Edgar Filing: EZCORP INC

Large accelerated filer

Accelerated filer

Non-accelerated filer

¨ (Do not check if a smaller reporting company)

Smaller reporting company

Form 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXHANGE ACT OF 1934

For the quarterly period ended December 31, 2011

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 0-19424

EZCORP, INC.

(Exact name of registrant as specified in its charter)


Delaware		74-2540145
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1901 Capital Parkway Austin, Texas		78746
(Address of principal executive offices)		(Zip Code)

(512) 314-3400

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 such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

APPLICABLE ONLY TO CORPORATE ISSUERS:

The only class of voting securities of the registrant issued and outstanding is the Class B Voting Common Stock, par value $.01 per share, all of which is owned by an affiliate of the registrant. There is no trading market for the Class B Voting Common Stock.

As of December 31, 2011, 47,409,234 shares of the registrant’s Class A Non-voting Common Stock, par value $.01 per share, and 2,970,171 shares of the registrant’s Class B Voting Common Stock, par value $.01 per share, were outstanding.

EZCORP, INC.

INDEX TO FORM 10-Q



PART I. FINANCIAL INFORMATION

	Item 1.	Financial Statements and Supplementary Data (Unaudited)

		Condensed Consolidated Balance Sheets as of December 31, 2011, December 31, 2010 and September 30, 2011 (audited)	1

		Condensed Consolidated Statements of Operations for the Three Months Ended December 31, 2011 and 2010	2

		Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended December 31, 2011 and 2010	3

		Condensed Consolidated Statements of Cash Flows for the Three Months Ended December 31, 2011 and 2010	4

		Notes to Interim Condensed Consolidated Financial Statements	5

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27

	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	38

	Item 4.	Controls and Procedures	39

PART II. OTHER INFORMATION

	Item 1.	Legal Proceedings	41

	Item 1A.	Risk Factors	41

	Item 6.	Exhibits	42

SIGNATURES			43

EXHIBIT INDEX			44

ITEM 1. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Condensed Consolidated Balance Sheets


	December 31,			December 31,		September 30,
	2011			2010		2011
	(Unaudited)			(Unaudited)
	(In thousands)
Assets:
Current assets:
Cash and cash equivalents	$	22,868		$	23,908	$	23,969
Pawn loans		150,060			124,388		145,318
Signature loans, net		12,676			11,953		11,389
Auto title loans, net		3,512			3,307		3,222
Pawn service charges receivable, net		28,593			24,068		26,455
Signature loan fees receivable, net		6,206			6,141		5,348
Auto title loan fees receivable, net		1,405			1,600		1,427
Inventory, net		100,319			77,677		90,373
Deferred tax asset		18,169			23,248		18,125
Prepaid expenses and other assets		38,914			20,724		30,611

Total current assets		382,722			317,014		356,237

Investments in unconsolidated affiliates		117,820			108,959		120,319
Property and equipment, net		84,513			66,641		78,498
Goodwill		212,475			128,181		173,206
Intangible assets, net		20,568			16,320		19,790
Other assets, net		7,781			7,932		8,400

Total assets	$	825,879		$	645,047	$	756,450

Liabilities and stockholders’ equity:
Current liabilities:
Current maturities of long-term debt	$	—		$	10,000	$	—
Accounts payable and other accrued expenses		57,451			48,986		57,400
Customer layaway deposits		6,152			5,950		6,176
Income taxes payable		12,672			5,267		693

Total current liabilities		76,275			70,203		64,269

Long-term debt, less current maturities		40,500			12,500		17,500
Deferred tax liability		8,724			1,619		8,331
Deferred gains and other long-term liabilities		1,997			2,419		2,102

Total liabilities		127,496			86,741		92,202

Commitments and contingencies
Stockholders’ equity:
Class A Non-voting Common Stock, par value $.01 per share; Authorized 54 million shares; issued and outstanding: 47,409,234 at December 31, 2011; 46,952,495 at December 31, 2010;and 47,228,610 at September 30, 2011		474			469		471
Class B Voting Common Stock, convertible, par value $.01 per share; 3 million shares authorized; issued and outstanding: 2,970,171		30			30		30
Additional paid-in capital		243,919			229,789		242,398
Retained earnings		461,447			327,365		422,095
Accumulated other comprehensive income (loss)		(7,487	)		653		(746	)

Total stockholders’ equity		698,383			558,306		664,248

Total liabilities and stockholders’ equity	$	825,879		$	645,047	$	756,450

See accompanying notes to interim condensed consolidated financial statements (unaudited).

Condensed Consolidated Statements of Operations (Unaudited)


	Three Months Ended
	December 31,
	2011			2010
	(In thousands, except per share amounts)
Revenues:
Sales	$	143,297		$	122,545
Pawn service charges		59,792			49,810
Signature loan fees		39,621			40,066
Auto title loan fees		5,467			6,244
Other		696			161

Total revenues		248,873			218,826

Cost of goods sold		83,820			73,566
Signature loan bad debt		10,101			10,046
Auto title loan bad debt		924			982

Net revenues		154,028			134,232
Operating Expenses:

Operations		74,501			64,504
Administrative		19,711			26,138
Depreciation and amortization		5,255			4,179
(Gain) / loss on sale or disposal of assets		(201	)		7

Total operating expenses		99,266			94,828

Operating income		54,762			39,404

Interest income		(39	)		(3	)
Interest expense		590			300
Equity in net income of unconsolidated affiliates		(4,161	)		(3,367	)
Other income		(1,119	)		(61	)

Income before income taxes		59,491			42,535
Income tax expense		20,139			15,106

Net income	$	39,352		$	27,429

Net income per common share:
Basic	$	0.78		$	0.55

Diluted	$	0.78		$	0.55

Weighted average shares outstanding:
Basic		50,355			49,698
Diluted		50,693			50,119

See accompanying notes to interim condensed consolidated financial statements (unaudited).

Condensed Consolidated Statements of Comprehensive Income (Unaudited)


	Three Months Ended December 31,
	2011			2010
	(In thousands)
Net Income	$	39,352		$	27,429
Other comprehensive income (loss):
Foreign currency translation adjustments		(8,768	)		9,777
Unrealized holding gains arising during period		(559	)		491
Income tax benefit (provision)		2,586			(3,240	)

Other comprehensive income (loss), net of tax		(6,741	)		7,028

Comprehensive income	$	32,611		$	34,457

See accompanying notes to interim condensed consolidated financial statements (unaudited).

Condensed Consolidated Statements of Cash Flows (Unaudited)


	Three Months Ended December 31,
	2011			2010
	(In thousands)
Operating Activities:
Net income	$	39,352		$	27,429
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		5,255			4,179
Signature loan and auto title loan loss provisions		4,035			4,134
Deferred taxes		257			1,619
(Gain) / loss on sale or disposal of assets		(201	)		7
Stock compensation		1,513			8,548
Income from investments in unconsolidated affiliates		(4,161	)		(3,367	)
Changes in operating assets and liabilities, net of business acquisitions:
Service charges and fees receivable, net		(2,392	)		(2,421	)
Inventory, net		(1,609	)		(1,680	)
Prepaid expenses, other current assets, and other assets, net		(8,187	)		(3,762	)
Accounts payable and accrued expenses		(3,693	)		(832	)
Customer layaway deposits		(1,865	)		(232	)
Deferred gains and other long-term liabilities		(116	)		(107	)
Excess tax benefit from stock compensation		(460	)		(3,065	)
Income taxes		12,284			4,672

Net cash provided by operating activities		43,742			35,122

Investing Activities:
Loans made		(182,757	)		(152,763	)
Loans repaid		110,988			91,340
Recovery of pawn loan principal through sale of forfeited collateral		61,701			50,750
Additions to property and equipment		(9,948	)		(7,933	)
Acquisitions, net of cash acquired		(49,399	)		(13,700	)
Dividends from unconsolidated affiliates		2,222			1,811

Net cash used in investing activities		(67,193	)		(30,495	)

Financing Activities:
Proceeds from exercise of stock options		—			204
Excess tax benefit from stock compensation		460			3,065
Taxes paid related to net share settlement of equity awards		(988	)		(7,396	)
Proceeds on revolving line of credit		116,500			15,000
Payments on revolving line of credit		(93,500	)		(15,000	)
Payments on bank borrowings		—			(2,500	)

Net cash provided by (used) in financing activities		22,472			(6,627	)

Effect of exchange rate changes on cash and cash equivalents		(122	)		54

Net (decrease) increase in cash and cash equivalents		(1,101	)		(1,946	)
Cash and cash equivalents at beginning of period		23,969			25,854

Cash and cash equivalents at end of period	$	22,868		$	23,908

Non-cash Investing and Financing Activities:
Pawn loans forfeited and transferred to inventory	$	66,068		$	54,405
Foreign currency translation adjustment	$	6,741		$	(6,537	)
Acquisition-related stock issuance	$	1,122		$	—

See accompanying notes to interim condensed consolidated financial statements (unaudited).

EZCORP, INC. AND SUBSIDIARIES

Notes to Interim Condensed Consolidated Financial Statements (Unaudited)

December 31, 2011

Note A: Significant Accounting Policies

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. Our management has included all adjustments it considers necessary for a fair presentation. These adjustments are of a normal, recurring nature except for those related to acquired businesses (described in Note B). The accompanying financial statements should be read with the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended September 30, 2011. The balance sheet at September 30, 2011 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. Certain prior period balances have been reclassified to conform to the current presentation.

Our business is subject to seasonal variations and operating results for the interim period ended December 31, 2011 (the “current quarter”) are not necessarily indicative of the results of operations for the full fiscal year.

The consolidated financial statements include the accounts of EZCORP, Inc. and its wholly owned subsidiaries. All significant inter-company accounts and transactions have been eliminated in consolidation. We account for our investments in Albemarle & Bond Holdings, PLC and Cash Converters International Limited using the equity method.

With the exception of the derivative instruments and hedging activities described in the section below, there have been no changes in significant accounting policies as described in our Annual Report on Form 10-K for the year ended September 30, 2011.

Derivative Instruments and Hedging Activities

We record all derivative instruments according to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 815-20-25, “Derivatives and Hedging – Recognition.” Accounting for changes in the fair value of derivatives is determined by the intended use of the derivative, whether it is designated as a hedge and whether the hedging relationship is effective in achieving offsetting changes for the risk being hedged.Derivatives designated to hedge the changes in the fair value of an asset, liability, or firm commitment due to an identified risk in the hedged item, such as interest rate risk or foreign currency exchange rate risk are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a cash flow hedge. We may enter into derivative contracts that are intended to economically hedge certain of our risks, even though hedge accounting does not apply or we elect not to apply hedge accounting.

We acquire significant amounts of gold either through purchases or from forfeited pawn loans and sell it to refiners. In order to manage our commodity price risk associated with the forecasted sales of gold scrap, from time to time, we purchase put options related to the future market price of gold. Simultaneously, we may sell a call option for the same future period for a premium to offset the cost of the put. The combined put and call options, or collar, has the effect of providing us protection from the future downward gold price movement but also limits the extent we can participate in future upward price movement.In the current quarter, we began using derivative financial instruments. These derivatives are not designated as hedges as they do not meet the hedge accounting requirements FASB ASC 851-20-25. The fair value of the derivative instruments is recognized in “Prepaid expenses and other assets” in the consolidated balance sheets and changes in fair value are recognized in “Other Income” in our consolidated statements of operation.

Recently Issued Accounting Pronouncements

In December 2011, FASB issued Accounting Standards Update (“ASU”) 2011-11, Disclosures about Offsetting Assets and Liabilities. This update, which amends FASB ASC 210 (Balance Sheet), requires entities to disclose information about offsetting and related arrangements and the effect of those arrangements on its financial position. The amendments in ASU 2011-11 enhance disclosures required by FASB ASC 210 by requiring improved information about financial instruments and derivative instruments that are either offset in accordance with FASB ASC 210-20-45 or 815-10-45 or are subject to an enforceable master netting arrangement or similar agreement. ASU 2011-11 is effective for interim and annual periods beginning on or after January 1, 2013. Disclosures are required retrospectively for all comparative periods presented. Currently, we do not enter into any right of offset arrangements and we do not anticipate that the adoption of ASU 2011-11 will have a material effect on our financial position, results of operations or cash flows.

In September 2011, the FASB issued ASU 2011-08, Testing Goodwill for Impairment. This update amends FASB ASC 350 (Intangibles – Goodwill and Other) by allowing entities to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. The amendments in this update are effective for annual and interim goodwill impairment tests performed for fiscal years beginning on or after December 15, 2011. We do not anticipate the adoption of ASU 2011-08 will have a material effect on our financial position, results of operations or cash flows.

In May 2011, the FASB issued ASU 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. Generally Accepted Accounting Principles (“GAAP”) and International Financial Reporting Standards (“IFRS”). This update amends FASB ASC 820 (Fair Value Measurement) by providing common principles and requirements for measuring fair value, as well as similar disclosure requirements between U.S. GAAP and IFRS. It changes certain fair value measurement principles, clarifies the application of existing fair value concepts, and expands disclosure requirements, particularly for Level 3 fair value measurements. ASU 2011-04 is effective for interim and annual periods beginning on or after December 15, 2011. We do not anticipate that the adoption of ASU 2011-04 will have a material effect on our financial position, results of operations or cash flows.

Recently Adopted Accounting Pronouncements

In December 2011, FASB issued ASU 2011-12 “Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in ASU 2011-05.” This update supersedes certain content in ASU 2011-05 “Presentation of Comprehensive Income” that requires entities to present on the face of the financial statements reclassification adjustments for items that are reclassified from other comprehensive income to net income in the statements where the components of net income and the components of other comprehensive income are presented. This update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. All other requirements in ASU 2011-05, including the requirement to report comprehensive income in either a single continuous financial statement or in two separate but consecutive financial statements, were not affected by ASU 2011-12. This update is effective for fiscal years beginning on or after December 15, 2011. We early adopted this amended standard in our fiscal year beginning October 1, 2011 with no effect on our financial position, results of operations or cash flows.

In December 2010, the FASB issued ASU 2010-29, “Disclosure of Supplementary Pro Forma Information for Business Combinations.” The amendments in this update specify that, when presenting comparative financial statements, entities should disclose revenue and earnings of the combined entity as though the business combinations that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period. ASU 2010-29 also expands the supplemental pro forma disclosures to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. The amendments are effective prospectively for material (on an individual or an aggregate basis) business combinations entered into in fiscal years beginning on or after December 15, 2010. We adopted this amended standard on October 1, 2011, resulting in no effect on our financial position, operations or cash flows.

Note B: Acquisitions

The following table provides information related to the acquisitions of domestic and foreign retail and financial services locations during the fiscal quarters ended December 31, 2011 and 2010:


	Three Months Ended December 31,
	2011		2010
Number of asset purchase acquisitions		5		3
Number of stock purchase acquisitions		1		1

U.S. stores acquired		24		4
Foreign stores acquired		1		—

Total stores acquired		25		4


	Three Months Ended December 31,
	2011			2010
	(In thousands)
Consideration:
Cash	$	49,644		$	13,736
Equity instruments		1,122			—

Fair value of total consideration transferred		50,766			13,736
Cash acquired		(245	)		(36	)

Total purchase price	$	50,521		$	13,700

Current assets:
Pawn loans	$	5,036		$	1,542
Service charges and fees receivable		645			312
Inventory		4,307			847
Deferred tax asset		45			53
Prepaid expenses and other assets		39			2

Total current assets		10,072			2,756

Property and equipment		1,725			273
Goodwill		39,642			10,708
Other assets		1,007			115

Total assets	$	52,446		$	13,852

Current liabilities:
Accounts payable and other accrued expenses	$	998		$	27
Customer layaway deposits		682			72
Other current liabilities		226			—

Total current liabilities		1,906			99

Deferred tax liability		19			53

Total liabilities		1,925			152

Net assets acquired	$	50,521		$	13,700

Goodwill deductible for tax purposes	$	6,864		$	6,061
Goodwill recorded in U.S. Pawn Segment		39,610			10,708
Goodwill recorded in EZMONEY segment		32			—

Definite lived intangible assets acquired:
Favorable lease asset	$	230		$	—
Non-compete agreements	$	180		$	115
Contractual relationship	$	450		$	—

All stores were acquired as part of our continuing strategy to acquire domestic and foreign pawn stores to enhance and diversify our earnings. Transaction related expenses were not material and were expensed as incurred. The results of all acquired stores have been consolidated with our results since their acquisition. The purchase price allocation of assets acquired in the most recent twelve months is preliminary as we continue to receive information regarding the acquired assets. Pro forma results of operations have not been presented because it is impracticable to do so, as historical audited financial statements are not readily available.

The amounts above include the acquisition, from a related party, of a decision science model for the underwriting of consumer loans, a contractual relationship with an income tax return preparer to facilitate refund anticipation loans and an online lending business in the U.K., for an aggregate purchase price of $1.2 million, which was paid in cash. Pursuant to our Policy for Review and Evaluation of Related Party Transactions, the Audit Committee reviewed and evaluated the terms of the transaction and concluded that the transaction was fair to, and in the best interest of, the company and its stockholders.

Note C: Earnings per Share

We compute basic earnings per share on the basis of the weighted average number of shares of common stock outstanding during the period. We compute diluted earnings per share on the basis of the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include outstanding stock options and restricted stock awards.

Potential common shares are required to be excluded from the computation of diluted earnings per share if the assumed proceeds upon exercise or vest, as defined by FASB ASC 718-10-25, are greater than the cost to re-acquire the same number of shares at the average market price, and therefore the effect would be anti-dilutive.

Components of basic and diluted earnings per share and excluded anti-dilutive potential common shares are as follows:


	Three Months Ended
	December 31,
	2011		2010
	(In thousands, except per share amounts)
Net income (A)	$	39,352	$	27,429
Weighted average outstanding shares of common stock (B)		50,355		49,698
Dilutive effect of stock options and restricted stock		338		421

Weighted average common stock and common stock equivalents (C)		50,693		50,119

Basic earnings per share (A/B)	$	0.78	$	0.55

Diluted earnings per share (A/C)	$	0.78	$	0.55

Potential common shares excluded from the calculation of diluted earnings per share		10		—

Note D: Strategic Investments and Fair Value of Financial Instruments

At December 31, 2011, we owned 16,644,640 ordinary shares of Albemarle & Bond Holdings, PLC, representing almost 30% of its total outstanding shares. Our total cost for those shares was approximately $27.6 million. Albemarle & Bond is primarily engaged in pawnbroking, retail jewelry sales, check cashing and lending in the United Kingdom. We account for the investment using the equity method. Since Albemarle & Bond’s fiscal year ends three months prior to ours, we report the income from this investment on a three-month lag. Albemarle & Bond files semi-annual financial reports for its fiscal periods ending December 31 and June 30. The income reported for our quarter ended December 31, 2011 represents our percentage interest in the estimated results of Albemarle & Bond’s operations from July 1, 2011 to September 30, 2011.

Conversion of Albemarle & Bond’s financial statements into U.S. GAAP resulted in no material differences from those reported by Albemarle & Bond following IFRS.

In its functional currency of British pounds, Albemarle & Bond’s total assets increased 19% from June 30, 2010 to June 30, 2011 and its net income improved 6% for the year ended June 30, 2011. Below is summarized financial information for Albemarle & Bond’s most recently reported results after translation to U.S. dollars (using the exchange rate as of June 30 of each year for balance sheet items and average exchange rates for the income statement items for the periods indicated):


	As of June 30,
	2011		2010
	(In thousands)
Current assets	$	125,862	$	97,476
Non-current assets		64,325		52,325

Total assets	$	190,187	$	149,801

Current liabilities	$	18,620	$	17,898
Non-current liabilities		57,016		42,078
Shareholders’ equity		114,551		89,825

Total liabilities and shareholders’ equity	$	190,187	$	149,801


	Years ended June 30,
	2011		2010
	(In thousands)
Gross revenues	$	162,002	$	129,794
Gross profit		97,197		84,850
Profit for the year (net income)		24,324		22,792

At December 31, 2011, we owned 124,418,000 shares, or approximately 33% of the total ordinary shares of Cash Converters International Limited, which is a publicly traded company headquartered in Perth, Australia. We acquired the shares between November 2009 and May 2010 for approximately $57.8 million. Cash Converters franchises and operates a worldwide network of over 600 specialty financial services and retail stores that provide pawn loans, short-term unsecured loans and other consumer finance products, and buy and sell second-hand goods. Cash Converters has significant store concentrations in Australia and the United Kingdom.

We account for our investment in Cash Converters using the equity method. Since Cash Converters’ fiscal year ends three months prior to ours, we report the income from this investment on a three-month lag. Cash Converters files semi-annual financial reports for its fiscal periods ending December 31 and June 30. Due to the three-month lag, income reported for our quarter ended December 31, 2011 represents our percentage interest in the estimated results of Cash Converters’ operations from July 1, 2011 to September 30, 2011.

Conversion of Cash Converters’ financial statements into U.S. GAAP resulted in no material differences from those reported by Cash Converters following IFRS.

In its functional currency of Australian dollars, Cash Converters’ total assets increased 18% from June 30, 2010 to June 30, 2011 and its net income improved 27% for the year ended June 30, 2011. Below is summarized financial information for Cash Converters’ most recently reported results after translation to U.S. dollars (using the exchange rate as of June 30 of each year for balance sheet items and average exchange rates for the income statement items for the periods indicated):


	As of June 30,
	2011		2010
	(In thousands)
Current assets	$	119,633	$	96,489
Non-current assets		126,811		72,408

Total assets	$	246,444	$	168,897

Current liabilities	$	38,235	$	19,179
Non-current liabilities		22,528		10,199
Shareholders’ equity		185,681		139,519

Total liabilities and shareholders’ equity	$	246,444	$	168,897


	Year ended June 30
	2011		2010
	(In thousands)
Gross revenues	$	184,011	$	111,218
Gross profit		138,997		84,296
Profit for the year (net income)		27,328		19,122

The table below summarizes the recorded value and fair value of each of these strategic investments at the dates indicated. These fair values are considered level one estimates within the fair value hierarchy of FASB ASC 820-10-50, and were calculated as (a) the quoted stock price on each company’s principal market multiplied by (b) the number of shares we owned multiplied by (c) the applicable foreign currency exchange rate at the dates indicated. We included no control premium for owning a large percentage of outstanding shares.


	December 31,				September 30,
	2011		2010		2011
	(In thousands of U.S. dollars)
Albemarle & Bond:
Recorded value	$	49,616	$	45,684	$	48,361
Fair value		84,622		81,630		91,741

Cash Converters:
Recorded value	$	68,204	$	63,275	$	71,958
Fair value		68,355		88,512		53,600

In August 2011, legislation was proposed in Australia that would, among other things, limit the interest charged on certain consumer loans and prohibit loan extensions and refinancing. If this legislation is enacted in its currently proposed form, Cash Converters’ consumer loan business in Australia may be adversely affected, which could have the effect of decreasing Cash Converters’ revenues and earnings. As of September 30, 2011 the fair value of our investment in Cash Converters (based on the market price of Cash Converters’ stock as of that date) was below our recorded value. In light of Cash Converters’ statements at that time regarding its ability to mitigate the potential impact of the proposed legislation, we considered this loss in value to be temporary. Following a series of representations from Cash Converters, its customers and other industry executives, the Australian Parliament, referred the bill to the Senate Economics committee and to the Joint Committee on Corporations and Financial Services for review. The committees concluded that the proposed legislation did not achieve an appropriate balance between consumer protection and industry viability and recommended that the Australian government revisit key aspects of its reform package with further industry consultation. As of December 31, 2011, the fair value of our investment in Cash Converters was slightly above our recorded value, further supporting our assessment of the loss in value of its stock to be temporary.

Note E: Goodwill and Other Intangible Assets

The following table presents the balance of each major class of indefinite-lived intangible asset at the specified dates:


	December 31,				September 30,
	2011		2010		2011
	(In thousands)
Pawn licenses	$	8,877	$	8,836	$	8,836
Trade name		4,870		4,870		4,870
Goodwill		212,475		128,181		173,206

Total	$	226,222	$	141,887	$	186,912

The following table presents the changes in the carrying value of goodwill, by segment, over the periods presented:


	U.S. Pawn Operations		Empeño Fácil			EZMONEY Operations			Consolidated
	(In thousands)
Balance at September 30, 2011	$	163,897	$	9,309		$	—		$	173,206
Acquisitions		39,610		—			32			39,642
Effect of foreign currency translation changes		—		(371	)		(2	)		(373	)

Balance at December 31, 2011	$	203,507	$	8,938		$	30		$	212,475


	U.S. Pawn Operations		Empeño Fácil			EZMONEY Operations			Consolidated
	(In thousands)
Balance at September 30, 2010	$	110,255	$	7,050		$	—		$	117,305
Acquisitions		10,793		—			—			10,793
Effect of foreign currency translation changes		—		83			—			83

Balance at December 31, 2010	$	121,048	$	7,133		$	—		$	128,181

The following table presents the gross carrying amount and accumulated amortization for each major class of definite-lived intangible asset at the specified dates:


	December 31,														September 30,
	2011							2010							2011
	Carrying Amount		Accumulated Amortization			Net Book Value		Carrying Amount		Accumulated Amortization			Net Book Value		Carrying Amount		Accumulated Amortization			Net Book Value
	(In thousands)
Real estate finders’ fees	$	1,221	$	(500	)	$	721	$	1,029	$	(420	)	$	609	$	1,157	$	(479	)	$	678
Non-compete agreements		3,836		(2,574	)		1,262		3,216		(2,040	)		1,176		3,722		(2,459	)		1,263
Favorable lease		985		(353	)		632		644		(241	)		403		755		(322	)		433
Franchise rights		1,567		(49	)		1,518		—		—			—		1,547		(32	)		1,515
Deferred financing costs		2,411		(413	)		1,998		1,470		(1,083	)		387		2,411		(262	)		2,149
Contractual relationship		450		(25	)		425		—		—			—		—		—			—
Other		276		(11	)		265		46		(7	)		39		58		(12	)		46

Total	$	10,746	$	(3,925	)	$	6,821	$	6,405	$	(3,791	)	$	2,614	$	9,650	$	(3,566	)	$	6,084

The amortization of most definite lived intangible assets is recorded as amortization expense. The favorable lease asset and other intangibles are amortized to operations expense (rent expense) over the related lease terms. The deferred financing costs are amortized to interest expense over the life of our credit agreement.The following table presents the amount and classification of amortization recognized as expense in each of the periods presented:


	Three Months Ended
	December 31,
	2011		2010
	(In thousands)
Amortization Expense	$	227	$	212
Operations Expense		31		23
Interest Expense		151		100

Total expense from the amortization of definite-lived intangible assets	$	409	$	335

The following table presents our estimate of amortization expense for definite-lived intangible assets (in thousands):


Fiscal Years Ended September 30,	Amortization Expense		Operations Expense		Interest Expense
2012	$	768	$	133	$	599
2013		382		120		599
2014		279		107		599
2015		249		95		350
2016		203		93		—

As acquisitions and dispositions occur in the future, amortization expense may vary from these estimates.

Note F: Long-term Debt

On May 10, 2011, we entered into a new senior secured credit agreement with a syndicate of five banks, replacing our previous credit agreement. Among other things, the new credit agreement provides for a four year $175 million revolving credit facility that we may, under the terms of the agreement, request to be increased to a total of $225 million. Upon entering the new credit agreement, we repaid and retired our $17.5 million outstanding debt. The new credit facility increases our available credit and provides greater flexibility to make investments and acquisitions both domestically and internationally.

Pursuant to the credit agreement, we may choose to pay interest to the lenders for outstanding borrowings at LIBOR plus 200 to 275 basis points or the bank’s base rate plus 100 to 175 basis points, depending on our leverage ratio computed at the end of each calendar quarter. On the unused amount of the credit facility, we pay a commitment fee of 37.5 to 50 basis points depending on our leverage ratio calculated at the end of each quarter. From the closing date to approximately October 31, 2011, we paid a minimum interest rate of LIBOR plus 250 basis points or the bank’s base rate plus 150 basis points, at our option, and a commitment fee of 50 basis points on the unused portion of the credit line. Terms of the credit agreement require, among other things, that we meet certain financial covenants. At December 31, 2011, we were in compliance with all covenants.We expect the recorded value of our debt to approximate its fair value as it is all variable rate debt and carries no pre-payment penalty.

At December 31, 2011, $40.5 million was outstanding under our revolving credit agreement. We also issued $5.0 million of bank letters of credit, leaving $129.5 million available on our revolving credit facility. The outstanding bank letters of credit secure our obligations under letters of credit we issue to unaffiliated lenders as part of our credit service operations.

Deferred financing costs related to our credit agreement are included in intangible assets, net on the balance sheet and are being amortized to interest expense over their four-year estimated useful life.

Note G: Stock Compensation

Our net income includes the following compensation costs related to our stock compensation arrangements:


	Three Months Ended
	December 31,
	2011			2010
	(In thousands)
Gross compensation costs	$	1,513		$	8,548
Income tax benefits		(446	)		(2,974	)

Net compensation expense	$	1,067		$	5,574

Included in the compensation cost for the three months ended December 31, 2010 is $7.3 million for the accelerated vesting of restricted stock upon the retirement of our former Chief Executive Officer on October 31, 2010, and a related $2.5 million income tax benefit. In the three months ended December 31, 2011, no stock options were exercised.

Note H: Income Taxes

The current quarter’s effective tax rate is 33.9% of pretax income compared to 35.5% for the prior year quarter. The decrease in effective tax rates is primarily due to the recognition of state net operating losses in the current quarter, as well as an increase in foreign tax credits on overseas earnings.

Note I: Contingencies

Currently and from time to time, we are defendants in various legal and regulatory actions. While we cannot determine the ultimate outcome of these actions, we believe their resolution will not have a material adverse effect on our financial condition, results of operations or liquidity. However, we cannot give any assurance as to their ultimate outcome.

Note J: Operating Segment Information

We manage our business and internal reporting as three reportable segments with operating results reported separately for each segment.

•

The U.S. Pawn Operations segment offers pawn and retail activities in our 450 U.S. pawn stores and seven retail stores, offers signature loans in 43 pawn stores and six EZMONEY stores and offers auto title loans in 44 pawn stores.

•

The Empeño Fácil segment offers pawn related activities in 192 Mexico pawn stores.

•

The EZMONEY Operations segment offers signature loans in 422 U.S. financial services stores, 64 Canadian financial services stores and online in the U.K. The segment offers auto title loans in 396 of its U.S. stores and buys and sells second-hand goods in 24 of its Canadian stores.

There are no inter-segment revenues, and the amounts below were determined in accordance with the same accounting principles used in our consolidated financial statements. The following tables present operating segment information:


	Three Months Ended December 31,
	U.S. Pawn Operations				Empeño Fácil				EZMONEY Operations
	2011		2010		2011		2010		2011		2010
	(In thousands)
Revenues:
Merchandise sales	$	75,975	$	66,305	$	10,342	$	5,575	$	577	$	—
Jewelry scrapping sales		52,516		47,006		3,537		3,462		350		197
Pawn service charges		54,370		46,436		5,422		3,374		—		—
Signature loan fees		920		509		—		—		38,701		39,557
Auto title loan fees		457		393		—		—		5,010		5,851
Other		241		117		120		3		335		41

Total revenues		184,479		160,766		19,421		12,414		44,973		45,646

Merchandise cost of goods sold		43,116		38,197		4,945		3,114		335		—
Jewelry scrapping cost of goods sold		32,973		29,538		2,274		2,638		177		79
Signature loan bad debt		352		165		—		—		9,749		9,881
Auto title loan bad debt		114		61		—		—		810		921

Net revenues		107,924		92,805		12,202		6,662		33,902		34,765

Operations expense		50,073		43,196		5,998		4,278		18,430		17,030

Store operating income	$	57,851	$	49,609	$	6,204	$	2,384	$	15,472	$	17,735

The following table reconciles store operating income, as shown above, to our consolidated income before income taxes:


	Three Months Ended December 31,
	2011			2010
	(In thousands)
U.S. Pawn Operations store operating income	$	57,851		$	49,609
Empeño Fácil store operating income		6,204			2,384
EZMONEY Operations store operating income		15,472			17,735

Consolidated store operating income		79,527			69,728
Administrative expenses		19,711			26,138
Depreciation and amortization		5,255			4,179
(Gain) / loss on sale or disposal of assets		(201	)		7
Interest income		(39	)		(3	)
Interest expense		590			300
Equity in net income of unconsolidated affiliates		(4,161	)		(3,367	)
Other		(1,119	)		(61	)

Consolidated income before income taxes	$	59,491		$	42,535

Note K: Allowance for Losses and Credit Quality of Financing Receivables

We offer a variety of loan products and credit services to customers who do not have cash resources or access to credit to meet their short-term cash needs. Our customers are considered to be in a higher risk pool with regard to creditworthiness when compared to those of typical financial institutions. As a result, our receivables do not have a credit risk profile that can easily be measured by the normal credit quality indicators used by the financial markets. We manage the risk through closely monitoring the performance of the portfolio and through our underwriting process. This process includes review of customer information, such as making a credit reporting agency inquiry, evaluating and verifying income sources and levels, verifying employment and verifying a telephone number where customers may be contacted. For auto title loans, we additionally inspect the automobile, title and reference to market values of used automobiles.

We consider a signature loan defaulted if it has not been repaid or renewed by the maturity date. If one payment of an installment loan is delinquent, that one payment is considered defaulted. If more than one installment payment is delinquent at any time, the entire installment loan is considered defaulted. Although defaulted loans may be collected later, we charge the loan principal to signature loan bad debt upon default, leaving only active loans in the reported balance. Accrued fees related to defaulted loans reduce fee revenue upon loan default, and increase fee revenue upon collection. Based on historical collection experience, the age of past-due loans and amounts we expect to receive through the sale of repossessed vehicles, we provide an allowance for losses on auto title loans.

The accuracy of our allowance estimates is dependent upon several factors, including our ability to predict future default rates based on historical trends and expected future events. We base our estimates on observable trends and various other assumptions that we believe to be reasonable under the circumstances.

The following table presents changes in the allowance for credit losses as well as the recorded investment in our financing receivables by portfolio segment for the periods presented:


	Allowance Balance at Beginning of Period		Charge-offs			Recoveries		Provision		Allowance Balance at End of Period		Financing Receivable at End of Period
Description	(In thousands)
Allowance for losses on signature loans:
Three-months ended December 31, 2011	$	1,727	$	(4,679	)	$	1,458	$	3,224	$	1,730	$	14,406
Three-months ended December 31, 2010		750		(4,260	)		1,496		3,224		1,210		13,163

Allowance for losses on auto title loans:
Three-months ended December 31, 2011	$	538	$	(2,494	)	$	2,160	$	778	$	982	$	4,494
Three-months ended December 31, 2010		1,137		(3,445	)		2,715		909		1,316		4,623

The provision presented in the table above includes only principal and excludes items such as non-sufficient funds fees, late fees, repossession fees, auction fees and interest. In addition, all credit service expenses and fees related to loans made by our unaffiliated lenders are excluded, as we do not own the loans made in connection with our credit services and they are not recorded as assets on our balance sheet. Expected losses on credit services are accrued and reported in “Accounts payable and other accrued expenses” on our balance sheets.

Auto title loans are our only loans that remain as recorded investments when in delinquent/nonaccrual status. We consider an auto title loan past due if it has not been repaid or renewed by the maturity date. Based on experience, we establish a reserve on all auto title loans. On auto title loans more than 90 days past due, we reserve the percentage we estimate will not be recoverable through auction and reserve 100% of loans for which we have not yet repossessed the underlying collateral. No fees are accrued on any auto title loans more than 90 days past due.

The following table presents an aging analysis of past due financing receivables by portfolio segment (in thousands):


	Days Past Due												Total			Current			Total Financing			Recorded Investment > 90 Days &
	1-30			31-60			61-90			>90			Past Due			Receivable			Receivable			Accruing
December 31, 2011
Auto title loans	$	659		$	445		$	424		$	592		$	2,120		$	2,374		$	4,494		$	—
Reserve	$	98		$	137		$	165		$	511		$	911		$	71		$	982		$	—
Reserve %		15	%		31	%		39	%		86	%		43	%		3	%		22	%

December 31, 2010
Auto title loans	$	609		$	636		$	452		$	753		$	2,450		$	2,173		$	4,623		$	—
Reserve	$	109		$	218		$	217		$	696		$	1,240		$	76		$	1,316		$	—
Reserve %		18	%		34	%		48	%		92	%		51	%		3	%		28	%

September 30, 2011
Auto title loans	$	840		$	479		$	283		$	219		$	1,821		$	1,939		$	3,760		$	—
Reserve	$	117		$	114		$	67		$	172		$	470		$	68		$	538		$	—
Reserve %		14	%		24	%		24	%		79	%		26	%		4	%		14	%

Note L: Fair Value Measurements

In accordance with FASB ASC 820-10, Fair Value Measurements and Disclosures, our assets and liabilities, which are carried at fair value, are classified in one of the following three categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Other observable inputs other than quoted market prices.

Level 3: Unobservable inputs that are not corroborated by market data.

The tables below present our financial assets that are measured at fair value on a recurring basis as of December 31, 2011 and 2010 and September 30, 2011 (in thousands):


	December 31, 2011		Fair Value Measurements Using
Financial assets:	December 31, 2011		Level 1		Level 2		Level 3
Gold collar	$	1,073	$	—	$	1,073	$	—
Marketable equity securities		4,807		4,807		—		—

Total	$	5,880	$	4,807	$	1,073	$	—


	December 31, 2010		Fair Value Measurements Using
Financial assets:	December 31, 2010		Level 1		Level 2		Level 3
Gold collar	$	—	$	—	$	—	$	—
Marketable equity securities		5,192		5,192		—		—

Total	$	5,192	$	5,192	$	—	$	—


	September 30, 2011		Fair Value Measurements Using
Financial assets:	September 30, 2011		Level 1		Level 2		Level 3
Gold collar	$	—	$	—	$	—	$	—
Marketable equity securities		5,366		5,366		—		—

Total	$	5,366	$	5,366	$	—	$	—

We measure the value of our gold collar under Level 2 inputs as defined by FASB ASC 820-10. The valuation is determined using widely accepted valuation techniques which reflect the contractual terms of the transaction, including the period to maturity and uses observable market-based inputs including gold forward curves and implied volatilities. We measure the value of our marketable equity securities under a Level 1 input. These assets are publicly traded equity securities for which market prices are readily available. There were no transfers of assets in or out of Level 1 or Level 2 fair value measurements in the periods presented.

Note M: Derivative Instruments and Hedging Activities

Our earnings and financial position are affected by changes in gold values. In the current quarter, we began using derivative financial instruments in order to manage our commodity price risk associated with the forecasted sales of gold scrap. These derivatives are not designated as hedges, and according to FASB ASC 815-20-25, “Derivatives and Hedging – Recognition,” changes in their fair value are recorded directly in earnings. As of December 31, 2011, the notional amount of the gold collars recorded on our balance sheet was 19,000 ounces of gold.

The table below presents the fair value of our derivative financial instruments on the Condensed Consolidated Balance Sheet (in thousands):


			Fair Value of Derivative Instruments
Derivative Instrument	Balance Sheet Location		December 31, 2011
Non-designated derivatives:
Gold Collar		Prepaid expenses and other assets	$	1,073

The table below presents the effect of our derivative financial instruments on the Condensed Consolidated Statement of Operations for the period ended December 31, 2011 (in thousands):


			(Gains) Losses Recognized in Income
Derivative Instrument	Location of (Gain) or Loss		Three Months Ended December 31,
Non-designated derivatives:
Gold Collar		Other income	$	(1,073	)

Note N: Condensed Consolidating Financial Information

On February 3, 2012, we filed with the United States Securities and Exchange Commission a “shelf” registration statement on Form S-3 registering the offer and sale of an indeterminate amount of a variety of securities, including debt securities. Unless otherwise indicated in connection with a particular offering of debt securities, each of our domestic subsidiaries will fully and unconditionally guarantee on a joint and several basis our payment obligations under such debt securities.

In accordance with Rule 3-10(d) of Regulation S-X, the following presents condensed consolidating financial information as of December 31, 2011 and 2010, and September 30, 2011 and for current and prior year fiscal quarters for EZCORP, Inc. (the “Parent”), each of the Parent’s domestic subsidiaries (the “Guarantor Subsidiaries”) on a combined basis and each of the Parent’s other subsidiaries (the “Non-Guarantor Subsidiaries”) on a combined basis. Eliminating entries presented are necessary to combine the groups of entities.

Condensed Consolidating Balance Sheets


	December 31, 2011
	(Unaudited)
	(In thousands)
	Parent			Subsidiary Guarantors			Other Subsidiaries			Eliminations			Consolidated
Assets:
Current assets:
Cash and cash equivalents	$	703		$	15,749		$	6,416		$	—		$	22,868
Pawn loans		—			140,386			9,674			—			150,060
Signature loans, net		—			10,386			2,290			—			12,676
Auto title loans, net		—			3,512			—			—			3,512
Pawn service charges receivable, net		—			27,061			1,532			—			28,593
Signature loan fees receivable, net		—			6,002			204			—			6,206
Auto title loan fees receivable, net		—			1,405			—			—			1,405
Inventory, net		—			90,175			10,144			—			100,319
Deferred tax asset		12,747			5,422			—			—			18,169
Receivable from affiliates		86,590			(86,590	)		—			—			—
Prepaid expenses and other assets		17			35,777			3,120			—			38,914

Total current assets		100,057			249,285			33,380			—			382,722

Investments in unconsolidated affiliates		68,204			49,616			—			—			117,820
Investments in subsidiaries		84,303			44,573			—			(128,876	)		—
Property and equipment, net		—			62,009			22,504			—			84,513
Goodwill		—			203,507			8,968			—			212,475
Other assets, net		2,038			22,484			3,827			—			28,349

Total assets	$	254,602		$	631,474		$	68,679		$	(128,876	)	$	825,879

Liabilities and stockholders’ equity:
Current liabilities:
Accounts payable and other accrued expenses	$	46		$	49,700		$	7,705		$	—		$	57,451
Customer layaway deposits		—			5,845			307			—			6,152
Intercompany payables		(219,474	)		193,339			26,145			(10	)		—
Income taxes payable		21,667			(5,156	)		(3,839	)		—			12,672

Total current liabilities		(197,761	)		243,728			30,318			(10	)		76,275

Long-term debt, less current maturities		40,500			—			—			—			40,500
Deferred tax liability		6,481			1,371			872			—			8,724
Deferred gains and other long-term liabilities		—			1,998			(1	)		—			1,997

Total liabilities		(150,780	)		247,097			31,189			(10	)		127,496

Commitments and contingencies

Stockholders’ equity:
Class A Non-voting Common Stock, par value $.01 per share;		464			12			—			(2	)		474
Class B Voting Common Stock, convertible, par value $.01 per share;		30			(1	)		1			—			30
Additional paid-in capital		221,534			100,431			50,818			(128,864	)		243,919
Retained earnings		180,299			285,039			(3,891	)					461,447
Accumulated other comprehensive income (loss)		3,055			(1,104	)		(9,438	)		—			(7,487	)

Total stockholders’ equity		405,382			384,377			37,490			(128,866	)		698,383

Total liabilities and stockholders’ equity	$	254,602		$	631,474		$	68,679		$	(128,876	)	$	825,879


	December 31, 2010
	(Unaudited)
	(In thousands)
	Parent			Subsidiary Guarantors			Other Subsidiaries			Eliminations			Consolidated
Assets:
Current assets:
Cash and cash equivalents	$	—		$	20,411		$	3,497		$	—		$	23,908
Pawn loans		—			117,583			6,805			—			124,388
Signature loans, net		—			10,451			1,502			—			11,953
Auto title loans, net		—			3,307			—			—			3,307
Pawn service charges receivable, net		—			23,045			1,023			—			24,068
Signature loan fees receivable, net		—			6,026			115			—			6,141
Auto title loan fees receivable, net		—			1,600			—			—			1,600
Inventory, net		—			71,874			5,803			—			77,677
Deferred tax asset		18,258			4,990						—			23,248
Receivable from affiliates		15,100			(15,100	)		—			—			—
Income taxes receivable		3,185			(3,185	)		—			—			—
Prepaid expenses and other assets		25			17,680			3,019			—			20,724

Total current assets		36,568			258,682			21,764			—			317,014

Investments in unconsolidated affiliates		63,275			45,684			—						108,959
Investments in subsidiaries		76,999			9,095			—			(86,094	)		—
Property and equipment, net		—			52,042			14,599			—			66,641
Deferred tax asset, non-current		1,121			(1,121	)		—			—			—
Goodwill		—			121,048			7,133			—			128,181
Other assets, net		118			21,985			2,149			—			24,252

Total assets	$	178,081		$	507,415		$	45,645		$	(86,094	)	$	645,047

Liabilities and stockholders’ equity:
Current liabilities:
Current maturities of long-term debt	$	10,000		$	—		$	—		$	—		$	10,000
Accounts payable and other accrued expenses		107			44,651			4,228			—			48,986
Customer layaway deposits		—			5,785			165			—			5,950
Intercompany payables		(237,528	)		203,963			33,515			50			—
Income taxes payable		13,107			(5,153	)		(2,687	)		—			5,267

Total current liabilities		(214,314	)		249,246			35,221			50			70,203

Long-term debt, less current maturities		12,500			—			—			—			12,500
Deferred tax liability		1,590			18			11			—			1,619
Deferred gains and other long-term liabilities		—			2,418			1			—			2,419

Total liabilities		(200,224	)		251,682			35,233			50			86,741

Commitments and contingencies

Stockholders’ equity:
Class A Non-voting Common Stock, par value $.01 per share;		458			11			—						469
Class B Voting Common Stock, convertible, par value $.01 per share;		30			(1	)		1			—			30
Additional paid-in capital		213,952			86,641			15,340			(86,144	)		229,789
Retained earnings		160,665			169,597			(2,897	)		—			327,365
Accumulated other comprehensive income (loss)		3,200			(515	)		(2,032	)		—			653

Total stockholders’ equity		378,305			255,733			10,412			(86,144	)		558,306

Total liabilities and stockholders’ equity	$	178,081		$	507,415		$	45,645		$	(86,094	)	$	645,047


	September 30, 2011
	(Unaudited)
	(In thousands)
	Parent			Subsidiary Guarantors			Other Subsidiaries			Eliminations			Consolidated
Assets:
Current assets:
Cash and cash equivalents	$	—		$	20,860		$	3,109		$	—		$	23,969
Pawn loans		—			134,457			10,861			—			145,318
Signature loans, net		—			9,304			2,085			—			11,389
Auto title loans, net		—			3,222			—			—			3,222
Pawn service charges receivable, net		—			24,792			1,663			—			26,455
Signature loan fees receivable, net		—			5,215			133			—			5,348
Auto title loan fees receivable, net		—			1,427			—			—			1,427
Inventory, net		—			81,277			9,096			—			90,373
Deferred tax asset		12,728			5,397			—			—			18,125
Receivable from affiliates		66,450			(66,450	)		—			—			—
Income taxes receivable		—			—			—			—			—
Prepaid expenses and other assets		29			25,976			4,606			—			30,611

Total current assets		79,207			245,477			31,553			—			356,237

Investments in unconsolidated affiliates		71,958			48,361			—			—			120,319
Investments in subsidiaries		84,303			44,323			—			(128,626	)		—
Property and equipment, net		—			59,434			19,064			—			78,498
Deferred tax asset, non-current		—			—			—			—			—
Goodwill		—			163,897			9,309			—			173,206
Other assets, net		2,147			22,219			3,822			2			28,190

Total assets	$	237,615		$	583,711		$	63,748		$	(128,624	)	$	756,450

Current liabilities:
Accounts payable and other accrued expenses	$	13		$	50,871		$	6,516		$	—		$	57,400
Customer layaway deposits		—			5,711			465			—			6,176
Intercompany payables		(199,190	)		178,375			20,761			54			—
Income taxes payable		9,552			(5,150	)		(3,709	)		—			693

Total current liabilities		(189,625	)		229,807			24,033			54			64,269

Long-term debt, less current maturities		17,500			—			—			—			17,500
Deferred tax liability		5,940			1,563			828			—			8,331
Deferred gains and other long-term liabilities		—			2,102			—			—			2,102

Total liabilities		(166,185	)		233,472			24,861			54			92,202

Commitments and contingencies

Stockholders’ equity:
Class A Non-voting Common Stock, par value $.01 per share;		461			12			—			(2	)		471
Class B Voting Common Stock; convertible, par value $.01 per share;		30			(1	)		1			—			30
Additional paid-in capital		221,526			98,980			50,568			(128,676	)		242,398
Retained earnings		174,860			251,418			(4,183	)		—			422,095
Accumulated other comprehensive income (loss)		6,923			(170	)		(7,499	)		—			(746	)

Total stockholders’ equity		403,800			350,239			38,887			(128,678	)		664,248

Total liabilities and stockholders’ equity	$	237,615		$	583,711		$	63,748		$	(128,624	)	$	756,450

Condensed Consolidating Statements of Operations


	Three Months Ended December 31, 2011
	(Unaudited)
	(In thousands)
	Parent			Subsidiary Guarantors			Other Subsidiaries			Eliminations			Consolidated
Revenues:
Sales	$	—		$	128,546		$	14,751		$	—		$	143,297
Pawn service charges		—			54,370			5,422			—			59,792
Signature loan fees		—			36,950			2,671			—			39,621
Auto title loan fees		—			5,467			—			—			5,467
Other		20,139			850			318			(20,611	)		696

Total revenues		20,139			226,183			23,162			(20,611	)		248,873

Cost of goods sold		—			76,121			7,699			—			83,820
Signature loan bad debt		—			9,267			834			—			10,101
Auto title loan bad debt		—			924			—			—			924

Net revenues		20,139			139,871			14,629			(20,611	)		154,028

Operating Expenses:
Operations		—			65,009			9,492			—			74,501
Administrative		—			17,688			2,495			(472	)		19,711
Depreciation and amortization		—			4,147			1,108			—			5,255
(Gain) / loss on sale or disposal of assets		—			(224	)		23			—			(201	)

Total operating expenses		—			86,620			13,118			(472	)		99,266

Operating income		20,139			53,251			1,511			(20,139	)		54,762

Interest income		—			(9	)		(38	)		8			(39	)
Interest expense		(1,873	)		2,462			9			(8	)		590
Equity in net income of unconsolidated affiliates		(2,336	)		(1,825	)		—			—			(4,161	)
Other		—			(1,137	)		18			—			(1,119	)

Income before income taxes		24,348			53,760			1,522			(20,139	)		59,491
Income tax expense		18,909			20,139			1,230			(20,139	)		20,139

Net income	$	5,439		$	33,621		$	292		$	—		$	39,352


	Three Months Ended December 31, 2010
	(Unaudited)
	(In thousands)
	Parent			Subsidiary Guarantors			Other Subsidiaries			Eliminations			Consolidated
Revenues:
Sales	$	—		$	113,353		$	9,192		$	—		$	122,545
Pawn service charges		—			46,436			3,374			—			49,810
Signature loan fees		—			38,468			1,598			—			40,066
Auto title loan fees		—			6,244			—			—			6,244
Other		15,100			148			13			(15,100	)		161

Total revenues		15,100			204,649			14,177			(15,100	)		218,826

Cost of goods sold		—			67,752			5,814			—			73,566
Signature loan bad debt		—			9,484			562			—			10,046
Auto title loan bad debt		—			982			—			—			982

Net revenues		15,100			126,431			7,801			(15,100	)		134,232

Operating Expenses:
Operations		—			58,260			6,244			—			64,504
Administrative		—			25,203			935			—			26,138
Depreciation and amortization		—			3,427			752			—			4,179
(Gain) / loss on sale or disposal of assets		—			(6	)		13			—			7

Total operating expenses		—			86,884			7,944			—			94,828

Operating income		15,100			39,547			(143	)		(15,100	)		39,404

Interest income		—			(63	)		—			60			(3	)
Interest expense		(2,311	)		2,610			61			(60	)		300
Equity in net income of unconsolidated affiliates		(1,678	)		(1,689	)		—			—			(3,367	)
Other		—			(60	)		(1	)		—			(61	)

Income before income taxes		19,089			38,749			(203	)		(15,100	)		42,535
Income tax expense		14,753			15,106			347			(15,100	)		15,106

Net income	$	4,336		$	23,643		$	(550	)	$	—		$	27,429

Condensed Consolidating Statement of Cash Flows


	Three Months Ended December 31, 2011
	(In thousands)
	Parent			Subsidiary Guarantors			Other Subsidiaries			Consolidated
Operating Activities:
Net income		5,439			33,621			292			39,352
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		—			4,147			1,108			5,255
Signature loan and auto title loan loss provisions		—			3,193			842			4,035
Deferred taxes		522			(191	)		(74	)		257
Net loss/(gain) on sale or disposal of assets		—			(224	)		23			(201	)
Stock compensation		—			1,513			—			1,513
Income from investments in unconsolidated affiliates		(2,336	)		(1,825	)		—			(4,161	)
Changes in operating assets and liabilities, net of business acquisitions:
Service charges and fees receivable, net		—			(2,389	)		(3	)		(2,392	)
Inventory, net		—			(1,353	)		(256	)		(1,609	)
Prepaid expenses, other current assets, and other assets, net		(20,019	)		10,632			1,200			(8,187	)
Accounts payable and accrued expenses		(19,712	)		11,722			4,297			(3,693	)
Customer layaway deposits		—			(766	)		2,631			1,865
Deferred gains and other long-term liabilities		—			(104	)		(12	)		(116	)
Excess tax benefit from stock compensation		—			(460	)		—			(460	)
Income taxes		12,115			454			(285	)		12,284

Net cash provided by/(used in) operating activities	$	(23,991	)	$	57,970		$	9,763		$	43,742

Investing Activities:
Loans made		—			(154,584	)		(28,173	)		(182,757	)
Loans repaid		—			89,880			21,108			110,988
Recovery of pawn loan principal through sale of forfeited collateral		—			55,885			5,816			61,701
Additions to property and equipment		—			(5,304	)		(4,644	)		(9,948	)
Acquisitions, net of cash acquired		—			(48,958	)		(441	)		(49,399	)
Dividends from unconsolidated affiliates		2,222			—			—			2,222

Net cash used in investing activities	$	2,222		$	(63,081	)	$	(6,334	)	$	(67,193	)

Financing Activities:
Stock issuance costs related to acquisitions		460			—			—			460
Taxes paid related to net share settlement of equity awards		(988	)		—			—			(988	)
Proceeds on revolving line of credit		116,500			—			—			116,500
Payments on revolving line of credit		(93,500	)		—			—			(93,500	)

Net cash used in financing activities	$	22,472		$	—		$	—		$	22,472
Effect of exchange rate changes on cash and cash equivalents		—			—			(122	)		(122	)

Net (decrease) increase in cash and cash equivalents		703			(5,111	)		3,307			(1,101	)
Cash and cash equivalents at beginning of period		—			20,860			3,109			23,969

Cash and cash equivalents at end of period	$	703		$	15,749		$	6,416		$	22,868


	Three Months Ended December 31, 2010
	(In thousands)
	Parent			Subsidiary Guarantors			Other Subsidiaries			Consolidated
Operating Activities:
Net income	$	4,336		$	23,643		$	(550	)		27,429
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		—			3,427			752			4,179
Signature loan and auto title loan loss provisions		—			3,643			491			4,134
Deferred taxes		1,641			(186	)		164			1,619
(Gain) / loss on sale or disposal of assets		—			(6	)		13			7
Stock compensation		—			8,548			—			8,548
Income from investments in unconsolidated affiliates		(1,678	)		(1,689	)		—			(3,367	)
Changes in operating assets and liabilities, net of business acquisitions:
Service charges and fees receivable, net		—			(2,437	)		16			(2,421	)
Inventory, net		—			(1,521	)		(159	)		(1,680	)
Prepaid expenses, other current assets, and other assets, net		(15,020	)		11,765			(507	)		(3,762	)
Accounts payable and accrued expenses		13,461			(18,852	)		4,559			(832	)
Customer layaway deposits		—			(227	)		(5	)		(232	)
Deferred gains and other long-term liabilities		—			(107	)		—			(107	)
Excess tax benefit from stock compensation		—			(3,065	)		—			(3,065	)
Income taxes		2,076			3,059			(463	)		4,672

Net cash provided by operating activities	$	4,816		$	25,995		$	4,311		$	35,122

Investing Activities:
Loans made		—			(133,938	)		(18,825	)		(152,763	)
Loans repaid		—			78,297			13,043			91,340
Recovery of pawn loan principal through sale of forfeited collateral		—			46,072			4,678			50,750
Additions to property and equipment		—			(6,177	)		(1,756	)		(7,933	)
Acquisitions, net of cash acquired		—			(13,700	)		—			(13,700	)
Dividends from unconsolidated affiliates		1,811			—			—			1,811

Net cash used in investing activities	$	1,811		$	(29,446	)	$	(2,860	)	$	(30,495	)

Financing Activities:
Proceeds from exercise of stock options		204			—			—			204
Excess tax benefit from stock compensation		3,065			—			—			3,065
Taxes paid related to net share settlement of equity awards		(7,396	)		—			—			(7,396	)
Proceeds on revolving line of credit		15,000			—			—			15,000
Payments on revolving line of credit		(15,000	)		—			—			(15,000	)
Payments on bank borrowings		(2,500	)		—			—			(2,500	)

Net cash used in financing activities	$	(6,627	)	$	—		$	—		$	(6,627	)

Effect of exchange rate changes on cash and cash equivalents		—			—			54			54

Net (decrease) increase in cash and cash equivalents		—			(3,451	)		1,505			(1,946	)
Cash and cash equivalents at beginning of period		—			23,862			1,992			25,854

Cash and cash equivalents at end of period	$	—		$	20,411		$	3,497		$	23,908

Note O. Supplemental Consolidated Financial Information

Supplemental Consolidated Statements of Financial Position Information:

The following table provides information on amounts included in pawn service charges receivable, net, signature loan fees receivable, net, inventories, net and property and equipment, net:


	December 31,						September 30,
	2011			2010			2011
	(In thousands)
Pawn service charges receivable:
Gross pawn service charges receivable	$	38,201		$	32,125		$	37,175
Allowance for uncollectible pawn service charges receivable		(9,608	)		(8,057	)		(10,720	)

Pawn service charges receivable, net	$	28,593		$	24,068		$	26,455

Signature loan fees receivable:
Gross signature loan fees receivable	$	6,817		$	6,657		$	5,839
Allowance for uncollectible signature loan fees receivable		(611	)		(516	)		(491	)

Signature loan fees receivable, net	$	6,206		$	6,141		$	5,348

Auto title loan fees receivable:
Gross auto title loan fees receivable	$	1,472		$	1,685		$	1,507
Allowance for uncollectible auto title loan fees receivable		(67	)		(85	)		(80	)

Auto title loan fees receivable, net	$	1,405		$	1,600		$	1,427

Inventory:
Inventory, gross	$	108,329		$	84,096		$	99,854
Inventory reserves