2014 - Q3 10Q_6/30/2014

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2014

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

For the transition period from to

Commission File No. 0-19424

EZCORP, INC.

(Exact name of registrant as specified in its charter) Delaware 74-2540145 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 1901 Capital Parkway Austin, Texas 78746 (Address of principal executive offices) (Zip Code)

(512) 314-3400

Registrant’s telephone number, including area code:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

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

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

Large accelerated filer x Accelerated filer ¨ Non-accelerated filer ¨ (Do not check if a smaller reporting company) Smaller reporting company ¨

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

APPLICABLE ONLY TO CORPORATE ISSUERS:

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

As of June 30, 2014 , 50,612,246 shares of the registrant’s Class A Non-voting Common Stock, par value $.01 per share, and 2,970,171 shares of the registrant’s Class B Voting Common Stock, par value $.01 per share, were outstanding.

EZCORP, Inc.

INDEX TO FORM 10-Q





PART I — FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements and Supplementary Data (unaudited)





EZCORP, Inc. CONDENSED CONSOLIDATED BALANCE SHEETS June 30,

2014 June 30,

2013 September 30,

2013 (in thousands) Assets: Current assets: Cash and cash equivalents $ 49,999

$ 45,955

$ 36,317

Restricted cash 13,248

3,132

3,312

Pawn loans 157,491

154,095

156,637

Consumer loans, net 76,748

42,883

64,683

Pawn service charges receivable, net 29,307

28,590

30,362

Consumer loan fees and interest receivable, net 38,351

35,315

36,292

Inventory, net 132,021

122,503

145,200

Deferred tax asset 13,825

15,716

13,825

Prepaid Income taxes 21,779

12,937

16,105

Prepaid expenses and other assets 113,458

37,377

34,217

Total current assets 646,227

498,503

536,950

Investments in unconsolidated affiliates 90,730

146,707

97,085

Property and equipment, net 109,458

110,312

116,281

Restricted cash, non-current 22,473

2,182

2,156

Goodwill 436,765

430,940

433,300

Intangible assets, net 62,915

60,687

58,772

Non-current consumer loans, net 51,798

82,935

70,294

Deferred tax asset 9,308

—

8,214

Other assets, net 92,693

28,835

29,138

Total assets (1) $ 1,522,367

$ 1,361,101

$ 1,352,190

Liabilities and stockholders’ equity: Current liabilities: Current maturities of long-term debt $ 21,029

$ 33,525

$ 30,436

Current capital lease obligations 520

533

533

Accounts payable and other accrued expenses 90,234

68,960

79,967

Other current liabilities 8,716

22,640

22,337

Customer layaway deposits 8,206

7,912

8,628

Total current liabilities 128,705

133,570

141,901

Long-term debt, less current maturities 360,628

198,374

215,939

Long-term capital lease obligations —

521

391

Deferred tax liability —

8,948

—

Deferred gains and other long-term liabilities 18,463

23,351

24,040

Total liabilities (2) 507,796

364,764

382,271

Commitments and contingencies











Temporary equity: Redeemable noncontrolling interest 36,645

56,837

55,393

Stockholders’ equity: Class A Non-voting Common Stock, par value $.01 per share; shares authorized: 100 million and 54 million at June 30, 2014 and 2013; and 56 million at September 30, 2013; issued: 51,612,246 and 51,230,843 at June 30, 2014 and 2013; and 51,269,434 at September 30, 2013 519

512

513

Class B Voting Common Stock, convertible, par value $.01 per share; 3 million shares authorized; issued and outstanding: 2,970,171 30

30

30

Additional paid-in capital 347,216

317,258

320,777

Retained earnings 641,947

624,620

599,880

Accumulated other comprehensive income (loss) 115

(2,920 ) (6,674 ) Treasury stock, at cost (1 million shares at June 30, 2014 and none at June 30 and September 30, 2013) (11,901 ) —

—

EZCORP, Inc. stockholders’ equity 977,926

939,500

914,526

Total liabilities and stockholders’ equity $ 1,522,367

$ 1,361,101

$ 1,352,190



Assets and Liabilities of Grupo Finmart Securitization Trust

(1) Our consolidated assets as of June 30, 2014 , June 30, 2013 and September 30, 2013 include the following assets of Grupo Finmart's securitization trust that can only be used to settle its liabilities: Restricted cash, $5.9 million as of June 30, 2014 ; Restricted cash, non-current, $16.7 million and $2.2 million as of June 30, 2014 and June 30, 2013 , respectively, and $2.2 million as of September 30, 2013 ; Consumer loans, net, $ 42.9 million and $34.3 million as of June 30, 2014 and June 30, 2013 , respectively, and $33.9 million as of September 30, 2013 ; Consumer loan fees and interest receivable, net, $6.6 million and $7.4 million as of June 30, 2014 and June 30, 2013 , respectively, and $7.3 million as of September 30, 2013 ; Other assets, net, $2.9 million and $2.2 million as of June 30, 2014 and June 30, 2013 , respectively, and $2.1 million as of September 30, 2013 ; and total assets, $75.0 million and $46.1 million as of June 30, 2014 and June 30, 2013 , respectively, and $45.5 million as of September 30, 2013 .

(2) Our consolidated liabilities as of June 30, 2014 , June 30, 2013 and September 30, 2013 include $56.1 million , $32.3 million , and $32.0 million , respectively, of long-term debt for which the creditors of Grupo Finmart's securitization trust do not have recourse to the general credit of EZCORP, Inc.

See accompanying notes to interim condensed consolidated financial statements.

1

EZCORP, Inc. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended June 30, Nine Months Ended June 30, 2014 2013 2014 2013 (in thousands, except per share amounts) Revenues: Merchandise sales $ 89,170

$ 86,576

$ 298,211

$ 281,262

Jewelry scrapping sales 20,273

26,288

74,169

113,579

Pawn service charges 59,917

60,397

183,212

187,812

Consumer loan fees and interest 61,144

59,234

192,258

183,119

Consumer loan sales and other 10,876

2,671

22,587

10,169

Total revenues 241,380

235,166

770,437

775,941

Merchandise cost of goods sold 55,751

51,050

183,196

164,711

Jewelry scrapping cost of goods sold 15,131

20,377

55,262

80,993

Consumer loan bad debt 17,246

12,518

46,100

34,496

Net revenues 153,252

151,221

485,879

495,741

Operating expenses: Operations 109,575

104,230

330,408

309,346

Administrative 14,467

12,644

50,244

34,918

Depreciation 7,551

7,377

22,556

21,008

Amortization 1,640

1,591

5,555

3,621

(Gain) loss on sale or disposal of assets (26 ) 178

(5,974 ) 220

Total operating expenses 133,207

126,020

402,789

369,113

Operating income 20,045

25,201

83,090

126,628

Interest expense, net 6,073

3,637

15,680

11,027

Equity in net income of unconsolidated affiliates (2,117 ) (4,328 ) (3,880 ) (13,491 ) Impairment of investments —

—

7,940

—

Other (income) expense (370 ) 96

786

—

Income from continuing operations before income taxes 16,459

25,796

62,564

129,092

Income tax expense 4,302

9,139

18,387

42,084

Income from continuing operations, net of tax 12,157

16,657

44,177

87,008

Income (loss) from discontinued operations, net of tax 186

(21,497 ) 1,628

(24,813 ) Net income (loss) 12,343

(4,840 ) 45,805

62,195

Net income from continuing operations attributable to redeemable noncontrolling interest 837

1,041

3,738

3,378

Net income (loss) attributable to EZCORP, Inc. $ 11,506

$ (5,881 ) $ 42,067

$ 58,817

Basic earnings (loss) per share attributable to EZCORP, Inc.: Continuing operations $ 0.21

$ 0.29

$ 0.74

$ 1.56

Discontinued operations —

(0.40 ) 0.03

(0.46 ) Basic earnings per share $ 0.21

$ (0.11 ) $ 0.77

$ 1.10

Diluted earnings (loss) per share attributable to EZCORP, Inc.: Continuing operations $ 0.21

$ 0.29

$ 0.74

$ 1.56

Discontinued operations —

(0.40 ) 0.03

(0.46 ) Diluted earnings per share $ 0.21

$ (0.11 ) $ 0.77

$ 1.10

Weighted average shares outstanding: Basic 54,308

54,196

54,338

53,465

Diluted 54,395

54,255

54,529

53,540

Net income from continuing operations attributable to EZCORP, Inc., net of tax $ 11,320

$ 15,616

$ 40,439

$ 83,630

Income (loss) from discontinued operations attributable to EZCORP, Inc., net of tax 186

(21,497 ) 1,628

(24,813 ) Net income (loss) attributable to EZCORP, Inc. $ 11,506

$ (5,881 ) $ 42,067

$ 58,817







See accompanying notes to interim condensed consolidated financial statements.

2

EZCORP, Inc. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Three Months Ended June 30, Nine Months Ended June 30, 2014 2013 2014 2013 (in thousands) Net income (loss) $ 12,343

$ (4,840 ) $ 45,805

$ 62,195

Other comprehensive income (loss): Foreign currency translation gain (loss) 6,897

(15,529 ) 9,504

(950 ) Foreign currency translation reclassification adjustment realized upon impairment —

—

375

—

(Loss) gain on effective portion of cash flow hedge: Other comprehensive (loss) gain before reclassifications (497 ) 2,388

(1,169 ) 2,388

Amounts reclassified from accumulated other comprehensive income 272

(1,888 ) 814

(1,888 ) Unrealized holding (loss) gain arising during period (77 ) (1,457 ) 540

(1,721 ) Income tax (expense) benefit (1,096 ) 1,189

(1,514 ) (1,848 ) Other comprehensive income (loss), net of tax 5,499

(15,297 ) 8,550

(4,019 ) Comprehensive income (loss) $ 17,842

$ (20,137 ) $ 54,355

$ 58,176

Attributable to redeemable noncontrolling interest: Net income 837

1,041

3,738

3,378

Foreign currency translation gain (loss) 1,581

(3,321 ) 1,903

(1,212 ) Loss on effective portion of cash flow hedge (90 ) —

(142 ) —

Comprehensive income (loss) attributable to redeemable noncontrolling interest 2,328

(2,280 ) 5,499

2,166

Comprehensive income (loss) attributable to EZCORP, Inc. $ 15,514

$ (17,857 ) $ 48,856

$ 56,010



See accompanying notes to interim condensed consolidated financial statements.





3

EZCORP, Inc. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Nine Months Ended June 30, 2014 2013 (in thousands) Operating Activities: Net income $ 45,805

$ 62,195

Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 28,083

25,732

Consumer loan loss provision 26,335

19,982

Deferred income taxes (1,280 ) 245

Other adjustments 4,252

73

(Gain) loss on sale or disposal of assets (6,137 ) 6,060

Gain on sale of loan portfolio (14,312 ) —

Stock compensation 9,929

5,202

Income from investments in unconsolidated affiliates (3,880 ) (13,491 ) Impairment of investments 7,940

—

Changes in operating assets and liabilities, net of business acquisitions: Service charges and fees receivable, net (4,407 ) (4,203 ) Inventory, net 1,061

(51 ) Prepaid expenses, other current assets, and other assets, net (25,402 ) (13,119 ) Accounts payable and accrued expenses (7,221 ) 7,330

Customer layaway deposits (433 ) 588

Deferred gains and other long-term liabilities 943

439

Tax provision (benefit) from stock compensation 570

(321 ) Prepaid income taxes (6,196 ) (5,664 ) Dividends from unconsolidated affiliates 5,129

8,418

Net cash provided by operating activities 60,779

99,415

Investing Activities: Loans made (705,181 ) (682,184 ) Loans repaid 476,196

451,182

Recovery of pawn loan principal through sale of forfeited collateral 182,004

181,461

Additions to property and equipment (15,930 ) (33,351 ) Acquisitions, net of cash acquired (12,990 ) (14,940 ) Investments in unconsolidated affiliates —

(11,018 ) Proceeds from sale of assets 44,568

—

Other investing activities 143

—

Net cash used in investing activities (31,190 ) (108,850 ) Financing Activities: Proceeds from exercise of stock options —

45

Tax provision (benefit) from stock compensation (569 ) 321

Taxes paid related to net share settlement of equity awards (1,990 ) (3,596 ) Debt issuance costs (12,686 ) —

Payout of deferred and contingent consideration (23,000 ) —

Proceeds from issuance of convertible notes 200,000

—

Purchase of convertible notes hedges (40,395 ) —

Proceeds from issuance of warrants 21,824

—

Purchase of subsidiary shares from noncontrolling interest (21,139 ) —

Change in restricted cash (29,992 ) 96

Proceeds from revolving line of credit 389,900

403,131

Payments on revolving line of credit (530,800 ) (385,964 ) Proceeds from bank borrowings 102,138

21,637

Payments on bank borrowings and capital lease obligations (57,578 ) (28,001 ) Repurchase of common stock (11,901 ) —

Net cash (used in) provided by financing activities (16,188 ) 7,669

Effect of exchange rate changes on cash and cash equivalents 281

(756 ) Net increase (decrease) in cash and cash equivalents 13,682

(2,522 ) Cash and cash equivalents at beginning of period 36,317

48,477

Cash and cash equivalents at end of period $ 49,999

$ 45,955

Non-cash Investing and Financing Activities: Pawn loans forfeited and transferred to inventory $ 171,288

$ 192,150

Issuance of common stock due to acquisitions $ —

$ 38,705

Deferred consideration $ 2,692

$ 25,872

Contingent consideration $ —

$ 7,148

Accrued additions to property and equipment $ —

$ 107

Issuance of common stock to 401(k) plan $ 557

$ —

Equity adjustment due to noncontrolling interest purchase $ 6,588

$ —

Receivable from sale of portfolio $ 38,269

$ —

Receivable from issuance of convertible notes $ 30,000

$ —

Payable to purchase convertible note hedges $ 6,059

$ —

Warrants receivable related to issuance of convertible notes $ 3,282

$ —

Deferred finance cost payable related to convertible notes $ 2,400

$ —

Payable to purchase additional shares of noncontrolling interest $ 8,636

$ —

See accompanying notes to interim condensed consolidated financial statements.

4

EZCORP, Inc. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Treasury Stock EZCORP, Inc. Stockholders’ Equity Shares Par Value Shares Amount (in thousands) Balances at September 30, 2012 51,226

$ 512

$ 268,626

$ 565,803

$ (113 ) —

$ —

$ 834,828

Stock compensation —

—

5,202

—

—

—

—

5,202

Stock options exercised 18

—

45

—

—

—

—

45

Issuance of common stock due to acquisitions 1,965

20

38,685

—

—

—

—

38,705

Issuance of common stock due to purchase of subsidiary shares from noncontrolling interest 592

6

10,398

—

—

—

—

10,404

Purchase of subsidiary shares from noncontrolling interest —

—

(2,423 ) —

85

—

—

(2,338 ) Release of restricted stock 400

4

—

—

—

—

—

4

Excess tax benefit from stock compensation —

—

321

—

—

—

—

321

Taxes paid related to net share settlement of equity awards —

—

(3,596 ) —

—

—

—

(3,596 ) Effective portion of cash flow hedge —

—

—

—

500

—

—

500

Unrealized loss on available-for-sale securities —

—

—

—

(1,120 ) —

—

(1,120 ) Foreign currency translation adjustment —

—

—

—

(2,272 ) —

—

(2,272 ) Net income attributable to EZCORP, Inc. —

—

—

58,817

—

—

—

58,817

Balances at June 30, 2013 54,201

$ 542

$ 317,258

$ 624,620

$ (2,920 ) —

$ —

$ 939,500

Balances at September 30, 2013 54,240

$ 543

$ 320,777

$ 599,880

$ (6,674 ) —

$ —

$ 914,526

Issuance of common stock related to 401(k) match 45

$ 1

557

—

—

—

—

558

Stock compensation —

—

9,929

—

—

—

—

9,929

Purchase of subsidiary shares from noncontrolling interest —

—

(6,594 ) —

(15 ) —

—

(6,609 ) Release of restricted stock 297

5

—

—

—

—

—

5

Tax deficiency of stock compensation —

—

(569 ) —

—

—

—

(569 ) Taxes paid related to net share settlement of equity awards —

—

(1,990 ) —

—

—

(1 ) (1,991 ) Effective portion of cash flow hedge —

—

—

—

(213 ) —

—

(213 ) Net proceeds from sale of warrants —

—

25,106

—

—

—

—

25,106

Unrealized gain on available-for-sale securities —

—

—

—

351

—

—

351

Foreign currency translation adjustment —

—

—

—

6,291

—

—

6,291

Foreign currency translation reclassification adjustment realized upon impairment —

—

—

—

375

—

—

375

Net income attributable to EZCORP, Inc. —

—

—

42,067

—

—

—

42,067

Purchase of treasury stock —

—

—

—

—

1,000

(11,900 ) (11,900 ) Balances at June 30, 2014 54,582

$ 549

$ 347,216

$ 641,947

$ 115

1,000

$ (11,901 ) $ 977,926







See accompanying notes to interim condensed consolidated financial statements.





5

EZCORP, Inc.

Notes to Interim Condensed Consolidated Financial Statements (Unaudited)

June 30, 2014





NOTE 1: ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Overview of Operations

We are a leader in delivering easy cash solutions to our customers across channels, products, services and markets. With approximately 7,300 teammates and approximately 1,400 locations and branches, we give our customers multiple ways to access instant cash, including pawn loans and consumer loans in the United States, Mexico, Canada and the United Kingdom. We offer these products through our four primary channels: in-store, online, at the worksite and through our mobile platforms. At our pawn and buy/sell stores and online, we also sell merchandise, primarily collateral forfeited from pawn lending operations and used merchandise purchased from customers.

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. Our management has included all adjustments it considers necessary for a fair presentation. These adjustments are of a normal, recurring nature except for those related to discontinued operations (described in Note 2) and acquired businesses (described in Note 3). Furthermore, certain reclassifications of prior period amounts have been made to conform to the current period presentation. These reclassifications did not have a material impact on our financial position, results of operations or cash flows.

The accompanying financial statements should be read in conjunction with the consolidated financial statements included in our Annual Report on Form 10-K for the year ended September 30, 2013 . The balance sheet at September 30, 2013 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. Our business is subject to seasonal variations, and operating results for the three and nine months ended June 30, 2014 (the "current quarter" and "current nine-month period") are not necessarily indicative of the results of operations for the full fiscal year.

The consolidated financial statements include the accounts of EZCORP, Inc. ("EZCORP") and its consolidated subsidiaries. All inter-company accounts and transactions have been eliminated in consolidation. As of June 30, 2014 , we ow n 76% of the outstanding equity interests in Prestaciones Finmart, S.A.P.I. de C.V., SOFOM, E.N.R. ("Grupo Finmart"), doing business under the brands "Crediamigo" and "Adex," and 59% of Renueva Comercial S.A.P.I. de C.V. ("TUYO"), and therefore, include their results in our consolidated financial statements. We account for our investments in Albemarle & Bond Holdings, PLC ("Albemarle & Bond") and Cash Converters International Limited ("Cash Converters International") using the equity method.

There have been no changes in significant accounting policies as described in our Annual Report on Form 10-K for the year ended September 30, 2013 except for the following addition.

Treasury Stock

We account for treasury stock under the cost method. When treasury stock is re-issued, proceeds in excess of cost are recorded as a component of additional paid-in capital in our consolidated balance sheets. Any deficiency is recorded as a component of additional paid-in capital to the extent that there are previously recorded gains to offset the losses. If there are no treasury stock gains in additional paid-in capital, the losses upon re-issuance of treasury stock are recorded as a component of retained earnings in our consolidated balance sheets.

Use of Estimates and Assumptions

The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates and judgments, including those related to revenue recognition, inventory, loan loss allowances, long-lived and intangible assets, income taxes, contingencies and litigation. We base our estimates on historical experience, observable trends and various other assumptions that we believe are reasonable under the circumstances. We use this information to make judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from the estimates under different assumptions or conditions.

6









Recently Adopted Accounting Pronouncements

In July 2013, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2013-11, Income Taxes (Topic 740)—Presentation of an Unrecognized Tax Benefit when a Net Operating Loss Carryforward or Tax Credit Carryforward Exists. This update provides that an entity's unrecognized tax benefit, or a portion of its unrecognized tax benefit, should be presented in its financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, with one exception. That exception states that, to the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position, or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. This update applies prospectively to all entities that have unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists at the reporting date. Retrospective application is also permitted. This update is effective for annual periods, and interim periods within those years, beginning after December 15, 2013. The adoption of ASU 2013-03 did not have a material effect on our financial position, results of operations or cash flows.

In February 2013, the FASB issued ASU 2013-02, Comprehensive Income (Topic 220) — Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. This update, requires an entity to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required under U.S. GAAP to be reclassified in its entirety to net income. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference other disclosures required under U.S. GAAP that provide additional detail about those amounts. This update requires entities to apply the amendments for periods beginning after December 15, 2012 and interim periods within those annual periods and to provide the required disclosures for all reporting periods presented. The adoption of ASU 2013-02 did not have a material effect on our financial position, results of operations or cash flows.

In February 2013, the FASB issued ASU 2013-04, Liabilities (Topic 405)—Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date (a consensus of the FASB Emerging Issues Task Force). This update provides guidance for the recognition, measurement and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this guidance is fixed at the reporting date (except for obligations addressed within existing guidance in U.S. GAAP). Examples of obligations within the scope of ASU 2013-04 include debt arrangements, other contractual obligations and settled litigation and judicial rulings. ASU 2013-04 is effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2013. The adoption of ASU 2013-04 did not have a material effect on our financial position, results of operations or cash flows.

In March 2013, the FASB issued ASU 2013-05, Foreign Currency Matters (Topic 830) — Parent's Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity (a consensus of the FASB Emerging Issues Task Force). This update applies to the release of the cumulative translation adjustment into net income when a parent either sells a part or all of its investment in a foreign entity, or no longer holds a controlling financial interest in a subsidiary or group of assets that is a business (other than a sale of in substance real estate or conveyance of oil and gas mineral rights) within a foreign entity. ASU 2013-05 is effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2013. The adoption of ASU 2013-05 did not have a material effect on our financial position, results of operations or cash flows.

Recently Issued Accounting Pronouncements

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) . The amendments in ASU 2014-09 will be added to the Accounting Standards Codification as Topic 606, Revenue from Contracts with Customers, and will supersede the revenue recognition requirements in Topic 605, Revenue Recognition, as well as some cost guidance in Subtopic 605-35, Revenue Recognition - Construction-Type and Production-Type Contracts. The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this core principle, the guidance provides that an entity should apply the following steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, the entity satisfies a

7

performance obligation. Notably, the existing requirements for the recognition of a gain or loss on the transfer of non-financial assets that are not in a contract with a customer (e.g., assets within the scope of Topic 360, Property, Plant, and Equipment, and intangible assets within the scope of Topic 350, Intangibles - Goodwill and Other) are amended to be consistent with the guidance on recognition and measurement in ASU 2014-09. For public entities, the amendments in ASU 2014-09 are effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period, and early application is prohibited. We do not anticipate that the adoption of ASU No. 2014-09 will have a material effect on our financial position, results of operations or cash flows.

In April 2014, the FASB issued ASU 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360) — Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. This update provides guidance for the reporting of discontinued operations if (1) a component or group of components of an entity meets the criteria in FASB ASC Paragraph 205-20-45-1E to be classified as held for sale; (2) the component of an entity or group of components of an entity is disposed of by sale; or (3) the component of an entity or group of components of an entity is disposed of other than by sale (for example, by abandonment or in a distribution to owners in a spinoff). This update states that a discontinued operation can also include a business or nonprofit activity. Among other disclosures, ASU No. 2014-08 requires an entity to present, for each comparative period, the assets and liabilities of a disposal group that includes a discontinued operation separately in the asset and liability sections, respectively, of the statement of financial position. ASU 2014-08 is effective prospectively for (1) all disposals of components that occur within annual periods beginning on or after December 15, 2014, and interim periods within those years; and (2) all businesses or nonprofit activities that, on acquisition, are classified as held for sale that occur within annual periods beginning on or after December 15, 2014, and interim periods within those years. We do not anticipate that the adoption of ASU No. 2014-08 will have a material effect on our financial position, results of operations or cash flows.

NOTE 2: DISCONTINUED OPERATIONS

During the third quarter of fiscal 2013, we implemented a plan to close 107 legacy stores (all of which were in operation at June 30, 2013) in a variety of locations. These stores were generally older, smaller stores that did not fit our future growth profile.

Store closures as discontinued operations included:

▪ 57 stores in Mexico, 52 of which were small, jewelry-only asset group formats. We will continue to operate our full-service store-within-a-store ("SWS") locations under the Empeño Fácil brand, and expect to continue our storefront growth in Mexico.

▪ 29 stores in Canada, where we were in the process of transitioning to an integrated buy/sell and financial services model under the Cash Converters brand. The affected asset group consisted of stores that were not optimal for that model because of location or size. We will continue to operate full-service buy/sell and financial services center stores under the Cash Converters brand in Canada and the United States.

▪ 20 financial services stores in Dallas, Texas and the State of Florida, where we exited both locations primarily due to onerous regulatory requirements.

▪ One jewelry-only concept store, which was our only jewelry-only store in the United States.

Due to discontinued operations, we incurred charges in the fiscal year ended September 30, 2013 for lease termination costs, asset and inventory write-downs to net realizable liquidation value, uncollectible receivables, and employee severance costs. During the three and nine-month periods ended June 30, 2013, we recorded $23.8 million of pre-tax charges, primarily lease terminations of $9.1 million , inventory write-downs of $7.8 million , and fixed asset write-downs of $5.8 million . During the third quarter ended June 30, 2014 , we recorded $0.8 million of pre-tax gains related to these termination costs, primarily related to lease terminations, as negotiated amounts were lower than the initial lease buyout estimates recorded in the prior year. During the nine-month period ended June 30, 2014 , we recorded $3.9 million of pre-tax gains related to these termination costs, primarily related to lease terminations of $3.0 million , as negotiated amounts were lower than the initial lease buyout estimates recorded in the prior year, and release of inventory write-down reserves of $0.6 million . These charges and gains have been recorded as part of income (loss) from discontinued operations in our three and nine-month periods ended June 30, 2014 and 2013 condensed consolidated statements of operations, respectively.

As of June 30, 2014 and 2013, accrued severance and lease termination costs related to discontinued operations were $0.9 million and $23.8 million , respectively. This amount is included in accounts payable and other accrued expenses in our condensed consolidated balance sheets. During the three and nine-month periods ended June 30, 2014 , cash payments of $0.5

8

million and $3.4 million , respectively, were made with regard to the recorded termination costs. As of June 30, 2013, no cash payments had been made with regard to the recorded termination costs.





Discontinued operations in the three-month periods ended June 30, 2014 and 2013 include $0.1 million and $3.2 million of total revenues, respectively. The nine-month periods ended June 30, 2014 and 2013 include $2.9 million and $11.6 million of total revenues, respectively.





The table below summarizes the operating income and losses from discontinued operations by operating segment:

Three Months Ended June 30, Nine Months Ended June 30, 2014 2013 2014 2013 (in thousands) U.S. & Canada Net revenues $ (26 ) $ 1,495

$ 189

$ 4,519

Operating expenses 102

2,942

505

8,980

Operating loss from discontinued operations before taxes (128 ) (1,447 ) (316 ) (4,461 ) Total termination (gain) loss related to the reorganization (793 ) 13,427

(1,744 ) 13,427

Income (loss) from discontinued operations before taxes 665

(14,874 ) 1,428

(17,888 ) Income tax (provision) benefit (166 ) 839

(131 ) 1,010

Income (loss) from discontinued operations, net of tax $ 499

$ (14,035 ) $ 1,297

$ (16,878 ) Latin America Net revenues $ (438 ) $ 752

$ (1,247 ) $ 2,483

Operating expenses 9

1,076

406

3,482

Operating loss from discontinued operations before taxes (447 ) (324 ) (1,653 ) (999 ) Total termination loss (gain) related to the reorganization —

10,336

(2,126 ) 10,336

(Loss) income from discontinued operations before taxes (447 ) (10,660 ) 473

(11,335 ) Income tax benefit (provision) 134

3,198

(142 ) 3,400

(Loss) income from discontinued operations, net of tax $ (313 ) $ (7,462 ) $ 331

$ (7,935 ) Consolidated Net revenues $ (464 ) $ 2,247

$ (1,058 ) $ 7,002

Operating expenses 111

4,018

911

12,462

Operating loss from discontinued operations before taxes (575 ) (1,771 ) (1,969 ) (5,460 ) Total termination (gain) loss related to the reorganization (793 ) 23,763

(3,870 ) 23,763

Income (loss) from discontinued operations before taxes 218

(25,534 ) 1,901

(29,223 ) Income tax (provision) benefit (32 ) 4,037

(273 ) 4,410

Income (loss) from discontinued operations, net of tax $ 186

$ (21,497 ) $ 1,628

$ (24,813 )





All revenue, expense and income reported in these condensed consolidated financial statements have been adjusted to reflect reclassification of all discontinued operations.





9

NOTE 3: ACQUISITIONS

On November 29, 2013, Grupo Finmart acquired an unsecured long-term consumer loan portfolio for approximately $15.7 million . This transaction was accounted for as an asset purchase. Refer to Note 13 for further detail.

During the nine-month period ended June 30, 2014 , we had no acquisitions accounted for as a business combination.

Go Cash

On November 20, 2012, we entered into a definitive agreement with Go Cash, LLC and certain of its affiliates ("Go Cash" or "EZCORP Online") to acquire substantially all the assets of Go Cash's online lending business. This acquisition of assets was completed on December 20, 2012 and accounted for as a business combination. No liabilities were assumed other than trade payables and accounts payable incurred prior to closing in the ordinary course of business, which were approximately $0.2 million .

The assets acquired include a proprietary software platform, including a loan management system and a lending decision science engine, that will enable geographic expansion both within the U.S. and internationally; an internal customer service and collections call center; a portion of the existing Go Cash multi-state loan portfolio; and related assets, including customer lists, customer data and customer transaction information. We hired substantially all of Go Cash's employees, including the management team, an internal underwriting and customer experience analytics team, and an experienced customer service and collections call center team.

The total purchase price is performance-based and will be determined over a period of four years following the closing. The total consideration of $55.6 million includes the performance consideration element, which is based on the net income generated by the "Post-Closing Business Unit" (which includes all of our online consumer lending business). Within a specified period after the end of each of the first four years following the closing, we will make a contingent supplemental payment equal to the difference between (a) the adjusted net income for such year, multiplied by 6.0 , and (b) all consideration payments previously paid. Each payment may be made, in our sole discretion, in cash or in the form of shares of EZCORP Class A Non-Voting Common Stock. A minimum of $50.8 million will be paid, of which $27.8 million was paid at closing, $6.0 million was paid on November 12, 2013, $5.0 million was paid on December 19, 2013 and the remaining $12.0 million will be paid in installments over the next two years . The initial payment was made in the form of 1,400,198 shares of EZCORP Class A Non-Voting Common Stock, and the November and December 2013 payments were made in cash.

Based on the final purchase price allocation, the contingent consideration was valued at $4.8 million . This amount was calculated using a Monte Carlo simulation, whereby future net income is simulated over the earn-out period. For each simulation path, the earn-out payments were calculated and then discounted to the valuation date. The fair value of the earn-out was then estimated to be the arithmetic average of all paths. The model utilized forecasted net income, and the valuation was performed in a risk-neutral framework. The significant inputs used for the valuation are not observable in the market, and thus this fair value measurement represents a Level 3 measurement within the fair value hierarchy. This contingent consideration element was valued and recorded during the first quarter ended December 31, 2013.

The three and nine month periods ended June 30, 2014 include $4.2 million and $11.4 million in total revenues and $1.7 million and $5.2 million in losses related to EZCORP Online. The three and nine month periods ended June 30, 2013 include $2.3 million and $3.9 million in total revenues and $2.4 million and $5.6 million in losses related to EZCORP Online.

TUYO

On November 1, 2012, we acquired a 51.0% interest in Renueva Comercial S.A.P.I. de C.V., a company headquartered in Mexico City and doing business under the name "TUYO", for approximately $1.1 million . On January 1, 2014, we acquired an additional 7.9% interest in TUYO for $1.1 million , increasing our ownership percentage to 58.9% . This transaction was treated as an equity transaction and not an adjustment to the purchase price of the initial controlling interest acquisition of TUYO. Refer to Note 9 for further detail. As of June 30, 2014 , TUYO owned and operated 19 stores in Mexico City and the surrounding metropolitan area. In these stores, TUYO buys quality used merchandise from customers and then resells that merchandise to other customers. TUYO also sells refurbished or other merchandise acquired in bulk from wholesalers. As this acquisition was individually immaterial, we present its related information, other than information related to the redeemable noncontrolling interest, combined with other immaterial acquisitions.

Pursuant to the acquisition agreement, the sellers have a put option with respect to their remaining shares of TUYO. The sellers have the right to sell their TUYO shares to EZCORP during a specified exercise period, with specified limitations on the number of shares that may be sold within a consecutive 12 -month period. Under the guidance in ASC 480-10-S99, securities that are redeemable for cash or other assets are to be classified outside of permanent equity; therefore, we have included the redeemable noncontrolling interest related to TUYO in temporary equity.

10





The acquisition date fair value of the TUYO redeemable noncontrolling interest was estimated by applying an income and market approach. This fair value measurement was based on significant inputs that are not observable in the market and thus represents a Level 3 measurement. Key assumptions include discount rates of 10% and 18% representing discounts for lack of control and lack of marketability respectively that market participants would consider when estimating the fair value of the noncontrolling interest. The fair market value of TUYO was determined using a multiple of future earnings. See Note 14 for additional details relating to the fair value disclosures.





Other - 2013





On April 26, 2013, Grupo Finmart, our 76% owned subsidiary, purchased 100% of the outstanding shares of Fondo ACH, S.A. de C.V., a specialty consumer finance company. The total purchase price is performance-based and will be determined over a period of four years . A minimum of $3.5 million will be paid, of which $2.7 million was paid at closing with the remaining due on January 2, 2017. The performance consideration element will be based on interest income generated by the acquired portfolios and new loans made through Fondo ACH's contractual relationships. The contingent consideration element of the purchase price, which is the amount in excess of the guaranteed $3.5 million , has been valued at $2.3 million as of the acquisition date and recorded during the quarter ended March 31, 2014. As this acquisition was individually immaterial, we present its related information combined with other immaterial acquisitions.

The fiscal year ended September 30, 2013 , includes the December 2012 acquisition of 12 pawn locations in Arizona, which was a new state of operation for EZCORP. As this acquisition was individually immaterial, we present its related information combined with other immaterial acquisitions.

All acquisitions were made as part of our continuing strategy to enhance and diversify our earnings over the long-term. The factors contributing to the recognition of goodwill were based on several strategic and synergistic benefits we expect to realize from the acquisitions. These benefits include our initial entry into several markets and a greater presence in others, as well as the ability to further leverage our expense structure through increased scale. There were no transaction related expenses for the nine-month period ended June 30, 2014 and approximately $0.5 million for the nine-month period ended June 30, 2013 , which were expensed as incurred and recorded as operations expense. These amounts exclude costs related to transactions that did not close and future acquisitions. The results of all acquisitions have been consolidated with our results since their respective closing. Pro forma results of operations have not been presented because it is impracticable to do so, as historical audited financial statements in U.S. GAAP are not readily available.

11

The following table provides information related to the acquisition of domestic and foreign pawn and financial services locations during fiscal 2013:

Fiscal Year Ended September 30, 2013 Go Cash Other Acquisitions Current assets: (in thousands) Pawn loans $ —

$ 5,714

Consumer loans, net —

1,079

Service charges and fees receivable, net 23

399

Inventory, net —

2,441

Prepaid expenses and other assets 120

508

Total current assets 143

10,141

Property and equipment, net 268

1,078

Goodwill 44,020

17,187

Intangible assets 11,215

2,685

Non-current consumer loans, net —

3,336

Other assets 124

314

Total assets 55,770

34,741

Current liabilities: Accounts payable and other accrued expenses 202

560

Customer layaway deposits —

103

Total current liabilities 202

663

Total liabilities 202

663

Redeemable noncontrolling interest —

2,836

Net assets acquired $ 55,568

$ 31,242

Goodwill deductible for tax purposes $ 44,020

$ —

Indefinite-lived intangible assets acquired: Domain name $ 215

$ —

Definite-lived intangible assets acquired (1) : Non-compete agreements $ —

$ 30

Internally developed software $ 11,000

$ 66

Contractual relationship $ —

$ 2,589



(1) The weighted average useful life of definite-lived intangible assets acquired is five years .





Per FASB ASC 805-10-25, adjustments to provisional purchase price allocation amounts made during the measurement period shall be recorded as if the accounting for the business combination had been completed at the acquisition date. Thus, the acquirer shall revise comparative information for prior periods presented in financial statements. The amounts above and our condensed consolidated balance sheets as of June 30, 2013 and September 30, 2013 reflect all measurement period adjustments recorded since the acquisition date. As of June 30, 2013 and September 30, 2013, these adjustments include a $6.9 million increase to deferred gains and other long-term liability, a $4.8 million increase to goodwill, a $1.9 million increase to intangible assets, and a $0.2 million net increase to various other assets.

NOTE 4: EARNINGS PER SHARE

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





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

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

Three Months Ended June 30, Nine Months Ended June 30, 2014 2013 2014 2013 (in thousands, except per share amounts) Net income from continuing operations attributable to EZCORP, Inc., net of tax (A) $ 11,320

$ 15,616

$ 40,439

$ 83,630

Income (Loss) from discontinued operations, net of tax (B) 186

(21,497 ) 1,628

(24,813 ) Net income (loss) attributable to EZCORP (C) 11,506

(5,881 ) 42,067

$ 58,817

Weighted average outstanding shares of common stock (D) 54,308

54,196

54,338

53,465

Dilutive effect of stock options and restricted stock 87

59

191

75

Weighted average common stock and common stock equivalents (E) 54,395

54,255

54,529

$ 53,540

Basic earnings (loss) per share attributable to EZCORP, Inc.: Continuing operations attributable to EZCORP, Inc. (A / D) $ 0.21

$ 0.29

$ 0.74

$ 1.56

Discontinued operations (B / D) —

(0.40 ) 0.03

(0.46 ) Basic earnings per share (C / D) $ 0.21

$ (0.11 ) $ 0.77

$ 1.10

Diluted earnings (loss) per share attributable to EZCORP, Inc.: Continuing operations attributable to EZCORP, Inc. (A / E) $ 0.21

$ 0.29

$ 0.74

$ 1.56

Discontinued operations (B / E) —

(0.40 ) 0.03

(0.46 ) Diluted earnings per share (C / E) $ 0.21

$ (0.11 ) $ 0.77

$ 1.10

Potential common shares excluded from the calculation of diluted earnings per share: Stock options and restricted stock 214

—

213

—

Warrants 14,317

—

14,317

—

Total potential common shares excluded 14,531

—

14,530

—



NOTE 5: STRATEGIC INVESTMENTS

Cash Converters International Limited

At June 30, 2014 , we owned 136,848,000 shares, or approximately 32% , of Cash Converters International Limited, a publicly traded company headquartered in Perth, Australia. Cash Converters International franchises and operates a worldwide network of over 700 specialty financial services and retail stores that provide pawn loans, short-term unsecured loans and other consumer finance products, and buy and sell second-hand goods, with significant store concentrations in Australia and the United Kingdom. Those shares include 12,430,000 shares that we acquired in November 2012 for approximately $11.0 million in cash as part of a share placement. Our total investment in Cash Converters International was acquired between November 2009 and November 2012 for approximately $68.8 million .

We account for our investment in Cash Converters International using the equity method. Since Cash Converters International’s fiscal year ends three months prior to ours, we report the income from this investment on a three -month lag. Cash Converters International files semi-annual financial reports for its fiscal periods ending December 31 and June 30 . Due to the three -month lag, income reported for our nine-month periods ended June 30, 2014 and 2013 represents our percentage interest in the results of Cash Converters International’s operations from July 1, 2013 to March 31, 2014 and July 1, 2012 to March 31, 2013, respectively.

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

In its functional currency of Australian dollars, Cash Converters International’s total assets increased 32% from December 31, 2012 to December 31, 2013 and its net income attributable to the owners of the parent decreased 46% for the six months ended December 31, 2013. This decrease is primarily due to a decline in short-term personal lending as a result of regulatory changes in Australia. Cash Converters International sees these regulatory changes as an opportunity to capitalize on their strong compliance culture and critical mass in terms of stores and financing capability. The quarter ended March 31, 2014 reflects the continuing upward trend that commenced in prior quarter and Cash Converters International expects this trend to continue.

13

The following table presents summary financial information for Cash Converters International’s most recently reported results after translation to U.S. dollars (using the exchange rate as of December 31 of each year for balance sheet items and average exchange rates for the income statement items for the periods indicated):

As of December 31, 2013 2012 (in thousands) Current assets $ 202,735

$ 169,739

Non-current assets 148,010

141,258

Total assets $ 350,745

$ 310,997

Current liabilities $ 77,263

$ 38,735

Non-current liabilities 52,522

31,591

Shareholders’ equity: Equity attributable to owners of the parent 224,026

240,671

Non-controlling interest (3,065 ) —

Total liabilities and shareholders’ equity $ 350,746

$ 310,997



Six Months Ended December 31, 2013 2012 (in thousands) Gross revenues $ 143,517

$ 140,123

Gross profit 91,605

95,149

Profit for the period attributable to: Owners of the parent $ 9,103

$ 19,143

Noncontrolling interest (2,417 ) —







Albemarle & Bond Holdings, PLC

At June 30, 2014 , we owned 16,644,640 ordinary shares of Albemarle & Bond, representing approximately 30% of its total outstanding shares. Our total cost for those shares was approximately $27.6 million . Albemarle & Bond is primarily engaged in pawnbroking, retail jewelry sales, check cashing and lending in the United Kingdom. We account for the investment using the equity method.

Since Albemarle & Bond’s fiscal year ends three months prior to ours, we report the income from this investment on a three -month lag. Albemarle & Bond files semi-annual financial reports for its fiscal periods ending December 31 and June 30 . Due to the three -month lag, income reported for our nine-month periods ended June 30, 2014 and 2013 represents our percentage interest in the results of Albemarle & Bond’s operations from July 1, 2013 to March 31, 2014 and July 1, 2012 to March 31, 2013, respectively.

On April 19, 2013, Albemarle & Bond announced that it expected profits for their full fiscal year (ending June 30, 2013) to be materially below market expectations, citing reduction in gold buying profit and pressures on its pawn loan business due to the challenging gold environment and increased competition. In addition Albemarle & Bond's Board of Directors announced that their CEO would step down earlier than planned. In early October 2013, Albemarle & Bond announced that discussions to underwrite an equity funding had failed and they were in ongoing discussions with their banks to negotiate covenants. The market price of Albemarle & Bond’s stock declined as a result of this information. Due to these events, we evaluated the economic and strategic benefits of continuing to hold this investment. Based on the review as of October 18, 2013, we determined that the fair value of this investment was less than its carrying value as of September 30, 2013 and that this impairment was other than temporary. As a result, we recognized an other than temporary impairment of $42.5 million ( $28.7 million , net of taxes), which brought our carrying value of this investment to $9.4 million at September 30, 2013.





As of March 31, 2014, we concluded that this investment was further impaired, and that such impairment was other than temporary. In reaching this conclusion, we considered all available evidence, including that (i) Albemarle & Bond had not achieved forecasted revenue or operating results, (ii) Albemarle & Bond had been negatively impacted by the falling price of gold on the international markets, a drop of more than 20% this year, (iii) Albemarle & Bond commenced a formal sale process of the company on December 5, 2013 and then terminated the process on January 27, 2014 after deciding that none of the

14

proposals deemed to represent a fair value for the company, and (iv) a prolonged drop in Albemarle & Bond's stock price as a result of the above aforementioned factors. The active trading of Albemarle & Bond was suspended on March 24, 2014. Despite the final sale of Albemarle & Bond in April 2014 we believe limited value, if any, is attributable to our investment. As a result, we recognized an other than temporary impairment of $ 7.9 million ( $5.4 million , net of taxes) during the quarter ended March 31, 2014, which brought our carrying value of this investment to zero .

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

The table below summarizes the recorded value and fair value of each of these strategic investments at the dates indicated. The fair values of Albemarle & Bond as of June 30, 2013 and Cash Converters International as of June 30, 2014 and 2013 as well as September 30, 2013 are considered Level 1 estimates within the fair value hierarchy of FASB ASC 820-10-50, and were calculated as (a) the quoted stock price on each company’s principal market multiplied by (b) the number of shares we owned multiplied by (c) the applicable foreign currency exchange rate at the dates indicated. We included no control premium by owning a large percentage of outstanding shares.

The fair value for Albemarle & Bond at June 30, 2014 is considered a Level 2 estimate within the fair value hierarchy of FASB ASC 820-10-50. We calculated the fair value based on (a) the last known stock price after all active trading was suspended on March 21, 2014 and (b) Albemarle & Bond's announcement of limited, if any, value available to the ordinary shares of its stock, which was considered to be an unobservable input insignificant to the overall determination of the Albemarle & Bond fair value. The fair value for Albemarle & Bond at September 30, 2013 is considered a Level 2 estimate within the fair value hierarchy of FASB ASC 820-10-50. We calculated the fair value based on (a) the quoted average stock price of Albemarle & Bond over the two week period subsequent to the October announcement multiplied by (b) the number of shares we owned multiplied by (c) the applicable foreign currency exchange rate as of the dates indicated during the post September 30, 2013 measurement date. We believe this measurement date allowed the market to react and adjust to the information released by Albemarle & Bond the first week of October 2013, as previously mentioned, and therefore resulted in a reasonable fair value as of September 30, 2013.

June 30, September 30, 2014 2013 2013 (in thousands of U.S. dollars) Albemarle & Bond: Recorded value $ —

$ 52,252

$ 9,439

Fair value —

33,920

9,439

Cash Converters International: Recorded value $ 90,730

$ 94,455

$ 87,645

Fair value 139,213

133,732

165,663











15

NOTE 6: GOODWILL AND OTHER INTANGIBLE ASSETS

The following table presents the balance of goodwill and each major class of intangible assets at the specified dates:

June 30, September 30, 2014 2013 2013 (in thousands) Goodwill $ 436,765

$ 430,940

$ 433,300

Indefinite-lived intangible assets: Pawn licenses $ 8,836

$ 8,836

$ 8,836

Trade name 9,970

9,654

9,791

Domain name 228

215

215

Total indefinite-lived intangible assets $ 19,034

$ 18,705

$ 18,842

Definite-lived intangible assets: Real estate finders’ fees $ 841

$ 940

$ 902

Non-compete agreements 431

789

673

Favorable lease 541

640

614

Franchise rights 1,294

1,376

1,388

Contractual relationship 12,648

14,534

14,039

Internally developed software 27,914

23,465

22,088

Other 212

238

226

Total definite-lived intangible assets $ 43,881

$ 41,982

$ 39,930

Intangible assets, net $ 62,915

$ 60,687

$ 58,772







The following tables present the changes in the carrying value of goodwill over the periods presented:

U.S. & Canada Latin America Other International Consolidated (in thousands) Balances at September 30, 2013 $ 283,199

$ 110,209

$ 39,892

$ 433,300

Effect of foreign currency translation changes —

1,228

2,237

3,465

Balances at June 30, 2014 $ 283,199

$ 111,437

$ 42,129

$ 436,765







U.S. & Canada Latin America Other International Consolidated (in thousands) Balances at September 30, 2012 $ 224,306

$ 110,401

$ 39,956

$ 374,663

Acquisitions 57,825

2,282

—

60,107

Goodwill impairment (29 ) —

—

(29 ) Effect of foreign currency translation changes (2 ) (1,446 ) (2,353 ) (3,801 ) Balances at June 30, 2013 $ 282,100

$ 111,237

$ 37,603

$ 430,940







In accordance with ASC 350-20-35, Goodwill - Subsequent Measurement , we test goodwill and intangible assets with an indefinite useful life for potential impairment annually, or more frequently when there are events or circumstances that indicate that it is more likely than not that an impairment exists. During the third quarter ended June 30, 2014, we evaluated such events and circumstances and concluded that it was not more likely than not that a goodwill or intangible assets impairment existed. We will continue to monitor if an interim triggering event is present in subsequent periods, and we will perform our required annual impairment test in the fourth quarter of our fiscal year.

16

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

Three Months Ended June 30, Nine Months Ended June 30, 2014 2013 2014 2013 (in thousands) Amortization expense in continuing operations $ 1,640

$ 1,591

$ 5,555

$ 3,621

Operations expense 30

64

91

131

Total expense from the amortization of definite-lived intangible assets $ 1,670

$ 1,655

$ 5,646

$ 3,752



The following table presents our estimate of future amortization expense for definite-lived intangible assets:

Fiscal Years Ended September 30, Amortization expense Operations expense (in thousands) 2014 $ 1,959

$ 30

2015 7,324

109

2016 6,878

106

2017 6,603

106

2018 5,781

106



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

17

NOTE 7: LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS

The following table presents our long-term debt instruments and balances under capital lease obligations outstanding at June 30, 2014 and 2013 and September 30, 2013 .





June 30, 2014 June 30, 2013 September 30, 2013 Carrying Amount Debt Premium (Discount) Carrying Amount Debt Premium Carrying Amount Debt Premium (in thousands) Recourse to EZCORP: Domestic line of credit up to $200 million due 2015 $ —

$ —

$ 122,500

$ —

$ 140,900

$ —

2.125% Cash Convertible Senior Notes Due 2019 183,694

(46,306 ) —

—

—

—

Cash Convertible Senior Notes Due 2019 embedded derivative 46,454

—

—

—

—

—

Capital lease obligations 520

—

1,054

—

924

—

Non-recourse to EZCORP: Secured foreign currency debt up to $3.8 million due 2014 251

28

1,562

124

1,207

99

Secured foreign currency debt up to $5.2 million due 2015 1,218

—

8,929

—

6,281

—

Secured foreign currency debt up to $19.2 million due 2015 5,516

—

—

—

—

—

Secured foreign currency debt up to $5.2 million due 2016 747

—

—

—

—

—

Secured foreign currency debt up to $23.1 million due 2017 23,077

—

23,035

—

22,822

—

Consumer loans facility due 2017 —

—

32,251

—

31,951

—

Consumer loans facility due 2019 56,075

—

—

—

—

—

10% unsecured notes due 2013 —

—

508

—

503

—

15% unsecured notes due 2013 —

—

13,272

514

12,884

244

10% unsecured notes due 2014 6,528

—

9,008

—

8,925

—

11% unsecured notes due 2014 111

—

111

—

110

—

9% unsecured notes due 2015 29,933

—

15,905

—

16,068

—

10% unsecured notes due 2015 700

—

421

—

418

—

15% secured notes due 2015 —

—

4,275

436

4,185

381

10% unsecured notes due 2016 122

—

122

—

121

—

12% secured notes due 2017 4,078

232

—

—

—

—

12% secured notes due 2019 23,153

—

—

—

—

—

Total long-term obligations 382,177

(46,046 ) 232,953

1,074

247,299

724

Less current portion 21,549

233

34,058

815

30,969

543

Total long-term and capital lease obligations $ 360,628

$ (46,279 ) $ 198,895

$ 259

$ 216,330

$ 181



Domestic line of credit up to $200 million due 2015

On May 10, 2011 , we entered into a senior secured credit agreement with a syndicate of five banks, replacing our previous credit agreement. Among other things, the credit agreement provided for a four -year $175 million revolving credit facility that we could, under the terms of the agreement, request to be increased to a total of $225 million . Upon entering the new credit agreement, we repaid and retired our $17.5 million outstanding debt. On May 31, 2013 , we amended the senior secured credit agreement to increase our revolving credit facility from $175 million to $200 million . No other terms of our senior secured credit agreement were modified.

Pursuant to the credit agreement, we could choose to pay interest to the lenders for outstanding borrowings at LIBOR plus 200 to 275 basis points or the banks' base rate plus 100 to 175 basis points , depending on our leverage ratio computed at the end of each calendar quarter. On the unused amount of the credit facility, we paid a commitment fee of 37.5 to 50.0 basis points depending on our leverage ratio calculated at the end of each quarter . Terms of the credit agreement required, among other things, that we meet certain financial covenants, restrict dividend payments and limit other and non-recourse debt.

We used approximately $119.4 million of net proceeds from the 2.125% Cash Convertible Senior Notes offering, described below, to repay all outstanding borrowings under the senior secured credit agreement and terminated that agreement.

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Debt extinguishment expense of $0.7 million was recognized in the three and nine months ended June 30, 2014 as a result of the recognition of deferred financing costs associated with the terminated senior secured credit agreement.

2.125% Cash Convertible Senior Notes Due 2019

In June 2014, we issued $200.0 million aggregate principal amount of 2.125% Cash Convertible Senior Notes Due 2019 (the “Convertible Notes”). We granted the initial purchasers the option to purchase up to an additional $30.0 million aggregate principal amount of Convertible Notes. Such option was exercised in full on June 27, 2014, and we issued an additional $30.0 million principal amount of Convertible Notes on July 2, 2014. All of the Convertible Notes were issued pursuant to an indenture dated June 23, 2014 (the "Indenture") by and between us and Wells Fargo Bank, National Association, as the trustee. The Convertible Notes were issued in a private offering under Rule 144A under the Securities Act of 1933. The Convertible Notes pay interest semi-annually in arrears at a rate of 2.125% per annum on June 15 and December 15 of each year, commencing on December 15, 2014, and will mature on June 15, 2019 (the "Maturity Date").

Prior to December 15, 2018, the Convertible Notes will be convertible only upon the occurrence of certain events and during certain periods, and thereafter, at any time prior to the close of business on the second scheduled trading day immediately preceding the Maturity Date, as described below. At maturity, the holders of the Convertible Notes will be entitled to receive cash equal to the principal amount of the Convertible Notes plus unpaid accrued interest.

The Convertible Notes will be our unsubordinated unsecured obligations and will rank senior in right of payment to any of our indebtedness that is expressly subordinated in right of payment to the Convertible Notes; equal in right of payment with all of our other unsecured unsubordinated indebtedness; and effectively junior to all debt or other obligations (including trade payables) of our wholly-owned subsidiaries. The Indenture governing the Convertible Notes does not contain any financial covenants.

We incurred transaction costs of approximately $9.2 million related to the issuance of the Convertible Notes, which we recorded as deferred financing costs and are included in other assets, net on our condensed consolidated balance sheet. Deferred financing costs are being amortized to interest expense using the effective interest method over the expected term of the Convertible Notes.

Convertible Notes Embedded Derivative

We account for the cash conversion feature of the Convertible Notes as a separate derivative instrument (the “ Convertible Notes Embedded Derivative ”), which had a fair value of $46.5 million on the issuance date that was recognized as the original issue discount of the Convertible Notes. This original issue discount is amortized to interest expense over the term of the Convertible Notes using the effective interest method. As of June 30, 2014, the Convertible Notes Embedded Derivative is recorded as a non-current liability under long-term debt, less current maturities in our condensed consolidated balance sheet, and will be marked to market in subsequent reporting periods. The classification of the Convertible Notes Embedded Derivative liability as current or non-current on the consolidated balance sheet corresponds with the classification of the net balance of the Convertible Notes as discussed below.

The Convertible Notes are convertible into cash, subject to satisfaction of certain conditions and during the periods described below, based on an initial conversion rate of 62.2471 shares of Class A non-voting common stock per $1,000 principal amount of Convertible Notes (equivalent to an initial conversion price of approximately $16.065 per share of our Class A non-voting common stock). Upon conversion of a note, we will pay cash based on a daily conversion value calculated on a proportionate basis for each trading day in the applicable 80 trading day observation period as described in the Indenture. The conversion rate will not be adjusted for any accrued and unpaid interest.

Holders may surrender their Convertible Notes for conversion into cash prior to December 15, 2018 only under the following circumstances (the “Early Conversion Conditions”): (1) during any fiscal quarter commencing after the fiscal quarter ending on September 30, 2014 (and only during such fiscal quarter), if the last reported sale price of our Class A non-voting common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price, as defined in the Indenture, per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our Class A non-voting common stock and the conversion rate on such trading day; or (3) upon the occurrence of specified corporate events, as defined in the Indenture. On or after December 15, 2018 until the close of business on the second scheduled trading day immediately preceding the Maturity Date, holders may convert their notes into cash at any time, regardless of the foregoing circumstances.

If a holder elects to convert its Convertible Notes in connection with certain make-whole fundamental changes, as that term is defined in the Indenture, that occur prior to the Maturity Date, we will, in certain circumstances, increase the conversion rate for Convertible Notes converted in connection with such make-whole fundamental changes by a specified number of shares of Class

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A non-voting common stock. In addition, the conversion rate is subject to customary anti-dilution adjustments (for example, certain dividend distributions or tender or exchange offer of our Class A non-voting common stock).

Upon the occurrence of a fundamental change, as defined in the Indenture, holders may require us to repurchase for cash all or any portion of the then outstanding Convertible Notes at a repurchase price equal to 100% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest.

Impact of Early Conversion Conditions on Financial Statements

As of June 30, 2014, the Convertible Notes are not convertible because the Early Conversion Conditions described above have not been met. Accordingly, the net balance of the Convertible Notes of $183.7 million is classified as a non-current liability on our condensed consolidated balance sheet as of June 30, 2014. The classification of the Convertible Notes as current or non-current on the consolidated balance sheet is evaluated at each balance sheet date and may change from time to time depending on whether one of the Early Conversion Conditions has been met.

If one of the Early Conversion Conditions is met in any future fiscal quarter, we would classify our net liability under the Convertible Notes as a current liability on the condensed consolidated balance sheet as of the end of that fiscal quarter. If none of the Early Conversion Conditions have been met in a future fiscal quarter prior to the one-year period immediately preceding the Maturity Date, we would classify our net liability under the Convertible Notes as a non-current liability on the condensed consolidated balance sheet as of the end of that fiscal quarter. If the note holders elect to convert their Convertible Notes prior to maturity, any unamortized discount and transaction costs will be expensed at the time of conversion. If the entire outstanding principal amount had been converted on June 30, 2014, we would have recorded an expense of $55.5 million associated with the conversion, comprised of $46.3 million of unamortized debt discount and $9.2 million of unamortized debt issuance costs. As of June 30, 2014, none of the note holders had elected to convert their Convertible Notes.

Convertible Notes Hedges

In connection with the issuance of the Convertible Notes, we purchased cash-settled call options (the “Convertible Notes Hedges”) in privately negotiated transactions with certain of the initial purchasers or their affiliates (in this capacity, the “option counterparties”). The Convertible Notes Hedges provide us with the option to acquire, on a net settlement basis, approximately 14.3 million shares of our Class A non-voting common stock at a strike price of $16.065 , which is equal to the number of shares of our Class A non-voting common stock that notionally underlie the Convertible Notes and corresponds to the conversion price of the Convertible Notes. The Convertible Notes Hedges have an expiration date that is the same as the Maturity Date of the Convertible Notes, subject to earlier exercise . The Convertible Notes Hedges have customary anti-dilution provisions similar to the Convertible Notes. If we exercise the Convertible Notes Hedges , the aggregate amount of cash we will receive from the option counterparties to the Convertible Notes Hedges will cover the aggregate amount of cash that we would be required to pay to the holders of the converted Convertible Notes, less the principal amount thereof. As of June 30, 2014, we have not purchased any shares under the Convertible Notes Hedges.

The aggregate cost of the Convertible Notes Hedges was $46.5 million (or $21.3 million net of the total proceeds from the Warrants sold, as discussed below). The Convertible Notes Hedges are accounted for as a derivative asset and are recorded on the condensed consolidated balance sheet at their estimated fair value in other assets, net. The fair value was $46.5 million as of June 30, 2014. The Convertible Notes Embedded Derivative liability and the Convertible Notes Hedges asset will be adjusted to fair value each reporting period and unrealized gains and losses will be reflected in the condensed consolidated income statements. The Convertible Notes Embedded Derivative and the Convertible Notes Hedges are designed to have similar fair values. Accordingly, the changes in the fair values of these instruments are expected to offset and not have a net impact on the condensed consolidated income statements.

The classification of the Convertible Notes Hedges asset as current or long-term on the consolidated balance sheet corresponds with the classification of the Convertible Notes, which is evaluated at each balance sheet date and may change from time to time depending on whether one of the Early Conversion Conditions has been met.

Convertible Notes Warrants

In connection with the issuance of the Convertible Notes, we also sold net-share-settled warrants (the “Warrants”) in privately negotiated transactions with the option counterparties for the purchase of up to approximately 14.3 million shares of our Class A non-voting common stock at a strike price of $20.83 per share, for total proceeds of $25.2 million , which was recorded as an increase in stockholders' equity. The Warrants have customary anti-dilution provisions similar to the Convertible Notes. As a result of the Warrants, we will experience dilution to our diluted earnings per share if our average closing stock price exceeds $20.83 for any fiscal quarter. The Warrants expire on various dates from September 2019 through February 2020 and must be settled in net shares of our Class A non-voting common stock. Therefore, upon expiration of the Warrants, we will issue shares of Class A non-

20

voting common stock to the purchasers of the Warrants that represent the value by which the price of the Class A non-voting common stock exceeds the strike price stipulated within the particular warrant agreement. As of June 30, 2014, there were 14.3 million warrants outstanding.

Convertible Notes Interest Expense

Total interest expense for the three and nine months ended June 30, 2014 was $0.2 million , composed of contractual interest expense and debt discount amortization of $0.1 million and $0.1 million , respectively. The effective interest rate for the three and nine months ended June 30, 2014 was 7% .

As of June 30, 2014, the remaining unamortized issuance discount will be amortized over the next 5.0 years assuming no early conversion.

Non-recourse debt to EZCORP, Inc.

On January 30, 2012 , we acquired a 60% ownership interest in Grupo Finmart. On June 30, 2014, we acquired an additional 16% of the ordinary shares outstanding of Grupo Finmart, increasing our ownership percentage from 60% to 76% . Non-recourse debt amounts in the table previously presented represent Grupo Finmart’s third-party debt. All unsecured notes are collateralized with Grupo Finmart's assets and are due at maturity. All secured foreign currency debt is guaranteed by Grupo Finmart's loan portfolio. Interest on secured foreign currency debt due 2014, 2015 and 2016 is charged at the Mexican Interbank Equilibrium ("TIIE") plus a margin varying from 5% to 10% . The secured foreign currency debt due 2014 requires monthly payments of $0.2 million with remaining principal due at maturity. The secured foreign currency debt due 2015 requires monthly payments of $0.6 million with the remaining principal due at maturity. The secured foreign currency debt due 2016 requires monthly payments of $0.1 million with the remaining principal due at maturity. The secured foreign currency debt due 2017 has a 14.5% interest rate, requires monthly payments of $1.9 million , and the remaining principal is due at maturity. The 12% secured notes due 2017 require monthly payments of $0.1 million with the remaining principal due at maturity. The 12% secured notes due 2019 require monthly payment of $1.0 million with the remaining principal due at maturity.

At acquisition, we performed a valuation to determine the fair value of Grupo Finmart's debt. As a result, we recorded a debt premium on Grupo Finmart’s debt. This debt premium is being amortized as a reduction of interest expense over the life of the debt. The fair value was determined by using an income approach, specifically the discounted cash flows method based on the contractual terms of the debt and risk adjusted discount rates.

Consumer loans facility due 2017

On July 10, 2012, Grupo Finmart entered into a securitization transaction to transfer the collection rights of certain eligible consumer loans to a bankruptcy remote trust in exchange for cash on a non-recourse basis. The trust received financing as a result of the issuance of debt securities and delivered the proceeds of the financing to Grupo Finmart. The securitization agreement called for a two -year lending period in which the trust would use principal collections of the consumer loan portfolio to acquire additional collection rights up to $115.4 million in eligible loans from Grupo Finmart. Upon the termination of the lending period, the collection received by the trust would be used to repay the debt. Grupo Finmart would continue to service the underlying loans in the trust. On February 17, 2014, Grupo Finmart repaid this facility. In connection with this repayment, we wrote off the deferred financing costs related to this facility.

Consumer loans facility due 2019

On February 17, 2014, Grupo Finmart entered into a new securitization transaction to transfer collection rights of certain eligible consumer loans to a bankruptcy remote trust in exchange for cash. The trust received financing as a result of the issuance of debt securities and delivered the proceeds of the financing to Grupo Finmart. The unrestricted cash received from this borrowing in the amount of $35.5 million was primarily used to repay the previous securitization borrowing facility due 2017 and the transaction costs associated with this transaction. The cash proceeds of approximately $20.6 million is restricted primarily for $17.9 million of collection rights on the additional eligible loans from Grupo Finmart, which Grupo Finmart expects to deliver to the trust within the next 12 months, and $2.7 million of interest and trust maintenance costs to be recovered at repayment. The restricted cash proceeds of $17.9 million is recourse to Grupo Finmart unless additional eligible loans are delivered within two-year period specified in the agreement. The borrowing facility has a two year lending period and matures on March 19, 2019. Upon the termination of the lending period, Grupo has an option to start prepaying the principle early from the collection received by the trust. Grupo Finmart will continue to service the underlying loans in the trust.

21

Deferred financing costs related to the new consumer loans facility, totaling approximately $2.6 million are included in other assets, net on the condensed consolidated balance sheets and are being amortized to interest expense over the term of the agreement.

Grupo Finmart is the primary beneficiary of the securitization trust because Grupo Finmart has the power to direct the most significant activities of the trust through its role as servicer of all the receivables held by the trust and through its obligation to absorb losses or receive benefits that could potentially be significant to the trust. Consequently, we consolidate the trust.

As of June 30, 2014 , borrowings under the securitization borrowing facility due 2019 amounted to $56.1 million . Interest is charged at TIIE plus a 2.5% margin, or a total of 5.8% as of June 30, 2014 .

9% unsecured notes due 2015

On May 15, 2013, Grupo Finmart issued and sold $30.0 million of 9% Global Registered Notes due November 16, 2015. Notes with an aggregate principal amount of $14.0 million were originally purchased by EZCORP and, therefore, eliminated in consolidation in prior periods. On March 31, 2014, EZCORP sold its outstanding notes in the amount of $11.7 million to an outside party, thereby increasing the total consolidated notes balance. As a result of this transaction we recorded a loss of $0.7 million , which is included under gain (loss) on sale or disposal of assets in our nine month period ended June 30, 2014 condensed consolidated statement of operations. Grupo Finmart used a portion of the net proceeds of the offering to repay existing indebtedness, and used the remaining portion for general operating purposes.

NOTE 8: COMMON STOCK, OPTIONS AND STOCK COMPENSATION

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

Three Months Ended June 30, Nine Months Ended June 30, 2014 2013 2014 2013 (in thousands) Gross compensation costs $ 1,653

$ 2,148

$ 9,929

$ 5,202

Income tax benefits (579 ) (727 ) (3,448 ) (1,746 ) Net compensation expense $ 1,074

$ 1,421

$ 6,481

$ 3,456







In the current three and nine-month periods ended June 30, 2014 , no stock options were exercised. In the prior year three and nine-month periods ended June 30, 2013 , stock option exercises resulted in the issuance of 15,000 and 18,000 shares, respectively, for nominal proceeds.





On March 25, 2014, following the shareholders' approval, we filed with the Secretary of State of the State of Delaware a Certificate of Amendment to our Amended and Restated Certificate of Incorporation to increase the number of authorized Class A Shares from 55,550,000 to 100,000,000 .





In connection with the retirement of our Executive Chairman effective June 30, 2014, we agreed to accelerate the vesting of 270,000 shares of restricted stock and recorded $2.2 million of the related gross compensation costs in the quarter ending March 31, 2014. Out of the 270,000 shares, 135,000 shares would have otherwise vested on October 2, 2014 and 135,000 shares would have otherwise vested on October 2, 2016.





In June 2014, in connection with the issuance of the Convertible Notes discussed in Note 7, we repurchased 1.0 million shares of outstanding Class A common stock in privately negotiated transactions totaling $11.9 million . We recognized the total amount of the repurchased shares in Treasury Stock on our condensed consolidated balance sheet as of June 30, 2014.





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NOTE 9: REDEEMABLE NONCONTROLLING INTEREST

The following table provides a summary of the activities in our redeemable noncontrolling interests as of June 30, 2014 and 2013 : Redeemable Noncontrolling Interests (in thousands) Balance as of September 30, 2012 $ 53,681

Acquisition of redeemable noncontrolling interest 2,836

Sale of additional shares to parent (7,981 ) Net income attributable to redeemable noncontrolling interests 3,378

Contribution to maintain ownership percentage 6,135

Foreign currency translation adjustment attributable to noncontrolling interests (1,212 ) Balance as of June 30, 2013 $ 56,837

Balance as of September 30, 2013 $ 55,393

Sale of additional shares to parent (24,247 ) Net income attributable to redeemable noncontrolling interests 3,738

Foreign currency translation adjustment attributable to noncontrolling interests 1,903

Effective portion of cash flow hedge (142 ) Balance as of June 30, 2014 $ 36,645



On November 1, 2012, we acquired a 51% interest in TUYO (see Note 3 for details). On January 1, 2014, we acquired an additional 7.9% interest in TUYO for $1.1 million , increasing our ownership percentage to 58.9% .

On November 14, 2012, we acquired an additional 23% of the ordinary shares outstanding of Cash Genie, our U.K. online lending business, for $10.4 million , increasing our ownership percentage from 72% to 95% , with the remaining 5% held by local management. The consideration paid to the selling shareholder was paid in the form of 592,461 shares of EZCORP Class A Non-voting Common Stock. This transaction was treated as an equity transaction and not an adjustment to the purchase price of the initial controlling interest acquisition of Cash Genie. On August 1, 2013, we acquired the remaining ordinary shares that were held by local management for $0.6 million . As of August 1, 2013, we own 100% of Cash Genie's ordinary shares.

On June 30, 2014, we acquired an additional 16% of the ordinary shares outstanding of Grupo Finmart, our Mexico consumer loan provider, for $28.4 million , increasing our ownership percentage from 60% to 76% , with the remaining 24% held by minority shareholders. This transaction was treated as an equity transaction and not an adjustment to the purchase price of the initial controlling interest acquisition of Grupo Finmart.

NOTE 10: INCOME TAXES

Income tax expense is provided at the U.S. tax rate on financial statement earnings, adjusted for the difference between the U.S. tax rate and the rate of tax in effect for non-U.S. earnings deemed to be permanently reinvested in our non-U.S. operations. Deferred income taxes have not been provided for the potential remittance of non-U.S. undistributed earnings to the extent those earnings are deemed to be permanently reinvested, or to the extent such recognition would result in a deferred tax asset.





The current quarter’s effective tax provision rate from continuing operations is 26.1% of pretax income compared to 35.4% for the prior year quarter. For the current nine-month period, the effective tax provision rate from continuing operations is 29.4% compared to 32.6% in the prior year nine-month period. The effective tax rate for the three month period ended June 30, 2014 was lower primarily due to the increase in foreign operations in lower tax jurisdictions . The effective tax rate for the nine-month period ended June 30, 2014 was lower primarily due to the continued diversification of our operations worldwide.





The current quarter's effective tax provision rate from discontinued operations is 14.7% compared to the tax benefit rate of 15.8% for the prior year quarter. For the current nine-month period, the effective tax provision rate from discontinued operations is 14.4% compared to the tax benefit rate of 15.1% in the prior year nine-month period.





23

For the nine months ended June 30, 2014, approximately 66% of the pre-tax income from discontinued operations was from our Canada operations, which has a net operating loss carryforward, against which we have provided a valuation allowance. In addition, Mexico accounted for approximately 25% of the pre-tax income from discontinued operations. Our effective tax rate in Mexico is lower than the effective tax rate for our U.S. operations. The U.S. pre-tax income represented a significantly smaller percentage of discontinued operations than continuing operations. That, combined with a net operating loss in Canada and a lower effective tax rate in Mexico, resulted in a materially different tax rate for discontinued operations compared to continuing operations.

NOTE 11: CONTINGENCIES

We are involved in various claims, suits, investigations and legal proceedings. While we cannot determine the ultimate outcome of any of these matters, we believe their resolution will not have a material adverse effect on our financial condition, results of operations or liquidity. However, we cannot give any assurance as to their ultimate outcome.

On July 28, 2014, a stockholder filed a derivative action in the Chancery Court of the State of Delaware styled Treppel v. Cohen, et. al. (C.A. No. 9962-VCP) . The lawsuit names as defendants Phillip E. Cohen, the beneficial owner of all of our outstanding Class B Voting Common Stock; several current and former members of our Board of Directors (Joseph J. Beal, Sterling B. Brinkley, John Farrell, Pablo Lagos Espinosa, William C. Love, Thomas C. Roberts and Paul E. Rothamel); three entities controlled by Mr. Cohen (MS Pawn Limited Partnership, the record holder of our Class B Voting Common Stock; MS Pawn Corporation, the general partner of MS Pawn Limited Partnership; and Madison Park LLC); and EZCORP, Inc., as nominal defendant. The plaintiff asserts the following claims:

• Claims against the current and former Board members for breach of fiduciary duties and waste of corporate assets in connection with the Board’s decision to enter into advisory services agreements with Madison Park LLC (see “Part III — Item 13 — Certain Relationships and Related Transactions, and Director Independence — Related Party Transactions — Agreement with Madison Park” in our Annual Report on Form 10-K for the year ended September 30, 2013);

• Claims against Mr. Cohen and MS Pawn Limited Partnership for aiding and abetting the breaches of fiduciary duties relating to the advisory services agreements with Madison Park; and

• Claims against Mr. Cohen and Madison Park for unjust enrichment for payments under the advisory services agreements.

The plaintiff seeks (a) a recovery for the Company in the amount of the damages the Company has sustained as a result of the alleged breach of fiduciary duties, waste of corporate assets and aiding and abetting, (b) disgorgement by Mr. Cohen and Madison Park of the benefits they received as a result of the related party transactions and (c) reimbursement of costs and expenses, including reasonable attorney’s fees. We and the other defendants intend to defend this lawsuit vigorously. A liability has not been recorded related to this lawsuit as of June 30, 2014 because it is not probable that a loss has been incurred and the amount of the loss cannot be reasonably estimated.

NOTE 12: OPERATING SEGMENT INFORMATION

Segment information is prepared on the same basis that our management reviews financial information for operational decision-making purposes.

We currently report our segments as follows:

• U.S. & Canada — All business activities in the United States and Canada

• Latin America — All business activities in Mexico and other parts of Latin America

• Other International — All business activities in the rest of the world (currently consisting of Cash Genie online lending business in the United Kingdom and our equity interests in the results of operations of Albemarle & Bond and Cash Converters International)

There are no inter-segment revenues, and the amounts below were determined in accordance with the same accounting principles used in our consolidated financial statements. The following tables present operating segment information for the three and nine-month periods ending June 30, 2014 and 2013, including reclassifications discussed in Note 1 "Organization and Summary of Significant Accounting Policies."

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Three Months Ended June 30, 2014 U.S. & Canada Latin America Other International Total Segments Corporate Items Consolidated (in thousands) Revenues: Merchandise sales $ 74,674

$ 14,496

$ —

$ 89,170

$ —

$ 89,170

Jewelry scrapping sales 18,909

1,364

—

20,273

—

20,273

Pawn service charges 51,894

8,023

—

59,917

—

59,917

Consumer loan fees and interest 41,749

14,839

4,556

61,144

—

61,144

Consumer loan sales and other 531

10,333

12

10,876

—

10,876

Total revenues 187,757

49,055

4,568

241,380

—

241,380

Merchandise cost of goods sold 45,927

9,824

—

55,751

—

55,751

Jewelry scrapping cost of goods sold 13,894

1,237

—

15,131

—

15,131

Consumer loan bad debt 12,894

1,361

2,991

17,246

—

17,246

Net revenues 115,042

36,633

1,577

153,252

—

153,252

Operating expenses (income): Operations 84,553

22,112

2,910

109,575

—

109,575

Administrative —

—

—

—

14,467

14,467

Depreciation 4,305

1,502

80

5,887

1,664

7,551

Amortization 414

329

4

747

893

1,640

Loss (gain) on sale or disposal of assets 129

11

(160 ) (20 ) (6 ) (26 ) Interest expense (income), net —

4,234

(2 ) 4,232

1,841

6,073

Equity in net income of unconsolidated affiliates —

—

(2,117 ) (2,117 ) —

(2,117 ) Other income (7 ) (167 ) —

(174 ) (196 ) (370 ) Segment contribution $ 25,648

$ 8,612

$ 862

$ 35,122









Income (loss) from continuing operations before income taxes $ 35,122

$ (18,663 ) $ 16,459



25

Three Months Ended June 30, 2013 U.S. & Canada Latin America Other International Total Segments Corporate Items Consolidated (in thousands) Revenues: Merchandise sales $ 71,464

$ 15,112

$ —

$ 86,576

$ —

$ 86,576

Jewelry scrapping sales 26,288

—

—

26,288

—

26,288

Pawn service charges 52,505

7,892

—

60,397

—

60,397

Consumer loan fees and interest 40,279

12,864

6,091

59,234

—

59,234

Consumer loan sales and other 1,058

1,034

579

2,671

—

2,671

Total revenues 191,594

36,902

6,670

235,166

—

235,166

Merchandise cost of goods sold 41,795

9,255

—

51,050

—

51,050

Jewelry scrapping cost of goods sold 20,285

92

—

20,377

—

20,377

Consumer loan bad debt expense 9,994

685

1,839

12,518

—

12,518

Net revenues 119,520

26,870

4,831

151,221

—

151,221

Operating expenses (income): Operations 84,194

16,513

3,523

104,230

—

104,230

Administrative —

—

—

—

12,644

12,644

Depreciation 4,184

1,420

93

5,697

1,680

7,377

Amortization 721

434

25

1,180

411

1,591

Loss on sale or disposal of assets 174

4

—

178

—

178

Interest (income) expense, net (25 ) 2,790

—

2,765

872

3,637

Equity in net income of unconsolidated affiliates —

—

(4,328 ) (4,328 ) —

(4,328 ) Other expense —

57

—

57

39

96

Segment contribution $ 30,272

$ 5,652

$ 5,518

$ 41,442









Income (loss) from continuing operations before income taxes $ 41,442

$ (15,646 ) $ 25,796







26

Nine Months Ended June 30, 2014 U.S. & Canada Latin America Other International Total Segments Corporate Items Consolidated (in thousands) Revenues: Merchandise sales $ 253,501

$ 44,710

$ —

$ 298,211

$ —

$ 298,211

Jewelry scrapping sales 69,531

4,638

—

74,169

—

74,169

Pawn service charges 161,117

22,095

—

183,212

—

183,212

Consumer loan fees and interest 136,108

43,460

12,690

192,258

—

192,258

Consumer loan sales and other 2,025

20,520

42

22,587

—

22,587

Total revenues 622,282

135,423

12,732

770,437

—

770,437

Merchandise cost of goods sold 153,864

29,332

—

183,196

—

183,196

Jewelry scrapping cost of goods sold 51,257

4,005

—

55,262

—

55,262

Consumer loan bad debt 37,571

3,206

5,323

46,100

—

46,100

Net revenues 379,590

98,880

7,409

485,879

—

485,879

Operating expenses (income): Operations 261,161

58,580

10,667

330,408

—

330,408

Administrative —

—

—

—

50,244

50,244

Depreciation 12,867

4,411

288

17,566

4,990

22,556

Amortization 1,723

1,553

55

3,331

2,224

5,555

(Gain) loss on sale or disposal of assets (6,630 ) 15

(1 ) (6,616 ) 642

(5,974 ) Interest (income) expense, net (11 ) 11,628

(4 ) 11,613

4,067

15,680

Equity in net income of unconsolidated affiliates —

—

(3,880 ) (3,880 ) —

(3,880 ) Impairment of investments —

—

7,940

7,940

—

7,940

Other (income) expense (7 ) (208 ) 346

131

655

786

Segment contribution (loss) $ 110,487

$ 22,901

$ (8,002 ) $ 125,386









Income (loss) from continuing operations before income taxes $ 125,386

$ (62,822 ) $ 62,564



27

Nine Months Ended June 30, 2013 U.S. & Canada Latin America Other International Total Segments Corporate Items Consolidated (in thousands) Revenues: Merchandise sales $ 237,577

$ 43,685

$ —

$ 281,262

$ —

$ 281,262

Jewelry scrapping sales 108,777

4,802

—

113,579

—

113,579

Pawn service charges 165,202

22,610

—

187,812

—

187,812

Consumer loan fees and interest 126,873

36,583

19,663

183,119

—

183,119

Consumer loan sales and other 5,469

2,880

1,820

10,169

—

10,169

Total revenues 643,898

110,560

21,483

775,941

—

775,941

Merchandise cost of goods sold 138,936

25,775

—

164,711

—

164,711

Jewelry scrapping cost of goods sold 76,922

4,071

—

80,993

—

80,993

Consumer loan bad debt expense (benefit) 27,363

(1,024 ) 8,157

34,496

—

34,496

Net revenues 400,677

81,738
