##### 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 June 30, 2010
 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
(State or other jurisdiction of incorporation or organization)
    
    74-2540145
(I.R.S. Employer Identification No.)1901 Capital ParkwayAustin, Texas
    
    78746(Address of principal executive offices)
    
    (Zip Code)
 (512) 314-3400
 þ o
 o o
  Large accelerated filer þ
    
    Accelerated filer o
    
    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 June 30, 2010, June 30,
2009 and September 30, 2009 (audited)
    
    
    1Condensed Consolidated Statements of Operations for the Three Months
and Nine Months Ended June 30, 2010 and 2009
    
    
    2Condensed Consolidated Statements of Cash Flows for the Nine Months
Ended June 30, 2010 and 2009
    
    
    3Notes to Interim Condensed Consolidated Financial Statements
    
    
    4Item 2. Managements Discussion and Analysis of
Financial Condition and Results of Operations
    
    
    19Item 3. Quantitative and Qualitative Disclosures
about Market Risk
    
    
    39Item 4. Controls and Procedures
    
    
    41PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    42Item 1A. Risk Factors
    
    
    42Item 6. Exhibits
    
    
    43SIGNATURE
    
    
    44EXHIBIT INDEX
    
    
    45EX-31.1EX-31.2EX-32.1




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PART I
 
 Item 1. Financial Statements
 
  June 30,
    
    
    June 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2009(Unaudited)
    
    
    (Unaudited)(In thousands)Assets:Current assets:Cash and cash equivalents
    
    $
    14,912
    
    
    $
    46,546
    
    
    $
    44,764Pawn loans
    
    
    112,807
    
    
    
    94,648
    
    
    
    101,684Signature loans, net
    
    
    8,915
    
    
    
    7,649
    
    
    
    8,357Auto title loans, net
    
    
    2,802
    
    
    
    1,126
    
    
    
    1,663Pawn service charges receivable, net
    
    
    19,899
    
    
    
    16,693
    
    
    
    18,187Signature loan fees receivable, net
    
    
    5,493
    
    
    
    5,105
    
    
    
    5,599Auto title loan fees receivable, net
    
    
    1,314
    
    
    
    352
    
    
    
    529Inventory, net
    
    
    61,027
    
    
    
    57,141
    
    
    
    64,001Deferred tax asset
    
    
    15,857
    
    
    
    15,809
    
    
    
    15,670Federal income tax receivable
    
    
    10,655
    
    
    
    
    
    
    
    Prepaid expenses and other assets
    
    
    15,179
    
    
    
    14,866
    
    
    
    16,927Total current assets
    
    
    268,860
    
    
    
    259,935
    
    
    
    277,381Investments in unconsolidated affiliates
    
    
    99,773
    
    
    
    34,784
    
    
    
    38,851Property and equipment, net
    
    
    59,045
    
    
    
    49,752
    
    
    
    51,154Deferred tax asset, non-current
    
    
    5,472
    
    
    
    9,090
    
    
    
    6,311Goodwill
    
    
    115,570
    
    
    
    100,742
    
    
    
    100,719Other assets, net
    
    
    22,663
    
    
    
    17,892
    
    
    
    18,101Total assets
    
    $
    571,383
    
    
    $
    472,195
    
    
    $
    492,517Liabilities and stockholders equity:Current liabilities:Current maturities of long-term debt
    
    $
    10,000
    
    
    $
    10,000
    
    
    $
    10,000Accounts payable and other accrued expenses
    
    
    44,194
    
    
    
    33,958
    
    
    
    33,838Customer layaway deposits
    
    
    5,404
    
    
    
    3,603
    
    
    
    4,175Federal income taxes payable
    
    
    
    
    
    
    1,988
    
    
    
    572Total current liabilities
    
    
    59,598
    
    
    
    49,549
    
    
    
    48,585Long-term debt, less current maturities
    
    
    17,500
    
    
    
    27,500
    
    
    
    25,000Deferred gains and other long-term liabilities
    
    
    2,630
    
    
    
    3,352
    
    
    
    3,247Total liabilities
    
    
    79,728
    
    
    
    80,401
    
    
    
    76,832Commitments and contingenciesStockholders equity:Class A Non-voting Common Stock, par value $.01 per share;
Authorized 54 million shares; 46,247,951 issued and
outstanding at June 30, 2010; 45,692,294 issued and
45,682,294 outstanding at June 30, 2009; 45,732,998 issued
and outstanding at September 30, 2009
    
    
    462
    
    
    
    457
    
    
    
    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
    
    
    224,243
    
    
    
    215,961
    
    
    
    217,176Retained earnings
    
    
    272,084
    
    
    
    181,703
    
    
    
    202,642Treasury stock, at cost; 10,000 shares at June 30, 2009
    
    
    
    
    
    
    (12
    )
    
    
    Accumulated other comprehensive loss
    
    
    (5,164
    )
    
    
    (6,345
    )
    
    
    (4,620
    )Total stockholders equity
    
    
    491,655
    
    
    
    391,794
    
    
    
    415,685Total liabilities and stockholders equity
    
    $
    571,383
    
    
    $
    472,195
    
    
    $
    492,517
  1




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Three Months Ended
    
    
    Nine Months EndedJune 30,
    
    
    June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009(In thousands, except per share amounts)Revenues:Sales
    
    $
    93,664
    
    
    $
    81,309
    
    
    $
    292,893
    
    
    $
    234,902Pawn service charges
    
    
    39,424
    
    
    
    32,880
    
    
    
    118,527
    
    
    
    92,777Signature loan fees
    
    
    32,296
    
    
    
    30,815
    
    
    
    102,616
    
    
    
    98,409Auto title loan fees
    
    
    4,658
    
    
    
    1,030
    
    
    
    11,716
    
    
    
    1,666Other
    
    
    3,500
    
    
    
    1,740
    
    
    
    9,125
    
    
    
    4,901Total revenues
    
    
    173,542
    
    
    
    147,774
    
    
    
    534,877
    
    
    
    432,655Cost of goods sold
    
    
    58,985
    
    
    
    50,965
    
    
    
    183,717
    
    
    
    147,816Signature loan bad debt
    
    
    8,917
    
    
    
    8,618
    
    
    
    22,104
    
    
    
    23,174Auto title loan bad debt
    
    
    836
    
    
    
    104
    
    
    
    1,616
    
    
    
    153Net revenues
    
    
    104,804
    
    
    
    88,087
    
    
    
    327,440
    
    
    
    261,512Operating expenses:Operations
    
    
    57,952
    
    
    
    53,833
    
    
    
    174,338
    
    
    
    151,955Administrative
    
    
    13,576
    
    
    
    9,687
    
    
    
    39,356
    
    
    
    29,892Depreciation and amortization
    
    
    3,759
    
    
    
    3,254
    
    
    
    10,688
    
    
    
    9,471(Gain) loss on sale / disposal of assets
    
    
    734
    
    
    
    (146
    )
    
    
    1,301
    
    
    
    (967
    )Total operating expenses
    
    
    76,021
    
    
    
    66,628
    
    
    
    225,683
    
    
    
    190,351Operating income
    
    
    28,783
    
    
    
    21,459
    
    
    
    101,757
    
    
    
    71,161Interest income
    
    
    (135
    )
    
    
    (59
    )
    
    
    (151
    )
    
    
    (257
    )Interest expense
    
    
    311
    
    
    
    428
    
    
    
    1,071
    
    
    
    1,064Equity in net income of unconsolidated affiliates
    
    
    (2,930
    )
    
    
    (851
    )
    
    
    (7,519
    )
    
    
    (3,163
    )Other
    
    
    (100
    )
    
    
    11
    
    
    
    (103
    )
    
    
    38Income before income taxes
    
    
    31,637
    
    
    
    21,930
    
    
    
    108,459
    
    
    
    73,479Income tax expense
    
    
    11,675
    
    
    
    7,545
    
    
    
    39,017
    
    
    
    25,946Net income
    
    $
    19,962
    
    
    $
    14,385
    
    
    $
    69,442
    
    
    $
    47,533Net income per common share:Basic
    
    $
    0.41
    
    
    $
    0.30
    
    
    $
    1.42
    
    
    $
    1.01Diluted
    
    $
    0.40
    
    
    $
    0.29
    
    
    $
    1.40
    
    
    $
    1.00Weighted average shares outstanding:Basic
    
    
    49,201
    
    
    
    48,628
    
    
    
    48,969
    
    
    
    46,932Diluted
    
    
    49,640
    
    
    
    49,279
    
    
    
    49,541
    
    
    
    47,724
  2




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Nine Months EndedJune 30,2010
    
    
    2009(In thousands)Operating Activities:Net income
    
    $
    69,442
    
    
    $
    47,533Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    10,688
    
    
    
    9,471Signature loan and auto title loan loss provisions
    
    
    7,785
    
    
    
    6,295Deferred taxes
    
    
    653
    
    
    
    626Net (gain) loss on sale or disposal of assets
    
    
    1,301
    
    
    
    (967
    )Share-based compensation
    
    
    3,457
    
    
    
    2,753Income from investments in unconsolidated affiliates
    
    
    (7,519
    )
    
    
    (3,163
    )Changes in operating assets and liabilities, net of business acquisitions:Service charges and fees receivable, net
    
    
    (2,019
    )
    
    
    768Inventory, net
    
    
    1,194
    
    
    
    905Prepaid expenses, other current assets, and other assets, net
    
    
    (4,043
    )
    
    
    (2,571
    )Accounts payable and accrued expenses
    
    
    10,232
    
    
    
    (4,663
    )Customer layaway deposits
    
    
    1,120
    
    
    
    286Deferred gains and other long-term liabilities
    
    
    (630
    )
    
    
    (265
    )Excess tax benefit from share-based compensation
    
    
    (1,850
    )
    
    
    (1,724
    )Federal income taxes
    
    
    (9,287
    )
    
    
    3,566Net cash provided by operating activities
    
    
    80,524
    
    
    
    58,850Investing Activities:Loans made
    
    
    (389,548
    )
    
    
    (317,064
    )Loans repaid
    
    
    247,724
    
    
    
    204,806Recovery of pawn loan principal through sale of forfeited collateral
    
    
    127,180
    
    
    
    113,040Additions to property and equipment
    
    
    (18,719
    )
    
    
    (14,350
    )Proceeds on disposal of assets
    
    
    1,347
    
    
    
    1,062Acquisitions, net of cash acquired
    
    
    (19,008
    )
    
    
    (41,002
    )(Investments in)/dividends from unconsolidated affiliates
    
    
    (55,241
    )
    
    
    1,634Net cash used in investing activities
    
    
    (106,265
    )
    
    
    (51,874
    )Financing Activities:Proceeds from exercise of stock options and warrants
    
    
    1,536
    
    
    
    4,907Stock issuance costs related to acquisitions
    
    
    
    
    
    
    (442
    )Excess tax benefit from share-based compensation
    
    
    1,850
    
    
    
    1,724Debt issuance costs
    
    
    3
    
    
    
    (1,178
    )Proceeds from bank borrowings
    
    
    
    
    
    
    40,000Payments on bank borrowings
    
    
    (7,500
    )
    
    
    (32,885
    )Net cash provided by (used in) financing activities
    
    
    (4,111
    )
    
    
    12,126Change in cash and cash equivalents
    
    
    (29,852
    )
    
    
    19,102Cash and cash equivalents at beginning of period
    
    
    44,764
    
    
    
    27,444Cash and cash equivalents at end of period
    
    $
    14,912
    
    
    $
    46,546Non-cash Investing and Financing Activities:Pawn loans forfeited and transferred to inventory
    
    $
    123,896
    
    
    $
    109,258Foreign currency translation adjustment
    
    $
    544
    
    
    $
    8,926Acquisition-related stock issuance
    
    $
    (31
    )
    
    $
    71,197Issuance of common stock to 401(k) plan
    
    $
    260
    
    
    $
    
  3




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EZCORP, Inc. and Subsidiaries
 
 Notes to Interim Condensed Consolidated Financial Statements (Unaudited)
 June 30, 2010
 Note A: Basis of Presentation
   Note B: Significant Accounting Policies
      4




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st
      6




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7




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Note C: Acquisitions
   Current assets:Pawn loans
    
    $
    5,442Payday loans
    
    
    55Auto title loans
    
    
    1,105Pawn service charges receivable
    
    
    1,231Signature loan fees receivable
    
    
    7Auto title loan fees receivable
    
    
    84Inventory
    
    
    2,860Deferred tax asset
    
    
    334Prepaid expenses and other assets
    
    
    79Total current assets
    
    
    11,197Property and equipment
    
    
    392Goodwill
    
    
    16,297Other assets
    
    
    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
    
    
    3,491Inventory
    
    
    16,265Deferred tax asset
    
    
    4,394Prepaid expenses and other assets
    
    
    1,438Total current assets
    
    
    43,474Property and equipment
    
    
    5,584Deferred tax asset, non-current
    
    
    690Goodwill
    
    
    61,877Other assets
    
    
    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 Ended
    
    
    Nine Months EndedJune 30,
    
    
    June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009(Unaudited and Pro Forma)(In thousands, except per share amounts)Revenues:Sales
    
    $
    93,664
    
    
    $
    81,309
    
    
    $
    292,893
    
    
    $
    262,817Pawn service charges
    
    
    39,424
    
    
    
    32,880
    
    
    
    118,527
    
    
    
    101,627Signature loan fees
    
    
    32,296
    
    
    
    30,815
    
    
    
    102,616
    
    
    
    98,409Auto title loan fees
    
    
    4,658
    
    
    
    1,030
    
    
    
    11,716
    
    
    
    1,666Other
    
    
    3,500
    
    
    
    1,740
    
    
    
    9,125
    
    
    
    5,373Total revenues
    
    
    173,542
    
    
    
    147,774
    
    
    
    534,877
    
    
    
    469,892Cost of goods sold
    
    
    58,985
    
    
    
    50,965
    
    
    
    183,717
    
    
    
    164,967Signature loan bad debt
    
    
    8,917
    
    
    
    8,618
    
    
    
    22,104
    
    
    
    23,174Auto title loan bad debt
    
    
    836
    
    
    
    104
    
    
    
    1,616
    
    
    
    153Net revenues
    
    
    104,804
    
    
    
    88,087
    
    
    
    327,440
    
    
    
    281,598Operating expenses:Operations
    
    
    57,952
    
    
    
    53,833
    
    
    
    174,338
    
    
    
    162,824Administrative
    
    
    13,576
    
    
    
    9,687
    
    
    
    39,356
    
    
    
    35,249Depreciation and amortization
    
    
    3,759
    
    
    
    3,254
    
    
    
    10,688
    
    
    
    9,744(Gain) loss on sale/disposal of assets
    
    
    734
    
    
    
    (146
    )
    
    
    1,301
    
    
    
    (938
    )Total operating expenses
    
    
    76,021
    
    
    
    66,628
    
    
    
    225,683
    
    
    
    206,879Operating income
    
    
    28,783
    
    
    
    21,459
    
    
    
    101,757
    
    
    
    74,719Interest expense, net
    
    
    176
    
    
    
    369
    
    
    
    920
    
    
    
    1,296Equity in net income of unconsolidated affiliates
    
    
    (2,930
    )
    
    
    (851
    )
    
    
    (7,519
    )
    
    
    (3,163
    )Other
    
    
    (100
    )
    
    
    11
    
    
    
    (103
    )
    
    
    38Income before income taxes
    
    
    31,637
    
    
    
    21,930
    
    
    
    108,459
    
    
    
    76,548Income tax expense
    
    
    11,675
    
    
    
    7,545
    
    
    
    39,017
    
    
    
    27,129Net income
    
    $
    19,962
    
    
    $
    14,385
    
    
    $
    69,442
    
    
    $
    49,419Net income per common share:Basic
    
    $
    0.41
    
    
    $
    0.30
    
    
    $
    1.42
    
    
    $
    1.02Diluted
    
    $
    0.40
    
    
    $
    0.29
    
    
    $
    1.40
    
    
    $
    1.01Weighted average shares outstanding:Basic
    
    
    49,201
    
    
    
    48,628
    
    
    
    48,969
    
    
    
    48,285Diluted
    
    
    49,640
    
    
    
    49,279
    
    
    
    49,541
    
    
    
    49,077
  10




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Note D: Earnings per Share
    Three Months Ended
    
    
    Nine Months EndedJune 30,
    
    
    June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net income (A)
    
    $
    19,962
    
    
    $
    14,385
    
    
    $
    69,442
    
    
    $
    47,533Weighted average outstanding shares of common stock (B)
    
    
    49,201
    
    
    
    48,628
    
    
    
    48,969
    
    
    
    46,932Dilutive effect of stock options, warrants, and restricted stock
    
    
    439
    
    
    
    651
    
    
    
    572
    
    
    
    792Weighted average common stock and common stock equivalents (C)
    
    
    49,640
    
    
    
    49,279
    
    
    
    49,541
    
    
    
    47,724Basic earnings per share (A/B)
    
    $
    0.41
    
    
    $
    0.30
    
    
    $
    1.42
    
    
    $
    1.01Diluted earnings per share (A/C)
    
    $
    0.40
    
    
    $
    0.29
    
    
    $
    1.40
    
    
    $
    1.00Potential common shares excluded from the calculation of
diluted earnings per share
    
    
    5
    
    
    
    178
    
    
    
    6
    
    
    
    125
 Note E: Strategic Investments
  11




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As of December 31,2009
    
    
    2008(In thousands)Current assets
    
    $
    104,537
    
    
    $
    92,849Non-current assets
    
    
    53,128
    
    
    
    46,093Total assets
    
    $
    157,665
    
    
    $
    138,942Current liabilities
    
    $
    21,128
    
    
    $
    10,809Non-current liabilities
    
    
    48,025
    
    
    
    63,461Equity shareholders funds
    
    
    88,512
    
    
    
    64,672Total liabilities and equity shareholders funds
    
    $
    157,665
    
    
    $
    138,942
 Six Months Ended December 31,2009
    
    
    2008(in thousands)Turnover (gross revenues)
    
    $
    64,572
    
    
    $
    45,977Gross profit
    
    
    43,054
    
    
    
    34,859Profit after tax (net income)
    
    
    12,752
    
    
    
    7,718
   12




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As of December 31,2009
    
    
    2008(In thousands)Current assets
    
    $
    96,680
    
    
    $
    27,929Non-current assets
    
    
    64,212
    
    
    
    44,979Total assets
    
    $
    160,892
    
    
    $
    72,908Current liabilities
    
    $
    19,251
    
    
    $
    11,330Non-current liabilities
    
    
    11,010
    
    
    
    7,835Equity shareholders funds
    
    
    130,631
    
    
    
    53,743Total liabilities and equity shareholders funds
    
    $
    160,892
    
    
    $
    72,908
 Six Months Ended December 31,2009
    
    
    2008(in thousands)Gross revenues
    
    $
    51,609
    
    
    $
    34,816Gross profit
    
    
    38,315
    
    
    
    25,895Profit for the year (net income)
    
    
    8,759
    
    
    
    6,209
  June 30, 2010
    
    
    June 30, 2009
    
    
    September 30, 2009(In thousands of U.S. dollars)Albemarle & Bond:Recorded value
    
    $
    41,613
    
    
    $
    34,784
    
    
    $
    38,851Fair value
    
    
    57,108
    
    
    
    60,179
    
    
    
    61,504Cash Converters:Recorded value
    
    
    58,160
    
    
    
    
    
    
    
    Fair value
    
    
    58,624
    
    
    
    
    
    
    
    
 Note F: Contingencies
  Note G: Comprehensive Income
  13




---



##### Table of Contents



Note H: Long-term Debt
   Note I: Goodwill and Other Intangible Assets
  June 30, 2010
    
    
    June 30, 2009
    
    
    September 30, 2009(In thousands)Pawn licenses
    
    $
    8,229
    
    
    $
    8,229
    
    
    $
    8,229Trade Name
    
    
    4,870
    
    
    
    4,870
    
    
    
    4,870Goodwill
    
    
    115,570
    
    
    
    100,742
    
    
    
    100,719Total
    
    $
    128,669
    
    
    $
    113,841
    
    
    $
    113,818
  U.S. Pawn
    
    
    
    
    
    EZMONEYOperations
    
    
    Empeño Fácil
    
    
    Operations
    
    
    Consolidated(in thousands)Balance at September 30, 2009
    
    $
    94,192
    
    
    $
    6,527
    
    
    $
    
    
    
    $
    100,719Acquisitions
    
    
    14,414
    
    
    
    
    
    
    
    
    
    
    
    14,414Effect of foreign currency translation changes
    
    
    
    
    
    
    437
    
    
    
    
    
    
    
    437Balance at June 30, 2010
    
    $
    108,606
    
    
    $
    6,964
    
    
    $
    
    
    
    $
    115,570
 U.S. Pawn
    
    
    
    
    
    EZMONEYOperations
    
    
    Empeño Fácil
    
    
    Operations
    
    
    Consolidated(in thousands)Balance at September 30, 2008
    
    $
    16,211
    
    
    $
    8,165
    
    
    $
    
    
    
    $
    24,376Acquisitions
    
    
    77,857
    
    
    
    
    
    
    
    
    
    
    
    77,857Effect of foreign currency translation changes
    
    
    
    
    
    
    (1,491
    )
    
    
    
    
    
    
    (1,491
    )Balance at June 30, 2009
    
    $
    94,068
    
    
    $
    6,674
    
    
    $
    
    
    
    $
    100,742
 14




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##### Table of Contents



June 30, 2010
    
    
    June 30, 2009
    
    
    September 30, 2009Carrying
    
    
    Accumulated
    
    
    Carrying
    
    
    Accumulated
    
    
    Carrying
    
    
    AccumulatedAmount
    
    
    Amortization
    
    
    Amount
    
    
    Amortization
    
    
    Amount
    
    
    Amortization(In thousands)License application fees
    
    $
    345
    
    
    $
    (345
    )
    
    $
    345
    
    
    $
    (334
    )
    
    $
    345
    
    
    $
    (339
    )Real estate finders fees
    
    
    824
    
    
    
    (392
    )
    
    
    556
    
    
    
    (357
    )
    
    
    609
    
    
    
    (367
    )Non-compete agreements
    
    
    3,019
    
    
    
    (1,639
    )
    
    
    2,534
    
    
    
    (1,095
    )
    
    
    2,497
    
    
    
    (1,192
    )Favorable lease
    
    
    644
    
    
    
    (189
    )
    
    
    644
    
    
    
    (63
    )
    
    
    644
    
    
    
    (95
    )Other
    
    
    53
    
    
    
    (4
    )
    
    
    
    
    
    
    
    
    
    
    11
    
    
    
    Total
    
    $
    4,885
    
    
    $
    (2,569
    )
    
    $
    4,079
    
    
    $
    (1,849
    )
    
    $
    4,106
    
    
    $
    (1,993
    )
  Fiscal Year
    
    Amortization Expense2010
    
    $
    6372011
    
    $
    7102012
    
    $
    5352013
    
    $
    992014
    
    $
    46
  Note J: Share-based Compensation
  Three Months Ended June 30,
    
    
    Nine Months Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009(in thousands)Gross compensation cost
    
    $
    1,113
    
    
    $
    971
    
    
    $
    3,457
    
    
    $
    2,753Income tax benefits
    
    
    (385
    )
    
    
    (320
    )
    
    
    (1,216
    )
    
    
    (946
    )Share-based compensation cost, net of tax benefit
    
    $
    728
    
    
    $
    651
    
    
    $
    2,241
    
    
    $
    1,807
  Note K: Income Taxes
  15




---



##### Table of Contents



Note L: Operating Segment Information
  
    
    The U.S. Pawn Operations segment offers pawn related activities in our 383 U.S. pawn
stores, offers signature loans in 53 pawn stores and six EZMONEY stores and offers auto
title loans in 58 pawn stores.
    
    The Empeño Fácil segment offers pawn related activities in 99 Mexico pawn stores.
    
    The EZMONEY Operations segment offers signature loans in 456 U.S. EZMONEY stores and 35
Canadian CASHMAX stores. The segment offers auto title loans in 398 of its U.S. EZMONEY
stores.
  U.S. Pawn
    
    
    Empeño
    
    
    EZMONEYOperations
    
    
    Fácil
    
    
    Operations
    
    
    Consolidated(in thousands)Three Months Ended June 30, 2010:Revenues:Sales
    
    $
    87,916
    
    
    $
    5,579
    
    
    $
    169
    
    
    $
    93,664Pawn service charges
    
    
    37,014
    
    
    
    2,410
    
    
    
    
    
    
    
    39,424Signature loan fees
    
    
    455
    
    
    
    
    
    
    
    31,841
    
    
    
    32,296Auto title loan fees
    
    
    359
    
    
    
    
    
    
    
    4,299
    
    
    
    4,658Other
    
    
    3,361
    
    
    
    131
    
    
    
    8
    
    
    
    3,500Total revenues
    
    
    129,105
    
    
    
    8,120
    
    
    
    36,317
    
    
    
    173,542Cost of goods sold
    
    
    55,077
    
    
    
    3,823
    
    
    
    85
    
    
    
    58,985Signature loan bad debt
    
    
    159
    
    
    
    
    
    
    
    8,758
    
    
    
    8,917Auto title loan bad debt
    
    
    44
    
    
    
    
    
    
    
    792
    
    
    
    836Net revenues
    
    
    73,825
    
    
    
    4,297
    
    
    
    26,682
    
    
    
    104,804Operations expense
    
    
    39,148
    
    
    
    2,999
    
    
    
    15,805
    
    
    
    57,952Store operating income
    
    $
    34,677
    
    
    $
    1,298
    
    
    $
    10,877
    
    
    $
    46,852Three Months Ended June 30, 2009:Revenues:Sales
    
    $
    78,519
    
    
    $
    2,790
    
    
    $
    
    
    
    $
    81,309Pawn service charges
    
    
    31,409
    
    
    
    1,471
    
    
    
    
    
    
    
    32,880Signature loan fees
    
    
    523
    
    
    
    
    
    
    
    30,292
    
    
    
    30,815Auto title loan fees
    
    
    430
    
    
    
    
    
    
    
    600
    
    
    
    1,030Other
    
    
    1,706
    
    
    
    34
    
    
    
    
    
    
    
    1,740Total revenues
    
    
    112,587
    
    
    
    4,295
    
    
    
    30,892
    
    
    
    147,774Cost of goods sold
    
    
    49,157
    
    
    
    1,808
    
    
    
    
    
    
    
    50,965Signature loan bad debt
    
    
    237
    
    
    
    
    
    
    
    8,381
    
    
    
    8,618Auto title loan bad debt
    
    
    30
    
    
    
    
    
    
    
    74
    
    
    
    104Net revenues
    
    
    63,163
    
    
    
    2,487
    
    
    
    22,437
    
    
    
    88,087Operations expense
    
    
    37,719
    
    
    
    1,441
    
    
    
    14,673
    
    
    
    53,833Store operating income
    
    $
    25,444
    
    
    $
    1,046
    
    
    $
    7,764
    
    
    $
    34,254
 16




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##### Table of Contents



U.S. Pawn
    
    
    Empeño
    
    
    EZMONEYOperations
    
    
    Fácil
    
    
    Operations
    
    
    Consolidated(in thousands)Nine Months Ended June 30, 2010:Revenues:Sales
    
    $
    278,314
    
    
    $
    14,346
    
    
    $
    233
    
    
    $
    292,893Pawn service charges
    
    
    112,211
    
    
    
    6,316
    
    
    
    
    
    
    
    118,527Signature loan fees
    
    
    1,442
    
    
    
    
    
    
    
    101,174
    
    
    
    102,616Auto title loan fees
    
    
    1,261
    
    
    
    
    
    
    
    10,455
    
    
    
    11,716Other
    
    
    8,771
    
    
    
    346
    
    
    
    8
    
    
    
    9,125Total revenues
    
    
    401,999
    
    
    
    21,008
    
    
    
    111,870
    
    
    
    534,877Cost of goods sold
    
    
    173,348
    
    
    
    10,253
    
    
    
    116
    
    
    
    183,717Signature loan bad debt
    
    
    446
    
    
    
    
    
    
    
    21,658
    
    
    
    22,104Auto title loan bad debt
    
    
    166
    
    
    
    
    
    
    
    1,450
    
    
    
    1,616Net revenues
    
    
    228,039
    
    
    
    10,755
    
    
    
    88,646
    
    
    
    327,440Operations expense
    
    
    119,259
    
    
    
    7,736
    
    
    
    47,343
    
    
    
    174,338Store operating income
    
    $
    108,780
    
    
    $
    3,019
    
    
    $
    41,303
    
    
    $
    153,102Nine Months Ended June 30, 2009:Revenues:Sales
    
    $
    227,494
    
    
    $
    7,408
    
    
    $
    
    
    
    $
    234,902Pawn service charges
    
    
    88,558
    
    
    
    4,219
    
    
    
    
    
    
    
    92,777Signature loan fees
    
    
    1,766
    
    
    
    
    
    
    
    96,643
    
    
    
    98,409Auto title loan fees
    
    
    991
    
    
    
    
    
    
    
    675
    
    
    
    1,666Other
    
    
    4,866
    
    
    
    35
    
    
    
    
    
    
    
    4,901Total revenues
    
    
    323,675
    
    
    
    11,662
    
    
    
    97,318
    
    
    
    432,655Cost of goods sold
    
    
    143,167
    
    
    
    4,649
    
    
    
    
    
    
    
    147,816Signature loan bad debt
    
    
    581
    
    
    
    
    
    
    
    22,593
    
    
    
    23,174Auto title loan bad debt
    
    
    72
    
    
    
    
    
    
    
    81
    
    
    
    153Net revenues
    
    
    179,855
    
    
    
    7,013
    
    
    
    74,644
    
    
    
    261,512Operations expense
    
    
    102,764
    
    
    
    4,024
    
    
    
    45,167
    
    
    
    151,955Store operating income
    
    $
    77,091
    
    
    $
    2,989
    
    
    $
    29,477
    
    
    $
    109,557
  Three Months Ended
    
    
    Nine Months EndedJune 30,
    
    
    June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009(in thousands)Consolidated store operating income
    
    $
    46,852
    
    
    $
    34,254
    
    
    $
    153,102
    
    
    $
    109,557Administrative expenses
    
    
    13,576
    
    
    
    9,687
    
    
    
    39,356
    
    
    
    29,892Depreciation and amortization
    
    
    3,759
    
    
    
    3,254
    
    
    
    10,688
    
    
    
    9,471(Gain) loss on sale / disposal of assets
    
    
    734
    
    
    
    (146
    )
    
    
    1,301
    
    
    
    (967
    )Interest income
    
    
    (135
    )
    
    
    (59
    )
    
    
    (151
    )
    
    
    (257
    )Interest expense
    
    
    311
    
    
    
    428
    
    
    
    1,071
    
    
    
    1,064Equity in net income of unconsolidated affiliates
    
    
    (2,930
    )
    
    
    (851
    )
    
    
    (7,519
    )
    
    
    (3,163
    )Other
    
    
    (100
    )
    
    
    11
    
    
    
    (103
    )
    
    
    38Consolidated income before income taxes
    
    $
    31,637
    
    
    $
    21,930
    
    
    $
    108,459
    
    
    $
    73,479
 17




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##### Table of Contents



U.S. Pawn
    
    
    Empeño
    
    
    EZMONEYOperations
    
    
    Fácil
    
    
    Operations
    
    
    Consolidated(in thousands)Assets at June 30, 2010:Pawn loans
    
    $
    107,419
    
    
    $
    5,388
    
    
    $
    
    
    
    $
    112,807Signature loans, net
    
    
    425
    
    
    
    
    
    
    
    8,490
    
    
    
    8,915Auto title loans, net
    
    
    638
    
    
    
    
    
    
    
    2,164
    
    
    
    2,802Service charges and fees receivable, net
    
    
    19,322
    
    
    
    813
    
    
    
    6,571
    
    
    
    26,706Inventory, net
    
    
    57,176
    
    
    
    3,819
    
    
    
    32
    
    
    
    61,027Goodwill
    
    
    108,606
    
    
    
    6,964
    
    
    
    
    
    
    
    115,570Total separately identified recorded segment assets
    
    $
    293,586
    
    
    $
    16,984
    
    
    $
    17,257
    
    
    $
    327,827Brokered signature loans outstanding from
unaffiliated lenders
    
    $
    228
    
    
    $
    
    
    
    $
    21,442
    
    
    $
    21,670Brokered auto title loans outstanding from
unaffiliated lenders
    
    $
    210
    
    
    $
    
    
    
    $
    5,557
    
    
    $
    5,767Assets at June 30, 2009:Pawn loans
    
    $
    91,451
    
    
    $
    3,197
    
    
    $
    
    
    
    $
    94,648Signature loans, net
    
    
    463
    
    
    
    
    
    
    
    7,186
    
    
    
    7,649Auto title loans, net
    
    
    695
    
    
    
    
    
    
    
    431
    
    
    
    1,126Service charges and fees receivable, net
    
    
    16,499
    
    
    
    465
    
    
    
    5,186
    
    
    
    22,150Inventory, net
    
    
    54,115
    
    
    
    3,026
    
    
    
    
    
    
    
    57,141Goodwill
    
    
    94,068
    
    
    
    6,674
    
    
    
    
    
    
    
    100,742Total separately identified recorded segment assets
    
    $
    257,291
    
    
    $
    13,362
    
    
    $
    12,803
    
    
    $
    283,456Brokered signature loans outstanding from
unaffiliated lenders
    
    $
    260
    
    
    $
    
    
    
    $
    20,673
    
    
    $
    20,933Brokered auto title loans outstanding from
unaffiliated lenders
    
    $
    133
    
    
    $
    
    
    
    $
    1,040
    
    
    $
    1,173Assets at September 30, 2009:Pawn loans
    
    $
    98,099
    
    
    $
    3,585
    
    
    $
    
    
    
    $
    101,684Signature loans, net
    
    
    453
    
    
    
    
    
    
    
    7,904
    
    
    
    8,357Auto title loans, net
    
    
    685
    
    
    
    
    
    
    
    978
    
    
    
    1,663Service charges and fees receivable, net
    
    
    17,910
    
    
    
    513
    
    
    
    5,892
    
    
    
    24,315Inventory, net
    
    
    61,196
    
    
    
    2,804
    
    
    
    1
    
    
    
    64,001Goodwill
    
    
    94,192
    
    
    
    6,527
    
    
    
    
    
    
    
    100,719Total separately identified recorded segment assets
    
    $
    272,535
    
    
    $
    13,429
    
    
    $
    14,775
    
    
    $
    300,739Brokered 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
  18




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Three Months Ended June 30, 2010 vs. Three Months Ended June 30, 2009
  Three Months Ended June 30,
    
    
    Percentage2010
    
    
    2009
    
    
    Change(in thousands)Net revenues:Sales
    
    $
    93,664
    
    
    $
    81,309
    
    
    
    15.2
    %Pawn service charges
    
    
    39,424
    
    
    
    32,880
    
    
    
    19.9
    %Signature loan fees
    
    
    32,296
    
    
    
    30,815
    
    
    
    4.8
    %Auto title loan fees
    
    
    4,658
    
    
    
    1,030
    
    
    
    352.2
    %Other
    
    
    3,500
    
    
    
    1,740
    
    
    
    101.1
    %Total revenues
    
    
    173,542
    
    
    
    147,774
    
    
    
    17.4
    %Cost of goods sold
    
    
    58,985
    
    
    
    50,965
    
    
    
    15.7
    %Signature loan bad debt
    
    
    8,917
    
    
    
    8,618
    
    
    
    3.5
    %Auto title loan bad debt
    
    
    836
    
    
    
    104
    
    
    
    703.8
    %Net revenues
    
    $
    104,804
    
    
    $
    88,087
    
    
    
    19.0
    %Net income
    
    $
    19,962
    
    
    $
    14,385
    
    
    
    38.8
    %
 Nine Months Ended June 30, 2010 vs. Nine Months Ended June 30, 2009
  Nine Months Ended June 30,
    
    
    Percentage2010
    
    
    2009
    
    
    Change(in thousands)Net revenues:Sales
    
    $
    292,893
    
    
    $
    234,902
    
    
    
    24.7
    %Pawn service charges
    
    
    118,527
    
    
    
    92,777
    
    
    
    27.8
    %Signature loan fees
    
    
    102,616
    
    
    
    98,409
    
    
    
    4.3
    %Auto title loan fees
    
    
    11,716
    
    
    
    1,666
    
    
    
    603.2
    %Other
    
    
    9,125
    
    
    
    4,901
    
    
    
    86.2
    %Total revenues
    
    
    534,877
    
    
    
    432,655
    
    
    
    23.6
    %Cost of goods sold
    
    
    183,717
    
    
    
    147,816
    
    
    
    24.3
    %Signature loan bad debt
    
    
    22,104
    
    
    
    23,174
    
    
    
    (4.6
    )%Auto title loan bad debt
    
    
    1,616
    
    
    
    153
    
    
    
    956.2
    %Net revenues
    
    $
    327,440
    
    
    $
    261,512
    
    
    
    25.2
    %Net income
    
    $
    69,442
    
    
    $
    47,533
    
    
    
    46.1
    %
 19




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##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedJune 30,
    
    
    June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009(Dollars in thousands)Fee revenue
    
    $
    32,296
    
    
    $
    30,815
    
    
    $
    102,616
    
    
    $
    98,409Bad debt:Net defaults, including interest on brokered loans
    
    
    7,877
    
    
    
    8,020
    
    
    
    21,437
    
    
    
    23,169Insufficient funds fees, net of collections
    
    
    217
    
    
    
    248
    
    
    
    622
    
    
    
    723Change in valuation allowance
    
    
    785
    
    
    
    313
    
    
    
    (141
    )
    
    
    (880
    )Other related costs
    
    
    38
    
    
    
    37
    
    
    
    186
    
    
    
    162Net bad debt
    
    
    8,917
    
    
    
    8,618
    
    
    
    22,104
    
    
    
    23,174Fee revenue less bad debt
    
    $
    23,379
    
    
    $
    22,197
    
    
    $
    80,512
    
    
    $
    75,235Average signature loan balance outstanding during period (a)
    
    $
    27,702
    
    
    $
    26,396
    
    
    $
    29,519
    
    
    $
    28,350Signature loan balance at end of period (a)
    
    $
    30,585
    
    
    $
    28,582
    
    
    $
    30,585
    
    
    $
    28,582Participating stores at end of period
    
    
    550
    
    
    
    557
    
    
    
    550
    
    
    
    557Signature loan bad debt, as a percent of fee revenue
    
    
    27.6
    %
    
    
    28.0
    %
    
    
    21.5
    %
    
    
    23.5
    %Net default rate (a) (b)
    
    
    5.1
    %
    
    
    5.2
    %
    
    
    4.4
    %
    
    
    4.8
    %
 
 (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. 20




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##### Table of Contents



Overview
    Three Months Ended June 30, 2010U.S. Pawn
    
    
    Empeño
    
    
    EZMONEYOperations
    
    
    Fácil
    
    
    Operations
    
    
    ConsolidatedStores in operation:Beginning of period
    
    
    377
    
    
    
    79
    
    
    
    476
    
    
    
    932New openings
    
    
    
    
    
    
    20
    
    
    
    15
    
    
    
    35Acquired
    
    
    13
    
    
    
    
    
    
    
    
    
    
    
    13Sold, combined, or closed
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    (1
    )End of period
    
    
    389
    
    
    
    99
    
    
    
    491
    
    
    
    979Average number of stores during the period
    
    
    380
    
    
    
    88
    
    
    
    483
    
    
    
    951
 Nine Months Ended June 30, 2010U.S. Pawn
    
    
    Empeño
    
    
    EZMONEYOperations
    
    
    Fácil
    
    
    Operations
    
    
    ConsolidatedStores in operation:Beginning of period
    
    
    375
    
    
    
    62
    
    
    
    473
    
    
    
    910New openings
    
    
    2
    
    
    
    37
    
    
    
    33
    
    
    
    72Acquired
    
    
    13
    
    
    
    
    
    
    
    
    
    
    
    13Sold, combined, or closed
    
    
    (1
    )
    
    
    
    
    
    
    (15
    )
    
    
    (16
    )End of period
    
    
    389
    
    
    
    99
    
    
    
    491
    
    
    
    979Average number of stores during the period
    
    
    377
    
    
    
    76
    
    
    
    477
    
    
    
    931Composition of ending stores:Pawn
    
    
    383
    
    
    
    99
    
    
    
    
    
    
    
    482Short-term consumer loan stores
    
    
    6
    
    
    
    
    
    
    
    491
    
    
    
    497Total stores in operation
    
    
    389
    
    
    
    99
    
    
    
    491
    
    
    
    979Stores offering payday loans (a)
    
    
    59
    
    
    
    
    
    
    
    491
    
    
    
    550Stores offering installment loans (a)
    
    
    
    
    
    
    
    
    
    
    197
    
    
    
    197Stores offering auto title loans (a)
    
    
    58
    
    
    
    
    
    
    
    398
    
    
    
    456
 Three Months Ended June 30, 2009U.S. Pawn
    
    
    Empeño
    
    
    EZMONEYOperations
    
    
    Fácil
    
    
    Operations
    
    
    ConsolidatedStores in operation:Beginning of period
    
    
    377
    
    
    
    45
    
    
    
    476
    
    
    
    898New openings
    
    
    
    
    
    
    2
    
    
    
    2
    
    
    
    4Acquired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Sold, combined, or closed
    
    
    (1
    )
    
    
    
    
    
    
    (4
    )
    
    
    (5
    )End of period
    
    
    376
    
    
    
    47
    
    
    
    474
    
    
    
    897Average number of stores during the period
    
    
    377
    
    
    
    46
    
    
    
    475
    
    
    
    897
 21




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##### Table of Contents



Nine Months Ended June 30, 2009U.S. Pawn
    
    
    Empeño
    
    
    EZMONEYOperations
    
    
    Fácil
    
    
    Operations
    
    
    ConsolidatedStores in operation:Beginning of period
    
    
    300
    
    
    
    38
    
    
    
    471
    
    
    
    809New openings
    
    
    
    
    
    
    8
    
    
    
    16
    
    
    
    24Acquired
    
    
    77
    
    
    
    1
    
    
    
    
    
    
    
    78Sold, combined, or closed
    
    
    (1
    )
    
    
    
    
    
    
    (13
    )
    
    
    (14
    )End of period
    
    
    376
    
    
    
    47
    
    
    
    474
    
    
    
    897Average number of stores during the period
    
    
    355
    
    
    
    42
    
    
    
    473
    
    
    
    870Composition of ending stores:Pawn
    
    
    370
    
    
    
    47
    
    
    
    
    
    
    
    417Short-term consumer loan stores
    
    
    6
    
    
    
    
    
    
    
    474
    
    
    
    480Total stores in operation
    
    
    376
    
    
    
    47
    
    
    
    474
    
    
    
    897Stores offering payday loans (a)
    
    
    83
    
    
    
    
    
    
    
    474
    
    
    
    557Stores offering installment loans (a)
    
    
    
    
    
    
    
    
    
    
    89
    
    
    
    89Stores offering auto title loans (a)
    
    
    35
    
    
    
    
    
    
    
    246
    
    
    
    281
 
 (a)
    
    Including credit services    June 30, 2010
    
    
    June 30, 2009
    
    
    September 30, 2009Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent(Dollars in thousands)Jewelry:Gross inventory held one year or less
    
    $
    31,046
    
    
    
    80.8
    %
    
    $
    27,424
    
    
    
    79.1
    %
    
    $
    28,338
    
    
    
    78.1
    %Gross inventory held more than one year
    
    
    7,362
    
    
    
    19.2
    %
    
    
    7,235
    
    
    
    20.9
    %
    
    
    7,953
    
    
    
    21.9
    %Total jewelry inventory, gross
    
    
    38,408
    
    
    
    100.0
    %
    
    
    34,659
    
    
    
    100.0
    %
    
    
    36,291
    
    
    
    100.0
    %General merchandise:Gross inventory held one year or less
    
    
    26,558
    
    
    
    94.4
    %
    
    
    26,414
    
    
    
    92.9
    %
    
    
    31,246
    
    
    
    93.5
    %Gross inventory held more than one year
    
    
    1,582
    
    
    
    5.6
    %
    
    
    2,022
    
    
    
    7.1
    %
    
    
    2,183
    
    
    
    6.5
    %Total general merchandise, gross
    
    
    28,140
    
    
    
    100.0
    %
    
    
    28,436
    
    
    
    100.0
    %
    
    
    33,429
    
    
    
    100.0
    %Total inventory:Gross inventory held one year or less
    
    
    57,604
    
    
    
    86.6
    %
    
    
    53,838
    
    
    
    85.3
    %
    
    
    59,584
    
    
    
    85.5
    %Gross inventory held more than one year
    
    
    8,944
    
    
    
    13.4
    %
    
    
    9,257
    
    
    
    14.7
    %
    
    
    10,136
    
    
    
    14.5
    %Total inventory, gross
    
    
    66,548
    
    
    
    100.0
    %
    
    
    63,095
    
    
    
    100.0
    %
    
    
    69,720
    
    
    
    100.0
    %Valuation allowance
    
    
    (5,521
    )
    
    
    (8.3
    %)
    
    
    (5,954
    )
    
    
    (9.4
    %)
    
    
    (5,719
    )
    
    
    (8.2
    %)Total inventory, net
    
    $
    61,027
    
    
    
    
    
    
    $
    57,141
    
    
    
    
    
    
    $
    64,001
 22




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24




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Results of Operations
 Three Months Ended June 30, 2010 vs. Three Months Ended June 30, 2009
  U.S. Pawn Operations Segment
  Three Months Ended June 30,2010
    
    
    2009(Dollars in thousands)Sales
    
    $
    87,916
    
    
    $
    78,519Pawn service charges
    
    
    37,014
    
    
    
    31,409Signature loan fees
    
    
    455
    
    
    
    523Auto title loan fees
    
    
    359
    
    
    
    430Other
    
    
    3,361
    
    
    
    1,706Total revenues
    
    
    129,105
    
    
    
    112,587Cost of goods sold
    
    
    55,077
    
    
    
    49,157Signature loan bad debt
    
    
    159
    
    
    
    237Auto title loan bad debt
    
    
    44
    
    
    
    30Net revenues
    
    
    73,825
    
    
    
    63,163Operations expense
    
    
    39,148
    
    
    
    37,719Store operating income
    
    $
    34,677
    
    
    $
    25,444Other data:Gross margin on sales
    
    
    37
    %
    
    
    37
    %Annualized inventory turnover
    
    
    4.1
    x
    
    
    3.7
    xAverage pawn loan balance per pawn store at quarter end
    
    $
    280
    
    
    $
    247Average inventory per pawn store at quarter end
    
    $
    149
    
    
    $
    146Average yield on pawn loan portfolio (a)
    
    
    155
    %
    
    
    150
    %Pawn loan redemption rate
    
    
    81
    %
    
    
    79
    %Average signature loan balance per store offering signature loans at
quarter end (b)
    
    $
    11
    
    
    $
    9Average auto title loan balance per store offering auto title loans at
quarter end (c)
    
    $
    15
    
    
    $
    24
 
 (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.   25




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Three Months Ended June 30,2010
    
    
    2009(Dollars in millions)Merchandise sales
    
    $
    46.5
    
    
    $
    48.2Jewelry scrapping sales
    
    
    41.4
    
    
    
    30.3Total sales
    
    $
    87.9
    
    
    $
    78.5Gross profit on merchandise sales
    
    $
    18.7
    
    
    $
    18.5Gross profit on jewelry scrapping sales
    
    $
    14.1
    
    
    $
    10.8Gross margin on merchandise sales
    
    
    40.3
    %
    
    
    38.5
    %Gross margin on jewelry scrapping sales
    
    
    34.0
    %
    
    
    35.6
    %Overall gross margin
    
    
    37.4
    %
    
    
    37.4
    %
      26




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##### Table of Contents



Empeño Fácil Segment
  Three months ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009(Dollars in thousands)
    
    
    (Pesos in thousands)Sales
    
    $
    5,579
    
    
    $
    2,790
    
    
    $
    69,990
    
    
    $
    37,267Pawn service charges
    
    
    2,410
    
    
    
    1,471
    
    
    
    30,257
    
    
    
    19,654Other
    
    
    131
    
    
    
    34
    
    
    
    1,638
    
    
    
    466Total revenues
    
    
    8,120
    
    
    
    4,295
    
    
    
    101,885
    
    
    
    57,387Cost of goods sold
    
    
    3,823
    
    
    
    1,808
    
    
    
    47,930
    
    
    
    24,140Net revenues
    
    
    4,297
    
    
    
    2,487
    
    
    
    53,955
    
    
    
    33,247Operations expense
    
    
    2,999
    
    
    
    1,441
    
    
    
    37,707
    
    
    
    19,210Store operating income
    
    $
    1,298
    
    
    $
    1,046
    
    
    $
    16,248
    
    
    $
    14,037Other data:Gross margin on sales
    
    
    31
    %
    
    
    35
    %
    
    
    31
    %
    
    
    35
    %Annualized inventory turnover
    
    
    4.4
    x
    
    
    2.5
    x
    
    
    4.4
    x
    
    
    2.5
    xAverage pawn loan balance per pawn store at quarter end
    
    $
    54
    
    
    $
    68
    
    
    $
    689
    
    
    $
    899Average inventory per pawn store at quarter end
    
    $
    39
    
    
    $
    64
    
    
    $
    488
    
    
    $
    850Average yield on pawn loan portfolio (a)
    
    
    190
    %
    
    
    180
    %
    
    
    190
    %
    
    
    180
    %Pawn loan redemption rate
    
    
    73
    %
    
    
    82
    %
    
    
    73
    %
    
    
    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.    27




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Three months ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009(Dollars in millions)
    
    
    (Pesos in millions)Merchandise sales
    
    $
    3.4
    
    
    $
    2.3
    
    
    $
    42.7
    
    
    $
    30.5Jewelry scrapping sales
    
    
    2.2
    
    
    
    0.5
    
    
    
    27.3
    
    
    
    6.8Total sales
    
    
    5.6
    
    
    
    2.8
    
    
    
    70.0
    
    
    
    37.3Gross profit on merchandise sales
    
    $
    1.5
    
    
    $
    0.9
    
    
    $
    18.1
    
    
    $
    11.3Gross profit on jewelry scrapping sales
    
    
    0.3
    
    
    
    0.1
    
    
    
    4.0
    
    
    
    1.8Gross margin on merchandise sales
    
    
    42.3
    %
    
    
    37.0
    %
    
    
    42.3
    %
    
    
    37.0
    %Gross margin on jewelry scrapping sales
    
    
    14.6
    %
    
    
    27.1
    %
    
    
    14.6
    %
    
    
    27.1
    %Overall gross margin
    
    
    31.5
    %
    
    
    35.2
    %
    
    
    31.5
    %
    
    
    35.2
    %
     28




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##### Table of Contents



EZMONEY Operations Segment
  Three Months Ended June 30,2010
    
    
    2009(Dollars in thousands)Signature loan fees
    
    $
    31,841
    
    
    $
    30,292Auto title loan fees
    
    
    4,299
    
    
    
    600Jewelry scrapping sales
    
    
    169
    
    
    
    Other revenues
    
    
    8
    
    
    
    Total revenues
    
    
    36,317
    
    
    
    30,892Signature loan bad debt
    
    
    8,758
    
    
    
    8,381Auto title loan bad debt
    
    
    792
    
    
    
    74Jewelry scrapping cost of goods sold
    
    
    85
    
    
    
    Net revenues
    
    
    26,682
    
    
    
    22,437Operations expense
    
    
    15,805
    
    
    
    14,673Store operating income
    
    $
    10,877
    
    
    $
    7,764Other data:Signature loan bad debt as a percent of signature loan fees
    
    
    27.5
    %
    
    
    27.7
    %Auto title loan bad debt as a percent of auto title loan fees
    
    
    18.4
    %
    
    
    12.3
    %Average signature loan balance per store offering signature loans at
quarter end (a)
    
    $
    61
    
    
    $
    59Average auto title loan balance per store offering title loans at quarter
end (b)
    
    $
    19
    
    
    $
    6
 
 (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.     29




---



##### Table of Contents



Other Items
         30




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Nine Months Ended June 30, 2010 vs. Nine Months Ended June 30, 2009
  U.S. Pawn Operations Segment
  Nine Months Ended June 30,2010
    
    
    2009(Dollars in thousands)Sales
    
    $
    278,314
    
    
    $
    227,494Pawn service charges
    
    
    112,211
    
    
    
    88,558Signature loan fees
    
    
    1,442
    
    
    
    1,766Auto title loan fees
    
    
    1,261
    
    
    
    991Other
    
    
    8,771
    
    
    
    4,866Total revenues
    
    
    401,999
    
    
    
    323,675Cost of goods sold
    
    
    173,348
    
    
    
    143,167Signature loan bad debt
    
    
    446
    
    
    
    581Auto title loan bad debt
    
    
    166
    
    
    
    72Net revenues
    
    
    228,039
    
    
    
    179,855Operations expense
    
    
    119,259
    
    
    
    102,764Store operating income
    
    $
    108,780
    
    
    $
    77,091Other data:Gross margin on sales
    
    
    38
    %
    
    
    37
    %Annualized inventory turnover
    
    
    3.9x
    
    
    
    3.7xAverage pawn loan balance per pawn store at quarter end
    
    $
    280
    
    
    $
    247Average inventory per pawn store at quarter end
    
    $
    149
    
    
    $
    146Average yield on pawn loan portfolio (a)
    
    
    158
    %
    
    
    151
    %Pawn loan redemption rate
    
    
    81
    %
    
    
    79
    %Average signature loan balance per store offering signature loans at
quarter end (b)
    
    $
    11
    
    
    $
    9Average auto title loan balance per store offering auto title loans at
quarter end (c)
    
    $
    15
    
    
    $
    24
 
 (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.   31




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##### Table of Contents



Nine Months Ended June 30,2010
    
    
    2009(Dollars in millions)Merchandise sales
    
    $
    165.6
    
    
    $
    150.1Jewelry scrapping sales
    
    
    112.7
    
    
    
    77.4Total sales
    
    $
    278.3
    
    
    $
    227.5Gross profit on merchandise sales
    
    $
    64.0
    
    
    $
    57.6Gross profit on jewelry scrapping sales
    
    $
    41.0
    
    
    $
    26.7Gross margin on merchandise sales
    
    
    38.6
    %
    
    
    38.4
    %Gross margin on jewelry scrapping sales
    
    
    36.4
    %
    
    
    34.5
    %Overall gross margin
    
    
    37.7
    %
    
    
    37.1
    %
      32




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##### Table of Contents



Empeño Fácil Segment
  Nine Months Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009(Dollars in thousands)
    
    
    (Pesos in thousands)Sales
    
    $
    14,346
    
    
    $
    7,408
    
    
    $
    183,039
    
    
    $
    100,349Pawn service charges
    
    
    6,316
    
    
    
    4,219
    
    
    
    80,769
    
    
    
    57,111Other
    
    
    346
    
    
    
    35
    
    
    
    4,416
    
    
    
    474Total revenues
    
    
    21,008
    
    
    
    11,662
    
    
    
    268,224
    
    
    
    157,934Cost of goods sold
    
    
    10,253
    
    
    
    4,649
    
    
    
    130,784
    
    
    
    62,913Net revenues
    
    
    10,755
    
    
    
    7,013
    
    
    
    137,440
    
    
    
    95,021Operations expense
    
    
    7,736
    
    
    
    4,024
    
    
    
    98,884
    
    
    
    54,493Store operating income
    
    $
    3,019
    
    
    $
    2,989
    
    
    $
    38,556
    
    
    $
    40,528Other data:Gross margin on sales
    
    
    29
    %
    
    
    37
    %
    
    
    29
    %
    
    
    37
    %Annualized inventory turnover
    
    
    4.5
    x
    
    
    2.2
    x
    
    
    4.5
    x
    
    
    2.2
    xAverage pawn loan balance per pawn store at quarter
end
    
    $
    54
    
    
    $
    68
    
    
    $
    689
    
    
    $
    899Average inventory per pawn store at quarter end
    
    $
    39
    
    
    $
    64
    
    
    $
    488
    
    
    $
    850Average yield on pawn loan portfolio (a)
    
    
    183
    %
    
    
    164
    %
    
    
    183
    %
    
    
    164
    %Pawn loan redemption rate
    
    
    76
    %
    
    
    82
    %
    
    
    76
    %
    
    
    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.    33




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##### Table of Contents



Nine Months Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009(Dollars in millions)
    
    
    (Pesos in millions)Merchandise sales
    
    $
    9.8
    
    
    $
    6.2
    
    
    $
    125.3
    
    
    $
    83.6Jewelry scrapping sales
    
    
    4.5
    
    
    
    1.2
    
    
    
    57.7
    
    
    
    16.7Total sales
    
    
    14.3
    
    
    
    7.4
    
    
    
    183.0
    
    
    
    100.3Gross profit on merchandise sales
    
    $
    3.5
    
    
    $
    2.4
    
    
    $
    44.1
    
    
    $
    31.7Gross profit on jewelry scrapping sales
    
    
    0.6
    
    
    
    0.4
    
    
    
    8.1
    
    
    
    5.7Gross margin on merchandise sales
    
    
    35.3
    %
    
    
    37.9
    %
    
    
    35.3
    %
    
    
    37.9
    %Gross margin on jewelry scrapping sales
    
    
    14.0
    %
    
    
    33.8
    %
    
    
    14.0
    %
    
    
    33.8
    %Overall gross margin
    
    
    28.5
    %
    
    
    37.2
    %
    
    
    28.5
    %
    
    
    37.2
    %
     34




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##### Table of Contents



EZMONEY Operations Segment
  Nine Months Ended June 30,2010
    
    
    2009(Dollars in thousands)Signature loan fees
    
    $
    101,174
    
    
    $
    96,643Auto title loan fees
    
    
    10,455
    
    
    
    675Jewelry scrapping sales
    
    
    233
    
    
    
    Other revenues
    
    
    8
    
    
    
    Total revenues
    
    
    111,870
    
    
    
    97,318Signature loan bad debt
    
    
    21,658
    
    
    
    22,593Auto title loan bad debt
    
    
    1,450
    
    
    
    81Jewelry scrapping cost of goods sold
    
    
    116
    
    
    
    Net revenues
    
    
    88,646
    
    
    
    74,644Operations expense
    
    
    47,343
    
    
    
    45,167Store operating income
    
    $
    41,303
    
    
    $
    29,477Other data:Signature loan bad debt as a percent of signature loan fees
    
    
    21.4
    %
    
    
    23.4
    %Auto title loan bad debt as a percent of auto title loan fees
    
    
    13.9
    %
    
    
    12.0
    %Average signature loan balance per store offering signature loans
at quarter end (a)
    
    $
    61
    
    
    $
    59Average auto title loan balance per store offering title loans at
quarter end (b)
    
    $
    19
    
    
    $
    6
 
 (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.     35




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##### Table of Contents



Other Items
        36




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##### Table of Contents



Liquidity and Capital Resources
     Payments due by PeriodContractual Obligations
    
    Total
    
    
    Less than 1 year
    
    
    1-3 years
    
    
    4-5 years
    
    
    More than 5 yearsLong-term debt obligations
    
    $
    27.5
    
    
    $
    10.0
    
    
    $
    17.5
    
    
    $
    
    
    
    $
    Interest on long-term debt obligations
    
    
    1.3
    
    
    
    0.7
    
    
    
    0.6
    
    
    
    
    
    
    
    Operating lease obligations
    
    
    140.8
    
    
    
    36.4
    
    
    
    57.7
    
    
    
    28.6
    
    
    
    18.1Total
    
    $
    169.6
    
    
    $
    47.1
    
    
    $
    75.8
    
    
    $
    28.6
    
    
    $
    18.1
    37




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##### Table of Contents



Off-Balance Sheet Arrangements
    38




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##### Table of Contents



Seasonality
    Use of Estimates and Assumptions
  
 Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
     39




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##### Table of Contents



Forward-Looking Information
  40




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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.
  41




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##### Table of Contents



PART II
 
 Item 1.
    
    Legal Proceedings
  
 Item 1A.
    
    Risk Factors
  A number of recent and ongoing legislative efforts could have an adverse effect on certain of our
financial products, particularly payday loans and auto title loans
   42




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##### Table of Contents



Item 6.
    
    Exhibits
 Exhibit No.
    
    Description of Exhibit10.1
    
    Amended and Restated EZCORP, Inc. 2010 Long-Term Incentive
Plan, effective May 1, 2010 (incorporated by reference to
Exhibit 99.1 to the Companys Registration Statement on Form
S-8 effective May 19, 2010, Commission File No. 333-166950)10.2
    
    Separation Agreement and Release, dated May 17, 2010, between
EZCORP, Inc. and Charles Bradford Wolfe (incorporated by
reference to Exhibit 99.1 to the Companys Current Report on
Form 8-K dated May 21, 2010 and filed May 26, 2010, Commission
File No. 0-19424)31.1
    
    Certification of Joseph L. Rotunda, 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 Daniel M. Chism, Vice President and Chief
Accounting Officer (principal 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, Chief Executive Officer,
and Daniel M. Chism, Vice President and Chief Accounting
Officer (principal financial officer), pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
 43




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##### Table of Contents



SIGNATURE
  EZCORP, INC.Date:  August 5, 2010
    /s/ Daniel M. ChismDaniel M. ChismVice President and Chief Accounting Officer  (on
behalf of the registrant and as principal financial
officer) 44




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##### Table of Contents



Exhibit No.
    
    Description of Exhibit10.1
    
    Amended and Restated EZCORP, Inc. 2010 Long-Term Incentive
Plan, effective May 1, 2010 (incorporated by reference to
Exhibit 99.1 to the Companys Registration Statement on Form
S-8 effective May 19, 2010, Commission File No. 333-166950)10.2
    
    Separation Agreement and Release, dated May 17, 2010, between
EZCORP, Inc. and Charles Bradford Wolfe (incorporated by
reference to Exhibit 99.1 to the Companys Current Report on
Form 8-K dated May 21, 2010 and filed May 26, 2010, Commission
File No. 0-19424)31.1
    
    Certification of Joseph L. Rotunda, 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 Daniel M. Chism, Vice President and Chief
Accounting Officer (principal 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, Chief Executive Officer,
and Daniel M. Chism, Vice President and Chief Accounting
Officer (principal financial officer), pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
 45