##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXHANGE ACT OF 1934
 For the quarterly period ended December 31, 2009
 or
 o
    
    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.
  Delaware
    
    74-2540145(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)
 1901 Capital Parkway 
Austin, Texas
(Address of principal executive offices)
    
    78746
(Zip Code)
 (512) 314-3400
 þ o
 o o
  Large accelerated filer o
Accelerated filer þ
Non-accelerated filer o
(Do not check if a smaller reporting company)
Smaller reporting company o o þ




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##### 



EZCORP, INC.
INDEX TO FORM 10-Q
 PagePART I. FINANCIAL INFORMATIONItem 1. Financial Statements (Unaudited)Condensed Consolidated Balance Sheets as of December 31, 2009,
December 31, 2008 and September 30, 2009 (audited)
    
    
    1Condensed Consolidated Statements of Operations for the Three Months
Ended December 31, 2009 and 2008
    
    
    2Condensed Consolidated Statements of Cash Flows for the Three Months
Ended December 31, 2009 and 2008
    
    
    3Notes to Interim Condensed Consolidated Financial Statements
    
    
    4Item 2. Managements Discussion and Analysis of
Financial Condition and Results of Operations
    
    
    17Item 3. Quantitative and Qualitative Disclosures
about Market Risk
    
    
    29Item 4. Controls and Procedures
    
    
    31PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    32Item 1A. Risk Factors
    
    
    32Item 6. Exhibits
    
    
    32SIGNATURE
    
    
    33EXHIBIT INDEX
    
    
    34CERTIFICATIONSEX-31.1EX-31.2EX-32.1




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PART I
 
 Item 1. Financial Statements
 
  December 31,
    
    
    December 31,
    
    
    September 30,2009
    
    
    2008
    
    
    2009(Unaudited)
    
    
    (Unaudited)(In thousands)Assets:Current assets:Cash and cash equivalents
    
    $
    17,032
    
    
    $
    41,595
    
    
    $
    44,764Pawn loans
    
    
    103,446
    
    
    
    93,789
    
    
    
    101,684Signature loans, net
    
    
    8,934
    
    
    
    8,246
    
    
    
    8,357Auto title loans, net
    
    
    2,110
    
    
    
    1,174
    
    
    
    1,663Pawn service charges receivable, net
    
    
    19,662
    
    
    
    16,888
    
    
    
    18,187Signature loan fees receivable, net
    
    
    6,044
    
    
    
    5,968
    
    
    
    5,599Auto title loan fees receivable, net
    
    
    827
    
    
    
    92
    
    
    
    529Inventory, net
    
    
    63,515
    
    
    
    64,563
    
    
    
    64,001Deferred tax asset
    
    
    15,671
    
    
    
    15,773
    
    
    
    15,670Prepaid expenses and other assets
    
    
    20,654
    
    
    
    12,284
    
    
    
    16,927Total current assets
    
    
    257,895
    
    
    
    260,372
    
    
    
    277,381Investments in unconsolidated affiliates
    
    
    90,455
    
    
    
    37,873
    
    
    
    38,851Property and equipment, net
    
    
    52,378
    
    
    
    46,674
    
    
    
    51,154Deferred tax asset, non-current
    
    
    5,011
    
    
    
    7,754
    
    
    
    6,311Goodwill
    
    
    101,134
    
    
    
    98,300
    
    
    
    100,719Other assets, net
    
    
    19,931
    
    
    
    18,693
    
    
    
    18,101Total assets
    
    $
    526,804
    
    
    $
    469,666
    
    
    $
    492,517Liabilities and stockholders equity:Current liabilities:Current maturities of long-term debt
    
    $
    10,000
    
    
    $
    10,000
    
    
    $
    10,000Accounts payable and other accrued expenses
    
    
    39,692
    
    
    
    48,534
    
    
    
    33,838Customer layaway deposits
    
    
    2,697
    
    
    
    2,879
    
    
    
    4,175Federal income taxes payable
    
    
    6,480
    
    
    
    3,186
    
    
    
    572Total current liabilities
    
    
    58,869
    
    
    
    64,599
    
    
    
    48,585Long-term debt, less current maturities
    
    
    22,500
    
    
    
    30,337
    
    
    
    25,000Deferred gains and other long-term liabilities
    
    
    2,840
    
    
    
    3,566
    
    
    
    3,247Total liabilities
    
    
    84,209
    
    
    
    98,502
    
    
    
    76,832Commitments and contingenciesStockholders equity:Class A Non-voting Common Stock, par value $.01 per share; Authorized
54 million shares; 45,761,998 issued and outstanding
at December 31, 2009; 45,457,188 issued and 45,447,188
outstanding at December 31, 2008; 45,732,998 issued and
outstanding at September 30, 2009
    
    
    458
    
    
    
    451
    
    
    
    457Class B Voting Common Stock, convertible, par value $.01 per
share; 3 million shares authorized; 2,970,171 issued and
outstanding
    
    
    30
    
    
    
    30
    
    
    
    30Additional paid-in capital
    
    
    218,284
    
    
    
    224,914
    
    
    
    217,176Retained earnings
    
    
    228,349
    
    
    
    148,998
    
    
    
    202,642Treasury stock, at cost; 10,000 shares at December 31, 2008
    
    
    
    
    
    
    (12
    )
    
    
    Accumulated other comprehensive loss
    
    
    (4,526
    )
    
    
    (3,217
    )
    
    
    (4,620
    )Total stockholders equity
    
    
    442,595
    
    
    
    371,164
    
    
    
    415,685Total liabilities and stockholders equity
    
    $
    526,804
    
    
    $
    469,666
    
    
    $
    492,517
  1




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Three Months EndedDecember 31,2009
    
    
    2008(In thousands, except per share amounts)Revenues:Sales
    
    $
    99,918
    
    
    $
    64,580Pawn service charges
    
    
    40,797
    
    
    
    26,381Signature loan fees
    
    
    38,678
    
    
    
    36,000Auto title loan fees
    
    
    3,102
    
    
    
    221Other
    
    
    2,256
    
    
    
    1,433Total revenues
    
    
    184,751
    
    
    
    128,615Cost of goods sold
    
    
    62,570
    
    
    
    40,425Signature loan bad debt
    
    
    8,790
    
    
    
    9,484Auto title loan bad debt
    
    
    460
    
    
    
    7Net revenues
    
    
    112,931
    
    
    
    78,699Operating expenses:Operations
    
    
    58,181
    
    
    
    43,494Administrative
    
    
    12,297
    
    
    
    10,411Depreciation and amortization
    
    
    3,356
    
    
    
    3,066(Gain) loss on sale / disposal of assets
    
    
    211
    
    
    
    (284
    )Total operating expenses
    
    
    74,045
    
    
    
    56,687Operating income
    
    
    38,886
    
    
    
    22,012Interest income
    
    
    (8
    )
    
    
    (126
    )Interest expense
    
    
    365
    
    
    
    165Equity in net income of unconsolidated affiliates
    
    
    (1,283
    )
    
    
    (941
    )Other
    
    
    (15
    )
    
    
    25Income before income taxes
    
    
    39,827
    
    
    
    22,889Income tax expense
    
    
    14,120
    
    
    
    8,061Net income
    
    $
    25,707
    
    
    $
    14,828Net income per common share:Basic
    
    $
    0.53
    
    
    $
    0.34Diluted
    
    $
    0.52
    
    
    $
    0.33Weighted average shares outstanding:Basic
    
    
    48,722
    
    
    
    43,661Diluted
    
    
    49,400
    
    
    
    44,692
  2




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Three Months EndedDecember 31,2009
    
    
    2008(In thousands)Operating Activities:Net income
    
    $
    25,707
    
    
    $
    14,828Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    3,356
    
    
    
    3,066Signature loan and auto title loan loss provisions
    
    
    2,938
    
    
    
    2,691Deferred taxes
    
    
    1,300
    
    
    
    1,239Net (gain) loss on sale or disposal of assets
    
    
    211
    
    
    
    (284
    )Share-based compensation
    
    
    1,056
    
    
    
    1,059Income from investments in unconsolidated affiliates
    
    
    (1,283
    )
    
    
    (941
    )Changes in operating assets and liabilities, net of business acquisitions:Service charges and fees receivable, net
    
    
    (2,198
    )
    
    
    (84
    )Inventory, net
    
    
    197
    
    
    
    (819
    )Prepaid expenses, other current assets, and other assets, net
    
    
    (5,659
    )
    
    
    (995
    )Accounts payable and accrued expenses
    
    
    5,654
    
    
    
    (389
    )Customer layaway deposits
    
    
    (1,482
    )
    
    
    (435
    )Deferred gains and other long-term liabilities
    
    
    (414
    )
    
    
    (43
    )Excess tax benefit from share-based compensation
    
    
    (23
    )
    
    
    (1,639
    )Federal income taxes
    
    
    5,967
    
    
    
    4,606Net cash provided by operating activities
    
    
    35,327
    
    
    
    21,860Investing Activities:Loans made
    
    
    (128,315
    )
    
    
    (92,792
    )Loans repaid
    
    
    77,849
    
    
    
    58,772Recovery of pawn loan principal through sale of forfeited collateral
    
    
    45,256
    
    
    
    32,732Additions to property and equipment
    
    
    (4,470
    )
    
    
    (4,197
    )Acquisitions, net of cash acquired
    
    
    (31
    )
    
    
    (17,064
    )Investments in unconsolidated affiliates
    
    
    (50,932
    )
    
    
    Net cash used in investing activities
    
    
    (60,643
    )
    
    
    (22,549
    )Financing Activities:Proceeds from exercise of stock options and warrants
    
    
    61
    
    
    
    4,580Stock issuance costs related to acquisitions
    
    
    
    
    
    
    (273
    )Excess tax benefit from share-based compensation
    
    
    23
    
    
    
    1,639Debt issuance costs
    
    
    
    
    
    
    (1,058
    )Proceeds from bank borrowings
    
    
    
    
    
    
    40,000Payments on bank borrowings
    
    
    (2,500
    )
    
    
    (30,048
    )Net cash provided by (used in) financing activities
    
    
    (2,416
    )
    
    
    14,840Change in cash and equivalents
    
    
    (27,732
    )
    
    
    14,151Cash and equivalents at beginning of period
    
    
    44,764
    
    
    
    27,444Cash and equivalents at end of period
    
    $
    17,032
    
    
    $
    41,595Non-cash Investing and Financing Activities:Pawn loans forfeited and transferred to inventory
    
    $
    44,872
    
    
    $
    35,278Foreign currency translation adjustment
    
    $
    (94
    )
    
    $
    5,798Acquisition-related stock issuance
    
    $
    (31
    )
    
    $
    82,080
  3




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EZCORP, Inc. and Subsidiaries
Notes to Interim Condensed Consolidated Financial Statements (Unaudited)
December 31, 2009
 Note A: Basis of Presentation
   Note B: Significant Accounting Policies
      4




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st
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Note C: Acquisitions
  7




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Current assets:Pawn loans
    
    $
    5,442Payday loans, net
    
    
    55Auto title loans, net
    
    
    1,105Pawn service charges receivable, net
    
    
    1,231Signature loan fees receivable, net
    
    
    7Auto title loan fees receivable, net
    
    
    84Inventory, net
    
    
    2,860Deferred tax asset, net
    
    
    334Prepaid expenses and other assets
    
    
    79Total current assets
    
    
    11,197Property and equipment, net
    
    
    392Goodwill
    
    
    16,297Other assets, net
    
    
    6,711Total assets
    
    $
    34,597Liabilities:Accounts payable and other accrued expenses
    
    $
    (27
    )Customer layaway deposits
    
    
    (135
    )Total liabilities
    
    
    (162
    )Net assets acquired
    
    $
    34,435
        8




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Current assets:Pawn loans
    
    $
    17,886Pawn service charges receivable, net
    
    
    3,491Inventory, net
    
    
    16,265Deferred tax asset, net
    
    
    4,394Prepaid expenses and other assets
    
    
    1,438Total current assets
    
    
    43,474Property and equipment, net
    
    
    5,584Deferred tax asset, non-current
    
    
    690Goodwill
    
    
    61,877Other assets, net
    
    
    5,719Total assets
    
    $
    117,344Current Liabilities:Current maturities of long-term debt
    
    $
    (4,000
    )Accounts payable and other accrued expenses
    
    
    (8,404
    )Customer layaway deposits
    
    
    (872
    )Total Current liabilities
    
    
    (13,276
    )Long-term debt
    
    
    (26,385
    )Total Liabilities
    
    
    (39,661
    )Net assets acquired
    
    $
    77,683
    9




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Three Months EndedDecember 31,2009
    
    
    2008(Unaudited and Pro Forma)(In thousands, except per share amounts)Revenues:Sales
    
    $
    99,918
    
    
    $
    92,495Pawn service charges
    
    
    40,797
    
    
    
    35,231Signature loan fees
    
    
    38,678
    
    
    
    36,000Auto title loan fees
    
    
    3,102
    
    
    
    221Other
    
    
    2,256
    
    
    
    1,905Total revenues
    
    
    184,751
    
    
    
    165,852Cost of goods sold
    
    
    62,570
    
    
    
    57,576Signature loan bad debt
    
    
    8,790
    
    
    
    9,484Auto title loan bad debt
    
    
    460
    
    
    
    7Net revenues
    
    
    112,931
    
    
    
    98,785Operating expenses:Operations
    
    
    58,181
    
    
    
    54,363Administrative
    
    
    12,297
    
    
    
    15,768Depreciation and amortization
    
    
    3,356
    
    
    
    3,339(Gain) loss on sale/disposal of assets
    
    
    211
    
    
    
    (255
    )Total operating expenses
    
    
    74,045
    
    
    
    73,215Operating income
    
    
    38,886
    
    
    
    25,570Interest expense, net
    
    
    357
    
    
    
    528Equity in net income of unconsolidated affiliate
    
    
    (1,283
    )
    
    
    (941
    )Other
    
    
    (15
    )
    
    
    25Income before income taxes
    
    
    39,827
    
    
    
    25,958Income tax expense
    
    
    14,120
    
    
    
    9,244Net income
    
    $
    25,707
    
    
    $
    16,714Net income per common share:Basic
    
    $
    0.53
    
    
    $
    0.35Diluted
    
    $
    0.52
    
    
    $
    0.34Weighted average shares outstanding:Basic
    
    
    48,722
    
    
    
    47,675Diluted
    
    
    49,400
    
    
    
    48,706
  Note D: Earnings per Share
  10




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Three Months EndedDecember 31,2009
    
    
    2008Net income (A)
    
    $
    25,707
    
    
    $
    14,828Weighted average outstanding shares of common stock (B)
    
    
    48,722
    
    
    
    43,661Dilutive effect of stock options, warrants, and restricted stock
    
    
    678
    
    
    
    1,031Weighted average common stock and common stock equivalents (C)
    
    
    49,400
    
    
    
    44,692Basic earnings per share (A/B)
    
    $
    0.53
    
    
    $
    0.34Diluted earnings per share (A/C)
    
    $
    0.52
    
    
    $
    0.33
  Note E: Strategic Investments
   As of June 30,2009
    
    
    2008(In thousands)Current assets
    
    $
    102,034
    
    
    $
    120,295Non-current assets
    
    
    51,980
    
    
    
    61,388Total assets
    
    $
    154,014
    
    
    $
    181,683Current liabilities
    
    $
    13,247
    
    
    $
    13,710Non-current liabilities
    
    
    55,729
    
    
    
    79,555Equity shareholders funds
    
    
    85,038
    
    
    
    88,418Total liabilities and equity shareholders funds
    
    $
    154,014
    
    
    $
    181,683
 Years ended June 30,2009
    
    2008(in thousands)Turnover (gross revenues)
    
    $
    89,712
    
    
    $
    93,914Gross profit
    
    
    68,572
    
    
    
    72,996Profit after tax (net income)
    
    
    17,239
    
    
    
    14,503
 11




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As of June 30,2009
    
    
    2008(In thousands)Current assets
    
    $
    37,477
    
    
    $
    37,838Non-current assets
    
    
    54,900
    
    
    
    57,602Total assets
    
    $
    92,377
    
    
    $
    95,440Current liabilities
    
    $
    14,523
    
    
    $
    15,627Non-current liabilities
    
    
    11,467
    
    
    
    8,618Equity shareholders funds
    
    
    66,387
    
    
    
    71,195Total liabilities and equity shareholders funds
    
    $
    92,377
    
    
    $
    95,440
 Years ended June 30,2009
    
    2008(in thousands)Gross revenues
    
    $
    70,612
    
    
    $
    66,702Gross profit
    
    
    52,680
    
    
    
    51,691Profit for the year (net income)
    
    
    12,084
    
    
    
    13,603
  December 31, 2009
    
    December 31, 2008
    
    September 30, 2009(In thousands of U.S. dollars)Albemarle & Bond:Recorded value
    
    $
    40,832
    
    
    $
    37,873
    
    
    $
    38,851Fair value
    
    
    69,091
    
    
    
    47,788
    
    
    
    61,504Cash Converters:Recorded value
    
    
    49,623
    
    
    
    
    
    
    
    Fair value
    
    
    63,789
    
    
    
    
    
    
    
    
 12




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Note F: Contingencies
  Note G: Comprehensive Income (Loss)
  Note H: Long-term Debt
   Note I: Goodwill and Other Intangible Assets
  December 31, 2009
    
    
    December 31, 2008
    
    
    September 30, 2009(In thousands)Pawn licenses
    
    $
    8,229
    
    
    $
    8,289
    
    
    $
    8,229Trade Name
    
    
    4,870
    
    
    
    4,060
    
    
    
    4,870Goodwill
    
    
    101,134
    
    
    
    98,300
    
    
    
    100,719Total
    
    $
    114,233
    
    
    $
    110,649
    
    
    $
    113,818
  U.S. Pawn
    
    
    
    
    
    
    EZMONEYOperations
    
    
    Empeño Fácil
    
    
    Operations
    
    
    Consolidated(in thousands)Balance at September 30, 2009
    
    $
    94,192
    
    
    $
    6,527
    
    
    $
    
    
    
    
    100,719Acquisitions  adjustments to initial estimate
    
    
    193
    
    
    
    
    
    
    
    
    
    
    
    193Effect of foreign currency translation changes
    
    
    
    
    
    
    222
    
    
    
    
    
    
    
    222Balance at December 31, 2009
    
    $
    94,385
    
    
    $
    6,749
    
    
    $
    
    
    
    $
    101,134
 13




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U.S. Pawn
    
    
    
    
    
    
    EZMONEYOperations
    
    
    Empeño Fácil
    
    
    Operations
    
    
    Consolidated(in thousands)Balance at September 30, 2008
    
    $
    16,211
    
    
    $
    8,165
    
    
    $
    
    
    
    $
    24,376Acquisitions
    
    
    75,580
    
    
    
    
    
    
    
    
    
    
    
    75,580Effect of foreign currency translation changes
    
    
    
    
    
    
    (1,656
    )
    
    
    
    
    
    
    (1,656
    )Balance at December 31, 2008
    
    $
    91,791
    
    
    $
    6,509
    
    
    $
    
    
    
    $
    98,300
  December 31, 2009
    
    
    December 31, 2008
    
    
    September 30, 2009Carrying
    
    
    Accumulated
    
    
    Carrying
    
    
    Accumulated
    
    
    Carrying
    
    
    AccumulatedAmount
    
    
    Amortization
    
    
    Amount
    
    
    Amortization
    
    
    Amount
    
    
    Amortization(In thousands)License application fees
    
    $
    345
    
    
    $
    (342
    )
    
    $
    345
    
    
    $
    (324
    )
    
    $
    345
    
    
    $
    (339
    )Real estate finders fees
    
    
    665
    
    
    
    (377
    )
    
    
    556
    
    
    
    (349
    )
    
    
    609
    
    
    
    (367
    )Non-compete agreements
    
    
    2,587
    
    
    
    (1,354
    )
    
    
    2,493
    
    
    
    (861
    )
    
    
    2,497
    
    
    
    (1,192
    )Favorable lease
    
    
    644
    
    
    
    (126
    )
    
    
    1,800
    
    
    
    
    
    
    
    644
    
    
    
    (95
    )Other
    
    
    11
    
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    11
    
    
    
    Total
    
    $
    4,252
    
    
    $
    (2,200
    )
    
    $
    5,194
    
    
    $
    (1,534
    )
    
    $
    4,106
    
    
    $
    (1,993
    )
  Fiscal Year
    
    Amortization Expense2010
    
    $
    5292011
    
    $
    4922012
    
    $
    4572013
    
    $
    502014
    
    $
    33
  Note J: Share-based Compensation
  Three Months Ended December 31,2009
    
    
    2008(in thousands)Gross compensation cost
    
    $
    1,056
    
    
    $
    1,059Income tax benefits
    
    
    (358
    )
    
    
    (319
    )Share-based compensation cost, net of tax benefit
    
    $
    698
    
    
    $
    740
  14




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##### Table of Contents



Note K: Income Taxes
  Note L: Operating Segment Information
  
    
    The U.S. Pawn Operations segment offers pawn related activities in our 370 U.S. pawn
stores, offers signature loans in 76 pawn stores and six EZMONEY stores and offers auto
title loans in 68 pawn stores.
    
    The Empeño Fácil segment offers pawn related activities in 70 Mexico pawn stores.
    
    The EZMONEY Operations segment offers signature loans in 466 U.S. EZMONEY stores and
eight Canadian CASHMAX stores. The segment offers auto title loans in 393 of its U.S.
EZMONEY stores.
  U.S. Pawn
    
    
    Empeño
    
    
    EZMONEYOperations
    
    
    Fácil
    
    
    Operations
    
    
    Consolidated(in thousands)Three Months Ended December 31, 2009:Revenues:Sales
    
    $
    96,034
    
    
    $
    3,872
    
    
    $
    12
    
    
    $
    99,918Pawn service charges
    
    
    38,941
    
    
    
    1,856
    
    
    
    
    
    
    
    40,797Signature loan fees
    
    
    553
    
    
    
    
    
    
    
    38,125
    
    
    
    38,678Auto title loan fees
    
    
    475
    
    
    
    
    
    
    
    2,627
    
    
    
    3,102Other
    
    
    2,167
    
    
    
    89
    
    
    
    
    
    
    
    2,256Total revenues
    
    
    138,170
    
    
    
    5,817
    
    
    
    40,764
    
    
    
    184,751Cost of goods sold
    
    
    59,730
    
    
    
    2,833
    
    
    
    7
    
    
    
    62,570Signature loan bad debt
    
    
    186
    
    
    
    
    
    
    
    8,604
    
    
    
    8,790Auto title loan bad debt
    
    
    70
    
    
    
    
    
    
    
    390
    
    
    
    460Net revenues
    
    
    78,184
    
    
    
    2,984
    
    
    
    31,763
    
    
    
    112,931Operations expense
    
    
    40,199
    
    
    
    2,164
    
    
    
    15,818
    
    
    
    58,181Store operating income
    
    $
    37,985
    
    
    $
    820
    
    
    $
    15,945
    
    
    $
    54,750Three Months Ended December 31, 2008:Revenues:Sales
    
    $
    62,167
    
    
    $
    2,413
    
    
    $
    
    
    
    $
    64,580Pawn service charges
    
    
    24,884
    
    
    
    1,497
    
    
    
    
    
    
    
    26,381Signature loan fees
    
    
    686
    
    
    
    
    
    
    
    35,314
    
    
    
    36,000Auto title loan fees
    
    
    210
    
    
    
    
    
    
    
    11
    
    
    
    221Other
    
    
    1,433
    
    
    
    
    
    
    
    
    
    
    
    1,433Total revenues
    
    
    89,380
    
    
    
    3,910
    
    
    
    35,325
    
    
    
    128,615Cost of goods sold
    
    
    38,938
    
    
    
    1,487
    
    
    
    
    
    
    
    40,425Signature loan bad debt
    
    
    236
    
    
    
    
    
    
    
    9,248
    
    
    
    9,484Auto title loan bad debt
    
    
    6
    
    
    
    
    
    
    
    1
    
    
    
    7Net revenues
    
    
    50,200
    
    
    
    2,423
    
    
    
    26,076
    
    
    
    78,699Operations expense
    
    
    26,678
    
    
    
    1,284
    
    
    
    15,532
    
    
    
    43,494Store operating income
    
    $
    23,522
    
    
    $
    1,139
    
    
    $
    10,544
    
    
    $
    35,205
 15




---



##### Table of Contents



Three Months EndedDecember 31,2009
    
    
    2008(in thousands)Consolidated store operating income
    
    $
    54,750
    
    
    $
    35,205Administrative expenses
    
    
    12,297
    
    
    
    10,411Depreciation and amortization
    
    
    3,356
    
    
    
    3,066(Gain) loss on sale / disposal of assets
    
    
    211
    
    
    
    (284
    )Interest income
    
    
    (8
    )
    
    
    (126
    )Interest expense
    
    
    365
    
    
    
    165Equity in net income of unconsolidated affiliate
    
    
    (1,283
    )
    
    
    (941
    )Other
    
    
    (15
    )
    
    
    25Consolidated income before income taxes
    
    $
    39,827
    
    
    $
    22,889
  U.S. Pawn
    
    
    Empeño
    
    
    EZMONEYOperations
    
    
    Fácil
    
    
    Operations
    
    
    Consolidated(in thousands)Assets at December 31, 2009:Pawn loans
    
    $
    99,326
    
    
    $
    4,120
    
    
    $
    
    
    
    $
    103,446Signature loans, net
    
    
    426
    
    
    
    
    
    
    
    8,508
    
    
    
    8,934Auto title loans, net
    
    
    756
    
    
    
    
    
    
    
    1,354
    
    
    
    2,110Inventory, net
    
    
    60,899
    
    
    
    2,614
    
    
    
    2
    
    
    
    63,515Total separately identified recorded segment assets
    
    $
    161,407
    
    
    $
    6,734
    
    
    $
    9,864
    
    
    $
    178,005Brokered signature loans outstanding from
unaffiliated lenders
    
    $
    299
    
    
    $
    
    
    
    $
    25,200
    
    
    $
    25,499Brokered auto title loans outstanding from
unaffiliated lenders
    
    $
    367
    
    
    $
    
    
    
    $
    3,921
    
    
    $
    4,288Assets at December 31, 2008:Pawn loans
    
    $
    90,682
    
    
    $
    3,107
    
    
    $
    
    
    
    $
    93,789Signature loans, net
    
    
    514
    
    
    
    
    
    
    
    7,732
    
    
    
    8,246Auto title loans, net
    
    
    1,123
    
    
    
    
    
    
    
    51
    
    
    
    1,174Inventory, net
    
    
    61,801
    
    
    
    2,762
    
    
    
    
    
    
    
    64,563Total separately identified recorded segment assets
    
    $
    154,120
    
    
    $
    5,869
    
    
    $
    7,783
    
    
    $
    167,772Brokered signature loans outstanding from
unaffiliated lenders
    
    $
    370
    
    
    $
    
    
    
    $
    24,968
    
    
    $
    25,338Brokered auto title loans outstanding from
unaffiliated lenders
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Assets at September 30, 2009:Pawn loans
    
    $
    98,099
    
    
    $
    3,585
    
    
    $
    
    
    
    $
    101,684Signature loans, net
    
    
    453
    
    
    
    
    
    
    
    7,904
    
    
    
    8,357Auto title loans, net
    
    
    685
    
    
    
    
    
    
    
    978
    
    
    
    1,663Inventory, net
    
    
    61,196
    
    
    
    2,804
    
    
    
    1
    
    
    
    64,001Total separately identified recorded segment assets
    
    $
    160,433
    
    
    $
    6,389
    
    
    $
    8,883
    
    
    $
    175,705Brokered signature loans outstanding from
unaffiliated lenders
    
    $
    278
    
    
    $
    
    
    
    $
    22,706
    
    
    $
    22,984Brokered auto title loans outstanding from
unaffiliated lenders
    
    $
    276
    
    
    $
    
    
    
    $
    1,910
    
    
    $
    2,186
  Note M: Subsequent Events
  16




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Three Months Ended December 31, 2009 vs. Three Months Ended December 31, 2008
  Three Months Ended December 31,
    
    
    Percentage2009
    
    
    2008
    
    
    Change(in thousands)Net revenues:Sales
    
    $
    99,918
    
    
    $
    64,580
    
    
    
    54.7
    %Pawn service charges
    
    
    40,797
    
    
    
    26,381
    
    
    
    54.6
    %Signature loan fees
    
    
    38,678
    
    
    
    36,000
    
    
    
    7.4
    %Auto title loan fees
    
    
    3,102
    
    
    
    221
    
    
    
    1303.6
    %Other
    
    
    2,256
    
    
    
    1,433
    
    
    
    57.4
    %Total revenues
    
    
    184,751
    
    
    
    128,615
    
    
    
    43.6
    %Cost of goods sold
    
    
    62,570
    
    
    
    40,425
    
    
    
    54.8
    %Signature loan bad debt
    
    
    8,790
    
    
    
    9,484
    
    
    
    (7.3
    )%Auto title loan bad debt
    
    
    460
    
    
    
    7
    
    
    
    6471.4
    %Net revenues
    
    $
    112,931
    
    
    $
    78,699
    
    
    
    43.5
    %Net income
    
    $
    25,707
    
    
    $
    14,828
    
    
    
    73.4
    %
  Three Months Ended December 31,2009
    
    
    2008(Dollars in thousands)Fee revenue
    
    $
    38,678
    
    
    $
    36,000Bad debt:Net defaults, including interest on brokered loans
    
    
    8,379
    
    
    
    9,385Insufficient funds fees, net of collections
    
    
    219
    
    
    
    293Change in valuation allowance
    
    
    120
    
    
    
    (254
    )Other related costs
    
    
    72
    
    
    
    60Net bad debt
    
    
    8,790
    
    
    
    9,484Fee revenue less bad debt
    
    $
    29,888
    
    
    $
    26,516Average signature loan balance outstanding during period (a)
    
    $
    31,988
    
    
    $
    30,785Signature loan balance at end of period (a)
    
    $
    34,433
    
    
    $
    33,584Participating stores at end of period
    
    
    556
    
    
    
    554Signature loan bad debt, as a percent of fee revenue
    
    
    22.7
    %
    
    
    26.3
    %Net default rate (a) (b)
    
    
    4.5
    %
    
    
    5.2
    %
 
 (a)
    
    Signature loan balances include payday loans and installment loans (net of valuation
allowance) recorded on our balance sheets and the principal portion of similar active
brokered loans outstanding from unaffiliated lenders, the balance of which is not included
on our balance sheets.(b)
    
    Principal defaults net of collections, as a percentage of signature loans made and
renewed. 17




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##### Table of Contents



Overview
    Three Months Ended December 31, 2009U.S. Pawn
    
    
    Empeño
    
    
    EZMONEYOperations
    
    
    Fácil
    
    
    Operations
    
    
    ConsolidatedStores in operation:Beginning of period
    
    
    375
    
    
    
    62
    
    
    
    473
    
    
    
    910New openings
    
    
    1
    
    
    
    8
    
    
    
    6
    
    
    
    15Acquired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Sold, combined, or closed
    
    
    
    
    
    
    
    
    
    
    (5
    )
    
    
    (5
    )End of period
    
    
    376
    
    
    
    70
    
    
    
    474
    
    
    
    920Average number of stores during the period
    
    
    375
    
    
    
    66
    
    
    
    472
    
    
    
    914Composition of ending stores:Pawn
    
    
    370
    
    
    
    70
    
    
    
    
    
    
    
    440Short-term consumer loan stores
    
    
    6
    
    
    
    
    
    
    
    474
    
    
    
    480Total stores in operation
    
    
    376
    
    
    
    70
    
    
    
    474
    
    
    
    920Stores offering payday loans (a)
    
    
    82
    
    
    
    
    
    
    
    474
    
    
    
    556Stores offering installment loans (a)
    
    
    
    
    
    
    
    
    
    
    193
    
    
    
    193Stores offering auto title loans (a)
    
    
    68
    
    
    
    
    
    
    
    393
    
    
    
    461
 Three Months Ended December 31, 2008U.S. Pawn
    
    
    Empeño
    
    
    EZMONEYOperations
    
    
    Fácil
    
    
    Operations
    
    
    ConsolidatedStores in operation:Beginning of period
    
    
    300
    
    
    
    38
    
    
    
    471
    
    
    
    809New openings
    
    
    
    
    
    
    2
    
    
    
    6
    
    
    
    8Acquired
    
    
    77
    
    
    
    1
    
    
    
    
    
    
    
    78Sold, combined, or closed
    
    
    
    
    
    
    
    
    
    
    (6
    )
    
    
    (6
    )End of period
    
    
    377
    
    
    
    41
    
    
    
    471
    
    
    
    889Average number of stores during the period
    
    
    322
    
    
    
    39
    
    
    
    471
    
    
    
    832Composition of ending stores:Pawn
    
    
    371
    
    
    
    41
    
    
    
    
    
    
    
    412Short-term consumer loan stores
    
    
    6
    
    
    
    
    
    
    
    471
    
    
    
    477Total stores in operation
    
    
    377
    
    
    
    41
    
    
    
    471
    
    
    
    889Stores offering payday loans (a)
    
    
    83
    
    
    
    
    
    
    
    471
    
    
    
    554Stores offering installment loans (a)
    
    
    
    
    
    
    
    
    
    
    91
    
    
    
    91Stores offering auto title loans (a)
    
    
    11
    
    
    
    
    
    
    
    30
    
    
    
    41
 
 (a)
    
    Including credit services 18




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##### Table of Contents



December 31, 2009
    
    
    December 31, 2008
    
    
    September 30, 2009Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent(Dollars in thousands)Jewelry:Gross inventory held one year or less
    
    $
    30,462
    
    
    
    78.4
    %
    
    $
    33,980
    
    
    
    84.4
    %
    
    $
    28,338
    
    
    
    78.1
    %Gross inventory held more than one year
    
    
    8,369
    
    
    
    21.6
    %
    
    
    6,263
    
    
    
    15.6
    %
    
    
    7,953
    
    
    
    21.9
    %Total jewelry inventory, gross
    
    
    38,831
    
    
    
    100.0
    %
    
    
    40,243
    
    
    
    100.0
    %
    
    
    36,291
    
    
    
    100.0
    %General merchandise:Gross inventory held one year or less
    
    
    28,578
    
    
    
    93.6
    %
    
    
    27,813
    
    
    
    94.1
    %
    
    
    31,246
    
    
    
    93.5
    %Gross inventory held more than one year
    
    
    1,939
    
    
    
    6.4
    %
    
    
    1,747
    
    
    
    5.9
    %
    
    
    2,183
    
    
    
    6.5
    %Total general merchandise, gross
    
    
    30,517
    
    
    
    100.0
    %
    
    
    29,560
    
    
    
    100.0
    %
    
    
    33,429
    
    
    
    100.0
    %Total inventory:Gross inventory held one year or less
    
    
    59,040
    
    
    
    85.1
    %
    
    
    61,793
    
    
    
    88.5
    %
    
    
    59,584
    
    
    
    85.5
    %Gross inventory held more than one year
    
    
    10,308
    
    
    
    14.9
    %
    
    
    8,010
    
    
    
    11.5
    %
    
    
    10,136
    
    
    
    14.5
    %Total inventory, gross
    
    
    69,348
    
    
    
    100.0
    %
    
    
    69,803
    
    
    
    100.0
    %
    
    
    69,720
    
    
    
    100.0
    %Valuation allowance
    
    
    (5,833
    )
    
    
    (8.4
    %)
    
    
    (5,240
    )
    
    
    (7.5
    %)
    
    
    (5,719
    )
    
    
    (8.2
    %)Total inventory, net
    
    $
    63,515
    
    
    
    
    
    
    $
    64,563
    
    
    
    
    
    
    $
    64,001
    19




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##### Table of Contents



20




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##### Table of Contents



Results of Operations
 Three Months Ended December 31, 2009 vs. Three Months Ended December 31 , 2008
  U.S. Pawn Operations Segment
  Three Months Ended December 31,2009
    
    
    2008(Dollars in thousands)Sales
    
    $
    96,034
    
    
    $
    62,167Pawn service charges
    
    
    38,941
    
    
    
    24,884Signature loan fees
    
    
    553
    
    
    
    686Auto title loan fees
    
    
    475
    
    
    
    210Other
    
    
    2,167
    
    
    
    1,433Total revenues
    
    
    138,170
    
    
    
    89,380Cost of goods sold
    
    
    59,730
    
    
    
    38,938Signature loan bad debt
    
    
    186
    
    
    
    236Auto title loan bad debt
    
    
    70
    
    
    
    6Net revenues
    
    
    78,184
    
    
    
    50,200Operations expense
    
    
    40,199
    
    
    
    26,678Store operating income
    
    $
    37,985
    
    
    $
    23,522Other data:Gross margin on sales
    
    
    38
    %
    
    
    37
    %Annualized inventory turnover
    
    
    3.7
    x
    
    
    3.4
    xAverage pawn loan balance per pawn store at quarter end
    
    $
    268
    
    
    $
    244Average inventory per pawn store at quarter end
    
    $
    165
    
    
    $
    167Average yield on pawn loan portfolio (a)
    
    
    159
    %
    
    
    138
    %Pawn loan redemption rate
    
    
    79
    %
    
    
    78
    %Average signature loan balance per store offering signature loans at
quarter end (b)
    
    $
    9
    
    
    $
    11Average auto title loan balance per store offering auto title loans at
quarter end (c)
    
    $
    17
    
    
    $
    102
 
 (a)
    
    Average yield on pawn loan portfolio is calculated as annualized pawn service charge revenues for the
period divided by the average pawn loan balance during the period.(b)
    
    Signature loan balances include payday loans (net of valuation allowance) recorded on our balance sheets
and the principal portion of similar active brokered loans outstanding from unaffiliated lenders, the
balance of which is not included on our balance sheets.(c)
    
    Auto title loan balances include title loans (net of valuation allowance) recorded on our balance sheets
and the principal portion of active brokered loans outstanding from unaffiliated lenders, the balance of
which is not included on our balance sheets.   21




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##### Table of Contents



Three Months Ended December 31,2009
    
    
    2008(Dollars in millions)Merchandise sales
    
    $
    59.2
    
    
    $
    42.8Jewelry scrapping sales
    
    
    36.8
    
    
    
    19.4Total sales
    
    $
    96.0
    
    
    $
    62.2Gross profit on merchandise sales
    
    $
    22.3
    
    
    $
    16.9Gross profit on jewelry scrapping sales
    
    $
    14.0
    
    
    $
    6.3Gross margin on merchandise sales
    
    
    37.7
    %
    
    
    39.4
    %Gross margin on jewelry scrapping sales
    
    
    38.0
    %
    
    
    32.9
    %Overall gross margin
    
    
    37.8
    %
    
    
    37.4
    %
      22




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##### Table of Contents



Empeño Fácil Segment
  Three months ended December 31,2009
    
    
    2008
    
    
    2009
    
    
    2008(Dollars in thousands)
    
    
    (Pesos in thousands)Sales
    
    $
    3,872
    
    
    $
    2,413
    
    
    $
    50,442
    
    
    $
    31,462Pawn service charges
    
    
    1,856
    
    
    
    1,497
    
    
    
    24,279
    
    
    
    19,489Other
    
    
    89
    
    
    
    
    
    
    
    1,159
    
    
    
    2Total revenues
    
    
    5,817
    
    
    
    3,910
    
    
    
    75,880
    
    
    
    50,953Cost of goods sold
    
    
    2,833
    
    
    
    1,487
    
    
    
    36,866
    
    
    
    19,338Net revenues
    
    
    2,984
    
    
    
    2,423
    
    
    
    39,014
    
    
    
    31,615Operations expense
    
    
    2,164
    
    
    
    1,284
    
    
    
    28,283
    
    
    
    16,687Store operating income
    
    $
    820
    
    
    $
    1,139
    
    
    $
    10,731
    
    
    $
    14,928Other data:Gross margin on sales
    
    
    27
    %
    
    
    38
    %
    
    
    27
    %
    
    
    38
    %Annualized inventory turnover
    
    
    3.9
    x
    
    
    2.2
    x
    
    
    3.9
    x
    
    
    2.2
    xAverage pawn loan balance per pawn store at quarter end
    
    $
    59
    
    
    $
    76
    
    
    $
    769
    
    
    $
    1,026Average inventory per pawn store at quarter end
    
    $
    37
    
    
    $
    67
    
    
    $
    488
    
    
    $
    912Average yield on pawn loan portfolio (a)
    
    
    184
    %
    
    
    158
    %
    
    
    184
    %
    
    
    158
    %Pawn loan redemption rate
    
    
    81
    %
    
    
    82
    %
    
    
    81
    %
    
    
    82
    %
 
 (a)
    
    Average yield on pawn loan portfolio is calculated as annualized pawn service charge revenue for the period
divided by the average pawn loan balance during the period.    23




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##### Table of Contents



Fiscal Year Ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(Dollars in millions)
    
    
    (Pesos in millions)Merchandise sales
    
    $
    3.3
    
    
    $
    2.0
    
    
    $
    42.5
    
    
    $
    25.6Jewelry scrapping sales
    
    
    0.6
    
    
    
    0.4
    
    
    
    7.9
    
    
    
    5.9Total sales
    
    
    3.9
    
    
    
    2.4
    
    
    
    50.4
    
    
    
    31.5Gross profit on merchandise sales
    
    $
    0.9
    
    
    $
    0.8
    
    
    $
    11.8
    
    
    $
    9.9Gross profit on jewelry scrapping sales
    
    
    0.1
    
    
    
    0.2
    
    
    
    1.7
    
    
    
    2.2Gross margin on merchandise sales
    
    
    27.8
    %
    
    
    38.7
    %
    
    
    27.8
    %
    
    
    38.7
    %Gross margin on jewelry scrapping sales
    
    
    21.7
    %
    
    
    36.9
    %
    
    
    21.7
    %
    
    
    36.9
    %Overall gross margin
    
    
    26.8
    %
    
    
    38.4
    %
    
    
    26.8
    %
    
    
    38.4
    %
    24




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##### Table of Contents



EZMONEY Operations Segment
  Three Months Ended December 31,2009
    
    
    2008(Dollars in thousands)Signature loan fees
    
    $
    38,125
    
    
    $
    35,314Auto title loan fees
    
    
    2,627
    
    
    
    11Jewelry scrapping sales
    
    
    12
    
    
    
    Total revenues
    
    
    40,764
    
    
    
    35,325Signature loan bad debt
    
    
    8,604
    
    
    
    9,248Auto title loan bad debt
    
    
    390
    
    
    
    1Jewelry scrapping cost of goods sold
    
    
    7
    
    
    
    Net revenues
    
    
    31,763
    
    
    
    26,076Operations expense
    
    
    15,818
    
    
    
    15,532Store operating income
    
    $
    15,945
    
    
    $
    10,544Other data:Signature loan bad debt as a percent of signature loan fees
    
    
    22.6
    %
    
    
    26.2
    %Auto title loan bad debt as a percent of auto title loan fees
    
    
    14.8
    %
    
    
    9.1
    %Average signature loan balance per store offering signature loans at
quarter end (a)
    
    $
    71
    
    
    $
    69Average auto title loan balance per store offering title loans at quarter
end (b)
    
    $
    13
    
    
    $
    2
 
 (a)
    
    Signature loan balances include payday and installment loans (net of valuation allowance) recorded on our balance
sheets and the principal portion of active signature loans outstanding from unaffiliated lenders, the balance of
which is not included on our balance sheets.(b)
    
    Auto title loan balances include title loans (net of valuation allowance) recorded on our balance sheets and the
principal portion of active brokered loans outstanding from unaffiliated lenders, the balance of which is not
included on our balance sheets.      25




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Other Items
         26




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Liquidity and Capital Resources
     Payments due by PeriodLess than 1
    
    
    
    
    
    
    
    
    
    
    More thanContractual Obligations
    
    Total
    
    
    year
    
    
    1-3 years
    
    
    4-5 years
    
    
    5 yearsLong-term debt obligations
    
    $
    32.5
    
    
    $
    10.0
    
    
    $
    20.0
    
    
    $
    2.5
    
    
    $
    Interest on long-term debt obligations
    
    
    1.7
    
    
    
    0.9
    
    
    
    0.8
    
    
    
    0.0
    
    
    
    Operating lease obligations
    
    
    131.9
    
    
    
    33.0
    
    
    
    52.6
    
    
    
    26.5
    
    
    
    19.8Total
    
    $
    166.1
    
    
    $
    43.9
    
    
    $
    73.4
    
    
    $
    29.0
    
    
    $
    19.8
     27




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##### Table of Contents



Off-Balance Sheet Arrangements
    28




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##### Table of Contents



Seasonality
    Use of Estimates and Assumptions
  
 Item 3. Quantitative and Qualitative Disclosures about Market Risk
     29




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Forward-Looking Information
  30




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##### Table of Contents



Item 4. Controls and Procedures
  Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control Over Financial Reporting
  Inherent Limitations on Internal Controls
  
    
    Judgments in decision-making can be faulty, and control and process breakdowns can occur
because of simple errors or mistakes.
 
    
    Controls can be circumvented by individuals, acting alone or in collusion with others, or
by management override.
 
    
    The design of any system of controls is based in part on certain assumptions about the
likelihood of future events, and there can be no assurance that any design will succeed in
achieving its stated goals under all potential future conditions.
 
    
    Over time, controls may become inadequate because of changes in conditions or deterioration
in the degree of compliance with associated policies or procedures.
 
    
    The design of a control system must reflect the fact that resources are constrained, and
the benefits of controls must be considered relative to their costs.
  31




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##### Table of Contents



PART II
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 6. Exhibits
 Exhibit No.
    
    Description of Exhibit31.1
    
    Certification of Joseph L. Rotunda, President and Chief
Executive Officer, pursuant to Rule 13a-14(a) under the
Securities Exchange Act of 1934, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification of Brad Wolfe, Senior Vice President and Chief
Financial Officer, pursuant to Rule 13a-14(a) under the
Securities Exchange Act of 1934, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    Certifications of Joseph L. Rotunda, President and Chief
Executive Officer, and Brad Wolfe, Senior Vice President and
Chief Financial Officer, pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002
 32




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##### Table of Contents



SIGNATURE
  EZCORP, INC.Date:  February 5, 2010
    /s/ DANIEL M. CHISMDaniel M. ChismVice President and
Chief Accounting Officer
(on behalf of the registrant and as principal
accounting officer) 33




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##### Table of Contents



Exhibit No.
    
    Description of Exhibit31.1
    
    Certification of Joseph L. Rotunda, President and Chief
Executive Officer, pursuant to Rule 13a-14(a) under the
Securities Exchange Act of 1934, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification of Brad Wolfe, Senior Vice President and Chief
Financial Officer, pursuant to Rule 13a-14(a) under the
Securities Exchange Act of 1934, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    Certifications of Joseph L. Rotunda, President and Chief
Executive Officer, and Brad Wolfe, Senior Vice President and
Chief Financial Officer, pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002
 34