NOTE 16: SUPPLEMENTAL CONSOLIDATED FINANCIAL INFORMATION AND DISCONTINUED OPERATIONS

Supplemental Consolidated Financial Information

The following table provides information on net amounts included in our consolidated balance sheets:



	September 30,
	2017			2016

	(in thousands)
Gross pawn service charges receivable	$	42,117		$	41,458
Allowance for uncollectible pawn service charges receivable	(10,569		)	(10,396		)
Pawn service charges receivable, net	$	31,548		$	31,062

Gross inventory	$	161,212		$	146,367
Inventory reserves	(6,801		)	(6,143		)
Inventory, net	$	154,411		$	140,224

Restricted cash	$	—		$	3,000
Consumer loans, net	2,615			2,111
Consumer loan fees and interest receivable, net	134			130
Guarantee asset	—			1,209
Accounts receivable	11,165			15,774
Income taxes receivable	2,804			2,533
Prepaid expenses and other	12,047			11,088
Prepaid expenses and other current assets	$	28,765		$	35,845

Other assets	$	3,124		$	2,658
Restricted cash	—			4,089
2019 Convertible Notes Hedges	6,591			37,692
Other assets	$	9,715		$	44,439

Trade accounts payable	$	13,064		$	21,953
Accrued payroll	4,860			4,638
Bonus accrual	9,010			17,946
Other payroll related expenses	3,922			3,485
Accrued interest	2,212			1,856
Accrued rent and property taxes	11,357			11,201
Deferred revenues	2,483			2,852
Other accrued expenses*	8,310			14,939
Income taxes payable	1,465			2,406
Unrecognized tax benefits	4,860			—
Guarantee liability	—			1,258
Restructuring reserve	—			1,751
Account payable, accrued expenses and other current liabilities	$	61,543		$	84,285

Unrecognized tax benefits, non-current	$	1,758		$	6,416
Other long-term liabilities	5,297			4,034
Other long-term liabilities	$	7,055		$	10,450


*	Includes provision for closed stores and accrued lease termination costs, exclusive of stores closed associated with restructuring actions, of $5.2 million as of September 30, 2016.

Discontinued Operations

Fiscal 2016

In September 2016 we completed the sale of all of our interests in Grupo Finmart to AlphaCredit. The information presented below includes the assets, liabilities, revenues and expenses of variable interest entities which were deconsolidated as a result of the sale of Grupo Finmart. As a result of the decision to sell the Grupo Finmart business, we classified Grupo Finmart as held for sale as of June 30, 2016 and recast all segment operations of Grupo Finmart as discontinued operations. As of the completion of the disposition, Grupo Finmart is no longer a subsidiary of EZCORP and neither Grupo Finmart nor AlphaCredit is considered to be a related party to EZCORP. See Note 5 for additional information regarding our continuing involvement with Grupo Finmart.

The following table presents the reconciliation of the major line items constituting "Loss from discontinued operations, net of tax" of Grupo Finmart and other operations discontinued prior to the adoption of ASU 2014-08 that are presented in the consolidated statements of operations, excluding immaterial amounts in fiscal 2017:



	Fiscal Year Ended September 30,
	2016			2015

	(in thousands)
Revenues	$	45,256		$	68,369
Consumer loan bad debt	(30,081		)	(26,446		)
Operations expense	(111,984		)	(32,664		)
Interest expense, net	(16,464		)	(24,487		)
Depreciation, amortization and other expenses	(12,732		)	(7,008		)
Gain on disposition	34,237			—
Loss from discontinued operations before income taxes of Grupo Finmart	(91,768		)	(22,236		)
Income tax benefit	12,896			7,508
Loss from discontinued operations, net of tax of operations discontinued prior to the adoption of ASU 2014-08	(560		)	(27,317		)
Loss from discontinued operations, net of tax	$	(79,432	)	$	(42,045	)

Loss from discontinued operations, net of tax of Grupo Finmart	$	(78,872	)	$	(14,728	)
Loss from discontinued operations, net of tax of Grupo Finmart attributable to noncontrolling interest	6,661			4,150
Loss from discontinued operations, net of tax of Grupo Finmart attributable to EZCORP, Inc.	$	(72,211	)	$	(10,578	)

There were immaterial cash flows from Grupo Finmart operating and investing activities for fiscal 2017. Cash flows from Grupo Finmart operating activities for fiscal 2016 and 2015 were $2.2 million and $11.1 million, respectively. Cash flows from Grupo Finmart investing activities for fiscal 2016 and 2015 were $42.7 million and $(41.1) million, respectively.

Fiscal 2015

During the fourth quarter of fiscal 2015, in the context of a transformational change in strategy following an intensive six-month review of all Company activities, we implemented a plan that included:


•	Exiting our USFS business and ceasing the employment of the employees related to that business; and


•	Streamlining our structure and operating model to improve overall efficiency and reduce costs, which includes additional store closures, consolidations and relocations; additional headcount reductions in the remaining business and in the corporate support center; termination of various real property leases; and write-down and write-offs of various assets no longer to be used in the business.

The following table summarizes the pre-tax charges pertaining to the above discontinued operations in fiscal 2015, in thousands:



Goodwill impairment	$	10,550
Long-lived assets impairment	1,685
Other (a)	21,045
Asset disposals	7,443
Lease termination costs	1,720
	$	42,443

(a)

Includes a $10.5 million one-time charge associated with the settlement of outstanding issues with the U.S. Consumer Financial Protection Bureau and a $4.0 million charge related to the resolution of regulatory compliance issues in our Cash Genie U.K online lending business, which was a part of fiscal 2014 discontinued operations, in addition to employee severance and accelerated amortization of prepaid expenses and other assets.

Total revenue included in “Loss from discontinued operations, net of tax” was $2.1 million and $124.7 million during fiscal 2016 and 2015, respectively, exclusive of Grupo Finmart revenue.

Valuation and Qualifying Accounts

The following table provides information on our valuation and qualifying accounts not disclosed elsewhere:



			Additions
Description	Balance at Beginning of Period		Charged to Expense		Charged to Revenue		Deductions			Balance at End of Period

	(in thousands)
Allowance for valuation of inventory:
Year Ended September 30, 2017	$	6,143	$	658	$	—	$	—		$	6,801
Year Ended September 30, 2016	7,090		—		—		947			6,143
Year Ended September 30, 2015	16,043		—		—		8,953			7,090
Allowance for uncollectible pawn service charges receivable:
Year Ended September 30, 2017	$	10,396	$	—	$	173	$	—		$	10,569
Year Ended September 30, 2016	9,025		—		1,371		—			10,396
Year Ended September 30, 2015	10,307		—		—		1,282			9,025
Allowance for uncollectible consumer loan fees and interest receivable:
Year Ended September 30, 2017	$	241	$	—	$	42	$	—		$	283
Year Ended September 30, 2016	12,045		—		—		11,804		*	241
Year Ended September 30, 2015	13,685		—		—		1,640			12,045
Allowance for valuation of deferred tax assets:
Year Ended September 30, 2017	$	21,078	$	—	$	—	$	3,218		$	17,860
Year Ended September 30, 2016	19,567		1,511		—		—			21,078
Year Ended September 30, 2015	14,721		4,846		—		—			19,567


*	Includes $9.2 million in allowance that was deconsolidated as a result of the disposition of Grupo Finmart as discussed above.