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):

                                              Three months                 Nine months
                                           ended December 31,          ended December 31,
                                           2008          2007          2008          2007
                                                       (Dollars in thousands)

 Average gross loans receivable (1)      $ 689,267       608,862       652,846       566,563
 Average net loans receivable (2)          507,965       448,934       481,807       419,050

 Expenses as a % of total revenue:
 Provision for loan losses                    29.6 %        26.4 %        25.3 %        22.8 %
 General and administrative                   51.9 %        53.9 %        53.2 %        53.8 %
 Total interest expense                        2.8 %         3.8 %         2.9 %         3.5 %

 Operating margin (3)                         18.5 %        19.7 %        21.5 %        23.4 %

 Return on average assets (annualized)         7.3 %         5.9 %         8.3 %         8.3 %

 Offices opened or acquired, net                16            14            85            99

 Total offices (at period end)                 923           831           923           831

(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) Operating margin is computed as total revenues less provision for loan losses and general and administrative expenses, as a percentage of total revenue.

Comparison of Three Months Ended December 31, 2008, Versus Three Months Ended December, 2007

Net income increased to $10.0 million for the three months ended December 31, 2008, or 37.3%, from the three month period ended December 31, 2007. Operating income (revenues less provision for loan losses and general and administrative expenses) increased approximately $1.1 million, or 6.3%.

Total revenues rose to $99.7 million during the quarter ended December 31, 2008, a 13.2% increase over the $88.0 million for the corresponding quarter of the previous year. This increase was attributable to new offices and an increase in revenues from offices open throughout both quarterly periods, gain on the extinguishment of debt and gain on the sale of the foreign currency option. Revenues from the 727 offices open throughout both quarterly periods increased by approximately 7.1%. At December 31, 2008, the Company had 923 offices in operation, an increase of 85 offices from March 31, 2008.

Interest and fee income for the quarter ended December 31, 2008 increased by $9.7 million, or 12.9%, over the same period of the prior year. This increase resulted from an $80.4 million increase, or 13.2%, in average gross loans receivable over the two corresponding periods.

Insurance commissions and other income increased by $1.9 million, or 15.1%, between the two quarterly periods. Insurance commissions increased by $405,000, or 4.8%, during the most recent quarter when compared to the prior year quarter due to the increase in loans in those states where credit insurance is sold in conjunction with the loan. Other income increased by approximately $1.5 million, or 34.3%, over the two corresponding quarters primarily due to a $1.5 million gain on the sale of the foreign currency option and a $2.0 million gain on the extinguishment of $5 million par value of the Convertible Notes. The gains were offset by a $1.0 million increase in the unrealized loss on the fair value of the interest rate swaps, a $700,000 reduction in World Class Buying Club ("WCBC") sales, and a $100,000 reduction in auto club sales.

The provision for loan losses during the quarter ended December 31, 2008 increased by $6.3 million, or 27.0%, from the same quarter last year. Delinquencies and charge-offs continued to increase during the third quarter as a result of the ongoing economic environment. Accounts that were 61 days or more past due increased from 2.7% to 3.3% on a recency basis and from 3.9% to 4.6% on a contractual basis when comparing the two quarter end statistics. Net charge-offs as a percentage of average net loans increased from 16.7% (annualized) during the prior year third quarter to 19.6% (annualized) during the most recent quarter. As expected, due to the economic conditions, our charge-offs have continued to increase to historical levels. The Company continues to monitor closely the loan portfolio in light of the softening economy and believes that the loss ratios are within acceptable ranges in light of current economic conditions. At this time, management does not expect to see the Company's loss ratios improve for the remainder of the fiscal year.

General and administrative expenses for the quarter ended December 31, 2008 increased by $4.2 million, or 8.9% over the same quarter of fiscal 2008. Overall, general and administrative expenses, when divided by average open offices, decreased by approximately 2.0% when comparing the two periods. The total general and administrative expense as a percent of total revenues was 51.9% for the three months ended December 31, 2008 and was 53.9% for the three months ended December 31, 2007.

Interest expense decreased by approximately $551,000 when comparing the two corresponding quarterly periods as a result of a decrease in the average interest rate, offset by increases in the average outstanding debt balance.

The Company's effective income tax rate decreased to 36.1% for the quarter ended December 31, 2008. The Company's effective income tax rate for the quarter ended December 31, 2007 was 48.0% primarily due to a charge of $1.5 million related to a state jurisdiction tax examination in that quarter. Excluding the $1.5 million charge, the effective income tax rate for the quarter ended December 31, 2007, would have been 37.3%. At this time, it is still too early to predict the outcome on this tax issue or any future recoverability of this charge. Until the tax issue is finally resolved, the Company will continue to accrue approximately $40,000 per quarter for interest and penalties. The current quarter decrease in the Company's effective income tax rate was primarily due to a non-taxable gain of $700,000 related to the extinguishment of debt mentioned above.

In addition, the current quarter effective rate was reduced due to the extinguishment of debt. Of the $2.0 million gain recorded to other income, only $1.3 million was treated as a taxable gain.

Comparison of Nine Months Ended December 31, 2008, Versus Nine Months Ended December 31, 2007

Net income increased to $32.7 million for the nine months ended December 31, 2008, or 14.4%, from the nine month period ended December 31, 2007. Operating income increased approximately $3.1 million, or 5.4%.

Total revenues rose to $279.8 million during the nine months ended December 31, 2008, a 14.4% increase over the $244.6 million for the corresponding nine months of the previous year. This increase was attributable to new offices and an increase in revenues from offices open throughout both nine month periods, a gain on the foreign currency option and a gain on the extinguishment of debt. Revenues from the 727 offices open throughout both quarterly periods increased by approximately 8.3%.

Interest and fee income for the nine months ended December 31, 2008 increased by $31.0 million, or 14.7%, over the same period of the prior year. This increase resulted from an $86.3 million increase, or 15.2%, in average gross loans receivable over the two corresponding periods.

Insurance commissions and other income increased by $4.2 million, or 12.2%, between the two nine month periods. Insurance commissions increased by $1.8 million, or 7.8%, during the most recent nine months when compared to the prior year nine months due to the increase in loans in those states where credit insurance is sold in conjunction with the loan. Other income increased by approximately $2.4 million, or 20.8%, over the corresponding nine months primarily due to a gain on the foreign currency option and a gain on the extinguishment of debt. The gains were offset by a reduction of revenue from the auto club sales of approximately $260,000 and a reduction of revenue from WCBC sales of approximately $300,000.

The provision for loan losses during the nine months ended December 31, 2008 increased by $14.8 million, or 26.5%, from the same nine months last year. Delinquencies and charge-offs continued to increase during the first nine months as a result of the ongoing deterioration in the economic environment. Net charge-offs as a percentage of average net loans increased from 15.0%
(annualized) during the prior year first nine months to 17.1% (annualized)
during the most recent nine months.

General and administrative expenses for the nine months ended December 31, 2008 increased by $17.3 million, or 13.1% over the same nine months of fiscal 2008. Overall, general and administrative expenses, when divided by average open offices, increased by approximately 1.4% when comparing the two periods. The total general and administrative expense as a percent of total revenues was 53.2% for the nine months ended December 31, 2008 and 53.8% the nine months ended December 31, 2007.

Interest expense decreased by approximately $590,000, or 6.9%, when comparing the two corresponding nine month periods as a result of increases in the average outstanding debt balance, offset by a decrease in the average interest rate.

The Company's effective income tax rate decreased to 37.4% for the nine months ended December 31, 2008 compared to 41.1% for the first nine months of the prior year. This decrease related to the FIN 48 adjustment discussed in Note 10 of the Consolidated Financial Statements and the extinguishment of debt.

Critical Accounting Policies

The Company's accounting and reporting policies are in accordance with U. S. generally accepted accounting principles and conform to general practices within the finance company industry. Certain accounting policies involve significant judgment by the Company's management, including the use of estimates and assumptions which affect the reported amounts of assets, liabilities, revenues, and expenses. As a result, changes in these estimates and assumptions could significantly affect the Company's financial position and results of operations. The Company considers its policies regarding the allowance for loan losses and share-based compensation to be its most critical accounting policies due to the significant degree of management judgment involved.

Allowance for Loan Losses

The Company has developed policies and procedures for assessing the adequacy of the allowance for loan losses that take into consideration various assumptions and estimates with respect to the loan portfolio. The Company's assumptions and estimates may be affected in the future by changes in economic conditions, among other factors. Additional information concerning the allowance for loan losses is discussed under "Management's Discussion and Analysis of Financial Conditions and Results of Operations - Credit Quality" in the Company's report on Form 10-K for the fiscal year ended March 31, 2008.

Share-Based Compensation

The Company measures compensation cost for share-based awards at fair value and recognizes compensation over the service period for awards expected to vest. The fair value of restricted stock is based on the number of shares granted and the quoted price of the Company's common stock, and the fair value of stock options is determined using the Black-Scholes valuation model. The Black-Scholes model requires the input of highly subjective assumptions, including expected volatility, risk-free interest rate and expected life, changes to which can materially affect the fair value estimate. In addition, the estimation of share-based awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from the Company's current estimates, such amounts will be recorded as a cumulative adjustment in the period estimates are revised. The Company considers many factors when estimating expected forfeitures, including types of awards, employee class, and historical experience. Actual results, and future changes in estimates, may differ substantially from the Company's current estimates.

Income Taxes

Management uses certain assumptions and estimates in determining income taxes payable or refundable, deferred income tax liabilities and assets for events recognized differently in its financial statements and income tax returns, and income tax expense. Determining these amounts requires analysis of certain transactions and interpretation of tax laws and regulations. Management exercises considerable judgment in evaluating the amount and timing of recognition of the resulting income tax liabilities and assets. These judgments and estimates are re-evaluated on a periodic basis as regulatory and business factors change.

No assurance can be given that either the tax returns submitted by management or the income tax reported on the Consolidated Financial Statements will not be adjusted by either adverse rulings by the U.S. Tax Court, or state or local taxing authorities, changes in tax laws or regulations, or assessments made by the Internal Revenue Service ("IRS") or state or local taxing authorities. The Company is subject to potential adverse adjustments, including but not limited to: an increase in the statutory federal or state income tax rates, the permanent non-deductible amounts currently considered deductible either now or in future periods, and the dependency on the generation of future taxable income, including capital gains, in order to ultimately realize deferred income tax assets.

The Company adopted FASB Interpretation No. 48 ("FIN 48"), "Accounting for Uncertainty in Income Taxes," on April 1, 2007. Under FIN 48, the Company includes the current and deferred tax impact of its tax positions in the financial statements when it is more likely than not (likelihood of greater than 50%) that such positions will be sustained by taxing authorities, with full knowledge of relevant information, based on the technical merits of the tax position. While the Company supports its tax positions by unambiguous tax law, prior experience with the taxing authority, and analysis that considers all relevant facts, circumstances and regulations, management must still rely on assumptions and estimates to determine the overall likelihood of success and proper quantification of a given tax position.

Liquidity and Capital Resources

The Company has financed its operations, acquisitions and office expansion through a combination of cash flow from operations and borrowings from its institutional lenders. The Company's primary ongoing cash requirements relate to the funding of new offices and acquisitions, the overall growth of loans outstanding, the repayment of indebtedness and the repurchase of its common stock. As the Company's gross loans receivable increased from $416.3 million at March 31, 2006 to $599.5 million at March 31, 2008, net cash provided by operating activities for fiscal years 2006, 2007 and 2008 was $98.0 million, $110.1 million and $136.0 million, respectively.

The Company believes stock repurchases to be a viable component of the Company's long-term financial strategy and an excellent use of excess cash when the opportunity arises. Although the Company historically has not repurchased shares during our loan growth season between October and December, management continues to analyze during this season, as it does at any other given time, whether stock repurchases are then advisable in light of our existing cash position, stock price, and available opportunities. Based on these considerations, the Company may repurchase stock during this season or at any other time. As of February 2, 2009, the Company has $13.1 million in aggregate remaining repurchase capacity under all of the Company's outstanding repurchase authorizations. In addition, we may from time to time seek to retire or purchase our outstanding debt through cash purchases and/or exchanges for equity securities, in open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

The Company plans to open or acquire at least 70 branches in the United States and 25 branches in Mexico during fiscal 2009. Expenditures by the Company to open and furnish new offices averaged approximately $25,000 per office during fiscal 2008. New offices have also required from $100,000 to $400,000 to fund outstanding loans receivable originated during their first 12 months of operation.

The Company acquired 11 offices and 10 loan portfolios from competitors in 9 states in 13 separate transactions during the first nine months of fiscal 2009. Gross loans receivable purchased in these transactions were approximately $10.1 million in the aggregate at the dates of purchase. The Company believes that attractive opportunities to acquire new offices or receivables from its competitors or to acquire offices in communities not currently served by the Company will continue to become available as conditions in local economies and the financial circumstances of owners change.

The Company has a $187.0 million base credit facility with a syndicate of banks. In addition to the base revolving credit commitment, there is a $30.0 million seasonal revolving credit commitment available November 15 of each year through March 31 of the immediately succeeding year to cover the increase in loan demand during this period. On August 4, 2008, the credit facility expiration date was amended to September 30, 2010. Funds borrowed under the revolving credit facility bear interest, at the Company's option, at either the agent bank's prime rate per annum or the LIBOR rate plus 1.80% per annum. At December 31, 2008, the interest rate on borrowings under the revolving credit facility was 3.25%. The Company pays a commitment fee equal to 0.375% per annum of the daily unused portion of the revolving credit facility. Amounts outstanding under the revolving credit facility may not exceed specified percentages of eligible loans receivable. On December 31, 2008, $185,350,000 million was outstanding under this facility, and there was $31,650,000 million of unused borrowing availability under the borrowing base limitations. Based on management's discussions with its bankers, the Company does not currently believe that the recent turmoil in the credit markets will affect its access to funding to the extent permitted by the credit facility.

The Company's credit agreements contain a number of financial covenants, including minimum net worth and fixed charge coverage requirements. The credit agreements also contain certain other covenants, including covenants that impose limitations on the Company with respect to (i) declaring or paying dividends or making distributions on or acquiring common or preferred stock or warrants or options; (ii) redeeming or purchasing or prepaying principal or interest on subordinated debt; (iii) incurring additional indebtedness; and (iv) entering into a merger, consolidation or sale of substantial assets or subsidiaries. The Company believes that it was in compliance with these agreements as of December 31, 2008, and does not believe that these agreements will materially limit its business and expansion strategy.

The Company's contractual obligations as of December 31, 2008 relating to FIN 48 included unrecognized tax benefits of $4.5 million which are expected to be settled in greater than one year. While the settlement of the obligation is expected to be in excess of one year, the precise timing of the settlement is indeterminable.

The Company believes that cash flow from operations and borrowings under its revolving credit facility or other sources will be adequate to fund the expected cost of opening or acquiring new offices, including funding initial operating losses of new offices and funding loans receivable originated by those offices and the Company's other offices and the scheduled repayment of the other notes payable (for the next 12 months and for the foreseeable future beyond that). Other than possible effects that could result from a worsening or prolongment of existing adverse conditions in the general economy or credit or capital markets on which the Company depends in part to fund its operations, management is not currently aware of any trends, demands, commitments, events or uncertainties related to the Company's operations that it believes will result in, or are reasonably likely to result in, the Company's liquidity increasing or decreasing in any material way. From time to time, the Company has needed and obtained, and expects that it will continue to need on a periodic basis, an increase in the borrowing limits under its revolving credit facility. Although the Company has successfully obtained such increases in the past and believes that it will be able to obtain such increases or secure other sources of financing in the future as the need arises, continued uncertainty and turmoil in the credit markets could impair the Company's ability to secure funding and adversely impact the cost of any available funding. There can be no assurance that this additional funding will be available if and when needed or that the cost or other terms of any such funding will not be materially unfavorable. For additional information regarding potential liquidity risks to the Company, see Part II, Item 1, Risk Factors, "Adverse conditions in the capital and credit markets generally, or any particular liquidity problems affecting one or more members of the syndicate of banks that are members of the Company's credit facility, could affect the Company's ability to meet its liquidity needs and its cost of capital," included in the Report on Form 10-Q, as well as our risk factors as previously disclosed under Park I, Item 1A (page 9) of the Company's Annual Report on Form 10-K for the year ended March 31, 2008.

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 two of the eleven states in which the Company currently operates allow indexing of maximum loan amounts to the Consumer Price Index and nine are unregulated regarding the loan size. 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.

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.

Recently Issued Accounting Pronouncements

Business Combinations

In December 2007, the Financial Accounting Standards Board issued SFAS No. 141 (revised 2007) ("SFAS 141R"), Business Combinations, which replaces SFAS 141, Business Combinations. SFAS 141R requires an acquirer to recognize the assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at the acquisition date, measured at their fair values as of that date, with limited exceptions. SFAS 141R also requires acquisition-related costs and restructuring costs that the acquirer expected, but was not obligated to incur at the acquisition date, to be recognized separately from the business combination. In addition, SFAS 141R amends SFAS No. 109, Accounting for Income Taxes, to require the acquirer to recognize changes in the amount of its deferred tax benefits that are recognizable because of a business combination either in income from continuing operations in the period of the combination or directly in contributed capital. SFAS 141R applies prospectively to business combinations in fiscal years beginning on or after December 15, 2008 and would therefore impact our accounting for future acquisitions beginning in fiscal 2010.

Noncontrolling Interest in Consolidated Financial Statements

In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests in Consolidated Financial Statements, an Amendment of ARB No. 51" ("SFAS 160"). SFAS 160 clarifies the accounting for noncontrolling interests and establishes accounting and reporting standards for the noncontrolling interest in a subsidiary, including classification as a component of equity. SFAS 160 is effective for fiscal years beginning after December 15, 2008, our fiscal 2010. The Company is in the process of determining the effect, if any, that the adoption of SFAS 160 will have on our Consolidated Financial Statements.

Disclosures about Derivative Instruments and Hedging Activities

On March 19, 2008, the FASB adopted Statement of Financial Accounting Standards No. 161 ("SFAS 161") "Disclosure About Derivative Instruments and Hedging Activities," which amends FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities. SFAS 161 requires companies with derivative instruments to disclose information about how and why a company uses derivative instruments, how derivative instruments and related hedged items are accounted for under Statement 133, and how derivative instruments and related hedged items affect a company's financial position, financial performance, and cash flows. The required disclosures include the fair value of derivative instruments and their gains or losses in tabular format, information about credit-risk-related contingent features in derivative agreements, counterparty credit risk, and the company's strategies and objectives for using derivative instruments. The SFAS 161 expands the current disclosure framework in Statement 133. SFAS 161 is effective prospectively for periods beginning on or after November 15, 2008.

Convertible Debt Instruments

On May 9, 2008, the FASB issued FASB Staff Position No. APB 14-1, "Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)" ("FSP APB 14-1"). FSP APB 14-1 applies to any convertible debt instrument that at conversion may be settled wholly or . . .