valign="bottom" >  
</td><td valign="bottom" ><p style="border-top:#000000 3px double;" > 
</p>
</td><td valign="bottom" ><p style="border-top:#000000 3px double;" > 
</p>
</td><td> 
</td>
</tr><tr><td valign="top" ><p style="text-indent:-1em;margin-left:1em;" ><font style="font-family:times new roman;" >Denominator:
</font>
</p>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="bottom" >
</td><td valign="bottom" >
</td><td valign="bottom" >
</td><td valign="bottom" ><font>  
</font>
</td><td valign="bottom" >
</td><td valign="bottom" >
</td><td valign="bottom" >
</td>
</tr><tr style="background-color:#cceeff;" ><td valign="top" ><p style="text-indent:-1em;margin-left:3em;" ><font style="font-family:times new roman;" >Denominator for basic earnings per share – weighted average shares
</font>
</p>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="bottom" ><font style="font-family:times new roman;" > 
</font>
</td><td valign="bottom" style="text-align:right;" ><font style="font-family:times new roman;" >11,651,295
</font>
</td><td valign="bottom" nowrap="nowrap" ><font style="font-family:times new roman;" >  
</font>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="bottom" ><font style="font-family:times new roman;" > 
</font>
</td><td valign="bottom" style="text-align:right;" ><font style="font-family:times new roman;" >11,555,212
</font>
</td><td valign="bottom" nowrap="nowrap" ><font style="font-family:times new roman;" >  
</font>
</td>
</tr><tr><td valign="top" ><p style="text-indent:-1em;margin-left:3em;" ><font style="font-family:times new roman;" >Effect of dilutive securities:
</font>
</p>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="bottom" >
</td><td valign="bottom" >
</td><td valign="bottom" >
</td><td valign="bottom" ><font>  
</font>
</td><td valign="bottom" >
</td><td valign="bottom" >
</td><td valign="bottom" >
</td>
</tr><tr style="background-color:#cceeff;" ><td valign="top" ><p style="text-indent:-1em;margin-left:5em;" ><font style="font-family:times new roman;" >Stock options and other share awards
</font>
</p>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="bottom" ><font style="font-family:times new roman;" > 
</font>
</td><td valign="bottom" style="text-align:right;" ><font style="font-family:times new roman;" >314,167
</font>
</td><td valign="bottom" nowrap="nowrap" ><font style="font-family:times new roman;" >  
</font>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="bottom" ><font style="font-family:times new roman;" > 
</font>
</td><td valign="bottom" style="text-align:right;" ><font style="font-family:times new roman;" >251,317
</font>
</td><td valign="bottom" nowrap="nowrap" ><font style="font-family:times new roman;" >  
</font>
</td>
</tr><tr style="font-size:1px;" ><td valign="bottom" >
</td><td valign="bottom" >  
</td><td valign="bottom" ><p style="border-top:#000000 1px solid;" > 
</p>
</td><td valign="bottom" ><p style="border-top:#000000 1px solid;" > 
</p>
</td><td> 
</td><td valign="bottom" >  
</td><td valign="bottom" ><p style="border-top:#000000 1px solid;" > 
</p>
</td><td valign="bottom" ><p style="border-top:#000000 1px solid;" > 
</p>
</td><td> 
</td>
</tr><tr><td valign="top" ><p style="text-indent:-1em;margin-left:3em;" ><font style="font-family:times new roman;" >Denominator for diluted earnings per share
</font>
</p>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="bottom" ><font
style="font-family:times new roman;" > 
</font>
</td><td valign="bottom" style="text-align:right;" ><font style="font-family:times new roman;" >11,965,462
</font>
</td><td valign="bottom" nowrap="nowrap" ><font style="font-family:times new roman;" >  
</font>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="bottom" ><font style="font-family:times new roman;" > 
</font>
</td><td valign="bottom" style="text-align:right;" ><font style="font-family:times new roman;" >11,806,529
</font>
</td><td valign="bottom" nowrap="nowrap" ><font style="font-family:times new roman;" >  
</font>
</td>
</tr><tr style="font-size:1px;" ><td valign="bottom" >
</td><td valign="bottom" >  
</td><td valign="bottom" ><p style="border-top:#000000 3px double;" > 
</p>
</td><td valign="bottom" ><p style="border-top:#000000 3px double;" > 
</p>
</td><td> 
</td><td valign="bottom" >  
</td><td valign="bottom" ><p style="border-top:#000000 3px double;" > 
</p>
</td><td valign="bottom" ><p style="border-top:#000000 3px double;" > 
</p>
</td><td> 
</td>
</tr><tr><td height="8" >
</td><td height="8" colspan="4" >
</td><td height="8" colspan="4" >
</td>
</tr><tr style="background-color:#cceeff;" ><td valign="top" ><p style="text-indent:-1em;margin-left:1em;" ><font style="font-family:times new roman;" >Earnings per share:
</font>
</p>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="bottom" >
</td><td valign="bottom" >
</td><td valign="bottom" >
</td><td valign="bottom" ><font>  
</font>
</td><td valign="bottom" >
</td><td valign="bottom" >
</td><td valign="bottom" >
</td>
</tr><tr><td valign="top" ><p style="text-indent:-1em;margin-left:3em;" ><font style="font-family:times new roman;" >Basic
</font>
</p>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="bottom" ><font style="font-family:times new roman;" >$
</font>
</td><td valign="bottom" style="text-align:right;" ><font style="font-family:times new roman;" >0.46
</font>
</td><td valign="bottom" nowrap="nowrap" ><font style="font-family:times new roman;" >  
</font>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="bottom" ><font style="font-family:times new roman;" >$
</font>
</td><td valign="bottom" style="text-align:right;" ><font style="font-family:times new roman;" >0.31
</font>
</td><td valign="bottom" nowrap="nowrap" ><font style="font-family:times new roman;" >  
</font>
</td>
</tr><tr style="font-size:1px;" ><td valign="bottom" >
</td><td valign="bottom" >  
</td><td valign="bottom" ><p style="border-top:#000000 3px double;" > 
</p>
</td><td valign="bottom" ><p style="border-top:#000000 3px double;" > 
</p>
</td><td> 
</td><td valign="bottom" >  
</td><td valign="bottom" ><p style="border-top:#000000 3px double;" > 
</p>
</td><td valign="bottom" ><p style="border-top:#000000 3px double;" > 
</p>
</td><td> 
</td>
</tr><tr style="background-color:#cceeff;" ><td valign="top" ><p style="text-indent:-1em;margin-left:3em;" ><font style="font-family:times new roman;" >Diluted
</font>
</p>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="bottom" ><font style="font-family:times new roman;" >$
</font>
</td><td valign="bottom" style="text-align:right;" ><font style="font-family:times new roman;" >0.44
</font>
</td><td valign="bottom" nowrap="nowrap" ><font style="font-family:times new roman;" >  
</font>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="bottom" ><font style="font-family:times new roman;" >$
</font>
</td><td valign="bottom" style="text-align:right;" ><font style="font-family:times new roman;" >0.30
</font>
</td><td valign="bottom" nowrap="nowrap" ><font style="font-family:times new roman;" >  
</font>
</td>
</tr><tr style="font-size:1px;" ><td valign="bottom" >
</td><td valign="bottom" >  
</td><td valign="bottom" ><p style="border-top:#000000 3px double;" > 
</p>
</td><td valign="bottom" ><p style="border-top:#000000 3px double;" > 
</p>
</td><td> 
</td><td valign="bottom" >  
</td><td valign="bottom" ><p style="border-top:#000000 3px double;" > 
</p>
</td><td valign="bottom" ><p style="border-top:#000000 3px double;" > 
</p>
</td><td> 
</td>
</tr>
</table><p style="margin-top:12px;margin-bottom:0px;" ><font style="font-family:times new roman;" >For the three months ended June 30, 2011 and 2010 potential common stock from stock options totaling 55,000 and 141,700, respectively, were not included in the diluted earnings per share calculation because their effect is anti-dilutive.
</font>
</p>
</div>
<div>
<p style="margin-top:18px;margin-bottom:0px;"><font style="font-family:times new roman;"><b>4. Finance Receivables </b></font></p>
<p style="margin-top:6px;margin-bottom:0px;"><font style="font-family:times new roman;">Finance receivables consist of automobile finance installment Contracts and direct consumer loans and are detailed as follows: </font></p>
<p style="margin-top:0px;margin-bottom:0px;font-size:12px;"> </p>
<table border="0" style="border-collapse:collapse;text-align:left;" cellspacing="0" width="76%" cellpadding="0">
<tr>
<td width="68%">  </td>
<td valign="bottom" width="5%">  </td>
<td>  </td>
<td>  </td>
<td>  </td>
<td valign="bottom" width="5%">  </td>
<td>  </td>
<td>  </td>
<td>  </td>
</tr>
<tr>
<td valign="bottom">  </td>
<td valign="bottom">   </td>
<td style="border-bottom:#000000 1px solid;text-align:left;" valign="bottom" colspan="2"><font style="font-family:times new roman;"><b>June 30, </b></font><br/>
<font style="font-family:times new roman;"><b>2011 </b></font></td>
<td valign="bottom">  </td>
<td valign="bottom">  </td>
<td style="border-bottom:#000000 1px solid;text-align:left;" valign="bottom" colspan="2"><font style="font-family:times new roman;"><b>March 31, </b></font><br/>
<font style="font-family:times new roman;"><b>2011 </b></font></td>
<td valign="bottom">  </td></tr>
<tr style="background-color:#cceeff;">
<td valign="top">
<p style="text-indent:-1em;margin-left:1em;"><font style="font-family:times new roman;">Finance receivables, gross contract </font></p></td>
<td valign="bottom">   </td>
<td valign="bottom"><font style="font-family:times new roman;">$ </font></td>
<td style="text-align:right;" valign="bottom"><font style="font-family:times new roman;">380,225,382 </font></td>
<td nowrap="nowrap" valign="bottom"><font style="font-family:times new roman;">   </font></td>
<td valign="bottom">  </td>
<td valign="bottom"><font style="font-family:times new roman;">$ </font></td>
<td style="text-align:right;" valign="bottom"><font style="font-family:times new roman;">372,950,283 </font></td>
<td nowrap="nowrap" valign="bottom"><font style="font-family:times new roman;">   </font></td></tr>
<tr>
<td valign="top">
<p style="text-indent:-1em;margin-left:1em;"><font style="font-family:times new roman;">Unearned interest </font></p></td>
<td valign="bottom">   </td>
<td valign="top"><font style="font-family:times new roman;">  </font></td>
<td style="text-align:right;" valign="top"><font style="font-family:times new roman;">(108,556,160 </font></td>
<td nowrap="nowrap" valign="top"><font style="font-family:times new roman;">)  </font></td>
<td valign="bottom">  </td>
<td valign="top"><font style="font-family:times new roman;">  </font></td>
<td style="text-align:right;" valign="top"><font style="font-family:times new roman;">(106,512,562 </font></td>
<td nowrap="nowrap" valign="top"><font style="font-family:times new roman;">)  </font></td></tr>
<tr style="font-size:1px;">
<td valign="bottom">  </td>
<td valign="bottom">  </td>
<td valign="top">
<p style="border-top:#000000 1px solid;"> </p></td>
<td valign="top">
<p style="border-top:#000000 1px solid;"> </p></td>
<td> </td>
<td valign="bottom"> </td>
<td valign="top">
<p style="border-top:#000000 1px solid;"> </p></td>
<td valign="top">
<p style="border-top:#000000 1px solid;"> </p></td>
<td> </td></tr>
<tr style="background-color:#cceeff;">
<td valign="top">
<p style="text-indent:-1em;margin-left:1em;"><font style="font-family:times new roman;">Finance receivables, net of unearned interest </font></p></td>
<td valign="bottom">   </td>
<td valign="top"><font style="font-family:times new roman;">  </font></td>
<td style="text-align:right;" valign="top"><font style="font-family:times new roman;">271,669,222 </font></td>
<td nowrap="nowrap" valign="top"><font style="font-family:times new roman;">   </font></td>
<td valign="bottom">  </td>
<td valign="top"><font style="font-family:times new roman;">  </font></td>
<td style="text-align:right;" valign="top"><font style="font-family:times new roman;">266,437,721 </font></td>
<td nowrap="nowrap" valign="top"><font style="font-family:times new roman;">   </font></td></tr>
<tr>
<td valign="top">
<p style="text-indent:-1em;margin-left:1em;"><font style="font-family:times new roman;">Allowance for credit losses </font></p></td>
<td valign="bottom">   </td>
<td valign="top"><font style="font-family:times new roman;">  </font></td>
<td style="text-align:right;" valign="top"><font style="font-family:times new roman;">(36,981,703 </font></td>
<td nowrap="nowrap" valign="top"><font style="font-family:times new roman;">)  </font></td>
<td valign="bottom">  </td>
<td valign="top"><font style="font-family:times new roman;">  </font></td>
<td style="text-align:right;" valign="top"><font style="font-family:times new roman;">(36,273,867 </font></td>
<td nowrap="nowrap" valign="top"><font style="font-family:times new roman;">)  </font></td></tr>
<tr style="font-size:1px;">
<td valign="bottom">  </td>
<td valign="bottom">  </td>
<td valign="top">
<p style="border-top:#000000 1px solid;"> </p></td>
<td valign="top">
<p style="border-top:#000000 1px solid;"> </p></td>
<td> </td>
<td valign="bottom"> </td>
<td valign="top">
<p style="border-top:#000000 1px solid;"> </p></td>
<td valign="top">
<p style="border-top:#000000 1px solid;"> </p></td>
<td> </td></tr>
<tr style="background-color:#cceeff;">
<td valign="top">
<p style="text-indent:-1em;margin-left:1em;"><font style="font-family:times new roman;">Finance receivables, net </font></p></td>
<td valign="bottom">   </td>
<td valign="top"><font style="font-family:times new roman;">$ </font></td>
<td style="text-align:right;" valign="top"><font style="font-family:times new roman;">234,687,519 </font></td>
<td nowrap="nowrap" valign="top"><font style="font-family:times new roman;">   </font></td>
<td valign="bottom">  </td>
<td valign="top"><font style="font-family:times new roman;">$ </font></td>
<td style="text-align:right;" valign="top"><font style="font-family:times new roman;">230,163,854 </font></td>
<td nowrap="nowrap" valign="top"><font style="font-family:times new roman;">   </font></td></tr>
</table></div>
<div><p style="margin-top:18px;margin-bottom:0px;" ><font style="font-family:times new roman;" ><b>5. Line of Credit
</b>
</font>
</p><p style="margin-top:6px;margin-bottom:0px;" ><font style="font-family:times new roman;" >The Company maintains a line of credit facility (the “Line”) up to $140,000,000, subject to formulas principally related to a percentage of eligible finance receivables, as defined. The pricing of the Line, which expires on November 30, 2011, is 300 basis points above 30-day LIBOR (4.00% and 4.00% at June 30, 2011 and March 31, 2011, respectively) with a 1% floor on LIBOR or at the prime rate. Prime rate borrowings are generally less than $5.0 million. The Company’s cost of borrowed funds, which is based upon the interest rates charged under the Line and the effect of the interest rate swap agreements (see note 6), amounted to 4.18% and 5.69% for the three months ended June 30, 2011 and 2010, respectively.
</font>
</p><p style="margin-top:12px;margin-bottom:0px;" ><font style="font-family:times new roman;" >Pledged as collateral for this credit facility are all of the assets of the Company. The outstanding amount of the credit facility was approximately $116,000,000 and $118,000,000 as of June 30, 2011 and March 31, 2011, respectively. The amount available under the line of credit was approximately $24,000,000 and $22,000,000 as of June 30, 2011 and March 31, 2011, respectively. The facility requires compliance with certain financial ratios and covenants and satisfaction of specified financial tests, including maintenance of asset quality and performance tests. Dividends require consent in writing by the agent and majority lenders under the facility. As of June 30, 2011, the Company was in full compliance with all debt covenants.
</font>
</p>
</div>
<div><p style="margin-top:18px;margin-bottom:0px;" ><font style="font-family:times new roman;" ><b>6. Interest Rate Swap Agreements
</b>
</font>
</p><p style="margin-top:6px;margin-bottom:0px;" ><font style="font-family:times new roman;" >As of June 30, 2011 and March 31, 2011, the Company did not have any outstanding interest rate swap agreements. Based on market conditions, the Company may or may not enter into new interest rate swap agreements during the current fiscal year. The swap agreements, in effect, converted a portion of the floating rate debt to a fixed rate, more closely matching the interest rate characteristics of finance receivables.
</font>
</p><p style="margin-top:12px;margin-bottom:0px;" ><font style="font-family:times new roman;" >The following table summarizes the activity in the notional amounts of interest rate swaps:
</font>
</p><p style="margin-top:0px;margin-bottom:0px;font-size:12px;" > 
</p><table border="0" cellspacing="0" cellpadding="0" width="76%" style="border-collapse:collapse;text-align:left;" ><tr><td width="77%" >
</td><td valign="bottom" width="5%" >
</td><td>
</td><td>
</td><td>
</td><td valign="bottom" width="5%" >
</td><td>
</td><td>
</td><td>
</td>
</tr><tr><td valign="bottom" ><font> 
</font>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="bottom" colspan="6" style="border-bottom:#000000 1px solid;text-align:left;" ><font style="font-family:times new roman;" ><b>Three months ended June 30,
</b>
</font>
</td><td valign="bottom" ><font> 
</font>
</td>
</tr><tr><td valign="bottom" ><font> 
</font>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="bottom" colspan="2" style="border-bottom:#000000 1px solid;text-align:left;" ><font style="font-family:times new roman;" ><b>2011
</b>
</font>
</td><td valign="bottom" ><font> 
</font>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="bottom" colspan="2" style="border-bottom:#000000 1px solid;text-align:left;" ><font style="font-family:times new roman;" ><b>2010
</b>
</font>
</td><td valign="bottom" ><font> 
</font>
</td>
</tr><tr style="background-color:#cceeff;" ><td valign="top" nowrap="nowrap" ><p style="text-indent:-1em;margin-left:1em;" ><font style="font-family:times new roman;" >Notional amounts at April 1
</font>
</p>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="bottom" nowrap="nowrap" ><font style="font-family:times new roman;" >$
</font>
</td><td valign="bottom" nowrap="nowrap" style="text-align:right;" ><font style="font-family:times new roman;" >—  
</font>
</td><td valign="bottom" nowrap="nowrap" ><font style="font-family:times new roman;" >  
</font>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="bottom" nowrap="nowrap" ><font style="font-family:times new roman;" >$
</font>
</td><td valign="bottom" nowrap="nowrap" style="text-align:right;" ><font style="font-family:times new roman;" >50,000,000
</font>
</td><td valign="bottom" nowrap="nowrap" ><font style="font-family:times new roman;" >  
</font>
</td>
</tr><tr><td valign="top" nowrap="nowrap" ><p style="text-indent:-1em;margin-left:1em;" ><font style="font-family:times new roman;" >New contracts
</font>
</p>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="top" nowrap="nowrap" ><font style="font-family:times new roman;" > 
</font>
</td><td valign="top" nowrap="nowrap" style="text-align:right;" ><font style="font-family:times new roman;" >—  
</font>
</td><td valign="top" nowrap="nowrap" ><font style="font-family:times new roman;" >  
</font>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="top" nowrap="nowrap" ><font style="font-family:times new roman;" > 
</font>
</td><td valign="top" nowrap="nowrap" style="text-align:right;" ><font style="font-family:times new roman;" >—  
</font>
</td><td valign="top" nowrap="nowrap" ><font style="font-family:times new roman;" >  
</font>
</td>
</tr><tr style="background-color:#cceeff;" ><td valign="top" nowrap="nowrap" ><p style="text-indent:-1em;margin-left:1em;" ><font style="font-family:times new roman;" >Matured contracts
</font>
</p>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="top" nowrap="nowrap" ><font style="font-family:times new roman;" > 
</font>
</td><td valign="top" nowrap="nowrap" style="text-align:right;" ><font style="font-family:times new roman;" >—  
</font>
</td><td valign="top" nowrap="nowrap" ><font style="font-family:times new roman;" >  
</font>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="top" nowrap="nowrap" ><font style="font-family:times new roman;" > 
</font>
</td><td valign="top" nowrap="nowrap" style="text-align:right;" ><font style="font-family:times new roman;" >(10,000,000
</font>
</td><td valign="top" nowrap="nowrap" ><font style="font-family:times new roman;" >) 
</font>
</td>
</tr><tr style="font-size:1px;" ><td valign="bottom" >
</td><td valign="bottom" >  
</td><td valign="bottom" ><p style="border-top:#000000 1px solid;" > 
</p>
</td><td valign="bottom" ><p style="border-top:#000000 1px solid;" > 
</p>
</td><td> 
</td><td valign="bottom" >  
</td><td valign="bottom" ><p style="border-top:#000000 1px solid;" > 
</p>
</td><td valign="bottom" ><p style="border-top:#000000 1px solid;" > 
</p>
</td><td> 
</td>
</tr><tr><td valign="top" nowrap="nowrap" ><p style="text-indent:-1em;margin-left:1em;" ><font style="font-family:times new roman;" >Notional amounts at June 30
</font>
</p>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="bottom" nowrap="nowrap" ><font style="font-family:times new roman;" >$
</font>
</td><td valign="bottom" nowrap="nowrap" style="text-align:right;" ><font style="font-family:times new roman;" >—  
</font>
</td><td valign="bottom" nowrap="nowrap" ><font style="font-family:times new roman;" >  
</font>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="bottom" nowrap="nowrap" ><font style="font-family:times new roman;" >$
</font>
</td><td valign="bottom" nowrap="nowrap" style="text-align:right;" ><font style="font-family:times new roman;" >40,000,000
</font>
</td><td valign="bottom" nowrap="nowrap" ><font style="font-family:times new roman;" >  
</font>
</td>
</tr><tr style="font-size:1px;" ><td valign="bottom" >
</td><td valign="bottom" >  
</td><td valign="bottom" ><p style="border-top:#000000 3px double;" > 
</p>
</td><td valign="bottom" ><p style="border-top:#000000 3px double;" > 
</p>
</td><td> 
</td><td valign="bottom" >  
</td><td valign="bottom" ><p style="border-top:#000000 3px double;" > 
</p>
</td><td valign="bottom" ><p style="border-top:#000000 3px double;" > 
</p>
</td><td> 
</td>
</tr>
</table><p style="margin-top:12px;margin-bottom:0px;" ><font style="font-family:times new roman;" >These interest rate swaps were previously designated as cash flow hedges. Based on credit market events that transpired in October 2008, the Company made an economic decision to elect the prime rate pricing option available under the Line for the month of October 2008. As a result, the critical terms of the interest rate swaps and hedged interest payments were no longer identical and the Company undesignated its interest rate swaps as cash flow hedges. Consequently, beginning in October 2008 changes in the fair value of interest rate swaps (unrealized gains and losses) were recorded in earnings. Unrealized losses previously recorded in accumulated other comprehensive loss were reclassified into earnings as interest payments on the Line and affect earnings over the remaining term of the respective swap agreements. The Company did not use interest rate swaps for speculative purposes.
</font>
</p><p style="margin-top:12px;margin-bottom:0px;" ><font style="font-family:times new roman;" >The locations and amounts of losses recognized in income are as follows:
</font>
</p><p style="margin-top:0px;margin-bottom:0px;font-size:12px;" > 
</p><table border="0" cellspacing="0" cellpadding="0" width="76%" style="border-collapse:collapse;text-align:left;" ><tr><td width="80%" >
</td><td valign="bottom" width="5%" >
</td><td>
</td><td>
</td><td>
</td><td valign="bottom" width="5%" >
</td><td>
</td><td>
</td><td>
</td>
</tr><tr><td valign="bottom" ><font> 
</font>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="bottom" colspan="6" style="border-bottom:#000000 1px solid;text-align:left;" ><font style="font-family:times new roman;" ><b>Three months ended
</b>
</font><br />
<font style="font-family:times new roman;" ><b>June 30,
</b>
</font>
</td><td valign="bottom" ><font> 
</font>
</td>
</tr><tr><td valign="bottom" ><font> 
</font>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="bottom" colspan="2" style="border-bottom:#000000 1px solid;text-align:left;" ><font style="font-family:times new roman;" ><b>2011
</b>
</font>
</td><td valign="bottom" ><font> 
</font>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="bottom" colspan="2" style="border-bottom:#000000 1px solid;text-align:left;" ><font style="font-family:times new roman;" ><b>2010
</b>
</font>
</td><td valign="bottom" ><font> 
</font>
</td>
</tr><tr style="background-color:#cceeff;" ><td valign="top" nowrap="nowrap" ><p style="text-indent:-1em;margin-left:1em;" ><font style="font-family:times new roman;" >Periodic change in fair value of interest rate swaps
</font>
</p>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="bottom" nowrap="nowrap" ><font style="font-family:times new roman;" >$
</font>
</td><td valign="bottom" nowrap="nowrap" style="text-align:right;" ><font style="font-family:times new roman;" >—  
</font>
</td><td valign="bottom" nowrap="nowrap" ><font style="font-family:times new roman;" >  
</font>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="bottom" nowrap="nowrap" ><font style="font-family:times new roman;" >$
</font>
</td><td valign="bottom" nowrap="nowrap" style="text-align:right;" ><font style="font-family:times new roman;" >393,198
</font>
</td><td valign="bottom" nowrap="nowrap" ><font style="font-family:times new roman;" >  
</font>
</td>
</tr><tr><td valign="top" nowrap="nowrap" ><p style="text-indent:-1em;margin-left:1em;" ><font style="font-family:times new roman;" >Losses reclassified from accumulated other comprehensive loss
</font>
</p>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="top" nowrap="nowrap" ><font style="font-family:times new roman;" > 
</font>
</td><td valign="top" nowrap="nowrap" style="text-align:right;" ><font style="font-family:times new roman;" >—  
</font>
</td><td valign="top" nowrap="nowrap" ><font style="font-family:times new roman;" >  
</font>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="top" nowrap="nowrap" ><font style="font-family:times new roman;" > 
</font>
</td><td valign="top" nowrap="nowrap" style="text-align:right;" ><font style="font-family:times new roman;" >(148,833
</font>
</td><td valign="top" nowrap="nowrap" ><font style="font-family:times new roman;" >) 
</font>
</td>
</tr><tr style="font-size:1px;" ><td valign="bottom" >
</td><td valign="bottom" >  
</td><td valign="top" ><p style="border-top:#000000 1px solid;" > 
</p>
</td><td valign="top" ><p style="border-top:#000000 1px solid;" > 
</p>
</td><td> 
</td><td valign="bottom" >  
</td><td valign="bottom" ><p style="border-top:#000000 1px solid;" > 
</p>
</td><td valign="bottom" ><p style="border-top:#000000 1px solid;" > 
</p>
</td><td> 
</td>
</tr><tr style="background-color:#cceeff;" ><td valign="top" >
</td><td valign="bottom" ><font>  
</font>
</td><td valign="top" nowrap="nowrap" ><font style="font-family:times new roman;" > 
</font>
</td><td valign="top" nowrap="nowrap" style="text-align:right;" ><font style="font-family:times new roman;" >—  
</font>
</td><td valign="top" nowrap="nowrap" ><font style="font-family:times new roman;" >  
</font>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="top" nowrap="nowrap" ><font style="font-family:times new roman;" > 
</font>
</td><td valign="top" nowrap="nowrap" style="text-align:right;" ><font style="font-family:times new roman;" >244,365
</font>
</td><td valign="top" nowrap="nowrap" ><font style="font-family:times new roman;" >  
</font>
</td>
</tr><tr><td valign="top" nowrap="nowrap" ><p style="text-indent:-1em;margin-left:1em;" ><font style="font-family:times new roman;" >Periodic settlement differentials included in interest expense
</font>
</p>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="bottom" nowrap="nowrap" ><font style="font-family:times new roman;" > 
</font>
</td><td valign="bottom" nowrap="nowrap" style="text-align:right;" ><font style="font-family:times new roman;" >—  
</font>
</td><td valign="bottom" nowrap="nowrap" ><font style="font-family:times new roman;" >  
</font>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="top" nowrap="nowrap" ><font style="font-family:times new roman;" > 
</font>
</td><td
valign="top" nowrap="nowrap" style="text-align:right;" ><font style="font-family:times new roman;" >(392,356
</font>
</td><td valign="top" nowrap="nowrap" ><font style="font-family:times new roman;" >) 
</font>
</td>
</tr><tr style="font-size:1px;" ><td valign="bottom" >
</td><td valign="bottom" >  
</td><td valign="top" ><p style="border-top:#000000 1px solid;" > 
</p>
</td><td valign="top" ><p style="border-top:#000000 1px solid;" > 
</p>
</td><td> 
</td><td valign="bottom" >  
</td><td valign="bottom" ><p style="border-top:#000000 1px solid;" > 
</p>
</td><td valign="bottom" ><p style="border-top:#000000 1px solid;" > 
</p>
</td><td> 
</td>
</tr><tr style="background-color:#cceeff;" ><td valign="top" nowrap="nowrap" ><p style="text-indent:-1em;margin-left:1em;" ><font style="font-family:times new roman;" >Pre-tax loss recognized in income
</font>
</p>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="top" nowrap="nowrap" ><font style="font-family:times new roman;" >$
</font>
</td><td valign="top" nowrap="nowrap" style="text-align:right;" ><font style="font-family:times new roman;" > —  
</font>
</td><td valign="top" nowrap="nowrap" ><font style="font-family:times new roman;" >  
</font>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="top" nowrap="nowrap" ><font style="font-family:times new roman;" >$
</font>
</td><td valign="top" nowrap="nowrap" style="text-align:right;" ><font style="font-family:times new roman;" >(147,991
</font>
</td><td valign="top" nowrap="nowrap" ><font style="font-family:times new roman;" >) 
</font>
</td>
</tr><tr style="font-size:1px;" ><td valign="bottom" >
</td><td valign="bottom" >  
</td><td valign="bottom" ><p style="border-top:#000000 3px double;" > 
</p>
</td><td valign="bottom" ><p style="border-top:#000000 3px double;" > 
</p>
</td><td> 
</td><td valign="bottom" >  
</td><td valign="bottom" ><p style="border-top:#000000 3px double;" > 
</p>
</td><td valign="bottom" ><p style="border-top:#000000 3px double;" > 
</p>
</td><td> 
</td>
</tr>
</table><p style="margin-top:0px;margin-bottom:0px;" ><font> 
</font>
</p>
<p style="margin-top:0px;margin-bottom:0px;" ><font> </font>
</p><p style="margin-top:0px;margin-bottom:0px;" ><font style="font-family:times new roman;" >The Company recorded net realized gains and losses from the swap agreements in the interest expense line item of the consolidated statement of income. The following table summarizes the average variable rates received and average fixed rates paid under the swap agreements.
</font>
</p><p style="margin-top:0px;margin-bottom:0px;font-size:12px;" > 
</p><table border="0" cellspacing="0" cellpadding="0" width="76%" style="border-collapse:collapse;text-align:left;" ><tr><td width="81%" >
</td><td valign="bottom" width="7%" >
</td><td>
</td><td>
</td><td>
</td><td valign="bottom" width="7%" >
</td><td>
</td><td>
</td><td>
</td>
</tr><tr><td valign="bottom" ><font> 
</font>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="bottom" colspan="6" style="border-bottom:#000000 1px solid;text-align:left;" ><font style="font-family:times new roman;" ><b>Three months ended
</b>
</font><br />
<font style="font-family:times new roman;" ><b>June  30,
</b>
</font>
</td><td valign="bottom" ><font> 
</font>
</td>
</tr><tr><td valign="bottom" ><font> 
</font>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="bottom" colspan="2" style="border-bottom:#000000 1px solid;text-align:left;" ><font style="font-family:times new roman;" ><b>2011
</b>
</font>
</td><td valign="bottom" ><font> 
</font>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="bottom" colspan="2" style="border-bottom:#000000 1px solid;text-align:left;" ><font style="font-family:times new roman;" ><b>2010
</b>
</font>
</td><td valign="bottom" ><font> 
</font>
</td>
</tr><tr style="background-color:#cceeff;" ><td valign="top" ><p style="text-indent:-1em;margin-left:1em;" ><font style="font-family:times new roman;" >Average variable rate received
</font>
</p>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="bottom" ><font style="font-family:times new roman;" > 
</font>
</td><td valign="bottom" style="text-align:right;" ><font style="font-family:times new roman;" >—  
</font>
</td><td valign="bottom" nowrap="nowrap" ><font style="font-family:times new roman;" >  
</font>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="bottom" ><font style="font-family:times new roman;" > 
</font>
</td><td valign="bottom" style="text-align:right;" ><font style="font-family:times new roman;" >0.29
</font>
</td><td valign="bottom" nowrap="nowrap" ><font style="font-family:times new roman;" >% 
</font>
</td>
</tr><tr><td valign="top" ><p style="text-indent:-1em;margin-left:1em;" ><font style="font-family:times new roman;" >Average fixed rate paid
</font>
</p>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="bottom" ><font style="font-family:times new roman;" > 
</font>
</td><td valign="bottom" style="text-align:right;" ><font style="font-family:times new roman;" >—  
</font>
</td><td valign="bottom" nowrap="nowrap" ><font style="font-family:times new roman;" >  
</font>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="bottom" ><font style="font-family:times new roman;" > 
</font>
</td><td valign="bottom" style="text-align:right;" ><font style="font-family:times new roman;" >3.89
</font>
</td><td valign="bottom" nowrap="nowrap" ><font style="font-family:times new roman;" >% 
</font>
</td>
</tr>
</table><p
style="margin-top:12px;margin-bottom:0px;" ><font style="font-family:times new roman;" >The following table reconciles net income with comprehensive income:
</font>
</p><p style="margin-top:0px;margin-bottom:0px;font-size:12px;" > 
</p><table border="0" cellspacing="0" cellpadding="0" width="76%" style="border-collapse:collapse;text-align:left;" ><tr><td width="74%" >
</td><td valign="bottom" width="4%" >
</td><td>
</td><td>
</td><td>
</td><td valign="bottom" width="4%" >
</td><td>
</td><td>
</td><td>
</td>
</tr><tr><td valign="bottom" ><font> 
</font>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="bottom" colspan="6" style="border-bottom:#000000 1px solid;text-align:left;" ><font style="font-family:times new roman;" ><b>Three months ended
</b>
</font><br />
<font style="font-family:times new roman;" ><b>June 30,
</b>
</font>
</td><td valign="bottom" ><font> 
</font>
</td>
</tr><tr><td valign="bottom" ><font> 
</font>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="bottom" colspan="2" style="border-bottom:#000000 1px solid;text-align:left;" ><font style="font-family:times new roman;" ><b>2011
</b>
</font>
</td><td valign="bottom" ><font> 
</font>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="bottom" colspan="2" style="border-bottom:#000000 1px solid;text-align:left;" ><font style="font-family:times new roman;" ><b>2010
</b>
</font>
</td><td valign="bottom" ><font> 
</font>
</td>
</tr><tr style="background-color:#cceeff;" ><td valign="top" ><p style="text-indent:-1em;margin-left:1em;" ><font style="font-family:times new roman;" >Net income
</font>
</p>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="bottom" ><font style="font-family:times new roman;" >$
</font>
</td><td valign="bottom" style="text-align:right;" ><font style="font-family:times new roman;" >5,302,793
</font>
</td><td valign="bottom" nowrap="nowrap" ><font style="font-family:times new roman;" >  
</font>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="bottom" ><font style="font-family:times new roman;" >$
</font>
</td><td valign="bottom" style="text-align:right;" ><font style="font-family:times new roman;" >3,575,838
</font>
</td><td valign="bottom" nowrap="nowrap" ><font style="font-family:times new roman;" >  
</font>
</td>
</tr><tr><td valign="top" ><p style="text-indent:-1em;margin-left:1em;" ><font style="font-family:times new roman;" >Reclassification adjustment for loss included in net income, net of tax benefit of $56,980
</font>
</p>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="bottom" ><font style="font-family:times new roman;" > 
</font>
</td><td valign="bottom" style="text-align:right;" ><font style="font-family:times new roman;" >—  
</font>
</td><td valign="bottom" nowrap="nowrap" ><font style="font-family:times new roman;" >  
</font>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="bottom" ><font style="font-family:times new roman;" > 
</font>
</td><td valign="bottom" style="text-align:right;" ><font style="font-family:times new roman;" >91,853
</font>
</td><td valign="bottom" nowrap="nowrap" ><font style="font-family:times new roman;" >  
</font>
</td>
</tr><tr style="font-size:1px;" ><td valign="bottom" >
</td><td valign="bottom" >  
</td><td valign="bottom" ><p style="border-top:#000000 1px solid;" > 
</p>
</td><td valign="bottom" ><p style="border-top:#000000 1px solid;" > 
</p>
</td><td> 
</td><td valign="bottom" >  
</td><td valign="bottom" ><p style="border-top:#000000 1px solid;" > 
</p>
</td><td valign="bottom" ><p style="border-top:#000000 1px solid;" > 
</p>
</td><td> 
</td>
</tr><tr style="background-color:#cceeff;" ><td valign="top" ><p style="text-indent:-1em;margin-left:1em;" ><font style="font-family:times new roman;" >Comprehensive income
</font>
</p>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="bottom" ><font style="font-family:times new roman;" >$
</font>
</td><td valign="bottom" style="text-align:right;" ><font style="font-family:times new roman;" >5,302,793
</font>
</td><td valign="bottom" nowrap="nowrap" ><font style="font-family:times new roman;" >  
</font>
</td><td valign="bottom" ><font>  
</font>
</td><td valign="bottom" ><font style="font-family:times new roman;" >$
</font>
</td><td valign="bottom" style="text-align:right;" ><font style="font-family:times new roman;" >3,667,691
</font>
</td><td valign="bottom" nowrap="nowrap" ><font style="font-family:times new roman;" >  
</font>
</td>
</tr><tr style="font-size:1px;" ><td valign="bottom" >
</td><td valign="bottom" >  
</td><td valign="bottom" ><p style="border-top:#000000 3px double;" > 
</p>
</td><td valign="bottom" ><p style="border-top:#000000 3px double;" > 
</p>
</td><td> 
</td><td valign="bottom" >  
</td><td valign="bottom" ><p style="border-top:#000000 3px double;" > 
</p>
</td><td valign="bottom" ><p style="border-top:#000000 3px double;" > 
</p>
</td><td> 
</td>
</tr>
</table>
</div>
<div><p style="margin-top:18px;margin-bottom:0px;" ><font style="font-family:times new roman;" ><b>7. Fair Value Disclosures
</b>
</font>
</p><p style="margin-top:6px;margin-bottom:0px;" ><font style="font-family:times new roman;" >The Company measures specific assets and liabilities at fair value, which is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When applicable, the Company utilizes market data or assumptions that market participants would use in pricing the asset or liability under a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs about which little or no market data exists, therefore requiring an entity to develop its own assumptions.
</font>
</p><p style="margin-top:18px;margin-bottom:0px;" ><font style="font-family:times new roman;" >Assets and Liabilities Recorded at Fair Value on a Recurring Basis
</font>
</p><p style="margin-top:6px;margin-bottom:0px;" ><font style="font-family:times new roman;" >The Company may be required, from time to time, to measure certain assets and liabilities at fair value on a recurring basis. The Company does not currently have any assets or liabilities measured at fair value on a recurring basis.
</font>
</p><p style="margin-top:18px;margin-bottom:0px;" ><font style="font-family:times new roman;" >Financial Instruments Not Measured at Fair Value
</font>
</p><p style="margin-top:6px;margin-bottom:0px;" ><font style="font-family:times new roman;" >The Company’s financial instruments, other than the interest rate swap agreements, consist of cash, finance receivables, accrued interest, the Line, and accounts payable. For each of these financial instruments the carrying value approximates fair value. The carrying value of cash approximates the fair value due to the nature of these accounts. Finance receivables, net approximates fair value based on the price paid to acquire indirect loans. The price paid reflects competitive market interest rates and purchase discounts for the Company’s chosen credit grade in the economic environment. This market is highly liquid as the Company acquires individual loans on a daily basis from dealers. The initial terms of the indirect finance receivables range from 12 to 72 months. The initial terms of the direct finance receivables range from 6 to 48 months. In addition, there have been minimal changes in interest rates and purchase discounts related to these types of loans. If liquidated outside of the normal course of business, the amount received may not be the carrying value. The Line was signed within the fourth quarter of fiscal year ending March 31, 2010. Based on current market conditions, any new or renewed credit facility would contain pricing that approximates the Company’s current Line. Based on these market conditions, the fair value of the Line as of June 30, 2011 was estimated to be equal to the book value. Accrued interest is paid monthly. As a result of the short-term nature of this activity, the carrying value of the accrued interest approximates fair value. The interest rate for the line of credit is a variable rate based on LIBOR pricing options or at the prime rate.
</font>
</p><p style="margin-top:18px;margin-bottom:0px;" ><font style="font-family:times new roman;" >Assets and Liabilities Recorded at Fair Value on a Nonrecurring Basis
</font>
</p><p style="margin-top:6px;margin-bottom:0px;" ><font style="font-family:times new roman;" >The Company may be required, from time to time, to measure certain assets and liabilities at fair value on a nonrecurring basis. The Company does not currently have any assets or liabilities measured at fair value on a nonrecurring basis.
</font>
</p><p style="margin-top:0px;margin-bottom:0px;" ><font> 
</font>
</p>
</div>
<div><p style="margin-top:0px;margin-bottom:0px;" ><font style="font-family:times new roman;" ><b>8.
</b> <b>Recently Issued Accounting Standards
</b>
</font>
</p><p style="margin-top:6px;margin-bottom:0px;" ><font style="font-family:times new roman;" >The Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2011-02: “Receivables (Topic 310) – A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring” in April 2011. The ASU’s main objective is to provide greater transparency regarding whether additional guidance or clarification is needed to help creditors in determining whether a creditor has granted a concession and whether a debtor is experiencing financial difficulties for purposes of determining whether a restructuring constitutes a troubled debt restructuring. The guidance is effective for interim and annual periods beginning on or after June 15, 2011. The Company does not expect the guidance to have a material impact on the Company’s consolidated financial statements.
</font>
</p><p style="margin-top:12px;margin-bottom:0px;" ><font style="font-family:times new roman;" >The FASB issued ASU 2011-05: “Comprehensive Income (Topic 220) – “Presentation of Comprehensive Income” in June 2011. The ASU’s main objective is to show the components of comprehensive income to provide a better understanding of the entity’s activities. The guidance is effective for interim and annual periods beginning after December 15, 2011. Other than financial statement display, the update will have no impact on the reported amounts in the Company’s consolidated financial statements.
</font>
</p>
</div>