10-Q 1 ezpw-12312012x10q.htm 10-Q EZPW-12/31/2012-10Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
 
 
 
 
FORM 10-Q
 
 
 
 
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXHANGE ACT OF 1934
For the quarterly period ended December 31, 2012
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 December 31, 2012, 51,196,870 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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




ITEM 1. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (UNAUDITED)

EZCORP, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
 
December 31,
2012
 
December 31,
2011
 
September 30,
2012
 
(in thousands)
 
 
 
 
 
 
Assets:
 
 
 
 
 
Current assets:
 
 
 
 
 
Cash and cash equivalents
$
46,668

 
$
22,988

 
$
48,477

Restricted cash
1,133

 

 
1,145

Pawn loans
162,095

 
150,060

 
157,648

Consumer loans, net
40,599

 
16,188

 
34,152

Pawn service charges receivable, net
31,077

 
28,593

 
29,401

Consumer loan fees receivable, net
34,074

 
7,611

 
30,416

Inventory, net
120,326

 
100,385

 
109,214

Deferred tax asset
15,716

 
18,169

 
14,984

Income tax receivable

 

 
10,511

Prepaid expenses and other assets
50,394

 
38,901

 
45,451

Total current assets
502,082

 
382,895

 
481,399

Investments in unconsolidated affiliates
144,232

 
117,820

 
126,066

Property and equipment, net
114,676

 
84,513

 
108,131

Restricted cash, non-current
1,994

 

 
4,337

Goodwill
428,011

 
212,263

 
374,663

Intangible assets, net
60,662

 
20,568

 
45,185

Non-current consumer loans, net
66,615

 

 
61,997

Other assets, net
19,074

 
7,781

 
16,229

Total assets (1)
$
1,337,346

 
$
825,840

 
$
1,218,007

Liabilities and stockholders’ equity:
 
 
 
 
 
Current liabilities:
 
 
 
 
 
Current maturities of long-term debt
$
27,562

 
$

 
$
21,085

Current capital lease obligations
533

 

 
594

Accounts payable and other accrued expenses
70,719

 
53,087

 
64,104

Other current liabilities
24,396

 
4,325

 
14,821

Customer layaway deposits
6,254

 
6,152

 
7,238

Income taxes payable
659

 
12,672

 

Total current liabilities
130,123

 
76,236

 
107,842

Long-term debt, less current maturities
207,978

 
40,500

 
198,836

Long-term capital lease obligations
771

 

 
995

Deferred tax liability
10,815

 
8,724

 
7,922

Deferred gains and other long-term liabilities
26,227

 
1,997

 
13,903

Total liabilities (2)
375,914

 
127,457

 
329,498

Commitments and contingencies


 


 


Temporary equity:
 
 
 
 
 
Redeemable noncontrolling interest
49,323

 

 
53,681

Stockholders’ equity:
 
 
 
 
 
Class A Non-voting Common Stock, par value $.01 per share; authorized 54 million shares; issued and outstanding: 51,196,870 and 47,409,234 at December 31, 2012 and 2011; and 48,255,536 at September 30, 2012
508

 
474

 
482

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
313,068

 
243,919

 
268,626

Retained earnings
596,520

 
461,447

 
565,803

Accumulated other comprehensive income (loss)
1,983

 
(7,487
)
 
(113
)
EZCORP, Inc. stockholders’ equity
912,109

 
698,383

 
834,828

Total liabilities and stockholders’ equity
$
1,337,346

 
$
825,840

 
$
1,218,007

Assets and Liabilities of Crediamigo Securitization Trust
(1) Our consolidated assets as of December 31, 2012 and September 30, 2012, include the following assets of the Crediamigo securitization trust that can only be used to settle its liabilities: Restricted cash, $2.0 million and $4.3 million; Consumer loans, net, $35.1 million and $33.6 million; Consumer loan fees receivable, net, $8.5 million and $7.7 million; Intangible assets, net $3.1 million and $2.6 million and total assets, $48.7 million and $48.2 million respectively.
(2) Our consolidated liabilities as of December 31, 2012 and September 30, 2012, include $32.3 million and $32.7 million of long-term debt for which the creditors of the Crediamigo securitization trust do not have recourse to EZCORP, Inc.
See accompanying notes to interim condensed consolidated financial statements.

1


EZCORP, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
Three Months Ended
December 31,
 
2012
 
2011
 
(in thousands, except per share amounts)
Revenues:
 
 
 
Merchandise sales
$
95,582

 
$
86,894

Jewelry scrapping sales
45,925

 
56,403

Pawn service charges
66,024

 
59,792

Consumer loan fees
64,765

 
45,088

Other revenues
4,830

 
696

Total revenues
277,126

 
248,873

Merchandise cost of goods sold
55,501

 
48,396

Jewelry scrapping cost of goods sold
32,199

 
35,424

Consumer loan bad debt
14,074

 
11,025

Net revenues
175,352

 
154,028

Operating expenses:
 
 
 
Operations
107,262

 
82,558

Administrative
13,671

 
11,654

Depreciation and amortization
7,652

 
5,255

(Gain) loss on sale or disposal of assets
29

 
(201
)
Total operating expenses
128,614

 
99,266

Operating income
46,738

 
54,762

Interest income
(178
)
 
(39
)
Interest expense
3,815

 
590

Equity in net income of unconsolidated affiliates
(5,038
)
 
(4,161
)
Other income
(501
)
 
(1,119
)
Income before income taxes
48,640

 
59,491

Income tax expense
16,485

 
20,139

Net income
32,155

 
39,352

Net income attributable to redeemable noncontrolling interest
1,438

 

Net income attributable to EZCORP, Inc.
$
30,717

 
$
39,352

 
 
 
 
Net income per common share:
 
 
 
Basic
$
0.59

 
$
0.78

Diluted
$
0.59

 
$
0.78

Weighted average shares outstanding:
 
 
 
Basic
52,049

 
50,355

Diluted
52,112

 
50,693

See accompanying notes to interim condensed consolidated financial statements.

2


CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 
Three Months Ended December 31,
 
2012
 
2011
 
(in thousands)
Net income
$
32,155

 
$
39,352

Other comprehensive income (loss):
 
 
 
Foreign currency translation gain (loss)
3,468

 
(8,768
)
Unrealized holding loss arising during period
(43
)
 
(559
)
Income tax benefit (provision)
(1,980
)
 
2,586

Other comprehensive income (loss), net of tax
1,445

 
(6,741
)
Comprehensive income
$
33,600

 
$
32,611

Attributable to redeemable noncontrolling interest:
 
 
 
Net income
1,438

 

Foreign currency translation loss
(651
)
 

Comprehensive income attributable to redeemable noncontrolling interest
787

 

Comprehensive income attributable to EZCORP, Inc.
$
32,813

 
$
32,611

See accompanying notes to interim condensed consolidated financial statements.


3


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
Three Months Ended December 31,
 
2012
 
2011
 
(in thousands)
Operating Activities:
 
 
 
Net income
$
32,155

 
$
39,352

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
7,652

 
5,255

Consumer loan loss provision
7,990

 
4,035

Deferred income taxes
2,214

 
257

(Gain) loss on sale or disposal of assets
29

 
(201
)
Stock compensation
925

 
1,513

Income from investments in unconsolidated affiliates
(5,038
)
 
(4,161
)
Changes in operating assets and liabilities, net of business acquisitions:
 
 
 
Service charges and fees receivable, net
(5,192
)
 
(2,392
)
Inventory, net
(11,908
)
 
(1,609
)
Prepaid expenses, other current assets, and other assets, net
(17,727
)
 
(8,187
)
Accounts payable and accrued expenses
9,323

 
(1,272
)
Customer layaway deposits
(1,077
)
 
(923
)
Deferred gains and other long-term liabilities
83

 
(116
)
Excess tax benefit from stock compensation
(346
)
 
(460
)
Income taxes receivable/payable
9,830

 
12,284

Dividends from unconsolidated affiliates
1,595

 
2,222

Net cash provided by operating activities
30,508

 
45,597

Investing Activities:
 
 
 
Loans made
(231,067
)
 
(182,757
)
Loans repaid
142,250

 
110,988

Recovery of pawn loan principal through sale of forfeited collateral
73,264

 
61,701

Additions to property and equipment
(8,906
)
 
(9,581
)
Acquisitions, net of cash acquired
(12,278
)
 
(49,279
)
Investments in unconsolidated affiliates
(11,018
)
 

Net cash used in investing activities
(47,755
)
 
(68,928
)
Financing Activities:
 
 
 
Excess tax benefit from stock compensation
346

 
460

Taxes paid related to net share settlement of equity awards
(3,431
)
 
(988
)
Change in restricted cash
2,298

 

Proceeds from revolving line of credit
80,125

 
116,500

Payments on revolving line of credit
(61,852
)
 
(93,500
)
Proceeds from bank borrowings
1,159

 

Payments on bank borrowings and capital lease obligations
(3,023
)
 

Net cash provided by in financing activities
15,622

 
22,472

Effect of exchange rate changes on cash and cash equivalents
(184
)
 
(122
)
Net decrease in cash and cash equivalents
(1,809
)
 
(981
)
Cash and cash equivalents at beginning of quarter
48,477

 
23,969

Cash and cash equivalents at end of quarter
$
46,668

 
$
22,988

Non-cash Investing and Financing Activities:
 
 
 
Pawn loans forfeited and transferred to inventory
$
69,370

 
$
66,068

Issuance of common stock due to acquisitions
$
38,647

 
$
1,122

Deferred consideration
$
24,000

 
$

Stock issued for additional investment in subsidiary
$
7,981

 
$

Accrued additions to property and equipment
$
2,100

 
$
367

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
 
Total
Stockholders’
Equity
 
Shares
 
Par Value
 
 
(in thousands)
Balances at September 30, 2011
50,199

 
$
501

 
$
242,398

 
$
422,095

 
$
(746
)
 
$
664,248

Stock compensation

 

 
1,513

 

 

 
1,513

Issuance of common stock due to acquisitions
38

 
2

 
536

 

 

 
538

Release of restricted stock
142

 
1

 

 

 

 
1

Excess tax benefit from stock compensation

 

 
460

 

 

 
460

Taxes paid related to net share settlement of equity awards

 

 
(988
)
 

 

 
(988
)
Unrealized loss on available-for-sale securities

 

 

 

 
(364
)
 
(364
)
Foreign currency translation adjustment

 

 

 

 
(6,377
)
 
(6,377
)
Net income attributable to EZCORP, Inc.

 

 

 
39,352

 

 
39,352

Balances at December 31, 2011
50,379

 
$
504

 
$
243,919

 
$
461,447

 
$
(7,487
)
 
$
698,383

 
 
 
 
 
 
 
 
 
 
 
 
Balances at September 30, 2012
51,226

 
$
512

 
$
268,626

 
$
565,803

 
$
(113
)
 
$
834,828

Stock compensation

 

 
925

 

 

 
925

Issuance of common stock due to acquisitions
1,965

 
20

 
38,627

 

 

 
38,647

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
384

 

 

 

 

 

Excess tax benefit from stock compensation

 

 
346

 

 

 
346

Taxes paid related to net share settlement of equity awards

 

 
(3,431
)
 

 

 
(3,431
)
Unrealized loss on available-for-sale securities

 

 

 

 
(28
)
 
(28
)
Foreign currency translation adjustment

 

 

 

 
2,039

 
2,039

Net income attributable to EZCORP, Inc.

 

 

 
30,717

 

 
30,717

Balances at December 31, 2012
54,167

 
$
538

 
$
313,068

 
$
596,520

 
$
1,983

 
$
912,109

See accompanying notes to interim condensed consolidated financial statements.


5


EZCORP, INC. AND SUBSIDIARIES
Notes to Interim Condensed Consolidated Financial Statements (Unaudited)
December 31, 2012

NOTE 1: ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. Our management has included all adjustments it considers necessary for a fair presentation. These adjustments are of a normal, recurring nature except for those related to acquired businesses (described in Note 2). The accompanying financial statements should be read with the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended September 30, 2012. The balance sheet at September 30, 2012 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 months ended December 31, 2012 (the “current quarter”) are not necessarily indicative of the results of operations for the full fiscal year. Certain prior period balances have been reclassified to conform to the current presentation.
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 December 31, 2012, we own 60% of the outstanding equity interests in Prestaciones Finmart, S.A. de C.V., SOFOM, E.N.R. (“Crediamigo”), 95% of Ariste Holding Limited and its affiliates ("Cash Genie"), and 51% of Renueva Comercial S.A. de C.V. ("TUYO"), and therefore, include their results in our consolidated financial statements. We account for our investments in Albemarle & Bond Holdings, PLC and Cash Converters International Limited 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, 2012.
Recently Issued Accounting Pronouncements
In October 2012, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2012-04, Technical Corrections and Improvements. This update clarifies the Codification or corrects unintended application of guidance and includes amendments identifying when the use of fair value should be linked to the definition of fair value in Topic 820, Fair Value Measurement. Amendments to the Codification without transition guidance are effective upon issuance for both public and nonpublic entities. For public entities, amendments subject to transition guidance will be effective for fiscal periods beginning after December 15, 2012. We do not anticipate that the adoption of ASU 2012-04 will have a material effect on our financial position, results of operations or cash flows.
In December 2011, the FASB issued ASU 2011-11, Disclosures about Offsetting Assets and Liabilities. This update, which amends FASB ASC 210 (Balance Sheet), requires entities to disclose information about offsetting and related arrangements and the effect of those arrangements on its financial position. The amendments in ASU 2011-11 enhance disclosures required by FASB ASC 210 by requiring improved information about financial instruments and derivative instruments that are either offset in accordance with FASB ASC 210-20-45 or 815-10-45 or are subject to an enforceable master netting arrangement or similar agreement. ASU 2011-11 is effective for interim and annual periods beginning on or after January 1, 2013. Disclosures are required retrospectively for all comparative periods presented. Currently, we do not enter into any right of offset arrangements and the adoption of ASU 2011-11 will not have a material effect on our financial position, results of operations or cash flows.
NOTE 2: ACQUISITIONS
Go Cash
On November 20, 2012, we entered into a definitive agreement with Go Cash, LLC and certain of its affiliates ("Go Cash") to acquire substantially all the assets of Go Cash's online lending business. This acquisition was completed on December 20, 2012 and accounted for as an asset purchase. No liabilities were assumed other than trade payables and accounts payables incurred prior to closing in the ordinary course of business, which were less than $0.1 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

6


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. A minimum of $50.7 million will be paid, of which $27.7 million was paid at closing, $11.0 million will be paid on November 10, 2013, $6.0 million will be paid on November 10, 2014, and $6.0 million will be paid on November 10, 2015. The performance consideration element will be based on the net income generated by the "Post-Closing Business Unit" (which will include all of EZCORP's online consumer lending business). Within a specified period after the end of each of each of the first four years following the closing, EZCORP 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 EZCORP's sole discretion, in cash or in the form of shares of EZCORP Class A Non-Voting Common Stock. The initial payment was made in the form of 1,400,198 shares of EZCORP Class A Non-Voting Common Stock.
The contingent consideration element of the purchase price, which is the amount in excess of the guaranteed $50.7 million, has not yet been valued as of December 31, 2012 and therefore has not been included in the purchase price allocation or the financial statements of EZCORP as of December 31, 2012.
TUYO
On November 1, 2012, we acquired a 51% interest in Renueva Comercial S.A. de C.V., a company headquartered in Mexico City and doing business under the name “TUYO.” TUYO owns and operates 20 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, on a combined basis.
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 months 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.

The fair value of the TUYO redeemable noncontrolling interest was estimated by applying an income and market approach. This fair value measurement is 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. We expect the recorded values related to the noncontrolling interest at December 31, 2012 to approximate fair value.
Other
The three month period ended December 31, 2012, includes the acquisition of 12 pawn locations in Arizona. Arizona is a new state of operation for EZCORP. As this acquisition was individually immaterial, we present its related information on a consolidated basis.
The following tables provide information related to the acquisitions of domestic and foreign retail and financial services locations during the three months ended December 31, 2012:

 
Three Months Ended December 31, 2012
 
Go Cash
 
Other Acquisitions
Number of asset purchase acquisitions
1

 

Number of stock purchase acquisitions

 
2

 
 
 
 
U.S. stores acquired

 
12

Foreign stores acquired

 
20

Total stores acquired

 
32




7


 
Three Months Ended December 31, 2012
 
Go Cash
 
Other Acquisitions
 
(in thousands)
Consideration:
 
 
 
Cash
$

 
$
15,318

Equity instruments
27,718

 
10,929

Deferred consideration
23,000

 
1,000

Fair value of total consideration transferred
50,718

 
27,247

Cash acquired

 
(3,040
)
Total purchase price
$
50,718

 
$
24,207

 
Three Months Ended December 31, 2012
 
Go Cash

Other Acquisitions
 
(in thousands)
Current assets:
 
 
 
Pawn loans
$

 
$
5,659

Consumer loans, net
129

 

Service charges and fees receivable, net
23

 
400

Inventory, net

 
2,496

Prepaid expenses and other assets
120

 
508

Total current assets
272

 
9,063

Property and equipment, net
863

 
1,064

Goodwill
37,359

 
17,127

Intangible assets
12,315

 
96

Other assets

 
313

Total assets
$
50,809

 
$
27,663

Current liabilities:
 
 
 
Accounts payable and other accrued expenses
$
91

 
$
517

Customer layaway deposits

 
103

Total current liabilities
91

 
620

Total liabilities
91

 
620

Redeemable noncontrolling interest

 
2,836

Net assets acquired
$
50,718

 
$
24,207

 
 
 
 
Goodwill deductible for tax purposes
$
37,359

 
$

 
 
 
 
Indefinite-lived intangible assets acquired:
 
 
 
Domain name
$
215

 
$

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

 
$
30

Internally developed software
$
12,100

 
$
66

(1) The weighted average useful life of definite-lived intangible assets acquired is five years.
All acquisitions were made as part of our continuing strategy to enhance and diversify our earnings. 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. The purchase price allocation of assets acquired in the most recent twelve month period is preliminary as we continue to receive information regarding the acquired assets. Transaction related expenses for the three month periods ended December 31, 2012 and 2011 of approximately $0.5 million and $0.4 million, respectively, were expensed as incurred and recorded as administrative expenses. 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

8


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.
Crediamigo
On January 30, 2012, we acquired a 60% interest in Crediamigo, a specialty consumer finance company, headquartered in Mexico City, with 45 loan servicing locations throughout the country, for total consideration of $60.1 million, net of cash acquired. This amount includes contingent consideration related to two earn out payments. If certain financial performance targets are achieved, during calendar years 2012 and 2013, we will make a payment to the sellers of $12.0 million dollars, each year, for a total amount of $24.0 million dollars. The Crediamigo purchase price allocation presented below includes a fair value amount of $23.0 million attributable to the contingent consideration payments.
Pursuant to the Master Transaction Agreement, the sellers have a put option with respect to their remaining shares of Crediamigo. 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 Crediamigo in temporary equity. The fair value of the Crediamigo redeemable noncontrolling interest was estimated by applying an income and market approach. This fair value measurement at acquisition was based on significant inputs that are not observable in the market and thus represents a Level 3 measurement. We expect the recorded values related to the noncontrolling interest at December 31, 2012 to approximate fair value.
Cash Genie
On April 14, 2012, we acquired a 72% interest in Ariste Holding Limited and its affiliates, which provides online loans in the U.K under the name "Cash Genie." As this acquisition was individually immaterial, we present its related information, other than information related to the redeemable noncontrolling interest, on a combined basis.
Pursuant to the acquisition agreement, the sellers have a put option with respect to their remaining shares of Cash Genie. The seller has the right to sell their Cash Genie shares to EZCORP during the exercise 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 Cash Genie in temporary equity.
On November 14, 2012, a seller exercised his option with respect to his remaining shares. This transaction was treated as an equity transaction and not an adjustment to the purchase price of the Company's initial controlling interest acquisition of Cash Genie. The details of the transaction are described further in Note 8. We expect the remaining recorded values related to the noncontrolling interest at December 31, 2012 to approximate fair value.
Other
In fiscal 2012, we acquired 50 locations in the U.S. and one in Canada. As these acquisitions, were individually immaterial, we present their related information on a combined basis.
The following tables provide information related to the acquisitions of domestic and foreign retail and financial services locations fiscal 2012:

9


 
Fiscal Year Ended September 30, 2012
 
Crediamigo

Other Acquisitions
 
(in thousands)
Current assets:
 
 
 
Pawn loans
$

 
$
6,781

Consumer loans, net
8,935

 
3,641

Service charges and fees receivable, net
18,844

 
1,940

Inventory, net

 
5,911

Deferred tax asset

 
238

Prepaid expenses and other assets
3,543

 
204

Total current assets
31,322

 
18,715

Property and equipment, net
2,326

 
4,061

Goodwill
99,486

 
99,747

Non-current consumer loans, net
56,120

 

Intangible assets
16,400

 
3,980

Other assets
7,497

 
294

Total assets
$
213,151

 
$
126,797

Current liabilities:
 
 
 
Accounts payable and other accrued expenses
$
6,853

 
$
5,496

Customer layaway deposits

 
808

Current maturities of long-term debt
22,810

 

Other current liabilities

 
257

Total current liabilities
29,663

 
6,561

Long-term debt, less current maturities
86,872

 

Deferred tax liability
171

 
113

Total liabilities
116,706

 
6,674

Redeemable noncontrolling interest
36,300

 
9,557

Net assets acquired
$
60,145

 
$
110,566

NOTE 3: EARNINGS PER SHARE
We compute basic earnings per share on the basis of the weighted average number of shares of common stock outstanding during the period. We compute diluted earnings per share on the basis of the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include outstanding stock options and restricted stock awards.

Potential common shares are required to be excluded from the computation of diluted earnings per share if the assumed proceeds upon exercise or vest, as defined by FASB ASC 718-10-25, are greater than the cost to re-acquire the same number of shares at the average market price, and therefore the effect would be anti-dilutive.
Components of basic and diluted earnings per share and excluded anti-dilutive potential common shares are as follows: 
 
Three Months Ended December 31,
 
2012
 
2011
 
(in thousands, except per share amounts)
Net income attributable to EZCORP (A)
$
30,717

 
$
39,352

Weighted average outstanding shares of common stock (B)
52,049

 
50,355

Dilutive effect of stock options and restricted stock
63

 
338

Weighted average common stock and common stock equivalents (C)
52,112

 
50,693

Basic earnings per share (A/B)
$
0.59

 
$
0.78

Diluted earnings per share (A/C)
$
0.59

 
$
0.78

Potential common shares excluded from the calculation of diluted earnings per share
39

 
10


10


NOTE 4: STRATEGIC INVESTMENTS
At December 31, 2012, we owned 16,644,640 ordinary shares of Albemarle & Bond Holdings, PLC ("Albermarle & Bond"), representing almost 30% of its total outstanding shares. Our total cost for those shares was approximately $27.6 million. Albemarle & Bond is primarily engaged in pawnbroking, retail jewelry sales, check cashing and lending in the United Kingdom. We account for the investment using the equity method. Since Albemarle & Bond’s fiscal year ends three months prior to ours, we report the income from this investment on a three-month lag. Albemarle & Bond files semi-annual financial reports for its fiscal periods ending December 31 and June 30. The income reported for our three months ended December 31, 2012 represents our percentage interest in the results of Albemarle & Bond’s operations from July 1, 2012 to September 30, 2012.
Conversion of Albemarle & Bond’s financial statements into U.S. GAAP resulted in no material differences from those reported by Albemarle & Bond following IFRS.
In its functional currency of British pounds, Albemarle & Bond’s total assets increased 14% from June 30, 2011 to June 30, 2012 and its net income improved 2% for the year ended June 30, 2012. The following table presents summary financial information for Albemarle & Bond’s most recently reported results after translation to U.S. dollars (using the exchange rate as of June 30 of each year for balance sheet items and average exchange rates for the income statement items for the periods indicated):
 
As of June 30,
 
2012
 
2011
 
(in thousands)
Current assets
$
141,880

 
$
125,862

Non-current assets
69,282

 
64,325

Total assets
$
211,162

 
$
190,187

Current liabilities
$
15,772

 
$
18,620

Non-current liabilities
70,016

 
57,016

Shareholders’ equity
125,374

 
114,551

Total liabilities and shareholders’ equity
$
211,162

 
$
190,187


 
Year ended June 30,
 
2012
 
2011
 
(in thousands)
Gross revenues
$
186,479

 
$
162,002

Gross profit
109,474

 
97,197

Profit for the year (net income)
24,835

 
24,324


At December 31, 2012, we owned 136,848,000 shares, or approximately 33% of Cash Converters International Limited ("Cash Converters International"), 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 three months ended December 31, 2012 and 2011 represents our percentage interest in the results of Cash Converters International’s operations from July 1, 2012 to September 30, 2012 and July 1, 2011 to September 30, 2011, 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.

11


In its functional currency of Australian dollars, Cash Converters International’s total assets increased 17% from June 30, 2011 to June 30, 2012 and its net income improved 6% for the year ended June 30, 2012. 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 June 30 of each year for balance sheet items and average exchange rates for the income statement items for the periods indicated):
 
As of June 30,
 
2012
 
2011
 
(in thousands)
Current assets
$
137,646

 
$
119,633

Non-current assets
129,274

 
117,301

Total assets
$
266,920

 
$
236,934

Current liabilities
$
45,392

 
$
38,105

Non-current liabilities
31,928

 
19,180

Shareholders’ equity
189,600

 
179,649

Total liabilities and shareholders’ equity
$
266,920

 
$
236,934

 
 
Year ended June 30,
 
2012
 
2011
 
(in thousands)
Gross revenues
$
241,924

 
$
184,315

Gross profit
162,598

 
126,628

Profit for the year (net income)
30,366

 
27,385


The table below summarizes the recorded value and fair value of each of these strategic investments at the dates indicated. These fair values are considered Level 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.
 
 
December 31,
 
September 30,
 
2012
 
2011
 
2012
 
(in thousands of U.S. dollars)
Albemarle & Bond:
 
 
 
 
 
Recorded value
$
54,559

 
$
49,616

 
$
51,812

Fair value
57,402

 
84,622

 
65,109

Cash Converters International:
 
 
 
 
 
Recorded value
$
89,673

 
$
68,204

 
$
74,254

Fair value
164,633

 
68,355

 
100,705


12


NOTE 5: GOODWILL AND OTHER INTANGIBLE ASSETS
The following table presents the balance of each major class of indefinite-lived intangible asset at the specified dates:
 
 
December 31,
 
September 30,
 
2012
 
2011
 
2012
 
(in thousands)
Pawn licenses
$
8,836

 
$
8,836

 
$
8,836

Trade name
9,822

 
4,870

 
9,845

Domain name
215

 

 

Goodwill
428,011

 
212,263

 
374,663

Total
$
446,884

 
$
225,969

 
$
393,344


The following tables present the changes in the carrying value of goodwill, by segment, over the periods presented:
 
 
U.S. &
Canada
 
Latin
America
 
Other
International
 
Consolidated
 
(in thousands)
Balances at September 30, 2012
$
224,306

 
$
110,401

 
$
39,956

 
$
374,663

Acquisitions
52,264

 
2,222

 

 
54,486

Effect of foreign currency translation changes

 
(1,138
)
 

 
(1,138
)
Balances at December 31, 2012
$
276,570

 
$
111,485

 
$
39,956

 
$
428,011


 
U.S. &
Canada
 
Latin
America
 
Other
International
 
Consolidated
 
(in thousands)
Balances at September 30, 2011
$
163,897

 
$
9,309

 
$

 
$
173,206

Acquisitions
39,430

 

 

 
39,430

Effect of foreign currency translation changes
(2
)
 
(371
)
 

 
(373
)
Balances at December 31, 2011
$
203,325

 
$
8,938

 
$

 
$
212,263


The following table presents the gross carrying amount and accumulated amortization for each major class of definite-lived intangible asset at the specified dates:
 
 
December 31,
 
September 30,
 
2012
 
2011
 
2012
 
Carrying
Amount
 
Accumulated
Amortization
 
Net Book
Value
 
Carrying
Amount
 
Accumulated
Amortization
 
Net Book
Value
 
Carrying
Amount
 
Accumulated
Amortization
 
Net Book
Value
 
(in thousands)
Real estate finders’ fees
$
1,563

 
$
(620
)
 
$
943

 
$
1,221

 
$
(500
)
 
$
721

 
$
1,457

 
$
(590
)
 
$
867

Non-compete agreements
4,513

 
(3,453
)
 
1,060

 
3,836

 
(2,574
)
 
1,262

 
4,504

 
(3,290
)
 
1,214

Favorable lease
1,159

 
(464
)
 
695

 
985

 
(353
)
 
632

 
1,159

 
(436
)
 
723

Franchise rights
1,603

 
(118
)
 
1,485

 
1,567

 
(49
)
 
1,518

 
1,625

 
(102
)
 
1,523

Deferred financing costs
10,628

 
(4,226
)
 
6,402

 
2,411

 
(413
)
 
1,998

 
10,584

 
(3,459
)
 
7,125

Contractual relationship
14,370

 
(1,451
)
 
12,919

 
450

 
(25
)
 
425

 
14,517

 
(1,075
)
 
13,442

Internally developed software
18,133

 
(127
)
 
18,006

 

 

 

 
1,344

 
(19
)
 
1,325

Other
322

 
(43
)
 
279

 
317

 
(11
)
 
306

 
321

 
(36
)
 
285

Total
$
52,291

 
$
(10,502
)
 
$
41,789

 
$
10,787

 
$
(3,925
)
 
$
6,862

 
$
35,511

 
$
(9,007
)
 
$
26,504



13


The amortization of most definite-lived intangible assets is recorded as amortization expense. The favorable lease asset and other intangibles are amortized to operations expense (rent expense) over the related lease terms. The deferred financing costs are amortized to interest expense over the life of the related debt instruments. The following table presents the amount and classification of amortization recognized as expense in each of the periods presented:
 
 
Three Months Ended December 31,
 
2012
 
2011
 
(in thousands)
Amortization expense
$
723

 
$
227

Operations expense
35

 
31

Interest expense
764

 
151

Total expense from the amortization of definite-lived intangible assets
$
1,522

 
$
409

The following table presents our estimate of amortization expense for definite-lived intangible assets:
 
Fiscal Years Ended September 30,
 
Amortization expense
 
Operations expense
 
Interest expense
 
 
(in thousands)
2013
 
$
3,886

 
$
102

 
$
2,230

2014
 
5,344

 
125

 
2,123

2015
 
5,063

 
113

 
1,011

2016
 
5,003

 
111

 
574

2017
 
4,914

 
111

 
464

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


14


NOTE 6: LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS
The following table presents our long-term debt instruments and balances under capital lease obligations outstanding at December 31, 2012 and 2011 and September 30, 2011:
 
 
December 31, 2012
 
December 31, 2011
 
September 30, 2012
 
Carrying
Amount
 
Debt Premium
 
Carrying
Amount
 
Carrying
Amount
Debt Premium
 
(in thousands)
 
Recourse to EZCORP:
 
 
 
 
 
 
 
 
Domestic line of credit up to $175,000 due 2015
$
142,600

 
$

 
$
40,500

 
$
130,000

$

Capital lease obligations
1,304

 

 

 
1,589


Non-recourse to EZCORP:
 
 
 
 
 
 
 
 
Unsecured, variable interest foreign currency line of credit
38

 

 

 


Secured foreign currency line of credit up to $3,800 due 2014
2,256

 
173

 

 
2,629

199

Secured foreign currency line of credit up to $19,000 due 2015
14,146

 

 

 
16,073


Secured foreign currency line of credit up to $23,000 due 2017
17,212

 

 

 
11,263


Consumer loans facility due 2017
32,338

 

 

 
32,679


10% unsecured notes due 2013
937

 

 

 
1,766


15% unsecured notes due 2013
13,844

 
1,052

 

 
14,262

1,334

16% unsecured notes due 2013

 

 

 
5,248

108

10% unsecured notes due 2014
2,257

 

 

 
963


11% unsecured notes due 2014
5,086

 

 

 


10% unsecured notes due 2015
314

 

 

 
427


15% secured notes due 2015
4,390

 
539

 

 
4,488

597

10% unsecured notes due 2016
122
 

 

 
123


Total long-term obligations
236,844
 
1,764

 
40,500

 
221,510

2,238

Less current portion
28,095
 
1,353

 

 
21,679

1,497

Total long-term and capital lease obligations
$
208,749

 
$
411

 
$
40,500

 
$
199,831

$
741


On May 10, 2011, we entered into a new senior secured credit agreement with a syndicate of five banks, replacing our previous credit agreement. Among other things, the new credit agreement provides for a four year $175 million revolving credit facility that we may, under the terms of the agreement, request to be increased to a total of $225 million. Upon entering the new credit agreement, we repaid and retired our $17.5 million outstanding debt. The new credit facility increases our available credit and provides greater flexibility to make investments and acquisitions both domestically and internationally.
Pursuant to the credit agreement, we may choose to pay interest to the lenders for outstanding borrowings at LIBOR plus 200 to 275 basis points or the bank's base rate plus 100 to 175 basis points, depending on our leverage ratio computed at the end of each calendar quarter. On the unused amount of the credit facility, we pay a commitment fee of 37.5 to 50 basis points depending on our leverage ratio calculated at the end of each quarter. Terms of the credit agreement require, among other things, that we meet certain financial covenants, restrict dividend payments and limit other and non-recourse debt. At December 31, 2012, we were in compliance with all covenants. We expect the recorded value of our debt to approximate its fair value, as it is all variable rate debt and carries no pre-payment penalty, and would be considered a Level 2 estimate within the fair value hierarchy.
Deferred financing costs related to our credit agreement are included in intangible assets, net on the balance sheet and are being amortized to interest expense over the term of the agreement.
On January 30, 2012, we acquired a 60% ownership interest in Crediamigo, a specialty consumer finance company headquartered in Mexico City. Non-recourse debt amounts in the table above represent Crediamigo’s third party debt. All lines of credit are guaranteed by the Crediamigo loan portfolio. Interest on lines of credit due 2014 and 2015 is charged at the Mexican Interbank Equilibrium ("TIIE") plus a margin varying from 6% to 9%. The line of credit due 2014 requires monthly payments of $0.1 million with remaining principal due at maturity. The line of credit due 2015 requires monthly payments of

15


$0.8 million with the remaining principal due at maturity. The 15% secured notes require monthly payments of $0.1 million with remaining principal due at maturity.
At acquisition, we performed a valuation to determine the fair value of Crediamigo's debt. As a result, we recorded a debt premium on Crediamigo’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. 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. We expect the recorded value of our debt to approximate its fair value and would be considered Level 3 estimates within the fair value hierarchy.
On July 10, 2012, Crediamigo 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 Crediamigo.The securitization agreement calls for a two-year revolving period in which the trust will use principal collections of the consumer loan portfolio to acquire additional collection rights up to $115.5 million in eligible loans from Crediamigo. Upon the termination of the revolving period, the collection received by the trust will be used to repay the debt. Crediamigo will continue to service the underlying loans in the trust.
Crediamigo is the primary beneficiary of the securitization trust because Crediamigo 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 December 31, 2012, borrowings under the securitization borrowing facility amounted to $32.3 million. Interest is charged at TIIE plus a 2.5% margin, or a total of 7.3% as of December 31, 2012, and required monthly payments of $0.9 million begin on July 2014. The debt issued by the trust will be paid solely from the collections of the consumer loans transferred to the trust, and therefore there is no recourse to Crediamigo or EZCORP.
NOTE 7: COMMON STOCK, OPTIONS AND STOCK COMPENSATION
Our net income includes the following compensation costs related to our stock compensation arrangements:
 
 
Three Months Ended December 31,
 
2012
 
2011
 
(in thousands)
Gross compensation costs
$
925

 
$
1,513

Income tax benefits
(299
)
 
(446
)
Net compensation expense
$
626

 
$
1,067

In the three months ended December 31, 2012 and 2011, no stock options were exercised.
NOTE 8: REDEEMABLE NONCONTROLLING INTEREST
The following table provides a summary of the activities in our redeemable noncontrolling interests as of December 31, 2012:
 
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
1,438

Foreign currency translation adjustment attributable to noncontrolling interests
(651
)
Balance as of December 31, 2012
$
49,323



16


On November 1, 2012, we acquired a 51% interest in Tuyo (See note 2 for details).
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 our initial controlling interest acquisition of Cash Genie.
NOTE 9: 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 the Company's 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 rate is 33.9% of pretax income compared to 33.9% for the prior year quarter. The effective tax rate for the three months ended December 31, 2011 was lowered by a one-time recognition of a tax benefit from state net operating losses. 
NOTE 10: CONTINGENCIES
Currently and from time to time, we are defendants in various legal and regulatory actions. While we cannot determine the ultimate outcome of these actions, we believe their resolution will not have a material adverse effect on our financial condition, results of operations or liquidity.
NOTE 11: OPERATING SEGMENT INFORMATION
Segment information is prepared on the same basis that our management reviews financial information for operational decision-making purposes. Previously, we reported segment information based primarily on product offerings. Beginning with the second quarter of fiscal 2012, we redefined our reportable operating segments based on geography as our company is increasingly being organized and managed along geographic lines, with product offerings and channels based on local custom and regulation. As a result, we concluded that segment reporting based on geography more closely aligns with our management organization and strategic direction. In connection with the new segment structure, we have changed the accountability for, and reporting of, certain items including administrative expenses, depreciation and amortization, interest and our equity in the net income of unconsolidated affiliates. When practical, these items are allocated to segments. Interest is also allocated to operating segments when debt is incurred at the local country level and is non-recourse to EZCORP. These items are now included in the segment’s measure of profit or loss (“segment contribution”). Expenses that cannot be allocated are included as corporate expenses. Concurrent with the change in reportable operating segments, we revised our prior period financial information to reflect comparable financial information for the new segment structure.
For periods ending after January 1, 2012, we report 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 consumer loans online in the U.K. and our equity interests in the net income of Albemarle & Bond and Cash Converters International)


17


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 months ending December 31, 2012 and 2011:

 
Three Months Ended December 31, 2012
  
U.S. &
Canada
 
Latin
America
 
Other
International
 
Consolidated
 
(in thousands)
Revenues:
 
 
 
 
 
 
 
Merchandise sales
$
80,465

 
$
15,117

 
$

 
$
95,582

Jewelry scrapping sales
42,142

 
3,783

 

 
45,925

Pawn service charges
58,210

 
7,814

 

 
66,024

Consumer loan fees
45,959

 
11,877

 
6,929

 
64,765

Other revenues
2,794

 
1,654

 
382

 
4,830

Total revenues
229,570

 
40,245

 
7,311

 
277,126

Merchandise cost of goods sold
46,732

 
8,769

 

 
55,501

Jewelry scrapping cost of goods sold
29,157

 
3,042

 

 
32,199

Consumer loan bad debt
11,481

 
(1,048
)
 
3,641

 
14,074

Net revenues
142,200

 
29,482

 
3,670

 
175,352

Segment expenses:
 
 
 
 
 
 
 
Operations
87,443

 
15,741

 
4,078

 
107,262

Depreciation and amortization
4,102

 
1,675

 
76

 
5,853

Loss on sale or disposal of assets
29

 

 

 
29

Interest expense
17

 
2,613

 

 
2,630

Equity in net income of unconsolidated affiliates

 

 
(5,038
)
 
(5,038
)
Other (income) expense
(4
)
 
20

 
(69
)
 
(53
)
Segment contribution
$
50,613

 
$
9,433

 
$
4,623

 
$
64,669

Corporate expenses:
 
 
 
 
 
 
 
Administrative
 
 
 
 
 
 
13,671

Depreciation and amortization
 
 
 
 
 
 
1,799

Interest, net
 
 
 
 
 
 
1,007

Other income
 
 
 
 
 
 
(448
)
Income before taxes
 
 
48,640

Income tax expense
 
 
 
 
 
 
16,485

Net income
 
 
 
 
 
 
32,155

Net income attributable to noncontrolling interest
 
 
 
 
 
 
1,438

Net income attributable to EZCORP
 
 
 
 
 
 
$
30,717


18


 
Three Months Ended December 31, 2011
  
U.S. &
Canada
 
Latin
America
 
Other
International
 
Consolidated
 
(in thousands)
Revenues:
 
 
 
 
 
 
 
Merchandise sales
$
76,552

 
$
10,342

 
$

 
$
86,894

Jewelry scrapping sales
52,866

 
3,537

 

 
56,403

Pawn service charges
54,370

 
5,422

 

 
59,792

Consumer loan fees
45,012

 

 
76

 
45,088

Other revenues
576

 
120

 

 
696

Total revenues
229,376

 
19,421

 
76

 
248,873

Merchandise cost of goods sold
43,451

 
4,945

 

 
48,396

Jewelry scrapping cost of goods sold
33,150

 
2,274

 

 
35,424

Consumer loan bad debt
10,890

 

 
135

 
11,025

Net revenues
141,885

 
12,202

 
(59
)
 
154,028

Segment expenses:
 
 
 
 
 
 
 
Operations
74,994

 
6,966

 
598

 
82,558

Depreciation and amortization
3,223

 
770

 
22

 
4,015

(Gain) on sale or disposal of assets
(200
)
 
(1
)
 

 
(201
)
Interest, net
4

 
(36
)
 

 
(32
)
Equity in net income of unconsolidated affiliates

 

 
(4,161
)
 
(4,161
)
Other (income) expense
(1,060
)
 
3

 
(64
)
 
(1,121
)
Segment contribution
$
64,924

 
$
4,500

 
$
3,546

 
$
72,970

Corporate expenses:
 
 
 
 
 
 
 
Administrative
 
 
 
 
 
 
11,654

Depreciation and amortization
 
 
 
 
 
 
1,240

Interest expense
 
 
 
 
 
 
583

Other expense
 
 
 
 
 
 
2

Income before taxes
 
 
59,491

Income tax expense
 
 
 
 
 
 
20,139

Net income
 
 
 
 
 
 
39,352

Net income attributable to noncontrolling interest
 
 
 
 
 
 

Net income attributable to EZCORP
 
 
 
 
 
 
$
39,352








19


The following table presents separately identified segment assets: 

 
U.S. &
Canada
 
Latin
America
 
Other
International
 
Consolidated
 
(in thousands)
Assets at December 31, 2012
 
 
 
 
 
 
 
Cash and cash equivalents
$
15,407

 
$
14,508

 
$
2,115

 
$
32,030

Restricted cash

 
1,133

 

 
1,133

Pawn loans
147,145

 
14,950

 

 
162,095

Consumer loans, net
21,546

 
80,858

 
4,810

 
107,214

Service charges and fees receivable, net
36,973

 
26,837

 
1,341

 
65,151

Inventory, net
103,042

 
17,284

 

 
120,326

Property and equipment, net
67,581

 
25,768

 
1,572

 
94,921

Restricted cash, non-current

 
1,994

 

 
1,994

Goodwill
276,570

 
111,485

 
39,956

 
428,011

Intangibles, net
35,522

 
20,820

 
2,921

 
59,263

Total separately identified recorded segment assets
$
703,786

 
$
315,637

 
$
52,715

 
$
1,072,138

Consumer loans outstanding from unaffiliated lenders
$
29,079

 
$

 
$

 
$
29,079

Assets at December 31, 2011
 
 
 
 
 
 
 
Cash and cash equivalents
$
13,004

 
$
4,696

 
$
183

 
$
17,883

Pawn loans
140,386

 
9,674

 

 
150,060

Consumer loans, net
16,102

 

 
86

 
16,188

Service charges and fees receivable, net
34,644

 
1,532

 
28

 
36,204

Inventory, net
91,264

 
9,121