10-Q 1 ezpw-6302012x10q.htm
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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 June 30, 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 June 30, 2012, 48,223,698 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, I NC.
INDEX TO FORM 10-Q

PART I. FINANCIAL INFORMATION |
Item 1. Financial Statements and Supplementary Data (Unaudited) |
Condensed Consolidated Balance Sheets as of June 30, 2012, June 30, 2011 and September 30, 2011 (audited) | 1
Condensed Consolidated Statements of Operations for the Three Months and Nine Months Ended June 30, 2012 and 2011 | 2
Condensed Consolidated Statements of Comprehensive Income for the Three Months and Nine Months Ended June 30, 2012 and 2011 | 3
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended June 30, 2012 and 2011 | 4
Consolidated Statements of Stockholders’ Equity for the Nine Months Ended June 30, 2012 and 2011 | 5
Notes to Interim Condensed Consolidated Financial Statements | 6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | 40
Item 3. Quantitative and Qualitative Disclosures about Market Risk | 60
Item 4. Controls and Procedures | 62
PART II. OTHER INFORMATION |
Item 1. Legal Proceedings | 63
Item 1A. Risk Factors | 63
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 63
Item 6. Exhibits | 64
SIGNATURES | 65
EXHIBIT INDEX | 66

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I TEM 1. F INANCIAL S TATEMENTS AND S UPPLEMENTARY D ATA

Condensed Consolidated Balance Sheets
| June 30, 2012 |  | June 30, 2011 |  | September 30, 2011
| (Unaudited) |  | (Unaudited) |  |
| (In thousands)
Assets: |  |  |  |  |
Current assets: |  |  |  |  |
Cash and cash equivalents | $ | 50,774 |  |  | $ | 27,492 |  |  | $ | 23,969 |
Cash, restricted | 1,051 |  |  | — |  |  | — |
Pawn loans | 147,503 |  |  | 134,633 |  |  | 145,318 |
Consumer loans, net | 28,487 |  |  | 14,437 |  |  | 14,611 |
Pawn service charges receivable, net | 26,092 |  |  | 24,372 |  |  | 26,455 |
Consumer loan fees receivable, net | 25,729 |  |  | 6,884 |  |  | 6,775 |
Inventory, net | 94,421 |  |  | 79,031 |  |  | 90,373 |
Deferred tax asset | 18,226 |  |  | 16,150 |  |  | 18,125 |
Income tax receivable | 9,898 |  |  | 3,099 |  |  | — |
Prepaid expenses and other assets | 40,268 |  |  | 21,932 |  |  | 30,611 |
Total current assets | 442,449 |  |  | 328,030 |  |  | 356,237 |
Investments in unconsolidated affiliates | 125,309 |  |  | 114,777 |  |  | 120,319 |
Property and equipment, net | 100,196 |  |  | 75,049 |  |  | 78,498 |
Goodwill | 321,423 |  |  | 167,017 |  |  | 173,206 |
Intangible assets, net | 78,666 |  |  | 20,192 |  |  | 19,790 |
Non-current consumer loans, net | 50,587 |  |  | — |  |  | — |
Other assets, net | 19,443 |  |  | 8,556 |  |  | 8,400 |
Total assets | $ | 1,138,073 |  |  | $ | 713,621 |  |  | $ | 756,450 |
Liabilities and stockholders’ equity: |  |  |  |  |
Current liabilities: |  |  |  |  |
Current maturities of long-term debt | $ | 31,126 |  |  | $ | — |  |  | $ | — |
Current capital lease obligations | 395 |  |  | — |  |  | — |
Accounts payable and other accrued expenses | 70,696 |  |  | 53,242 |  |  | 57,400 |
Customer layaway deposits | 6,740 |  |  | 6,131 |  |  | 6,176 |
Income taxes payable | — |  |  | — |  |  | 693 |
Total current liabilities | 108,957 |  |  | 59,373 |  |  | 64,269 |
Long-term debt, less current maturities | 175,740 |  |  | 26,500 |  |  | 17,500 |
Long-term capital lease obligations | 764 |  |  | — |  |  | — |
Deferred tax liability | 7,788 |  |  | 1,237 |  |  | 8,331 |
Deferred gains and other long-term liabilities | 14,187 |  |  | 2,209 |  |  | 2,102 |
Total liabilities | 307,436 |  |  | 89,319 |  |  | 92,202 |
Commitments and contingencies |  |  |  |  |
Temporary equity: |  |  |  |  |
Redeemable noncontrolling interest | 44,864 |  |  | — |  |  | — |
Stockholders’ equity: |  |  |  |  |
Class A Non-voting Common Stock, par value $.01 per share; authorized 54 million shares; issued and outstanding: 48,223,698 at June 30, 2012; 46,971,535 at June 30, 2011; and 47,228,610 at September 30, 2011 | 482 |  |  | 469 |  |  | 471 |
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 | 266,653 |  |  | 233,056 |  |  | 242,398 |
Retained earnings | 527,231 |  |  | 385,730 |  |  | 422,095 |
Accumulated other comprehensive income (loss) | (8,623 | ) |  | 5,017 |  |  | (746 | )
EZCORP, Inc. stockholders’ equity | 785,773 |  |  | 624,302 |  |  | 664,248 |
Total liabilities and stockholders’ equity | $ | 1,138,073 |  |  | $ | 713,621 |  |  | $ | 756,450 |

See accompanying notes to interim condensed consolidated financial statements (unaudited).
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Condensed Consolidated Statements of Operations (Unaudited)
| Three Months Ended June 30, |  | Nine Months Ended June 30,
| 2012 |  | 2011 |  | 2012 |  | 2011
| (In thousands, except per share amounts)
Revenues: |  |  |  |  |  |  |
Sales | $ | 117,932 |  |  | $ | 115,345 |  |  | $ | 409,401 |  |  | $ | 363,658 |
Pawn service charges | 56,163 |  |  | 48,365 |  |  | 172,399 |  |  | 144,944 |
Consumer loan fees | 53,504 |  |  | 38,870 |  |  | 148,911 |  |  | 125,652 |
Other revenues | 1,365 |  |  | 572 |  |  | 3,404 |  |  | 978 |
Total revenues | 228,964 |  |  | 203,152 |  |  | 734,115 |  |  | 635,232 |
Cost of goods sold | 72,453 |  |  | 69,128 |  |  | 244,463 |  |  | 219,258 |
Consumer loan bad debt | 11,251 |  |  | 11,027 |  |  | 28,742 |  |  | 27,795 |
Net revenues | 145,260 |  |  | 122,997 |  |  | 460,910 |  |  | 388,179 |
Operating expenses: |  |  |  |  |  |  |
Operations | 75,709 |  |  | 66,753 |  |  | 227,479 |  |  | 197,302 |
Administrative | 22,697 |  |  | 14,379 |  |  | 63,761 |  |  | 56,250 |
Depreciation | 6,215 |  |  | 4,458 |  |  | 16,805 |  |  | 12,670 |
Amortization | 1,162 |  |  | 221 |  |  | 3,086 |  |  | 654 |
(Gain) loss on sale or disposal of assets | 312 |  |  | 169 |  |  | 138 |  |  | (2 | )
Total operating expenses | 106,095 |  |  | 85,980 |  |  | 311,269 |  |  | 266,874 |
Operating income | 39,165 |  |  | 37,017 |  |  | 149,641 |  |  | 121,305 |
Interest income | (133 | ) |  | (21 | ) |  | (486 | ) |  | (35 | )
Interest expense | 1,030 |  |  | 586 |  |  | 4,180 |  |  | 1,186 |
Equity in net income of unconsolidated affiliates | (4,197 | ) |  | (4,099 | ) |  | (12,935 | ) |  | (12,157 | )
Other | 160 |  |  | (103 | ) |  | (157 | ) |  | (160 | )
Income before income taxes | 42,305 |  |  | 40,654 |  |  | 159,039 |  |  | 132,471 |
Income tax expense | 12,594 |  |  | 14,127 |  |  | 52,603 |  |  | 46,677 |
Net income | 29,711 |  |  | 26,527 |  |  | 106,436 |  |  | 85,794 |
Net income attributable to redeemable noncontrolling interest | 1,188 |  |  | — |  |  | 1,300 |  |  | — |
Net income attributable to EZCORP, Inc. | $ | 28,523 |  |  | $ | 26,527 |  |  | $ | 105,136 |  |  | $ | 85,794 |
Net income per common share: |  |  |  |  |  |  |
Basic | $ | 0.56 |  |  | $ | 0.53 |  |  | $ | 2.07 |  |  | $ | 1.72 |
Diluted | $ | 0.56 |  |  | $ | 0.53 |  |  | $ | 2.06 |  |  | $ | 1.71 |
Weighted average shares outstanding: |  |  |  |  |  |  |
Basic | 51,162 |  |  | 49,926 |  |  | 50,769 |  |  | 49,849 |
Diluted | 51,340 |  |  | 50,385 |  |  | 51,042 |  |  | 50,292 |

See accompanying notes to interim condensed consolidated financial statements (unaudited).
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Condensed Consolidated Statements of Comprehensive Income (Unaudited)
| Three Months Ended June 30, |  | Nine Months Ended June 30,
| 2012 |  | 2011 |  | 2012 |  | 2011
| (In thousands) |  | (In thousands)
Net income | $ | 29,711 |  |  | $ | 26,527 |  |  | $ | 106,436 |  |  | $ | 85,794 |
Other comprehensive income (loss): |  |  |  |  |  |  |
Foreign currency translation gain (loss) | (8,513 | ) |  | 2,445 |  |  | (10,887 | ) |  | 15,333 |
Unrealized holding gains (loss) arising during period | (108 | ) |  | 748 |  |  | (846 | ) |  | 986 |
Income tax benefit (provision) | (948 | ) |  | (1,000 | ) |  | 1,563 |  |  | (4,927 | )
Other comprehensive income (loss), net of tax | (9,569 | ) |  | 2,193 |  |  | (10,170 | ) |  | 11,392 |
Comprehensive income | $ | 20,142 |  |  | $ | 28,720 |  |  | $ | 96,266 |  |  | $ | 97,186 |
Attributable to redeemable noncontrolling interest: |  |  |  |  |  |  |
Net income | 1,188 |  |  | — |  |  | 1,300 |  |  | — |
Foreign currency translation gain (loss) | (2,789 | ) |  | — |  |  | (2,293 | ) |  | — |
Comprehensive income (loss) | (1,601 | ) |  | — |  |  | (993 | ) |  | — |
Comprehensive income attributable to EZCORP, Inc. | $ | 21,743 |  |  | $ | 28,720 |  |  | $ | 97,259 |  |  | $ | 97,186 |

See accompanying notes to interim condensed consolidated financial statements (unaudited).
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Condensed Consolidated Statements of Cash Flows (Unaudited)
| Nine Months Ended June 30,
| 2012 |  | 2011
| (In thousands)
Operating Activities: |  |  |
Net income | $ | 106,436 |  |  | $ | 85,794 |
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |
Depreciation and amortization | 19,891 |  |  | 13,324 |
Consumer loan loss provision | 12,136 |  |  | 11,255 |
Deferred income taxes | (644 | ) |  | 8,571 |
(Gain) loss on sale or disposal of assets | 138 |  |  | (2 | )
Stock compensation | 5,191 |  |  | 11,536 |
Income from investments in unconsolidated affiliates | (12,935 | ) |  | (12,157 | )
Changes in operating assets and liabilities, net of business acquisitions: |  |  |
Service charges and fees receivable, net | 1,150 |  |  | (984 | )
Inventory, net | (874 | ) |  | (1,206 | )
Prepaid expenses, other current assets, and other assets, net | (4,845 | ) |  | (4,845 | )
Accounts payable and accrued expenses | (12,100 | ) |  | 3,068 |
Customer layaway deposits | (182 | ) |  | (162 | )
Deferred gains and other long-term liabilities | 722 |  |  | (275 | )
Excess tax benefit from stock compensation | (1,582 | ) |  | (3,166 | )
Income taxes receivable/payable | (8,370 | ) |  | (3,453 | )
Net cash provided by operating activities | 104,132 |  |  | 107,298 |
Investing Activities: |  |  |
Loans made | (571,683 | ) |  | (466,137 | )
Loans repaid | 382,854 |  |  | 297,016 |
Recovery of pawn loan principal through sale of forfeited collateral | 179,681 |  |  | 149,954 |
Additions to property and equipment | (33,193 | ) |  | (24,324 | )
Acquisitions, net of cash acquired | (125,249 | ) |  | (64,823 | )
Dividends from unconsolidated affiliates | 5,560 |  |  | 7,274 |
Net cash used in investing activities | (162,030 | ) |  | (101,040 | )
Financing Activities: |  |  |
Proceeds from exercise of stock options | 647 |  |  | 395 |
Excess tax benefit from stock compensation | 1,582 |  |  | 3,166 |
Debt issuance cost | — |  |  | (2,397 | )
Taxes paid related to net share settlement of equity awards | (1,153 | ) |  | (7,409 | )
Change in restricted cash | (1,085 | ) |  | — |
Proceeds from revolving line of credit | 594,809 |  |  | 70,000 |
Payments on revolving line of credit | (502,575 | ) |  | (43,500 | )
Proceeds from bank borrowings | 343 |  |  | — |
Payments on bank borrowings and capital lease obligations | (8,164 | ) |  | (25,004 | )
Net cash provided by (used) in financing activities | 84,404 |  |  | (4,749 | )
Effect of exchange rate changes on cash and cash equivalents | 299 |  |  | 129 |
Net increase in cash and cash equivalents | 26,805 |  |  | 1,638 |
Cash and cash equivalents at beginning of period | 23,969 |  |  | 25,854 |
Cash and cash equivalents at end of period | $ | 50,774 |  |  | $ | 27,492 |
Non-cash Investing and Financing Activities: |  |  |
Pawn loans forfeited and transferred to inventory | $ | 177,490 |  |  | $ | 152,415 |
Issuance of common stock due to acquisitions | $ | 17,984 |  |  | $ | — |
Contingent consideration | $ | 23,000 |  |  | $ | — |
Deferred consideration | $ | 916 |  |  | $ | — |

See accompanying notes to interim condensed consolidated financial statements (unaudited).
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Consolidated Statements of Stockholders’ Equity (Unaudited)
| Common Stock |  | Additional Paid In Capital |  | Retained Earnings |  | Accumulated Other Comprehensive Income |  | Total Shareholders’ Equity |  | Redeemable Noncontrolling Interest
| Shares |  | Par Value |
| (In thousands)
Balances at September 30, 2010 | 49,226 |  |  | $ | 493 |  |  | $ | 225,374 |  |  | $ | 299,936 |  |  | $ | (6,375 | ) |  | $ | 519,428 |  |  | — |
Stock compensation | — |  |  | — |  |  | 11,536 |  |  | — |  |  | — |  |  | 11,536 |  |  | — |
Stock options exercised | 41 |  |  | 1 |  |  | 394 |  |  | — |  |  | — |  |  | 395 |  |  | — |
Release of restricted stock | 675 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Excess tax benefit from stock compensation | — |  |  | 5 |  |  | 3,161 |  |  | — |  |  | — |  |  | 3,166 |  |  | — |
Taxes paid related to net share settlement of equity awards | — |  |  | — |  |  | (7,409 | ) |  | — |  |  | — |  |  | (7,409 | ) |  | — |
Unrealized gain on available-for-sale securities | — |  |  | — |  |  | — |  |  | — |  |  | 642 |  |  | 642 |  |  | — |
Foreign currency translation adjustment | — |  |  | — |  |  | — |  |  | — |  |  | 10,750 |  |  | 10,750 |  |  | — |
Net income attributable to EZCORP, Inc. | — |  |  | — |  |  | — |  |  | 85,794 |  |  | — |  |  | 85,794 |  |  | — |
Balances at June 30, 2011 | 49,942 |  |  | $ | 499 |  |  | $ | 233,056 |  |  | $ | 385,730 |  |  | $ | 5,017 |  |  | $ | 624,302 |  |  | $ | — |
Balances at September 30, 2011 | 50,199 |  |  | $ | 501 |  |  | $ | 242,398 |  |  | $ | 422,095 |  |  | $ | (746 | ) |  | $ | 664,248 |  |  | — |
Stock compensation | — |  |  | — |  |  | 5,191 |  |  | — |  |  | — |  |  | 5,191 |  |  | — |
Stock options exercised | 201 |  |  | 2 |  |  | 645 |  |  | — |  |  | — |  |  | 647 |  |  | — |
Issuance of common stock due to acquisitions | 635 |  |  | 7 |  |  | 17,992 |  |  | — |  |  | — |  |  | 17,999 |  |  | — |
Acquisition of redeemable noncontrolling interest | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 45,857 |
Release of restricted stock | 159 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Excess tax benefit from stock compensation | — |  |  | 2 |  |  | 1,580 |  |  | — |  |  | — |  |  | 1,582 |  |  | — |
Taxes paid related to net share settlement of equity awards | — |  |  | — |  |  | (1,153 | ) |  | — |  |  | — |  |  | (1,153 | ) |  | — |
Unrealized (loss) on available-for-sale securities | — |  |  | — |  |  | — |  |  | — |  |  | (550 | ) |  | (550 | ) |  | — |
Foreign currency translation adjustment | — |  |  | — |  |  | — |  |  | — |  |  | (7,327 | ) |  | (7,327 | ) |  | (2,293 | )
Net income attributable to EZCORP, Inc. | — |  |  | — |  |  | — |  |  | 105,136 |  |  | — |  |  | 105,136 |  |  | — |
Net income attributable to redeemable noncontrolling interest | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 1,300 |
Balances at June 30, 2012 | 51,194 |  |  | $ | 512 |  |  | $ | 266,653 |  |  | $ | 527,231 |  |  | $ | (8,623 | ) |  | $ | 785,773 |  |  | $ | 44,864 |

See accompanying notes to interim condensed consolidated financial statements (unaudited).
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EZCORP, I NC. AND S UBSIDIARIES
Notes to Interim Condensed Consolidated Financial Statements (Unaudited)
June 30, 2012
Note A: 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 of 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 B). The accompanying financial statements should be read with the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended September 30, 2011. The balance sheet at September 30, 2011 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-month periods ended June 30, 2012 (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. and its consolidated subsidiaries. All significant inter-company accounts and transactions have been eliminated in consolidation. We own 60% of the outstanding equity interests in Prestaciones Finmart, S.A.P.I. de C.V., SOFOM, E.N.R. (“Crediamigo”) and 72% of Ariste Holding Limited and its affiliates ("Cash Genie"), 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.
With the exception of the policies described in the section below, 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, 2011.
Consumer Loans
We provide a variety of short-term consumer loans including payday loans, installment loans and auto title loans, and in Texas only, fee-based credit services to customers seeking loans. In Mexico, Crediamigo enters into agreements with employers that permit it to market long-term consumer loans to employees. Payments are withheld by the employers through payroll deductions and remitted to Crediamigo. With the exception of the consolidation of Crediamigo, there have been no changes to our consumer loans policy.
Revenue Recognition
We recognize consumer loan fees related to loans we directly originate based on the percentage of consumer loans made that we believe to be collectible. We earn credit service fees when we assist customers in obtaining consumer loans from unaffiliated lenders, and we recognize the fee revenue ratably over the life of the related loans. We reserve the percentage of interest and credit service fees we expect not to collect. Accrued fees related to defaulted loans reduce fee revenue upon loan default and increase fee revenue upon collection.
Allowance for Losses and Bad Debt Expense
See note K “Allowance for Losses and Credit Quality of Financing Receivables” for a discussion of the Company’s allowance for losses and bad debt expense on consumer loans.
Derivative Instruments and Hedging Activities
We record all derivative instruments according to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 815-20-25, “Derivatives and Hedging – Recognition.” Accounting for changes in the fair value of derivatives is determined by the intended use of the derivative, whether it is designated as a hedge and whether the hedging relationship is effective in achieving offsetting changes for the risk being hedged. Derivatives designated to hedge the changes in the fair value of an asset, liability or firm commitment due to an identified risk in the hedged item, such as interest rate risk or foreign currency exchange rate risk are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a cash flow hedge. We may enter into derivative contracts that are intended to economically hedge certain of our risks, even though
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hedge accounting does not apply or we elect not to apply hedge accounting.
We acquire significant amounts of gold either through purchases or from forfeited pawn loan collateral and sell it to refiners. In our first fiscal quarter of 2012, we began using derivate financial instruments in order to manage our commodity price risk associated with the forecasted sales of gold scrap. From time to time, we purchase put options related to the future market price of gold, and simultaneously, we sell a call option for the same future period for a premium to offset the cost of the put. The combined put and call options, or collar, has the effect of providing us protection from the future downward gold price movement but also limits the extent we can participate in future upward price movement. These collars are not designated as hedges as they do not meet the hedge accounting requirements FASB ASC 851-20-25. The fair value of the derivative instruments is recognized in “Prepaid expenses and other assets” in the consolidated balance sheets and changes in fair value are recognized in “Other” in our consolidated statements of operations.
Reclassifications
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. For this reason, 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, Inc. 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.
In our second fiscal quarter of 2011, we reclassified fees from our Product Protection Plan and Jewelry VIP Program as well as layaway fees from “Other” revenue to “Sales,” as fees from these products are incidental to sales of merchandise. Prior year figures have been reclassified to conform to this presentation and margins have been recalculated accordingly throughout management’s discussion and analysis.
Recently Issued Accounting Pronouncements
In July 2012, the FASB issued Accounting Standards Updates ("ASU") 2012-02, Testing Indefinite-Lived Intangible Assets for Impairment. This update amends FASB ASC 350 (Intangibles – Goodwill and Other) by allowing entities to first assess qualitative factors to determine whether it is necessary to perform a quantitative impairment test. The amendments in this update are effective for annual and interim impairment tests performed for fiscal years beginning on or after September 15, 2012. We do not anticipate the adoption of ASU 2012-02 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 we do not anticipate that the adoption of ASU 2011-11 will have a material effect on our financial position, results of operations or cash flows.
In September 2011, the FASB issued ASU 2011-08, Testing Goodwill for Impairment. This update amends FASB ASC 350 (Intangibles – Goodwill and Other) by allowing entities to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. The amendments in this update are effective for annual and interim goodwill impairment tests performed for fiscal years beginning on or after December 15, 2011. We do not anticipate the adoption of ASU 2011-08 will have a material effect on our financial position, results of operations or cash flows.
Recently Adopted Accounting Pronouncements
In May 2011, the FASB issued ASU 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. Generally Accepted Accounting Principles (“GAAP”) and International Financial Reporting Standards (“IFRS”). This update amends FASB ASC 820 (Fair Value Measurement) by providing common principles and requirements for measuring fair value, as well as similar disclosure requirements between U.S. GAAP and IFRS. It changes certain fair value measurement principles, clarifies the application of existing fair value concepts, and expands disclosure requirements, particularly for Level 3 fair value measurements. ASU 2011-04 is effective for interim and annual periods beginning on or after
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December 15, 2011. We adopted ASU 2011-04 in our interim period beginning January 1, 2012 with no material effect on our financial position, results of operations or cash flows.
In December 2011, the FASB issued ASU 2011-12, Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in ASU 2011-05. This update supersedes certain content in ASU 2011-05 Presentation of Comprehensive Income that requires entities to present on the face of the financial statements reclassification adjustments for items that are reclassified from other comprehensive income to net income in the statements where the components of net income and the components of other comprehensive income are presented. This update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. All other requirements in ASU 2011-05, including the requirement to report comprehensive income in either a single continuous financial statement or in two separate but consecutive financial statements, were not affected by ASU 2011-12. This update is effective for fiscal years beginning on or after December 15, 2011. We early adopted this amended standard in our fiscal year beginning October 1, 2011 with no effect on our financial position, results of operations or cash flows.
In December 2010, the FASB issued ASU 2010-29, Disclosure of Supplementary Pro Forma Information for Business Combinations. The amendments in this update specify that, when presenting comparative financial statements, entities should disclose revenue and earnings of the combined entity as though the business combinations that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period. ASU 2010-29 also expands the supplemental pro forma disclosures to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. The amendments are effective prospectively for material (on an individual or an aggregate basis) business combinations entered into in fiscal years beginning on or after December 15, 2010. We adopted this amended standard on October 1, 2011, resulting in no effect on our financial position, operations or cash flows.
Note B: Acquisitions
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 purchase price above includes a fair value amount of $23.0 million attributable to the contingent consideration payments. This amount was calculated using a probability-weighted discounted cash flow approach, in which all outcomes were successful. 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.
Pursuant to the Master Transaction Agreement, the sellers have a put option with respect to their remaining shares of Crediamigo. Each seller has the right to sell their Crediamigo shares to EZCORP, Inc., during the exercise period commencing on the second anniversary of the acquisition closing date and ending on the fifth anniversary of the acquisition closing date, with no more than 50% of the seller’s shares being sold within a consecutive twelve -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 Crediamigo in temporary equity.
The fair value of the redeemable noncontrolling interest in Crediamigo was estimated by applying an income approach and a 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 ranging from 10% to 18%, representing discounts for lack of control and lack of marketability that market participants would consider when estimating the fair value of the noncontrolling interest. The fair market value of Crediamigo was determined using a multiple of future earnings.
The nine-month period ended June 30, 2012, includes $18.2 million in revenues and $1.9 million in income related to the Crediamigo acquisition. The purchase price allocation is preliminary as we continue to receive information regarding the acquired assets. We have recorded provisional amounts for certain assets and liabilities for which we have not yet received all information necessary to finalize our assessment.
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.
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Pursuant to the acquisition agreement, the seller has a put option with respect to his remaining shares of Cash Genie. The seller has the right to sell his Cash Genie shares to EZCORP, Inc, during the exercise period commencing on the second anniversary of the acquisition closing date and ending on the fourth anniversary of the acquisition closing date, with no more than 50% of the seller's shares being 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 Cash Genie in temporary equity.
The fair value of the Cash Genie 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 ranging from 10% to 18%, representing discounts for lack of control and lack of marketability that market participants would consider when estimating the fair value of the noncontrolling interest. The fair market value of Cash Genie was determined using a multiple of future earnings.
Other
The nine-month period ended June 30, 2012, includes the acquisition of 48 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 during the nine months ended June 30, 2012 and 2011:

| Nine Months Ended June 30,
| 2012 |  | 2011
| Crediamigo |  | Other Acquisitions |  |
Number of asset purchase acquisitions | 0 |  | 6 |  | 7
Number of stock purchase acquisitions | 1 |  | 4 |  | 3
U.S. stores acquired | 0 |  | 48 |  | 32
Foreign stores acquired | 45 |  | 1 |  | 0
Total stores acquired | 45 |  | 49 |  | 32

| Nine Months Ended June 30,
| 2012 |  | 2011
| (In thousands)
| Crediamigo |  | Other Acquisitions |  |
Consideration: |  |  |  |  |
Cash | $ | 45,001 |  |  | $ | 91,843 |  |  | $ | 65,844 |
Equity instruments | — |  |  | 17,984 |  |  | — |
Deferred consideration | 5,785 |  |  | — |  |  | — |
Contingent consideration | 23,000 |  |  | — |  |  | — |
Fair value of total consideration transferred | 73,786 |  |  | 109,827 |  |  | 65,844 |
Cash acquired | (13,641 | ) |  | (2,823 | ) |  | (1,051 | )
Total purchase price | $ | 60,145 |  |  | $ | 107,004 |  |  | $ | 64,793 |

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| Nine Months Ended June 30,
| (In thousands)
| 2012 |  | 2011
| Crediamigo |  | Other Acquisitions |  |
Current assets: |  |  |  |  |
Pawn loans, net | $ | — |  |  | $ | 6,351 |  |  | $ | 6,865 |
Consumer loans, net | 8,658 |  |  | 3,640 |  |  | 710 |
Service charges and fees receivable, net | 18,844 |  |  | 1,839 |  |  | 1,136 |
Inventory, net | — |  |  | 5,596 |  |  | 4,396 |
Deferred tax asset | — |  |  | 217 |  |  | 449 |
Prepaid expenses and other assets | 3,543 |  |  | 204 |  |  | 200 |
Total current assets | 31,045 |  |  | 17,847 |  |  | 13,756 |
Property and equipment, net | 2,326 |  |  | 3,965 |  |  | 861 |
Goodwill | 54,765 |  |  | 96,946 |  |  | 49,231 |
Non-current consumer loans, net | 52,228 |  |  | — |  |  | — |
Intangible assets | 57,900 |  |  | 3,960 |  |  | 2,367 |
Other assets | 16,833 |  |  | 291 |  |  | 82 |
Total assets | $ | 215,097 |  |  | $ | 123,009 |  |  | $ | 66,297 |
Current liabilities: |  |  |  |  |
Accounts payable and other accrued expenses | $ | 6,852 |  |  | $ | 5,335 |  |  | $ | 1,038 |
Customer layaway deposits | — |  |  | 764 |  |  | 167 |
Current maturities of long-term debt | 22,810 |  |  | — |  |  | 4 |
Other current liabilities | 1,010 |  |  | 257 |  |  | 22 |
Total current liabilities | 30,672 |  |  | 6,356 |  |  | 1,231 |
Deferred gains and other long-term liabilities | 937 |  |  | — |  |  | — |
Long-term debt, less current maturities | 86,872 |  |  | — |  |  | — |
Deferred tax liability | 171 |  |  | 92 |  |  | 273 |
Total liabilities | 118,652 |  |  | 6,448 |  |  | 1,504 |
Redeemable noncontrolling interest | 36,300 |  |  | 9,557 |  |  | — |
Net assets acquired | $ | 60,145 |  |  | $ | 107,004 |  |  | $ | 64,793 |
Goodwill deductible for tax purposes | $ | — |  |  | $ | 45,786 |  |  | $ | 26,935 |
Indefinite lived intangible assets acquired: |  |  |  |  |
Trade name | $ | 2,200 |  |  | $ | 2,706 |  |  | $ | — |
Definite lived intangible assets acquired: |  |  |  |  |
Favorable lease asset | $ | — |  |  | $ | 404 |  |  | $ | 111 |
Non-compete agreements | $ | 300 |  |  | $ | 400 |  |  | $ | 658 |
Contractual relationship | $ | 55,400 |  |  | $ | 450 |  |  | $ | — |
Franchise license rights | $ | — |  |  | $ | — |  |  | $ | 1,598 |

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 months is preliminary as we continue to receive information regarding the acquired assets. Transaction related expenses for the nine-month periods ended June 30, 2012 and 2011 of approximately $2.1 million and $0.8 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 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.
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The amounts above for the nine months ended June 30, 2012 include the acquisition of a decision science model for the underwriting of consumer loans, a contractual relationship with an income tax return preparer to facilitate refund anticipation loans, an online lending business in the U.K. and 15 financial services stores in Hawaii and Texas, from FS Management, 1 st Money Centers, Inc. and 1429 Funding, Inc., companies owned partially by Brent Turner, the former President of our eCommerce and Card Services division and a former executive officer, for total consideration of $3.0 million in cash and 387,924 shares of our Class A Non-Voting common stock. Mr. Turner received $2.0 million in cash and 167,811 shares of stock in connection with these acquisitions. The basic terms of the acquisitions were agreed prior to the commencement of Mr. Turner’s employment (and, thus, prior to Mr. Turner’s becoming an executive officer), subject to our completion of appropriate due diligence and the execution of appropriate definitive documentation. Even though the terms of the acquisitions were agreed to prior to Mr. Turner’s becoming an executive officer, we treated the transactions as related party transactions. Consequently, pursuant to our Policy for Review and Evaluation of Related Party Transactions, the Audit Committee reviewed and evaluated the terms of the acquisitions and concluded that the transactions were fair to, and in the best interest of the company and its stockholders.
Note C: 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 June 30, |  | Nine Months Ended June 30,
| 2012 |  | 2011 |  | 2012 |  | 2011
| (In thousands, except per share amounts)
Net income attributable to EZCORP, Inc. (A) | $ | 28,523 |  |  | $ | 26,527 |  |  | $ | 105,136 |  |  | $ | 85,794 |
Weighted average outstanding shares of common stock (B) | 51,162 |  |  | 49,926 |  |  | 50,769 |  |  | 49,849 |
Dilutive effect of stock options and restricted stock | 178 |  |  | 459 |  |  | 273 |  |  | 443 |
Weighted average common stock and common stock equivalents (C) | 51,340 |  |  | 50,385 |  |  | 51,042 |  |  | 50,292 |
Basic earnings per share (A/B) | $ | 0.56 |  |  | $ | 0.53 |  |  | $ | 2.07 |  |  | $ | 1.72 |
Diluted earnings per share (A/C) | $ | 0.56 |  |  | $ | 0.53 |  |  | $ | 2.06 |  |  | $ | 1.71 |
Potential common shares excluded from the calculation of diluted earnings per share | 117 |  |  | — |  |  | 36 |  |  | 6 |

Note D: Strategic Investments and Fair Value of Financial Instruments
At June 30, 2012, we owned 16,644,640 ordinary shares of Albemarle & Bond Holdings, PLC, 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 year-to-date period ended June 30, 2012 represents our percentage interest in the results of Albemarle & Bond’s operations from July 1, 2011 to March 31, 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.
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In its functional currency of British pounds, Albemarle & Bond’s total assets increased 12% from December 31, 2010 to December 31, 2011 and its net income for the six months ended December 31, 2011 improved 16%. Below is summarized financial information for Albemarle & Bond’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,
| 2011 |  | 2010
| (In thousands)
Current assets | $ | 134,387 |  |  | $ | 121,519 |
Non-current assets | 65,354 |  |  | 56,755 |
Total assets | $ | 199,741 |  |  | $ | 178,274 |
Current liabilities | $ | 21,021 |  |  | $ | 25,801 |
Non-current liabilities | 62,169 |  |  | 53,497 |
Shareholders’ equity | 116,551 |  |  | 98,976 |
Total liabilities and shareholders’ equity | $ | 199,741 |  |  | $ | 178,274 |

| Six Months Ended December 31,
| 2011 |  | 2010
| (In thousands)
Gross revenues | $ | 99,804 |  |  | $ | 76,424 |
Gross profit | 58,165 |  |  | 46,745 |
Profit for the year (net income) | 14,208 |  |  | 12,088 |

At June 30, 2012, we owned 124,418,000 shares, or approximately 33% of the total ordinary shares of Cash Converters International Limited, which is a publicly traded company headquartered in Perth, Australia. We acquired the shares between November 2009 and May 2010 for approximately $57.8 million. Cash Converters franchises and operates a worldwide network of over 600 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. Cash Converters has significant store concentrations in Australia and the United Kingdom.
We account for our investment in Cash Converters using the equity method. Since Cash Converters’ fiscal year ends three months prior to ours, we report the income from this investment on a three-month lag. Cash Converters 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 year-to-date period ended June 30, 2012 represents our percentage interest in the results of Cash Converters’ operations from July 1, 2011 to March 31, 2012.
Conversion of Cash Converters’ financial statements into U.S. GAAP resulted in no material differences from those reported by Cash Converters following IFRS.
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In its functional currency of Australian dollars, Cash Converters’ total assets increased 17% from December 31, 2010 to December 31, 2011 and its net income decreased 7% for the six months ended December 31, 2011. Below is summarized financial information for Cash Converters’ 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,
| 2011 |  | 2010
| (In thousands)
Current assets | $ | 128,289 |  |  | $ | 104,408 |
Non-current assets | 121,835 |  |  | 109,336 |
Total assets | $ | 250,124 |  |  | $ | 213,744 |
Current liabilities | $ | 33,290 |  |  | $ | 30,844 |
Non-current liabilities | 37,797 |  |  | 11,970 |
Shareholders’ equity | 179,037 |  |  | 170,930 |
Total liabilities and shareholders’ equity | $ | 250,124 |  |  | $ | 213,744 |

| Six Months Ended December 31,
| 2011 |  | 2010
| (In thousands)
Gross revenues | $ | 115,256 |  |  | $ | 82,343 |
Gross profit | 76,405 |  |  | 57,038 |
Profit for the year (net income) | 13,668 |  |  | 13,528 |

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. We included no control premium for owning a large percentage of outstanding shares.

| June 30, |  | September 30,
| 2012 |  | 2011 |  | 2011
| (In thousands of U.S. dollars)
Albemarle & Bond: |  |  |  |  |
Recorded value | $ | 51,156 |  |  | $ | 46,457 |  |  | $ | 48,361 |
Fair value | 63,677 |  |  | 99,180 |  |  | 91,741 |
Cash Converters: |  |  |  |  |
Recorded value | $ | 74,153 |  |  | $ | 68,320 |  |  | $ | 71,958 |
Fair value | 80,894 |  |  | 94,911 |  |  | 53,600 |

In August 2011, legislation was proposed in Australia that would, among other things, limit the interest charged on certain consumer loans and prohibit loan extensions and refinancing. That legislation, as proposed, could have adversely affected, Cash Converters’ consumer loan business in Australia, which could have the effect of decreasing Cash Converters’ revenues and earnings. As of September 30, 2011, the fair value of our investment in Cash Converters (based on the market price of Cash Converters’ stock as of that date) was below our recorded value. In light of Cash Converters’ statements at that time regarding its ability to mitigate the potential impact of the proposed legislation, we considered this loss in value to be temporary. The Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 was passed by the Australian House of Representatives in June 2012. The Bill incorporates amendments that increase permitted fees and charges for microlending. The Bill is expected to be approved by the Australian Senate in September and to go into effect on July 1, 2013. As of June 30, 2012, the fair value of our investment in Cash Converters was above our recorded value, further supporting our assessment of the loss in value of its stock to be temporary.
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Note E: Goodwill and Other Intangible Assets
The following table presents the balance of each major class of indefinite-lived intangible asset at the specified dates:

| June 30, |  | September 30,
| 2012 |  | 2011 |  | 2011
| (In thousands)
Pawn licenses | $ | 8,836 |  |  | $ | 8,836 |  |  | $ | 8,836 |
Trade name | 9,621 |  |  | 4,870 |  |  | 4,870 |
Goodwill | 321,423 |  |  | 167,017 |  |  | 173,206 |
Total | $ | 339,880 |  |  | $ | 180,723 |  |  | $ | 186,912 |

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)
Balance at September 30, 2011 | $ | 163,897 |  |  | $ | 9,309 |  |  | $ | — |  |  | $ | 173,206 |
Acquisitions | 57,653 |  |  | 54,765 |  |  | 39,293 |  |  | 151,711 |
Effect of foreign currency translation changes | (1 | ) |  | (2,752 | ) |  | (741 | ) |  | (3,494 | )
Balance at June 30, 2012 | $ | 221,549 |  |  | $ | 61,322 |  |  | $ | 38,552 |  |  | $ | 321,423 |

| U.S. & Canada |  | Latin America |  | Other International |  | Consolidated
| (In thousands)
Balance at September 30, 2010 | $ | 110,255 |  |  | $ | 7,050 |  |  | $ | — |  |  | $ | 117,305 |
Acquisitions | 49,317 |  |  | — |  |  | — |  |  | 49,317 |
Effect of foreign currency translation changes | — |  |  | 395 |  |  | — |  |  | 395 |
Balance at June 30, 2011 | $ | 159,572 |  |  | $ | 7,445 |  |  | $ | — |  |  | $ | 167,017 |

The following table presents the gross carrying amount and accumulated amortization for each major class of definite-lived intangible asset at the specified dates:

| June 30, |  | September 30,
| 2012 |  | 2011 |  | 2011
| 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 | $ | 1,373 |  |  | $ | (553 | ) |  | $ | 820 |  |  | $ | 1,147 |  |  | $ | (465 | ) |  | $ | 682 |  |  | $ | 1,157 |  |  | $ | (479 | ) |  | $ | 678 |
Non-compete agreements | 4,356 |  |  | (2,993 | ) |  | 1,363 |  |  | 3,837 |  |  | (2,472 | ) |  | 1,365 |  |  | 3,722 |  |  | (2,459 | ) |  | 1,263 |
Favorable lease | 1,159 |  |  | (409 | ) |  | 750 |  |  | 755 |  |  | (289 | ) |  | 466 |  |  | 755 |  |  | (322 | ) |  | 433 |
Franchise rights | 1,559 |  |  | (82 | ) |  | 1,477 |  |  | 1,636 |  |  | (17 | ) |  | 1,619 |  |  | 1,547 |  |  | (32 | ) |  | 1,515 |
Deferred financing costs | 7,512 |  |  | (2,945 | ) |  | 4,567 |  |  | 2,413 |  |  | (113 | ) |  | 2,300 |  |  | 2,411 |  |  | (262 | ) |  | 2,149 |
Contractual relationship | 53,226 |  |  | (2,299 | ) |  | 50,927 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Other | 333 |  |  | (28 | ) |  | 305 |  |  | 66 |  |  | (11 | ) |  | 55 |  |  | 58 |  |  | (12 | ) |  | 46 |
Total | $ | 69,518 |  |  | $ | (9,309 | ) |  | $ | 60,209 |  |  | $ | 9,854 |  |  | $ | (3,367 | ) |  | $ | 6,487 |  |  | $ | 9,650 |  |  | $ | (3,566 | ) |  | $ | 6,084 |

The amortization of most definite-lived intangible assets is recorded as amortization expense. The favorable lease asset and
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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 our credit agreement. The following table presents the amount and classification of amortization recognized as expense in each of the periods presented:

| Three Months Ended June 30, |  | Nine Months Ended June 30,
| 2012 |  | 2011 |  | 2012 |  | 2011
| (In thousands)
Amortization expense | $ | 1,162 |  |  | $ | 221 |  |  | $ | 3,086 |  |  | $ | 654 |
Operations expense | 49 |  |  | 28 |  |  | 103 |  |  | 76 |
Interest expense | 569 |  |  | 252 |  |  | 1,164 |  |  | 464 |
Total expense from the amortization of definite-lived intangible assets | $ | 1,780 |  |  | $ | 501 |  |  | $ | 4,353 |  |  | $ | 1,194 |

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)
2012 |  | $ | 2,321 |  |  | $ | 138 |  |  | $ | 1,017 |
2013 |  | 6,063 |  |  | 136 |  |  | 2,112 |
2014 |  | 5,825 |  |  | 125 |  |  | 1,383 |
2015 |  | 5,558 |  |  | 113 |  |  | 442 |
2016 |  | 5,500 |  |  | 111 |  |  | — |

As acquisitions and dispositions occur in the future, amortization expense may vary from these estimates.
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Note F: Long-term Debt
The table presents our long-term debt instruments and balances under capital lease obligations outstanding at June 30, 2012 and 2011 and September 30, 2011 (in thousands):

| June 30, 2012 |  | June 30, |  | September 30,
| Carrying Amount |  | Debt Premium |  | 2011 |  | 2011
Recourse to EZCORP: |  |  |  |  |  |  |
Domestic line of credit up to $175,000 due 2015 | $ | 114,700 |  |  | $ | — |  |  | $ | 26,500 |  |  | $ | 17,500 |
Capital lease obligations | 1,159 |  |  | — |  |  | — |  |  | — |
Non-recourse to EZCORP: |  |  |  |  |  |  |
Secured foreign currency line of credit up to $3,700 due 2014 | 2,803 |  |  | 210 |  |  | — |  |  | — |
Secured foreign currency line of credit up to $71,800 due 2015 | 58,455 |  |  | 9,004 |  |  | — |  |  | — |
Secured foreign currency line of credit up to $21,975 due 2017 | 6,903 |  |  | — |  |  | — |  |  | — |
10% unsecured notes due 2013 | 1,570 |  |  | — |  |  | — |  |  | — |
16% unsecured notes due 2013 | 5,013 |  |  | 174 |  |  | — |  |  | — |
20% unsecured notes due 2013 | 11,725 |  |  | 1,511 |  |  | — |  |  | — |
10% unsecured notes due 2014 | 906 |  |  | — |  |  | — |  |  | — |
10% unsecured notes due 2015 | 402 |  |  | — |  |  | — |  |  | — |
18% secured notes due 2015 | 4,273 |  |  | 611 |  |  | — |  |  | — |
10% unsecured notes due 2016 | 116 |  |  | — |  |  | — |  |  | — |
Total long-term obligations | $ | 208,025 |  |  | $ | 11,510 |  |  | $ | 26,500 |  |  | $ | 17,500 |
Less current portion | 31,521 |  | — |  |  | — |  |  | — |
Total long-term and capital lease obligations | $ | 176,504 |  |  | $ | 11,510 |  |  | $ | 26,500 |  |  | $ | 17,500 |

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. At June 30, 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 3 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 9% to 20%. 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 $0.8 million increasing to $1.9 million on November 30, 2012, with the remaining principal due at maturity. Beginning September 30, 2012, the 18% secured notes require monthly payments of $0.1 million with remaining principal due at maturity. The debt premium on Crediamigo’s debt was recorded at acquisition and is being amortized as a reduction of interest expense over the life of the debt. 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 June 29, 2012 Crediamigo renegotiated their revolving line of credit originally due 2016. The interest rate was decreased
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from 20% to 14.5% and the term was extended 6 months, now being due at the end of April 2017. The maximum borrowing capacity was also raised from $14.6 million to $22.0 million. Due to the substantial improvement in the renegotiated terms, the remaining unamortized premium of $2.8 million, valued at acquisition, was accelerated and recognized as a reduction to interest expense in the current quarter.
Included in the amounts above are notes due to Crediamigo’s shareholders, which are presented in the table below (in thousands):

| June 30, 2012
16% unsecured notes due 2013 | $ | 5,013 |
10% unsecured notes due 2014 | 906 |
Secured foreign currency line of credit due 2015 | 10,284 |
Total debt to stockholders | $ | 16,203 |

Note G: 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,
| 2012 |  | 2011 |  | 2012 |  | 2011
| (In thousands)
Gross compensation costs | $ | 1,953 |  |  | $ | 1,508 |  |  | $ | 5,191 |  |  | $ | 11,536 |
Income tax benefits | (650 | ) |  | (499 | ) |  | (1,666 | ) |  | (3,952 | )
Net compensation expense | $ | 1,303 |  |  | $ | 1,009 |  |  | $ | 3,525 |  |  | $ | 7,584 |

Included in the compensation cost for the nine months ended June 30, 2011 is $7.3 million for the accelerated vesting of restricted stock upon the retirement of our former Chief Executive Officer on October 31, 2010, and a related $2.5 million income tax benefit. In the current quarter, stock option exercises resulted in the issuance of 5,400 shares for immaterial proceeds. In the nine-month period ended June 30, 2012, stock option exercises resulted in the issuance of 201,298 shares for total proceeds of $0.6 million. All options and restricted stock relate to our Class A Non-voting Common Stock.
Note H: 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 29.8% of pretax income compared to 34.7% for the prior year quarter. For the current nine-month period, the effective tax rate is 33.1% compared to 35.2% in the prior nine-month period. The decrease in the effective tax rates is primarily due to the determination that the undistributed earnings of non-U.S. subsidiaries on which income taxes were previously recorded will not be repatriated in the foreseeable future, as well as the recognition of state net operating losses.
Note I: 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. However, we cannot give any assurance as to their ultimate outcome.
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Note J: 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.
For periods ending after January 1, 2012, we will 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)

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.
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 period s ending June 30, 2012 and 2011, including the reclassifications discussed in Note A “Significant Accounting Policies.”
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| Three Months Ended June 30, 2012
| U.S. & Canada |  | Latin America |  | Other International |  | Consolidated
| (In thousands)
Revenues: |  |  |  |  |  |  |
Merchandise sales | $ | 65,799 |  |  | $ | 10,159 |  |  | $ | — |  |  | $ | 75,958 |
Jewelry scrapping sales | 37,456 |  |  | 4,518 |  |  | — |  |  | 41,974 |
Pawn service charges | 49,979 |  |  | 6,184 |  |  | — |  |  | 56,163 |
Consumer loan fees | 39,243 |  |  | 10,381 |  |  | 3,880 |  |  | 53,504 |
Other revenues | 649 |  |  | 558 |  |  | 158 |  |  | 1,365 |
Total revenues | 193,126 |  |  | 31,800 |  |  | 4,038 |  |  | 228,964 |
Merchandise cost of goods sold | 38,519 |  |  | 5,735 |  |  | — |  |  | 44,254 |
Jewelry scrapping cost of goods sold | 24,415 |  |  | 3,784 |  |  | — |  |  | 28,199 |
Consumer loan bad debt | 9,368 |  |  | 632 |  |  | 1,251 |  |  | 11,251 |
Net revenues | 120,824 |  |  | 21,649 |  |  | 2,787 |  |  | 145,260 |
Operating expenses: |  |  |  |  |  |  |
Store operations | 65,975 |  |  | 8,792 |  |  | 942 |  |  | 75,709 |
Administrative | 5,970 |  |  | 4,335 |  |  | 1,870 |  |  | 12,175 |
Depreciation | 3,622 |  |  | 1,054 |  |  | 73 |  |  | 4,749 |
Amortization | 142 |  |  | 999 |  |  | 21 |  |  | 1,162 |
(Gain) loss on sale or disposal of assets | 93 |  |  | (4 | ) |  | 223 |  |  | 312 |
Interest, net | (1 | ) |  | 22 |  |  | (1 | ) |  | 20 |
Equity in net income of unconsolidated affiliates | — |  |  | — |  |  | (4,197 | ) |  | (4,197 | )
Other | 614 |  |  | (13 | ) |  | (441 | ) |  | 160 |
Segment contribution | $ | 44,409 |  |  | $ | 6,464 |  |  | $ | 4,297 |  |  | $ | 55,170 |
Corporate expenses: |  |  |  |  |  |  |
Administrative |  |  |  |  |  |  | 10,522 |
Depreciation |  |  |  |  |  |  | 1,466 |
Interest, net |  |  |  |  |  |  | 877 |
Income before taxes |  |  |  |  |  |  | 42,305 |
Income tax expense |  |  | 12,594 |
Net income |  |  |  |  |  |  | 29,711 |
Net income attributable to redeemable noncontrolling interest |  |  |  |  |  |  | 1,188 |
Net income attributable to EZCORP, Inc. |  |  |  |  |  |  | $ | 28,523 |

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| Three Months Ended June 30, 2011
| U.S. & Canada |  | Latin America |  | Other International |  | Consolidated
| (In thousands)
Revenues: |  |  |  |  |  |  |
Merchandise sales | $ | 58,173 |  |  | $ | 6,401 |  |  | $ | — |  |  | $ | 64,574 |
Jewelry scrapping sales | 46,514 |  |  | 4,257 |  |  | — |  |  | 50,771 |
Pawn service charges | 43,846 |  |  | 4,519 |  |  | — |  |  | 48,365 |
Consumer loan fees | 38,870 |  |  | — |  |  | — |  |  | 38,870 |
Other revenues | 566 |  |  | 6 |  |  | — |  |  | 572 |
Total revenues | 187,969 |  |  | 15,183 |  |  | — |  |  | 203,152 |
Merchandise cost of goods sold | 32,924 |  |  | 3,767 |  |  | — |  |  | 36,691 |
Jewelry scrapping cost of goods sold | 28,951 |  |  | 3,486 |  |  | — |  |  | 32,437 |
Consumer loan bad debt | 11,027 |  |  | — |  |  | — |  |  | 11,027 |
Net revenues | 115,067 |  |  | 7,930 |  |  | — |  |  | 122,997 |
Operating expenses: |  |  |  |  |  |  |
Store operations | 61,347 |  |  | 5,406 |  |  | — |  |  | 66,753 |
Administrative | 4,293 |  |  | 1,014 |  |  | 506 |  |  | 5,813 |
Depreciation | 2,828 |  |  | 639 |  |  | — |  |  | 3,467 |
Amortization | 117 |  |  | 104 |  |  | — |  |  | 221 |
Loss on sale or disposal of assets | 157 |  |  | 12 |  |  | — |  |  | 169 |
Interest, net | 20 |  |  | 2 |  |  | — |  |  | 22 |
Equity in net income of unconsolidated affiliates | — |  |  | — |  |  | (4,099 | ) |  | (4,099 | )
Other | 2 |  |  | 2 |  |  | (107 | ) |  | (103 | )
Segment contribution | $ | 46,303 |  |  | $ | 751 |  |  | $ | 3,700 |  |  | $ | 50,754 |
Corporate expenses: |  |  |  |  |  |  |
Administrative |  |  |  |  |  |  | 8,566 |
Depreciation |  |  |  |  |  |  | 991 |
Interest, net |  |  |  |  |  |  | 543 |
Income before taxes |  |  |  |  |  |  | 40,654 |
Income tax expense |  |  | 14,127 |
Net income |  |  |  |  |  |  | 26,527 |
Net income attributable to redeemable noncontrolling interest |  |  |  |  |  |  | — |
Net income attributable to EZCORP, Inc. |  |  |  |  |  |  | $ | 26,527 |

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| Nine Months Ended June 30, 2012
| U.S. & Canada |  | Latin America |  | Other International |  | Consolidated
| (In thousands)
Revenues: |  |  |  |  |  |  |
Merchandise sales | $ | 227,849 |  |  | $ | 30,000 |  |  | $ | — |  |  | $ | 257,849 |
Jewelry scrapping sales | 139,736 |  |  | 11,816 |  |  | — |  |  | 151,552 |
Pawn service charges | 154,854 |  |  | 17,545 |  |  | — |  |  | 172,399 |
Consumer loan fees | 127,061 |  |  | 17,764 |  |  | 4,086 |  |  | 148,911 |
Other revenues | 2,444 |  |  | 802 |  |  | 158 |  |  | 3,404 |
Total revenues | 651,944 |  |  | 77,927 |  |  | 4,244 |  |  | 734,115 |
Merchandise cost of goods sold | 132,469 |  |  | 16,061 |  |  | — |  |  | 148,530 |
Jewelry scrapping cost of goods sold | 87,102 |  |  | 8,831 |  |  | — |  |  | 95,933 |
Consumer loan bad debt | 26,136 |  |  | 1,140 |  |  | 1,466 |  |  | 28,742 |
Net revenues | 406,237 |  |  | 51,895 |  |  | 2,778 |  |  | 460,910 |
Operating expenses: |  |  |  |  |  |  |
Store operations | 203,190 |  |  | 23,001 |  |  | 1,288 |  |  | 227,479 |
Administrative | 17,841 |  |  | 9,964 |  |  | 2,292 |  |  | 30,097 |
Depreciation | 10,121 |  |  | 2,576 |  |  | 109 |  |  | 12,806 |
Amortization | 414 |  |  | 2,651 |  |  | 21 |  |  | 3,086 |
(Gain) loss on sale or disposal of assets | (82 | ) |  | (3 | ) |  | 223 |  |  | 138 |
Interest, net | 3 |  |  | 1,755 |  |  | (1 | ) |  | 1,757 |
Equity in net income of unconsolidated affiliates | — |  |  | — |  |  | (12,935 | ) |  | (12,935 | )
Other | 345 |  |  | 3 |  |  | (505 | ) |  | (157 | )
Segment contribution | $ | 174,405 |  |  | $ | 11,948 |  |  | $ | 12,286 |  |  | $ | 198,639 |
Corporate expenses: |  |  |  |  |  |  |
Administrative |  |  |  |  |  |  | 33,664 |
Depreciation |  |  |  |  |  |  | 3,999 |
Interest, net |  |  |  |  |  |  | 1,937 |
Income before taxes |  |  |  |  |  |  | 159,039 |
Income tax expense |  |  | 52,603 |
Net income |  |  |  |  |  |  | 106,436 |
Net income attributable to redeemable noncontrolling interest |  |  |  |  |  |  | 1,300 |
Net income attributable to EZCORP, Inc. |  |  |  |  |  |  | $ | 105,136 |

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| Nine Months Ended June 30, 2011
| U.S. & Canada |  | Latin America |  | Other International |  | Consolidated
| (In thousands)
Revenues: |  |  |  |  |  |  |
Merchandise sales | $ | 196,898 |  |  | $ | 17,329 |  |  | $ | — |  |  | $ | 214,227 |
Jewelry scrapping sales | 138,068 |  |  | 11,363 |  |  | — |  |  | 149,431 |
Pawn service charges | 133,355 |  |  | 11,589 |  |  | — |  |  | 144,944 |
Consumer loan fees | 125,652 |  |  | — |  |  | — |  |  | 125,652 |
Other revenues | 944 |  |  | 34 |  |  | — |  |  | 978 |
Total revenues | 594,917 |  |  | 40,315 |  |  | — |  |  | 635,232 |
Merchandise cost of goods sold | 112,605 |  |  | 10,036 |  |  | — |  |  | 122,641 |
Jewelry scrapping cost of goods sold | 87,416 |  |  | 9,201 |  |  | — |  |  | 96,617 |
Consumer loan bad debt | 27,795 |  |  | — |  |  | — |  |  | 27,795 |
Net revenues | 367,101 |  |  | 21,078 |  |  | — |  |  | 388,179 |
Operating expenses: |  |  |  |  |  |  |
Store operations | 182,769 |  |  | 14,533 |  |  | — |  |  | 197,302 |
Administrative | 14,103 |  |  | 3,030 |  |  | 558 |  |  | 17,691 |
Depreciation | 8,194 |  |  | 1,723 |  |  | — |  |  | 9,917 |
Amortization | 353 |  |  | 301 |  |  | — |  |  | 654 |
(Gain) loss on sale or disposal of assets | (15 | ) |  | 13 |  |  | — |  |  | (2 | )
Interest, net | 20 |  |  | 4 |  |  | — |  |  | 24 |
Equity in net income of unconsolidated affiliates | — |  |  | — |  |  | (12,157 | ) |  | (12,157 | )
Other | 5 |  |  | 3 |  |  | (168 | ) |  | (160 | )
Segment contribution | $ | 161,672 |  |  | $ | 1,471 |  |  | $ | 11,767 |  |  | $ | 174,910 |
Corporate expenses: |  |  |  |  |  |  |
Administrative |  |  |  |  |  |  | 38,559 |
Depreciation |  |  |  |  |  |  | 2,753 |
Interest, net |  |  |  |  |  |  | 1,127 |
Income before taxes |  |  |  |  |  |  | 132,471 |
Income tax expense |  |  | 46,677 |
Net income |  |  |  |  |  |  | 85,794 |
Net income attributable to redeemable noncontrolling interest |  |  |  |  |  |  | — |
Net income attributable to EZCORP, Inc. |  |  |  |  |  |  | $ | 85,794 |

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The following table presents separately identified segment assets:

| U.S. & Canada |  | Latin America |  | Other International |  | Consolidated
| (In thousands)
Assets at June 30, 2012: |  |  |  |  |  |  |
Cash and cash equivalents | $ | 18,789 |  |  | $ | 17,708 |  |  | $ | 1,638 |  |  | $ | 38,135 |
Pawn loans, net | 134,064 |  |  | 13,439 |  |  | — |  |  | 147,503 |
Consumer loans, net | 17,247 |  |  | 59,989 |  |  | 1,838 |  |  | 79,074 |
Service charges and fees receivable, net | 30,555 |  |  | 20,721 |  |  | 545 |  |  | 51,821 |
Inventory, net | 82,631 |  |  | 11,790 |  |  | — |  |  | 94,421 |
Property and equipment, net | 57,532 |  |  | 20,338 |  |  | 1,400 |  |  | 79,270 |
Goodwill, net | 221,549 |  |  | 61,322 |  |  | 38,552 |  |  | 321,423 |
Intangibles, net | 17,597 |  |  | 56,541 |  |  | 2,830 |  |  | 76,968 |
Total separately identified recorded segment assets | $ | 579,964 |  |  | $ | 261,848 |  |  | $ | 46,803 |  |  | $ | 888,615 |
Consumer loans outstanding from unaffiliated lenders | $ | 23,466 |  |  | $ | — |  |  | $ | — |  |  | $ | 23,466 |
Assets at June 30, 2011: |  |  |  |  |  |  |
Cash and cash equivalents | $ | 6,198 |  |  | $ | 2,873 |  |  | $ | — |  |  | $ | 9,071 |
Pawn loans, net | 124,810 |  |  | 9,823 |  |  | — |  |  | 134,633 |
Consumer loans, net | 14,437 |  |  | — |  |  | — |  |  | 14,437 |
Service charges and fees receivable, net | 29,732 |  |  | 1,524 |  |  | — |  |  | 31,256 |
Inventory, net | 70,631 |  |  | 8,400 |  |  | — |  |  | 79,031 |
Property and equipment, net | 49,366 |  |  | 12,939 |  |  | — |  |  | 62,305 |
Goodwill, net | 159,572 |  |  | 7,445 |  |  | — |  |  | 167,017 |
Intangibles, net | 16,953 |  |  | 942 |  |  | — |  |  | 17,895 |
Total separately identified recorded segment assets | $ | 471,699 |  |  | $ | 43,946 |  |  | $ | — |  |  | $ | 515,645 |
Consumer loans outstanding from unaffiliated lenders | $ | 26,299 |  |  | $ | — |  |  | $ | — |  |  | $ | 26,299 |
Assets at September 30, 2011: |  |  |  |  |  |  |
Cash and cash equivalents | $ | 10,040 |  |  | $ | 1,496 |  |  | $ | — |  |  | $ | 11,536 |
Pawn loans, net | 134,457 |  |  | 10,861 |  |  | — |  |  | 145,318 |
Consumer loans, net | 14,611 |  |  | — |  |  | — |  |  | 14,611 |
Service charges and fees receivable, net | 31,567 |  |  | 1,663 |  |  | — |  |  | 33,230 |
Inventory, net | 81,859 |  |  | 8,514 |  |  | — |  |  | 90,373 |
Property and equipment, net | 51,469 |  |  | 12,769 |  |  | — |  |  | 64,238 |
Goodwill, net | 163,897 |  |  | 9,309 |  |  | — |  |  | 173,206 |
Intangibles, net | 16,775 |  |  | 867 |  |  | — |  |  | 17,642 |
Total separately identified recorded segment assets | $ | 504,675 |  |  | $ | 45,479 |  |  | $ | — |  |  | $ | 550,154 |
Consumer loans outstanding from unaffiliated lenders | $ | 27,040 |  |  | $ | — |  |  | $ | — |  |  | $ | 27,040 |

The following table reconciles separately identified recorded segment assets, as shown above, to our consolidated total assets:

| June 30, |  | September 30,
| 2012 |  | 2011 |  | 2011
| (In thousands)
Total separately identified recorded segment assets | $ | 888,615 |  |  | $ | 515,645 |  |  | $ | 550,154 |
Corporate assets | 249,458 |  |  | 197,976 |  |  | 206,296 |
Total assets | $ | 1,138,073 |  |  | $ | 713,621 |  |  | $ | 756,450 |

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The following tables provide geographic information required by ASC 280-10-50-41:

| Three Months Ended June 30, |  | Nine Months Ended June 30,
| 2012 |  | 2011 |  | 2012 |  | 2011
| (In thousands)
Revenues: |  |  |  |  |  |  |
U.S. | $ | 188,573 |  |  | $ | 184,903 |  |  | $ | 639,778 |  |  | $ | 587,845 |
Mexico | 31,800 |  |  | 15,183 |  |  | 77,927 |  |  | 40,315 |
Canada | 4,553 |  |  | 3,066 |  |  | 12,166 |  |  | 7,072 |
U.K | 4,038 |  |  | — |  |  | 4,244 |  |  | — |
Total | 228,964 |  |  | 203,152 |  |  | 734,115 |  |  | 635,232 |

| June 30, |  | September 30,
| 2012 |  | 2011 |  | 2011
| (In thousands)
Long-lived assets: |  |  |  |  |
U.S. | $ | 309,168 |  |  | $ | 233,637 |  |  | $ | 240,661 |
Mexico | 138,202 |  |  | 21,326 |  |  | 7,888 |
Canada | 10,133 |  |  | 7,295 |  |  | 22,945 |
U.K | 42,782 |  |  | — |  |  | — |
Total | $ | 500,285 |  |  | $ | 262,258 |  |  | $ | 271,494 |

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Note K: Allowance for Losses and Credit Quality of Financing Receivables
We offer a variety of loan products and credit services to customers who do not have cash resources or access to credit to meet their cash needs. Our customers are considered to be in a higher risk pool with regard to creditworthiness when compared to those of typical financial institutions. As a result, our receivables do not have a credit risk profile that can easily be measured by the normal credit quality indicators used by the financial markets. We manage the risk through closely monitoring the performance of the portfolio and through our underwriting process. This process includes review of customer information, such as making a credit reporting agency inquiry, evaluating and verifying income sources and levels, verifying employment and verifying a telephone number where customers may be contacted. For auto title loans, we additionally inspect the automobile, title and reference to market values of used automobiles.
We consider consumer loans made by our wholly owned subsidiaries defaulted if they have not been repaid or renewed by the maturity date. If one payment of an installment loan is delinquent, that one payment is considered defaulted. If more than one installment payment is delinquent at any time, the entire installment loan is considered defaulted. Although defaulted loans may be collected later, we charge the loan principal to consumer loan bad debt upon default, leaving only active loans in the reported balance. Accrued fees related to defaulted loans reduce fee revenue upon loan default, and increase fee revenue upon collection.
Based on historical collection experience, the age of past-due loans and amounts we expect to receive through the sale of repossessed vehicles, we provide an allowance for losses on auto title loans.
The Crediamigo acquisition marked our initial entry into unsecured consumer lending in Mexico. Crediamigo consumer loans are considered defaulted once the customer is no longer employed, and therefore we are no longer entitled to payments via payroll withholdings. Once we receive notice that the customer’s employment has been terminated, we charge the loan principal to consumer loan bad debt, leaving only active loans in the reported balance. Accrued fees related to defaulted loans reduce fee revenue upon default, and increase fee revenue upon collection.
The accuracy of our allowance estimates is dependent upon several factors, including our ability to predict future default rates based on historical trends and expected future events. We base our estimates on observable trends and various other assumptions that we believe to be reasonable under the circumstances.
The following table presents changes in the allowance for credit losses as well as the recorded investment in our financing receivables by portfolio segment for the periods presented:

Description | Allowance Balance at Beginning of Period |  | Charge-offs |  | Recoveries |  | Provision |  | Translation Adjustment |  | Allowance Balance at End of Period |  | Financing Receivable at End of Period
| (In thousands)
Unsecured short-term consumer loans: |  |  |  |  |  |  |  |  |  |  |  |  |
Three Months Ended June 30, 2012 | $ | 2,118 |  |  | $ | (8,900 | ) |  | $ | 3,974 |  |  | $ | 5,047 |  |  | $ | (12 | ) |  | $ | 2,227 |  |  | $ | 17,640 |
Three Months Ended June 30, 2011 | $ | 1,110 |  |  | $ | (4,747 | ) |  | $ | 1,505 |  |  | $ | 3,796 |  |  | $ | — |  |  | $ | 1,664 |  |  | $ | 13,753 |
Nine Months Ended June 30, 2012 | $ | 2,404 |  |  | $ | (17,853 | ) |  | $ | 7,676 |  |  | $ | 10,012 |  |  | $ | (12 | ) |  | $ | 2,227 |  |  | $ | 17,640 |
Nine Months Ended June 30, 2011 | $ | 750 |  |  | $ | (12,992 | ) |  | $ | 4,575 |  |  | $ | 9,331 |  |  | $ | — |  |  | $ | 1,664 |  |  | $ | 13,753 |
Secured short-term consumer loans: |  |  |  |  |  |  |  |  |  |  |  |  |
Three Months Ended June 30, 2012 | $ | 708 |  |  | $ | (5,410 | ) |  | $ | 4,836 |  |  | $ | 462 |  |  | $ | — |  |  | $ | 596 |  |  | $ | 4,267 |
Three Months Ended June 30, 2011 | $ | 810 |  |  | $ | (2,800 | ) |  | $ | 2,074 |  |  | $ | 489 |  |  | $ | — |  |  | $ | 573 |  |  | $ | 2,921 |
Nine Months Ended June 30, 2012 | $ | 538 |  |  | $ | (13,177 | ) |  | $ | 11,478 |  |  | $ | 1,757 |  |  | $ | — |  |  | $ | 596 |  |  | $ | 4,267 |
Nine Months Ended June 30, 2011 | $ | 1,137 |  |  | $ | (9,682 | ) |  | $ | 7,646 |  |  | $ | 1,472 |  |  | $ | — |  |  | $ | 573 |  |  | $ | 2,921 |
Unsecured long-term consumer loans: |  |  |  |  |  |  |  |  |  |  |  |  |
Three Months Ended June 30, 2012 | $ | 166 |  |  | $ | (780 | ) |  | $ | 288 |  |  | $ | 603 |  |  | $ | (10 | ) |  | $ | 267 |  |  | $ | 60,256 |
Nine Months Ended June 30, 2012 | $ | — |  |  | $ | (1,351 | ) |  | $ | 519 |  |  | $ | 1,111 |  |  | $ | (12 | ) |  | $ | 267 |  |  | $ | 60,256 |

The provisions presented in the table above include only principal and excludes items such as non-sufficient funds fees, repossession fees, auction fees and interest. In addition, all credit service expenses and fees related to loans made by our unaffiliated lenders are excluded, as we do not own the loans made in connection with our credit services and they are not recorded as assets on our balance sheets. Expected losses on credit services are accrued and reported in “Accounts payable and
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other accrued expenses” on our balance sheets.
Auto title loans are our only consumer loans (other than those made by Crediamigo) that remain as recorded investments when in delinquent or nonaccrual status. We consider an auto title loan past due if it has not been repaid or renewed by the maturity date. Based on experience, we establish a reserve on all auto title loans. On auto title loans more than 90 days past due, we reserve the percentage we estimate will not be recoverable through auction and reserve 100% of loans for which we have not yet repossessed the underlying collateral. No fees are accrued on any auto title loans more than 90 days past due.
Consumer loans made by Crediamigo remain on the balance sheet as recorded investments when in delinquent status. We consider a consumer loan past due if it has not been repaid or renewed by the maturity date; however, it is not unusual to have a lag in payments due to the time it takes the government agencies to setup the initial payroll withholding. Only those consumer loans made to customers that are no longer employed are considered in nonaccrual status. We establish a reserve on all consumer loans, based on historical experience. No fees are accrued on any consumer loans made to customers that are no longer employed.
The following table presents an aging analysis of past due financing receivables by portfolio segment:

| Days Past Due |  | Total |  | Current |  | Fair Value |  | Total Financing |  | Allowance |  | Recorded Investment > 90 Days &
| 1-30 |  | 31-60 |  | 61-90 |  | >90 |  | Past Due |  | Receivable |  | Adjustment |  | Receivable |  | Balance |  | Accruing
| (In thousands)
Secured short-term consumer loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
June 30, 2012 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer loans | $ | 838 |  |  | $ | 360 |  |  | $ | 239 |  |  | $ | 246 |  |  | $ | 1,683 |  |  | $ | 2,584 |  |  | $ | — |  |  | $ | 4,267 |  |  | $ | 596 |  |  | $ | — |
June 30, 2011 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer loans | $ | 575 |  |  | $ | 382 |  |  | $ | 245 |  |  | $ | 285 |  |  | $ | 1,487 |  |  | $ | 1,434 |  |  | $ | — |  |  | $ | 2,921 |  |  | $ | 573 |  |  | $ | — |
September 30, 2011 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer loans | $ | 840 |  |  | $ | 479 |  |  | $ | 283 |  |  | $ | 219 |  |  | $ | 1,821 |  |  | $ | 1,939 |  |  | $ | — |  |  | $ | 3,760 |  |  | $ | 538 |  |  | $ | — |
Unsecured long-term consumer loans: * |  |  |  |  |  |  |  |  |  |  |  |  |  |
June 30, 2012 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer loans | $ | 2,645 |  |  | $ | 23,532 |  |  | $ | 403 |  |  | $ | 4,282 |  |  | $ | 30,862 |  |  | $ | 36,555 |  |  | $ | (7,161 | ) |  | $ | 60,256 |  |  | $ | 267 |  |  | $ | 3,987 |

* Unsecured long-term consumer loans amounts only existed in periods after the acquisition of Crediamigo.
Note L: Fair Value Measurements
In accordance with FASB ASC 820-10, Fair Value Measurements and Disclosures, our assets and liabilities, which are carried at fair value, are classified in one of the following three categories:
Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Other observable inputs other than quoted market prices.
Level 3: Unobservable inputs that are not corroborated by market data.
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The tables below present our financial assets that are measured at fair value on a recurring basis as of June 30, 2012 and 2011 and September 30, 2011:

| June 30, 2012 |  | Fair Value Measurements Using
Financial assets: | Level 1 |  | Level 2 |  | Level 3
| (In thousands)
Marketable equity securities | $ | 4,520 |  |  | $ | 4,520 |  |  | $ | — |  |  | $ | — |
| June 30, 2011 |  | Fair Value Measurements Using
Financial assets: | Level 1 |  | Level 2 |  | Level 3
| (In thousands)
Marketable equity securities | $ | 5,422 |  |  | $ | 5,422 |  |  | $ | — |  |  | $ | — |
| September 30, 2011 |  | Fair Value Measurements Using
Financial assets: | Level 1 |  | Level 2 |  | Level 3
| (In thousands)
Marketable equity securities | $ | 5,366 |  |  | $ | 5,366 |  |  | $ | — |  |  | $ | — |

We measure the value of our marketable equity securities under a Level 1 input. These assets are publicly traded equity securities for which market prices are readily available. There were no transfers of assets in or out of Level 1 fair value measurements in the periods presented.
Note M: Derivative Instruments and Hedging Activities
Our earnings and financial position are affected by changes in gold values. In fiscal year 2012, we began using derivative financial instruments in order to manage our commodity price risk associated with the forecasted sales of gold scrap. These derivatives are not designated as hedges, and according to FASB ASC 815-20-25, “Derivatives and Hedging – Recognition,” changes in their fair value are recorded directly in earnings. As of June 30, 2012, we had no balance outstanding recorded on our balance sheet.
The table below presents the effect of our derivative financial instruments on the Condensed Consolidated Statements of Operations for three months and nine months ended June 30, 2012 and 2011:

|  |  | (Gains) Losses Recognized in Income
|  |  | Three Months Ended June 30, |  | Nine Months Ended June 30,
Derivative Instrument | Location of (Gain) or Loss |  | 2012 |  | 2011 |  | 2012 |  | 2011
|  |  | (In thousands)
Non-designated derivatives: |  |  |  |  |  |  |  |  |
Gold Collar | Other (income) expense |  | $ | — |  |  | $ | — |  |  | $ | (151 | ) |  | $ | — |

Note N: Condensed Consolidating Financial Information
On February 3, 2012, we filed with the United States Securities and Exchange Commission a “shelf” registration statement on Form S-3 registering the offer and sale of an indeterminate amount of a variety of securities, including debt securities. Unless otherwise indicated in connection with a particular offering of debt securities, each of our domestic subsidiaries will fully and unconditionally guarantee on a joint and several basis our payment obligations under such debt securities.
In accordance with Rule 3-10(d) of Regulation S-X, the following presents condensed consolidating financial information as of June 30, 2012 and 2011 and for the current and prior three and nine-month period s then ended and as of September 30, 2011 for EZCORP, Inc. (the “Parent”), each of the Parent’s domestic subsidiaries (the “Subsidiary Guarantors”) on a combined basis and each of the Parent’s other subsidiaries (the “Other Subsidiaries”) on a combined basis. Eliminating entries presented are necessary to combine the groups of entities.
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Condens ed Consolidating Balance Sheets

| June 30, 2012
| (Unaudited)
| (In thousands)
| Parent |  | Subsidiary Guarantors |  | Other Subsidiaries |  | Eliminations |  | Consolidated
Assets: |  |  |  |  |  |  |  |  |
Current assets: |  |  |  |  |  |  |  |  |
Cash and cash equivalents | $ | 703 |  |  | $ | 28,674 |  |  | $ | 21,397 |  |  | $ | — |  |  | $ | 50,774 |
Cash, restricted | — |  |  | — |  |  | 1,051 |  |  | — |  |  | 1,051 |
Pawn loans, net | — |  |  | 134,064 |  |  | 13,439 |  |  | — |  |  | 147,503 |
Consumer loans, net | — |  |  | 14,928 |  |  | 13,559 |  |  | — |  |  | 28,487 |
Pawn service charges receivable, net | — |  |  | 24,041 |  |  | 2,051 |  |  | — |  |  | 26,092 |
Consumer loan fees receivable, net | — |  |  | 6,026 |  |  | 19,703 |  |  | — |  |  | 25,729 |
Inventory, net | — |  |  | 81,355 |  |  | 13,066 |  |  | — |  |  | 94,421 |
Deferred tax asset | 12,747 |  |  | 5,479 |  |  | — |  |  | — |  |  | 18,226 |
Receivable from affiliates | 202,619 |  |  | 83,050 |  |  | — |  |  | (285,669 | ) |  | — |
Federal income tax receivable | 9,732 |  |  | 506 |  |  | (340 | ) |  | — |  |  | 9,898 |
Prepaid expenses and other assets | 42 |  |  | 35,840 |  |  | 4,386 |  |  | — |  |  | 40,268 |
Total current assets | 225,843 |  |  | 413,963 |  |  | 88,312 |  |  | (285,669 | ) |  | 442,449 |
Investments in unconsolidated affiliates | 51,156 |  |  | 74,153 |  |  | — |  |  | — |  |  | 125,309 |
Investments in subsidiaries | 135,412 |  |  | 72,946 |  |  | — |  |  | (208,358 | ) |  | — |
Property and equipment, net | — |  |  | 69,911 |  |  | 30,285 |  |  | — |  |  | 100,196 |
Goodwill | — |  |  | 221,519 |  |  | 99,904 |  |  | — |  |  | 321,423 |
Intangible assets, net | 1,698 |  |  | 15,998 |  |  | 60,970 |  |  | — |  |  | 78,666 |
Non-current consumer loans, net | — |  |  | — |  |  | 50,587 |  |  | — |  |  | 50,587 |
Other assets, net | — |  |  | 8,633 |  |  | 10,810 |  |  | — |  |  | 19,443 |
Total assets | $ | 414,109 |  |  | $ | 877,123 |  |  | $ | 340,868 |  |  | $ | (494,027 | ) |  | $ | 1,138,073 |
Liabilities and stockholders’ equity: |  |  |  |  |  |  |  |  |
Current liabilities: |  |  |  |  |  |  |  |  |
Current maturities of long-term debt | $ | — |  |  | $ | — |  |  | $ | 31,126 |  |  | $ | — |  |  | $ | 31,126 |
Current capital lease obligations | — |  |  | 395 |  |  | — |  |  | — |  |  | 395 |
Accounts payable and other accrued expenses | 95 |  |  | 46,495 |  |  | 24,106 |  |  | — |  |  | 70,696 |
Customer layaway deposits | — |  |  | 5,884 |  |  | 856 |  |  | — |  |  | 6,740 |
Intercompany payables | (170,788 | ) |  | 371,474 |  |  | 84,983 |  |  | (285,669 | ) |  | — |
Federal income taxes payable | 9,875 |  |  | (6,168 | ) |  | (3,707 | ) |  | — |  |  | — |
Total current liabilities | (160,818 | ) |  | 418,080 |  |  | 137,364 |  |  | (285,669 | ) |  | 108,957 |
Long-term debt, less current maturities | 114,700 |  |  | — |  |  | 61,040 |  |  | — |  |  | 175,740 |
Long-term capital lease obligations | — |  |  | 764 |  |  | — |  |  | — |  |  | 764 |
Deferred tax liability | 6,522 |  |  | 1,266 |  |  | — |  |  | — |  |  | 7,788 |
Deferred gains and other long-term liabilities | — |  |  | 1,880 |  |  | 12,307 |  |  | — |  |  | 14,187 |
Total liabilities | (39,596 | ) |  | 421,990 |  |  | 210,711 |  |  | (285,669 | ) |  | 307,436 |
Commitments and contingencies |  |  |  |  |  |  |  |  |
Temporary equity: |  |  |  |  |  |  |  |  |
Redeemable noncontrolling interest | — |  |  | — |  |  | 44,864 |  |  | — |  |  | 44,864 |
Stockholders’ equity: |  |  |  |  |  |  |  |  |
Class A Non-voting Common Stock, par value $.01 per share; | 470 |  |  | 12 |  |  | — |  |  | — |  |  | 482 |
Class B Voting Common Stock, convertible, par value $.01 per share; | 30 |  |  | — |  |  | — |  |  | — |  |  | 30 |
Additional paid-in capital | 294,135 |  |  | 78,688 |  |  | 102,188 |  |  | (208,358 | ) |  | 266,653 |
Retained earnings | 154,454 |  |  | 377,229 |  |  | (4,452 | ) |  | — |  |  | 527,231 |
Accumulated other comprehensive income (loss) | 4,616 |  |  | (796 | ) |  | (12,443 | ) |  | — |  |  | (8,623 | )
EZCORP, Inc. stockholders’ equity | 453,705 |  |  | 455,133 |  |  | 85,293 |  |  | (208,358 | ) |  | 785,773 |
Total liabilities and stockholders’ equity | $ | 414,109 |  |  | $ | 877,123 |  |  | $ | 340,868 |  |  | $ | (494,027 | ) |  | $ | 1,138,073 |

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| June 30, 2011
| (Unaudited)
| (In thousands)
| Parent |  | Subsidiary Guarantors |  | Other Subsidiaries |  | Eliminations |  | Consolidated
Assets: |  |  |  |  |  |  |  |  |
Current assets: |  |  |  |  |  |  |  |  |
Cash and cash equivalents | $ | — |  |  | $ | 23,377 |  |  | $ | 4,115 |  |  | $ | — |  |  | $ | 27,492 |
Pawn loans, net | — |  |  | 124,810 |  |  | 9,823 |  |  | — |  |  | 134,633 |
Consumer loans, net | — |  |  | 12,423 |  |  | 2,014 |  |  | — |  |  | 14,437 |
Pawn service charges receivable, net | — |  |  | 22,848 |  |  | 1,524 |  |  | — |  |  | 24,372 |
Consumer loan fees receivable, net | — |  |  | 6,754 |  |  | 130 |  |  | — |  |  | 6,884 |
Inventory, net | — |  |  | 70,326 |  |  | 8,705 |  |  | — |  |  | 79,031 |
Deferred tax asset | 10,560 |  |  | 5,385 |  |  | 205 |  |  | — |  |  | 16,150 |
Receivable from affiliates | 46,658 |  |  | (46,658 | ) |  | — |  |  | — |  |  | — |
Income taxes receivable | 3,099 |  |  | — |  |  | — |  |  | — |  |  | 3,099 |
Prepaid expenses and other assets | 42 |  |  | 17,757 |  |  | 4,133 |  |  | — |  |  | 21,932 |
Total current assets | 60,359 |  |  | 237,022 |  |  | 30,649 |  |  | — |  |  | 328,030 |
Investments in unconsolidated affiliates | 68,321 |  |  | 46,456 |  |  | — |  |  | — |  |  | 114,777 |
Investments in subsidiaries | 76,999 |  |  | 9,145 |  |  | — |  |  | (86,144 | ) |  | — |
Property and equipment, net | — |  |  | 56,522 |  |  | 18,527 |  |  | — |  |  | 75,049 |
Goodwill | — |  |  | 159,572 |  |  | 7,445 |  |  | — |  |  | 167,017 |
Intangible assets, net | 2,296 |  |  | 15,247 |  |  | 2,649 |  |  | — |  |  | 20,192 |
Other assets, net | — |  |  | 7,207 |  |  | 1,349 |  |  | — |  |  | 8,556 |
Total assets | $ | 207,975 |  |  | $ | 531,171 |  |  | $ | 60,619 |  |  | $ | (86,144 | ) |  | $ | 713,621 |
Liabilities and stockholders’ equity: |  |  |  |  |  |  |  |  |
Current liabilities: |  |  |  |  |  |  |  |  |
Accounts payable and other accrued expenses | 16 |  |  | 47,531 |  |  | 5,695 |  |  | — |  |  | 53,242 |
Customer layaway deposits | — |  |  | 5,703 |  |  | 428 |  |  | — |  |  | 6,131 |
Intercompany payables | (216,982 | ) |  | 169,742 |  |  | 47,240 |  |  | — |  |  | — |
Income taxes payable | 8,879 |  |  | (5,157 | ) |  | (3,722 | ) |  | — |  |  | — |
Total current liabilities | (208,087 | ) |  | 217,819 |  |  | 49,641 |  |  | — |  |  | 59,373 |
Long-term debt, less current maturities | 26,500 |  |  | — |  |  | — |  |  | — |  |  | 26,500 |
Deferred tax liability | (345 | ) |  | 1,571 |  |  | 11 |  |  | — |  |  | 1,237 |
Deferred gains and other long-term liabilities | (446 | ) |  | 2,208 |  |  | 447 |  |  | — |  |  | 2,209 |
Total liabilities | (182,378 | ) |  | 221,598 |  |  | 50,099 |  |  | — |  |  | 89,319 |
Commitments and contingencies |  |  |  |  |  |  |  |  |
Temporary equity: |  |  |  |  |  |  |  |  |
Redeemable noncontrolling interest | — |  |  | — |  |  | — |  |  | — |  |  | — |
Stockholders’ equity: |  |  |  |  |  |  |  |  |
Class A Non-voting Common Stock, par value $.01 per share; | 458 |  |  | 11 |  |  | — |  |  | — |  |  | 469 |
Class B Voting Common Stock, convertible, par value $.01 per share; | 30 |  |  | (1 | ) |  | 1 |  |  | — |  |  | 30 |
Additional paid-in capital | 214,231 |  |  | 89,629 |  |  | 15,340 |  |  | (86,144 | ) |  | 233,056 |
Retained earnings | 170,202 |  |  | 220,039 |  |  | (4,511 | ) |  | — |  |  | 385,730 |
Accumulated other comprehensive income (loss) | 5,432 |  |  | (105 | ) |  | (310 | ) |  | — |  |  | 5,017 |
EZCorp, Inc. stockholders’ equity | 390,353 |  |  | 309,573 |  |  | 10,520 |  |  | (86,144 | ) |  | 624,302 |
Total liabilities and stockholders’ equity | $ | 207,975 |  |  | $ | 531,171 |  |  | $ | 60,619 |  |  | $ | (86,144 | ) |  | $ | 713,621 |

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| September 30, 2011
| (Unaudited)
| (In thousands)
| Parent |  | Subsidiary Guarantors |  | Other Subsidiaries |  | Eliminations |  | Consolidated
Assets: |  |  |  |  |  |  |  |  |
Current assets: |  |  |  |  |  |  |  |  |
Cash and cash equivalents | $ | — |  |  | $ | 20,860 |  |  | $ | 3,109 |  |  | $ | — |  |  | $ | 23,969 |
Pawn loans, net | — |  |  | 134,457 |  |  | 10,861 |  |  | — |  |  | 145,318 |
Consumer loans, net | — |  |  | 12,526 |  |  | 2,085 |  |  | — |  |  | 14,611 |
Pawn service charges receivable, net | — |  |  | 24,792 |  |  | 1,663 |  |  | — |  |  | 26,455 |
Consumer loan fees receivable, net | — |  |  | 6,642 |  |  | 133 |  |  | — |  |  | 6,775 |
Inventory, net | — |  |  | 81,277 |  |  | 9,096 |  |  | — |  |  | 90,373 |
Deferred tax asset | 12,728 |  |  | 5,397 |  |  | — |  |  | — |  |  | 18,125 |
Receivable from affiliates | 66,450 |  |  | (66,450 | ) |  | — |  |  | — |  |  | — |
Income taxes receivable | — |  |  | — |  |  | — |  |  | — |  |  | — |
Prepaid expenses and other assets | 29 |  |  | 25,976 |  |  | 4,606 |  |  | — |  |  | 30,611 |
Total current assets | 79,207 |  |  | 245,477 |  |  | 31,553 |  |  | — |  |  | 356,237 |
Investments in unconsolidated affiliates | 71,958 |  |  | 48,361 |  |  | — |  |  | — |  |  | 120,319 |
Investments in subsidiaries | 84,303 |  |  | 44,323 |  |  | — |  |  | (128,626 | ) |  | — |
Property and equipment, net | — |  |  | 59,434 |  |  | 19,064 |  |  | — |  |  | 78,498 |
Deferred tax asset, non-current | — |  |  | — |  |  | — |  |  | — |  |  | — |
Goodwill | — |  |  | 163,897 |  |  | 9,309 |  |  | — |  |  | 173,206 |
Intangible assets, net | 2,147 |  |  | 15,183 |  |  | 2,460 |  |  | — |  |  | 19,790 |
Other assets, net | — |  |  | 7,036 |  |  | 1,362 |  |  | 2 |  |  | 8,400 |
Total assets | $ | 237,615 |  |  | $ | 583,711 |  |  | $ | 63,748 |  |  | $ | (128,624 | ) |  | $ | 756,450 |
Current liabilities: |  |  |  |  |  |  |  |  |
Accounts payable and other accrued expenses | $ | 13 |  |  | $ | 50,871 |  |  | $ | 6,516 |  |  | $ | — |  |  | $ | 57,400 |
Customer layaway deposits | — |  |  | 5,711 |  |  | 465 |  |  | — |  |  | 6,176 |
Intercompany payables | (199,190 | ) |  | 178,375 |  |  | 20,761 |  |  | 54 |  |  | — |
Income taxes payable | 9,552 |  |  | (5,150 | ) |  | (3,709 | ) |  | — |  |  | 693 |
Total current liabilities | (189,625 | ) |  | 229,807 |  |  | 24,033 |  |  | 54 |  |  | 64,269 |
Long-term debt, less current maturities | 17,500 |  |  | — |  |  | — |  |  | — |  |  | 17,500 |
Deferred tax liability | 5,940 |  |  | 1,563 |  |  | 828 |  |  | — |  |  | 8,331 |
Deferred gains and other long-term liabilities | — |  |  | 2,102 |  |  | — |  |  | — |  |  | 2,102 |
Total liabilities | (166,185 | ) |  | 233,472 |  |  | 24,861 |  |  | 54 |  |  | 92,202 |
Commitments and contingencies |  |  |  |  |  |  |  |  |
Temporary equity: |  |  |  |  |  |  |  |  |
Redeemable noncontrolling interest | — |  |  | — |  |  | — |  |  | — |  |  | — |
Stockholders’ equity: |  |  |  |  |  |  |  |  |
Class A Non-voting Common Stock, par value $.01 per share; | 461 |  |  | 12 |  |  | — |  |  | (2 | ) |  | 471 |
Class B Voting Common Stock, convertible, par value $.01 per share; | 30 |  |  | (1 | ) |  | 1 |  |  | — |  |  | 30 |
Additional paid-in capital | 221,526 |  |  | 98,980 |  |  | 50,568 |  |  | (128,676 | ) |  | 242,398 |
Retained earnings | 174,860 |  |  | 251,418 |  |  | (4,183 | ) |  | — |  |  | 422,095 |
Accumulated other comprehensive income (loss) | 6,923 |  |  | (170 | ) |  | (7,499 | ) |  | — |  |  | (746 | )
EZCorp, Inc. stockholders’ equity | 403,800 |  |  | 350,239 |  |  | 38,887 |  |  | (128,678 | ) |  | 664,248 |
Total liabilities and stockholders’ equity | $ | 237,615 |  |  | $ | 583,711 |  |  | $ | 63,748 |  |  | $ | (128,624 | ) |  | $ | 756,450 |

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Condensed Consolidating Statements of Operations

| Three Months Ended June 30, 2012
| (Unaudited)
| (In thousands)
| Parent |  | Subsidiary Guarantors |  | Other Subsidiaries |  | Eliminations |  | Consolidated
Revenues: |  |  |  |  |  |  |  |  |
Sales | $ | — |  |  | $ | 102,008 |  |  | $ | 15,924 |  |  | $ | — |  |  | $ | 117,932 |
Pawn service charges | — |  |  | 49,979 |  |  | 6,184 |  |  | — |  |  | 56,163 |
Consumer loan fees | — |  |  | 36,171 |  |  | 17,333 |  |  | — |  |  | 53,504 |
Other revenues | — |  |  | 2,006 |  |  | 952 |  |  | (1,593 | ) |  | 1,365 |
Total revenues | — |  |  | 190,164 |  |  | 40,393 |  |  | (1,593 | ) |  | 228,964 |
Cost of goods sold | — |  |  | 62,198 |  |  | 10,255 |  |  | — |  |  | 72,453 |
Consumer loan bad debt | — |  |  | 8,710 |  |  | 2,541 |  |  | — |  |  | 11,251 |
Net revenues | — |  |  | 119,256 |  |  | 27,597 |  |  | (1,593 | ) |  | 145,260 |
Operating expenses: |  |  |  |  |  |  |  |  |
Operations | — |  |  | 62,612 |  |  | 13,097 |  |  | — |  |  | 75,709 |
Administrative | — |  |  | 16,200 |  |  | 8,090 |  |  | (1,593 | ) |  | 22,697 |
Depreciation | — |  |  | 4,660 |  |  | 1,555 |  |  | — |  |  | 6,215 |
Amortization | — |  |  | 118 |  |  | 1,044 |  |  | — |  |  | 1,162 |
Loss on sale or disposal of assets | — |  |  | 93 |  |  | 219 |  |  | — |  |  | 312 |
Total operating expenses | — |  |  | 83,683 |  |  | 24,005 |  |  | (1,593 | ) |  | 106,095 |
Operating income | — |  |  | 35,573 |  |  | 3,592 |  |  | — |  |  | 39,165 |
Interest income | — |  |  | (287 | ) |  | (117 | ) |  | 271 |  |  | (133 | )
Interest expense | 877 |  |  | 15 |  |  | 409 |  |  | (271 | ) |  | 1,030 |
Equity in net income of unconsolidated affiliates | (2,247 | ) |  | (1,950 | ) |  | — |  |  | — |  |  | (4,197 | )
Other | — |  |  | 500 |  |  | (340 | ) |  | — |  |  | 160 |
Income before income taxes | 1,370 |  |  | 37,295 |  |  | 3,640 |  |  | — |  |  | 42,305 |
Income tax expense | 10,938 |  |  | 2 |  |  | 1,654 |  |  | — |  |  | 12,594 |
Net income | (9,568 | ) |  | 37,293 |  |  | 1,986 |  |  | — |  |  | 29,711 |
Net income attributable to redeemable noncontrolling interest | — |  |  | — |  |  | 1,188 |  |  | — |  |  | 1,188 |
Net income attributable to EZCORP, Inc. | $ | (9,568 | ) |  | $ | 37,293 |  |  | $ | 798 |  |  | $ | — |  |  | $ | 28,523 |

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| Three Months Ended June 30, 2011
| (Unaudited)
| (In thousands)
| Parent |  | Subsidiary Guarantors |  | Other Subsidiaries |  | Eliminations |  | Consolidated
Revenues: |  |  |  |  |  |  |  |  |
Sales | $ | — |  |  | $ | 104,342 |  |  | $ | 11,003 |  |  | $ | — |  |  | $ | 115,345 |
Pawn service charges | — |  |  | 43,846 |  |  | 4,519 |  |  | — |  |  | 48,365 |
Consumer loan fees | — |  |  | 36,390 |  |  | 2,480 |  |  | — |  |  | 38,870 |
Other revenues | 14,121 |  |  | 327 |  |  | 245 |  |  | (14,121 | ) |  | 572 |
Total revenues | 14,121 |  |  | 184,905 |  |  | 18,247 |  |  | (14,121 | ) |  | 203,152 |
Cost of goods sold | — |  |  | 61,677 |  |  | 7,451 |  |  | — |  |  | 69,128 |
Consumer loan bad debt | — |  |  | 10,311 |  |  | 716 |  |  | — |  |  | 11,027 |
Net revenues | 14,121 |  |  | 112,917 |  |  | 10,080 |  |  | (14,121 | ) |  | 122,997 |
Operating expenses: |  |  |  |  |  |  |  |  |
Operations | — |  |  | 58,869 |  |  | 7,884 |  |  | — |  |  | 66,753 |
Administrative | — |  |  | 13,109 |  |  | 1,270 |  |  | — |  |  | 14,379 |
Depreciation | — |  |  | 3,641 |  |  | 817 |  |  | — |  |  | 4,458 |
Amortization | — |  |  | 93 |  |  | 128 |  |  | — |  |  | 221 |
Loss on sale or disposal of assets | — |  |  | 157 |  |  | 12 |  |  | — |  |  | 169 |
Total operating expenses | — |  |  | 75,869 |  |  | 10,111 |  |  | — |  |  | 85,980 |
Operating income | 14,121 |  |  | 37,048 |  |  | (31 | ) |  | (14,121 | ) |  | 37,017 |
Interest income | 5,008 |  |  | (65 | ) |  | (1 | ) |  | (4,963 | ) |  | (21 | )
Interest expense | (7,108 | ) |  | 2,668 |  |  | 63 |  |  | 4,963 |  |  | 586 |
Equity in net income of unconsolidated affiliates | (2,365 | ) |  | (1,734 | ) |  | — |  |  | — |  |  | (4,099 | )
Other | — |  |  | (107 | ) |  | 4 |  |  | — |  |  | (103 | )
Income before income taxes | 18,586 |  |  | 36,286 |  |  | (97 | ) |  | (14,121 | ) |  | 40,654 |
Income tax expense | 13,877 |  |  | 14,127 |  |  | 244 |  |  | (14,121 | ) |  | 14,127 |
Net income | 4,709 |  |  | 22,159 |  |  | (341 | ) |  | — |  |  | 26,527 |
Net income attributable to redeemable noncontrolling interest | — |  |  | — |  |  | — |  |  | — |  |  | — |
Net income attributable to EZCORP, Inc. | $ | 4,709 |  |  | $ | 22,159 |  |  | $ | (341 | ) |  | $ | — |  |  | $ | 26,527 |

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| Nine Months Ended June 30, 2012
| (Unaudited)
| (In thousands)
| Parent |  | Subsidiary Guarantors |  | Other Subsidiaries |  | Eliminations |  | Consolidated
Revenues: |  |  |  |  |  |  |  |  |
Sales | $ | — |  |  | $ | 364,326 |  |  | $ | 45,075 |  |  | $ | — |  |  | $ | 409,401 |
Pawn service charges | — |  |  | 154,854 |  |  | 17,545 |  |  | — |  |  | 172,399 |
Consumer loan fees | — |  |  | 118,821 |  |  | 30,090 |  |  | — |  |  | 148,911 |
Other revenues | 20,139 |  |  | 3,841 |  |  | 1,628 |  |  | (22,204 | ) |  | 3,404 |
Total revenues | 20,139 |  |  | 641,842 |  |  | 94,338 |  |  | (22,204 | ) |  | 734,115 |
Cost of goods sold | — |  |  | 217,709 |  |  | 26,754 |  |  | — |  |  | 244,463 |
Consumer loan bad debt | — |  |  | 24,211 |  |  | 4,531 |  |  | — |  |  | 28,742 |
Net revenues | 20,139 |  |  | 399,922 |  |  | 63,053 |  |  | (22,204 | ) |  | 460,910 |
Operating expenses: |  |  |  |  |  |  |  |  |
Operations | — |  |  | 192,880 |  |  | 34,599 |  |  | — |  |  | 227,479 |
Administrative | — |  |  | 51,021 |  |  | 14,805 |  |  | (2,065 | ) |  | 63,761 |
Depreciation | — |  |  | 13,027 |  |  | 3,778 |  |  | — |  |  | 16,805 |
Amortization | — |  |  | 345 |  |  | 2,741 |  |  | — |  |  | 3,086 |
(Gain) loss on sale or disposal of assets | — |  |  | (129 | ) |  | 267 |  |  | — |  |  | 138 |
Total operating expenses | — |  |  | 257,144 |  |  | 56,190 |  |  | (2,065 | ) |  | 311,269 |
Operating income | 20,139 |  |  | 142,778 |  |  | 6,863 |  |  | (20,139 | ) |  | 149,641 |
Interest income | (3,525 | ) |  | (672 | ) |  | (274 | ) |  | 3,985 |  |  | (486 | )
Interest expense | 2,133 |  |  | 3,542 |  |  | 2,490 |  |  | (3,985 | ) |  | 4,180 |
Equity in net income of unconsolidated affiliates | (6,725 | ) |  | (6,210 | ) |  | — |  |  | — |  |  | (12,935 | )
Other | — |  |  | 166 |  |  | (323 | ) |  | — |  |  | (157 | )
Income before income taxes | 28,256 |  |  | 145,952 |  |  | 4,970 |  |  | (20,139 | ) |  | 159,039 |
Income tax expense | 48,662 |  |  | 20,141 |  |  | 3,939 |  |  | (20,139 | ) |  | 52,603 |
Net income | (20,406 | ) |  | 125,811 |  |  | 1,031 |  |  | — |  |  | 106,436 |
Net income attributable to redeemable noncontrolling interest | — |  |  | — |  |  | 1,300 |  |  | — |  |  | 1,300 |
Net income attributable to EZCORP, Inc. | $ | (20,406 | ) |  | $ | 125,811 |  |  | $ | (269 | ) |  | $ | — |  |  | $ | 105,136 |

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| Nine Months Ended June 30, 2011
| (Unaudited)
| (In thousands)
| Parent |  | Subsidiary Guarantors |  | Other Subsidiaries |  | Eliminations |  | Consolidated
Revenues: |  |  |  |  |  |  |  |  |
Sales | $ | — |  |  | $ | 334,209 |  |  | $ | 29,449 |  |  | $ | — |  |  | $ | 363,658 |
Pawn service charges | — |  |  | 133,355 |  |  | 11,589 |  |  | — |  |  | 144,944 |
Consumer loan fees | — |  |  | 119,600 |  |  | 6,052 |  |  | — |  |  | 125,652 |
Other revenues | 46,658 |  |  | 681 |  |  | 297 |  |  | (46,658 | ) |  | 978 |
Total revenues | 46,658 |  |  | 587,845 |  |  | 47,387 |  |  | (46,658 | ) |  | 635,232 |
Cost of goods sold | — |  |  | 199,625 |  |  | 19,633 |  |  | — |  |  | 219,258 |
Consumer loan bad debt | — |  |  | 25,875 |  |  | 1,920 |  |  | — |  |  | 27,795 |
Net revenues | 46,658 |  |  | 362,345 |  |  | 25,834 |  |  | (46,658 | ) |  | 388,179 |
Operating expenses: |  |  |  |  |  |  |  |  |
Operations | — |  |  | 176,145 |  |  | 21,157 |  |  | — |  |  | 197,302 |
Administrative | — |  |  | 52,827 |  |  | 3,423 |  |  | — |  |  | 56,250 |
Depreciation | — |  |  | 10,462 |  |  | 2,208 |  |  | — |  |  | 12,670 |
Amortization | — |  |  | 320 |  |  | 334 |  |  | — |  |  | 654 |
(Gain) loss on sale or disposal of assets | — |  |  | (132 | ) |  | 130 |  |  | — |  |  | (2 | )
Total operating expenses | — |  |  | 239,622 |  |  | 27,252 |  |  | — |  |  | 266,874 |
Operating income | 46,658 |  |  | 122,723 |  |  | (1,418 | ) |  | (46,658 | ) |  | 121,305 |
Interest income | (15 | ) |  | (202 | ) |  | (1 | ) |  | 183 |  |  | (35 | )
Interest expense | (6,511 | ) |  | 7,691 |  |  | 189 |  |  | (183 | ) |  | 1,186 |
Equity in net income of unconsolidated affiliates | (6,797 | ) |  | (5,360 | ) |  | — |  |  | — |  |  | (12,157 | )
Other | — |  |  | (168 | ) |  | 8 |  |  | — |  |  | (160 | )
Income before income taxes | 59,981 |  |  | 120,762 |  |  | (1,614 | ) |  | (46,658 | ) |  | 132,471 |
Income tax expense | 46,108 |  |  | 46,677 |  |  | 550 |  |  | (46,658 | ) |  | 46,677 |
Net income | 13,873 |  |  | 74,085 |  |  | (2,164 | ) |  | — |  |  | 85,794 |
Net income attributable to redeemable noncontrolling interest | — |  |  | — |  |  | — |  |  | — |  |  | — |
Net income attributable to EZCORP, Inc. | $ | 13,873 |  |  | $ | 74,085 |  |  | $ | (2,164 | ) |  | $ | — |  |  | $ | 85,794 |

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Condensed Consolidating Statement of Comprehensive Income

| Three Months Ended
| June 30, 2012
| Parent |  | Subsidiary Guarantors |  | Other Subsidiaries |  | Consolidated
| (In thousands)
Net income (loss) | $ | (9,568 | ) |  | $ | 37,293 |  |  | $ | 1,986 |  |  | $ | 29,711 |
Other comprehensive income (loss): |  |  |  |  |  |  |
Foreign currency translation gain (loss) | 1,578 |  |  | 1,235 |  |  | (11,326 | ) |  | (8,513 | )
Unrealized holding loss arising during period | — |  |  | (108 | ) |  | — |  |  | (108 | )
Income tax benefit (provision) | (553 | ) |  | (395 | ) |  | — |  |  | (948 | )
Other comprehensive income (loss), net of tax | 1,025 |  |  | 732 |  |  | (11,326 | ) |  | (9,569 | )
Comprehensive income (loss) | $ | (8,543 | ) |  | $ | 38,025 |  |  | $ | (9,340 | ) |  | $ | 20,142 |
Attributable to redeemable noncontrolling interest: |  |  |  |  |  |  |
Net income | — |  |  | — |  |  | 1,188 |  |  | 1,188 |
Foreign currency translation gain (loss) | — |  |  | — |  |  | (2,789 | ) |  | (2,789 | )
Comprehensive income (loss) | — |  |  | — |  |  | (1,601 | ) |  | (1,601 | )
Comprehensive income (loss) attributable to EZCORP, Inc. | $ | (8,543 | ) |  | $ | 38,025 |  |  | $ | (7,739 | ) |  | $ | 21,743 |

| Three Months Ended
| June 30, 2011
| Parent |  | Subsidiary Guarantors |  | Other Subsidiaries |  | Consolidated
| (In thousands)
Net income (loss) | $ | 4,709 |  |  | $ | 22,159 |  |  | $ | (341 | ) |  | $ | 26,527 |
Other comprehensive income (loss): |  |  |  |  |  |  |
Foreign currency translation gain (loss) | 1,045 |  |  | 1,063 |  |  | 337 |  |  | 2,445 |
Unrealized holding loss arising during period | — |  |  | 748 |  |  | — |  |  | 748 |
Income tax provision | (366 | ) |  | (634 | ) |  | — |  |  | (1,000 | )
Other comprehensive income (loss), net of tax | 679 |  |  | 1,177 |  |  | 337 |  |  | 2,193 |
Comprehensive income (loss) | $ | 5,388 |  |  | $ | 23,336 |  |  | $ | (4 | ) |  | $ | 28,720 |
Attributable to redeemable noncontrolling interest: |  |  |  |  |  |  |
Net income | — |  |  | — |  |  | — |  |  | — |
Foreign currency translation gain (loss) | — |  |  | — |  |  | — |  |  | — |
Comprehensive income | — |  |  | — |  |  | — |  |  | — |
Comprehensive income (loss) attributable to EZCORP, Inc. | $ | 5,388 |  |  | $ | 23,336 |  |  | $ | (4 | ) |  | $ | 28,720 |

| Nine Months Ended
| June 30, 2012
| Parent |  | Subsidiary Guarantors |  | Other Subsidiaries |  | Consolidated
| (In thousands)
Net income (loss) | $ | (20,406 | ) |  | $ | 125,811 |  |  | $ | 1,031 |  |  | $ | 106,436 |
Other comprehensive income (loss): |  |  |  |  |  |  |
Foreign currency translation adjustments | (3,551 | ) |  | (102 | ) |  | (7,234 | ) |  | (10,887 | )
Unrealized holding loss arising during period | — |  |  | (846 | ) |  | — |  |  | (846 | )
Income tax benefit | 1,242 |  |  | 321 |  |  | — |  |  | 1,563 |
Other comprehensive income (loss), net of tax | (2,309 | ) |  | (627 | ) |  | (7,234 | ) |  | (10,170 | )
Comprehensive income (loss) | $ | (22,715 | ) |  | $ | 125,184 |  |  | $ | (6,203 | ) |  | $ | 96,266 |
Attributable to redeemable noncontrolling interest: |  |  |  |  |  |  |
Net income | — |  |  | — |  |  | 1,300 |  |  | 1,300 |
Foreign currency translation adjustments | — |  |  | — |  |  | (2,293 | ) |  | (2,293 | )
Comprehensive income | — |  |  | — |  |  | (993 | ) |  | (993 | )
Comprehensive income (loss) attributable to EZCORP, Inc. | $ | (22,715 | ) |  | $ | 125,184 |  |  | $ | (5,210 | ) |  | $ | 97,259 |

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Table of Contents

| Nine Months Ended
| June 30, 2011
| Parent |  | Subsidiary Guarantors |  | Other Subsidiaries |  | Consolidated
| (In thousands)
Net Income (loss) | $ | 13,873 |  |  | $ | 74,085 |  |  | $ | (2,164 | ) |  | $ | 85,794 |
Other comprehensive income (loss): |  |  |  |  |  |  |
Foreign currency translation adjustments | 11,354 |  |  | 1,736 |  |  | 2,243 |  |  | 15,333 |
Unrealized holding gains arising during period | — |  |  | 986 |  |  | — |  |  | 986 |
Income tax provision | (3,974 | ) |  | (953 | ) |  | — |  |  | (4,927 | )
Other comprehensive income, net of tax | 7,380 |  |  | 1,769 |  |  | 2,243 |  |  | 11,392 |
Comprehensive income | $ | 21,253 |  |  | $ | 75,854 |  |  | $ | 79 |  |  | $ | 97,186 |
Attributable to redeemable noncontrolling interest: |  |  |  |  |  |  |
Net income | — |  |  | — |  |  | — |  |  | — |
Foreign currency translation adjustments | — |  |  | — |  |  | — |  |  | — |
Comprehensive income | — |  |  | — |  |  | — |  |  | — |
Comprehensive income attributable to EZCORP, Inc. | $ | 21,253 |  |  | $ | 75,854 |  |  | $ | 79 |  |  | $ | 97,186 |

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Condensed Consolidating Statement of Cash Flows

| Nine Months Ended June 30, 2012
| (In thousands)
| Parent |  | Subsidiary Guarantors |  | Other Subsidiaries |  | Consolidated
Operating Activities: |  |  |  |  |  |  |
Net income (loss) | $ | (20,406 | ) |  | $ | 125,811 |  |  | $ | 1,031 |  |  | $ | 106,436 |
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |  |  |  |  |
Depreciation and amortization | — |  |  | 13,372 |  |  | 6,519 |  |  | 19,891 |
Consumer loan loss provisions | — |  |  | 7,609 |  |  | 4,527 |  |  | 12,136 |
Deferred income taxes | 563 |  |  | (379 | ) |  | (828 | ) |  | (644 | )
Net (gain) loss on sale or disposal of assets | — |  |  | (129 | ) |  | 267 |  |  | 138 |
Stock compensation | — |  |  | 5,191 |  |  | — |  |  | 5,191 |
Income from investments in unconsolidated affiliates | (6,725 | ) |  | (6,210 | ) |  | — |  |  | (12,935 | )
Changes in operating assets and liabilities, net of business acquisitions: |  |  |  |  |  |  |
Service charges and fees receivable, net | — |  |  | 2,651 |  |  | (1,501 | ) |  | 1,150 |
Inventory, net | — |  |  | 761 |  |  | (1,635 | ) |  | (874 | )
Prepaid expenses, other current assets, and other assets, net | (13 | ) |  | (11,377 | ) |  | 6,545 |  |  | (4,845 | )
Accounts payable and accrued expenses | (65,383 | ) |  | (48,709 | ) |  | 101,992 |  |  | (12,100 | )
Customer layaway deposits | — |  |  | (582 | ) |  | 400 |  |  | (182 | )
Deferred gains and other long-term liabilities | — |  |  | 650 |  |  | 72 |  |  | 722 |
Excess tax benefit from stock compensation | (1,582 | ) |  | — |  |  | — |  |  | (1,582 | )
Income taxes receivable/payable | (6,249 | ) |  | (3,102 | ) |  | 981 |  |  | (8,370 | )
Net cash provided by (used in) operating activities | $ | (99,795 | ) |  | $ | 85,557 |  |  | $ | 118,370 |  |  | $ | 104,132 |
Investing Activities: |  |  |  |  |  |  |
Loans made | — |  |  | (461,023 | ) |  | (110,660 | ) |  | (571,683 | )
Loans repaid | — |  |  | 304,028 |  |  | 78,826 |  |  | 382,854 |
Recovery of pawn loan principal through sale of forfeited collateral | — |  |  | 159,913 |  |  | 19,768 |  |  | 179,681 |
Additions to property and equipment | — |  |  | (21,427 | ) |  | (11,766 | ) |  | (33,193 | )
Acquisitions, net of cash acquired | — |  |  | (62,504 | ) |  | (62,745 | ) |  | (125,249 | )
Dividends from unconsolidated affiliates | 2,222 |  |  | 3,338 |  |  | — |  |  | 5,560 |
Net cash provided by (used in) investing activities | $ | 2,222 |  |  | $ | (77,675 | ) |  | $ | (86,577 | ) |  | $ | (162,030 | )
Financing Activities: |  |  |  |  |  |  |
Proceeds from exercise of stock options | 647 |  |  | — |  |  | — |  |  | 647 |
Excess tax benefit from stock compensation | 1,582 |  |  | — |  |  | — |  |  | 1,582 |
Taxes paid related to net share settlement of equity awards | (1,153 | ) |  | — |  |  | — |  |  | (1,153 | )
Change in restricted cash | — |  |  | — |  |  | (1,085 | ) |  | (1,085 | )
Proceeds from revolving line of credit | 590,700 |  |  | — |  |  | 4,109 |  |  | 594,809 |
Payments on revolving line of credit | (493,500 | ) |  | — |  |  | (9,075 | ) |  | (502,575 | )
Proceeds from bank borrowings | — |  |  | — |  |  | 343 |  |  | 343 |
Payments on bank borrowings and capital lease obligations | — |  |  | (68 | ) |  | (8,096 | ) |  | (8,164 | )
Net cash provided by (used in) financing activities | $ | 98,276 |  |  | $ | (68 | ) |  | $ | (13,804 | ) |  | $ | 84,404 |
Effect of exchange rate changes on cash and cash equivalents | — |  |  | — |  |  | 299 |  |  | 299 |
Net increase in cash and cash equivalents | 703 |  |  | 7,814 |  |  | 18,288 |  |  | 26,805 |
Cash and cash equivalents at beginning of period | — |  |  | 20,860 |  |  | 3,109 |  |  | 23,969 |
Cash and cash equivalents at end of period | $ | 703 |  |  | $ | 28,674 |  |  | $ | 21,397 |  |  | $ | 50,774 |

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| Nine Months Ended June 30, 2011
| (In thousands)
| Parent |  | Subsidiary Guarantors |  | Other Subsidiaries |  | Consolidated
Operating Activities: |  |  |  |  |  |  |
Net income | $ | 13,873 |  |  | $ | 74,085 |  |  | $ | (2,164 | ) |  | 85,794 |
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |  |  |  |  |
Depreciation and amortization | — |  |  | 10,782 |  |  | 2,542 |  |  | 13,324 |
Consumer loan loss provisions | — |  |  | 9,296 |  |  | 1,959 |  |  | 11,255 |
Deferred income taxes | 8,341 |  |  | 241 |  |  | (11 | ) |  | 8,571 |
Net (gain) loss on sale or disposal of assets | — |  |  | (132 | ) |  | 130 |  |  | (2 | )
Stock compensation | — |  |  | 11,536 |  |  | — |  |  | 11,536 |
Income from investments in unconsolidated affiliates | (6,797 | ) |  | (5,360 | ) |  | — |  |  | (12,157 | )
Changes in operating assets and liabilities, net of business acquisitions: |  |  |  |  |  |  |
Service charges and fees receivable, net | — |  |  | (545 | ) |  | (439 | ) |  | (984 | )
Inventory, net | — |  |  | (292 | ) |  | (914 | ) |  | (1,206 | )
Prepaid expenses, other current assets, and other assets, net | (2,115 | ) |  | 713 |  |  | (3,443 | ) |  | (4,845 | )
Accounts payable and accrued expenses | (12,558 | ) |  | (4,157 | ) |  | 19,783 |  |  | 3,068 |
Customer layaway deposits | — |  |  | (404 | ) |  | 242 |  |  | (162 | )
Deferred gains and other long-term liabilities | (446 | ) |  | 107 |  |  | 64 |  |  | (275 | )
Excess tax benefit from stock compensation | (3,166 | ) |  | — |  |  | — |  |  | (3,166 | )
Income taxes receivable/payable | 1,100 |  |  | (3,195 | ) |  | (1,358 | ) |  | (3,453 | )
Net cash provided by (used in) operating activities | $ | (1,768 | ) |  | $ | 92,675 |  |  | $ | 16,391 |  |  | $ | 107,298 |
Investing Activities: |  |  |  |  |  |  |
Loans made | — |  |  | (397,416 | ) |  | (68,721 | ) |  | (466,137 | )
Loans repaid | — |  |  | 251,111 |  |  | 45,905 |  |  | 297,016 |
Recovery of pawn loan principal through sale of forfeited collateral | — |  |  | 134,668 |  |  | 15,286 |  |  | 149,954 |
Additions to property and equipment | — |  |  | (17,457 | ) |  | (6,867 | ) |  | (24,324 | )
Acquisitions, net of cash acquired | — |  |  | (64,823 | ) |  | — |  |  | (64,823 | )
Dividends from unconsolidated affiliates | 4,116 |  |  | 3,158 |  |  | — |  |  | 7,274 |
Net cash provided by (used in) investing activities | $ | 4,116 |  |  | $ | (90,759 | ) |  | $ | (14,397 | ) |  | $ | (101,040 | )
Financing Activities: |  |  |  |  |  |  |
Proceeds from exercise of stock options | 395 |  |  | — |  |  | — |  |  | 395 |
Excess tax benefit from stock compensation | 3,166 |  |  | — |  |  | — |  |  | 3,166 |
Debt issuance cost | — |  |  | (2,397 | ) |  | — |  |  | (2,397 | )
Taxes paid related to net share settlement of equity awards | (7,409 | ) |  | — |  |  | — |  |  | (7,409 | )
Proceeds on revolving line of credit | 70,000 |  |  | — |  |  | — |  |  | 70,000 |
Payments on revolving line of credit | (43,500 | ) |  | — |  |  | — |  |  | (43,500 | )
Payments on bank borrowings | (25,000 | ) |  | (4 | ) |  | — |  |  | (25,004 | )
Net cash used in financing activities | $ | (2,348 | ) |  | $ | (2,401 | ) |  | $ | — |  |  | $ | (4,749 | )
Effect of exchange rate changes on cash and cash equivalents | — |  |  | — |  |  | 129 |  |  | 129 |
Net (decrease) increase in cash and cash equivalents | — |  |  | (485 | ) |  | 2,123 |  |  | 1,638 |
Cash and cash equivalents at beginning of period | — |  |  | 23,862 |  |  | 1,992 |  |  | 25,854 |
Cash and cash equivalents at end of period | $ | — |  |  | $ | 23,377 |  |  | $ | 4,115 |  |  | $ | 27,492 |

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Note O. Supplemental Consolidated Financial Information
Supplemental Consolidated Statements of Financial Position Information:
The following table provides information on amounts included in pawn service charges receivable, net, consumer loan fees, net, inventories, net and property and equipment, net:

| June 30, |  | September 30,
| 2012 |  | 2011 |  | 2011
| (In thousands)
Pawn service charges receivable: |  |  |  |  |
Gross pawn service charges receivable | $ | 37,127 |  |  | $ | 34,739 |  |  | $ | 37,175 |
Allowance for uncollectible pawn service charges receivable | (11,035 | ) |  | (10,367 | ) |  | (10,720 | )
Pawn service charges receivable, net | $ | 26,092 |  |  | $ | 24,372 |  |  | $ | 26,455 |
Consumer loan fees receivable: |  |  |  |  |
Gross consumer loan fees receivable | $ | 30,097 |  |  | $ | 7,381 |  |  | $ | 7,346 |
Allowance for uncollectible consumer loan fees receivable | (4,368 | ) |  | (497 | ) |  | (571 | )
Consumer loan fees receivable, net | $ | 25,729 |  |  | $ | 6,884 |  |  | $ | 6,775 |
Inventory: |  |  |  |  |
Inventory, gross | $ | 100,970 |  |  | $ | 87,066 |  |  | $ | 99,854 |
Inventory reserves | (6,549 | ) |  | (8,035 | ) |  | (9,481 | )
Inventory, net | $ | 94,421 |  |  | $ | 79,031 |  |  | $ | 90,373 |
Property and equipment: |  |  |  |  |
Property and equipment, gross | $ | 245,487 |  |  | $ | 200,728 |  |  | $ | 207,392 |
Accumulated depreciation | (145,291 | ) |  | (125,679 | ) |  | (128,894 | )
Property and equipment, net | $ | 100,196 |  |  | $ | 75,049 |  |  | $ | 78,498 |

Property and equipment at June 30, 2012 includes approximately $1.2 million of equipment leased under a capital lease. Amortization of equipment under capital leases is included with depreciation expense and was immaterial for the three and nine-month periods ended June 30, 2012. Future minimum lease payments related to capital leases are $0.5 million, $0.5 million and $0.3 million due within one, two and three years respectively, for a total of $1.3 million, of this amount $0.2 million represents interest, and the present value of net minimum lease payments as of June 30, 2012 was $1.1 million.
Other Supplemental Information:

| June 30, |  | September 30,
| 2012 |  | 2011 |  | 2011
| (In thousands)
Consumer loans: |  |  |  |  |
Expected LOC losses | $ | 1,775 |  |  | $ | 1,664 |  |  | $ | 1,795 |
Maximum exposure for LOC losses | $ | 24,842 |  |  | $ | 29,589 |  |  | $ | 30,268 |

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The discussion in this section contains forward-looking statements that are based on our current expectations. Actual results could differ materially from those expressed or implied by the forward-looking statements due to a number of risks, uncertainties and other factors, including those identified in “Part II, Item 1A — Risk Factors” of this report and "Part I, Item 1A—Risk Factors" of our Annual Report on FOrm 10-K for the year ended September 30, 2011.
Overview
We are a leading provider of instant cash solutions. We provide collateralized, non-recourse loans, commonly known as pawn loans, and a variety of short-term consumer loans including payday loans, installment loans and auto title loans, and in Texas only, fee-based credit services to customers seeking loans. The acquisition of a 60% interest in Crediamigo marks our initial entry into the unsecured lending market in Mexico. Crediamigo has approximately 170 payroll withholding agreements with Mexican employers, primarily federal, state and local governments and agencies, and provides long-term consumer loans to the agencies’ employees. In the current quarter, we acquired a 72% interest in Cash Genie, which offers short-term consumer loans online in the United Kingdom.
At June 30, 2012, we operated a total of 1,250 locations, consisting of 464 U.S. pawn stores (operating primarily as EZPAWN or Value Pawn) and seven retail stores (operating as Cash Converters), 223 pawn stores in Mexico (operating as Empeño Fácil or Empeñe su Oro), 443 U.S. financial services stores (operating primarily as EZMONEY), 32 financial services stores in Canada (operating as CASHMAX ), 36 financial and retail services stores in Canada (operating as Cash Converters) and 45 Crediamigo locations in Mexico. In addition, we are the franchisor for 12 franchised Cash Converters stores in Canada. We also own almost 30% of Albemarle & Bond Holdings, PLC, one of the U.K.’s largest pawnbroking businesses with over 150 stores, and almost 33% of Cash Converters International Limited, which franchises and operates a worldwide network of over 600 locations that buy and sell second-hand merchandise and offer financial services.
Our business consists of three reportable segments: The U.S. & Canada segment, which includes all business activities in the United States and Canada; Latin America segment, which includes our Empeño Fácil Pawn operations and Crediamigo financial services operations in Mexico; and Other International segment, which currently includes the Cash Genie online business in the U.K. and our equity interests in the net income of Albemarle & Bond and Cash Converters International.
The following tables present stores by segment:

| Three Months Ended June 30, 2012
| Company-owned Stores |  |
| U.S. & Canada |  | Latin America |  | Other International |  | Consolidated |  | Franchises
Stores in operation: |  |  |  |  |  |  |  |  |
Beginning of period | 970 |  |  | 250 |  |  | — |  |  | 1,220 |  |  | 12 |
De novo | 4 |  |  | 19 |  |  | — |  |  | 23 |  |  | — |
Acquired | 9 |  |  | — |  |  | — |  |  | 9 |  |  | — |
Sold, combined, or closed | (1 | ) |  | (1 | ) |  | — |  |  | (2 | ) |  | — |
End of period | 982 |  |  | 268 |  |  | — |  |  | 1,250 |  |  | 12 |

| Nine Months Ended June 30, 2012
| Company-owned Stores |  |
| U.S. & Canada |  | Latin America |  | Other International |  | Consolidated |  | Franchises
Stores in operation: |  |  |  |  |  |  |  |  |
Beginning of period | 933 |  |  | 178 |  |  | — |  |  | 1,111 |  |  | 13 |
De novo | 12 |  |  | 46 |  |  | — |  |  | 58 |  |  | — |
Acquired | 49 |  |  | 45 |  |  | — |  |  | 94 |  |  | — |
Sold, combined, or closed | (12 | ) |  | (1 | ) |  | — |  |  | (13 | ) |  | (1 | )
End of period | 982 |  |  | 268 |  |  | — |  |  | 1,250 |  |  | 12 |

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| Three Months Ended June 30, 2011
| Company-owned Stores |  |
| U.S. & Canada |  | Latin America |  | Other International |  | Consolidated |  | Franchises
Stores in operation: |  |  |  |  |  |  |  |  |
Beginning of period | 910 |  |  | 147 |  |  | — |  |  | 1,057 |  |  | — |
De novo | 1 |  |  | 8 |  |  | — |  |  | 9 |  |  | — |
Acquired | 23 |  |  | — |  |  | — |  |  | 23 |  |  | 13 |
Sold, combined, or closed | (6 | ) |  | — |  |  | — |  |  | (6 | ) |  | (1 | )
End of period | 928 |  |  | 155 |  |  | — |  |  | 1,083 |  |  | 12 |

| Nine Months Ended June 30, 2011
| Company-owned Stores |  |
| U.S. & Canada |  | Latin America |  | Other International |  | Consolidated |  | Franchises
Stores in operation: |  |  |  |  |  |  |  |  |
Beginning of period | 891 |  |  | 115 |  |  | — |  |  | 1,006 |  |  | — |
De novo | 16 |  |  | 40 |  |  | — |  |  | 56 |  |  | — |
Acquired | 32 |  |  | — |  |  | — |  |  | 32 |  |  | 13 |
Sold, combined, or closed | (11 | ) |  | — |  |  | — |  |  | (11 | ) |  | (1 | )
End of period | 928 |  |  | 155 |  |  | — |  |  | 1,083 |  |  | 12 |

Pawn and Retail Activities
We earn pawn service charge revenues on our pawn lending. While allowable service charges vary by state and loan size, a majority of our U.S. pawn loans earn 20% per month. Our average U.S. pawn loan amount typically ranges between $125 and $145 but varies depending on the valuation of each item pawned. The total U.S. loan term ranges between 60 and 120 days, consisting of the primary term and grace period. In Mexico, pawn service charges range from 15% to 21% per month, including applicable taxes, with the majority of loans earning 21%. The total Mexico pawn loan term is 40 days, consisting of the primary term and grace period. Individual loans are made in Mexican pesos and vary depending on the valuation of each item pawned, but typically average $60 U.S. dollars.
In our pawn stores, retail stores in Pennsylvania and Virginia and certain financial services stores in Canada, we acquire inventory for retail sales through pawn loan forfeitures, purchases of customers’ second hand merchandise or purchases of new or refurbished merchandise from third party vendors. The gross profit on sales of inventory depends primarily on our assessment of the loan or purchase value at the time the property is either accepted as loan collateral or purchased. Margins achieved upon sale of inventory are a function of the assessment of value at the time the pawn loan was originated or, in the case of purchased merchandise, the purchase price.
We record a valuation allowance for obsolete or slow-moving inventory based on the type and age of merchandise. We generally establish a higher allowance percentage on general merchandise, as it is more susceptible to obsolescence, and establish a lower allowance percentage on jewelry, as it generally has greater inherent commodity value. At June 30, 2012, our total allowance was 6.5% of gross inventory compared to 9.2% at June 30, 2011 and 9.5% at September 30, 2011. Changes in the valuation allowance are charged to merchandise cost of goods sold.
Consumer Loan Activities
At June 30, 2012, 290 of our U.S. financial services stores and 25 of our U.S. pawn stores in Texas offered credit services to customers seeking short-term consumer loans from unaffiliated lenders. We do not participate in any of the loans made by the lenders, but earn a fee for helping customers obtain credit and for enhancing customers’ creditworthiness by providing letters of credit to the unaffiliated lenders. Customers may obtain two types of signature loans from the unaffiliated lenders. In all stores offering signature loan credit services, customers can obtain payday loans, with principal amounts up to $1,500 but averaging about $505. Terms of these loans are generally less than 30 days, averaging about 16 days, with due dates corresponding with the customers’ next payday. We typically earn a fee of 22% of the loan amount for our credit services offered in connection with payday loans. In the financial services stores offering credit services, customers can obtain longer-term unsecured installment loans from the unaffiliated lenders. There are two types of installment loans offered in connection with our credit
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services. All installment loans typically carry terms of about five months with ten equal installment payments, including principal amortization, due on customers’ paydays. Traditional installment loan principal amounts range from $1,525 to $3,000, but average about $2,145, and with each semi-monthly or bi-weekly installment payment, we earn a fee of 11% of the initial loan amount. Low dollar installment loan principal amounts range from $100 to $1,500, but average about $695. With each semi-monthly or bi-weekly installment payment, we earn a fee of 13-14% of the initial loan amount. At June 30, 2012, payday loans comprised 86% of the balance of signature loans brokered through our credit services, and installment loans comprised the remaining 14%.
Outside of Texas, we earn loan fee revenue on our consumer loans. In 20 U.S. pawn stores, 79 U.S. financial services stores and 67 Canadian financial services stores we offer payday loans subject to state or provincial law. The average payday loan amount is approximately $440 and the term is generally less than 30 days, averaging about 17 days. We typically charge a fee of 15% to 22% of the loan amount. In 115 of our U.S. financial services stores and three U.S. pawn stores, we offer installment loans subject to state law. These installment loans carry a term of four to seven months, with a series of equal installment payments including principal amortization, due monthly, semi-monthly or on the customers’ paydays. Total interest and fees on these loans vary in accordance with state law and loan terms, but over the entire loan term, total approximately 45% to 130% of the original principal amount of the loan. We began offering installment loans rather than payday loans in Wisconsin in January 2011 and in Missouri in June 2011. Installment loan principal amounts range from $100 to $3,000, but average approximately $555.
At June 30, 2012, 399 of our U.S. financial services stores and 44 of our U.S. pawn stores offered auto title loans or, in Texas, credit services to assist customers in obtaining auto title loans from unaffiliated lenders. Auto title loans are 30-day loans secured by the titles to customers’ automobiles. Loan principal amounts range from $100 to $10,000, but average about $825. We earn a fee of 12.5% to 25% of auto title loan amounts. In the current quarter, in Texas, we began assisting customers in obtaining longer-term auto title installment loans from unaffiliated lenders. Auto installment loans typically carry terms of two to four months with up to four equal installments. Auto installment loan principal amounts range from $150 to $10,000, but average about $850, and with each installment payment, we earn a fee of 5-14% of the initial loan amount.
In Mexico, Crediamigo offers installment consumer loans with typical annual yields of around 70% and collects interest and principal through payroll deductions. The average loan is approximately $1,150 with a term of 32 months.
Acquisitions
In the current quarter, we acquired nine pawn stores located in the state of Minnesota and a 72% interest in Ariste Holding Limited and its affiliates, which provides online loans in the U.K under the name "Cash Genie," for total consideration of $43.7 million, net of cash acquired. In the prior year quarter we acquired 23 stores located in Florida, Iowa, Wisconsin, Utah and the Chicago metropolitan area for approximately $33.3 million, net of cash acquired. The results of all acquired stores have been consolidated with our results since their acquisition.
International Growth
With continued execution of the our geographic and product diversification strategy nearly 20% of our consolidated segment contribution in the quarter was attributable to areas outside the United States, up from 9% a year earlier. Total revenue in the Latin America and Other International segments combined more than doubled, with combined segment contribution increasing 142%. These year-over year increases are the result of continued strength in our Empeño Fácil business in Mexico, the acquisition of controlling interests in Crediamigo and Cash Genie, and our strategic investments in the United Kingdom and Australia.
Other
Included in the results for the nine-month period ended June 30, 2011 is a pre-tax administrative expense charge of $10.9 million related to the October 2010 retirement of our former Chief Executive Officer, including $3.4 million attributable to a cash payment and $7.5 million attributable to the vesting of restricted stock. The prior year quarter income tax expense reflects a $3.8 million tax benefit related to this charge.
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Critical Accounting Policies
With the exception of the derivative instruments and hedging activities and consumer loan policies as described in the section below, there have been no changes in critical accounting policies as described in our Annual Report on Form 10-K for the year ended September 30, 2011.
Consumer Loans
We provide a variety of short-term consumer loans including payday loans, installment loans and auto title loans, and in Texas only, fee-based credit services to customers seeking loans. In Mexico, Crediamigo enters into agreements with employers that permit it to market long-term consumer loans to employees. Payments are withheld by the employers through payroll deductions and remitted to Crediamigo. With the exception of the incorporation of Crediamigo, there have been no changes to our consumer loans revenue recognition, allowance for losses and bad debt expense policies.
Revenue Recognition
We recognize consumer loan fees related to loans we directly originate based on the percentage of consumer loans made that we believe to be collectible. We earn credit service fees when we assist customers in obtaining consumer loans from unaffiliated lenders, and we recognize the fee revenue ratably over the life of the related loans. We reserve the percentage of interest and credit service fees we expect not to collect. Accrued fees related to defaulted loans reduce fee revenue upon loan default and increase fee revenue upon collection.
Bad Debt Expense
We consider a consumer loan defaulted if it has not been repaid or renewed, when applicable, by the maturity date. If one payment of an installment loan is delinquent, that one payment is considered defaulted. If more than one installment payment is delinquent at any time, the entire installment loan is considered defaulted. We charge loan principal of loans we directly originate to consumer loan bad debt. In Texas, we issue letters of credit to enhance the creditworthiness of our customers, which assure the lenders that if borrowers default on the loans, we will pay the lenders, upon demand, the principal and accrued interest owed to the lenders by the borrowers plus any insufficient fund fees. We charge amounts paid under letters of credit to consumer loan bad debt. In Mexico, we consider consumer loans made by Crediamigo defaulted if the customer is no longer employed and therefore we are no longer entitled to receive payments via payroll withholdings. Once we receive notice that the customer’s employment has been terminated, we charge the loan principal to consumer loan bad debt, leaving only active loans in the reported balance. We record recoveries of defaulted loans as a reduction of bad debt at the time of collection. After attempting collection of bad debts internally, we occasionally sell them to an unaffiliated company as another method of recovery, and record the proceeds from such sales as a reduction of bad debt at the time of the sale.
Allowance for Losses
We provide an allowance for losses on consumer loans that have not yet matured and related fees receivable, based on recent loan default experience adjusted for seasonal variations, and if applicable, the age of past-due loans and amounts we expect to receive through the sale of repossessed vehicles. The allowance for losses we expect to incur under letters of credit includes all amounts we expect to pay to the lenders upon loan default, including loan principal, accrued interest and insufficient funds fees. We charge any changes in the principal valuation allowance to consumer loan bad debt. We record changes in the fee receivable valuation allowance to consumer loan fee revenue.
Derivative Instruments and Hedging Activities
We record all derivative instruments according to Financial Accounting Standards Board (“FASB”) ASC 815-20-25, “Derivatives and Hedging – Recognition.” Accounting for changes in the fair value of derivatives is determined by the intended use of the derivative, whether it is designated as a hedge and whether the hedging relationship is effective in achieving offsetting changes for the risk being hedged. Derivatives designated to hedge the changes in the fair value of an asset, liability, or firm commitment due to an identified risk in the hedged item, such as interest rate risk or foreign currency exchange rate risk are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a cash flow hedge. We may enter into derivative contracts that are intended to economically hedge certain of our risks, even though hedge accounting does not apply or we elect not to apply hedge accounting.
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We acquire significant amounts of gold either through purchases or from forfeited pawn loan collateral and sell it to refiners. In our first fiscal quarter of 2012, we began using derivate financial instruments in order to manage our commodity price risk associated with the forecasted sales of gold scrap. From time to time, we purchase put options related to the future market price of gold, and simultaneously, we sell a call option for the same future period for a premium to offset the cost of the put. The combined put and call options, or collar, has the effect of providing us protection from the future downward gold price movement but also limits the extent we can participate in future upward price movement. These collars are not designated as hedges as they do not meet the hedge accounting requirements FASB ASC 851-20-25. The fair value of the derivative instruments is recognized in “Prepaid expenses and other assets” in the consolidated balance sheets and changes in fair value are recognized in “Other” in our consolidated statements of operations.
Reclassifications
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. For this reason, 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 costs including administrative, depreciation and amortization. When practical, these costs 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. Expenses that cannot be allocated are included as corporate expenses.
In our second fiscal quarter of 2011, we reclassified fees from our Product Protection Plan and Jewelry VIP Program as well as layaway fees from “Other” revenue to “Sales,” as fees from these products are incidental to sales of merchandise. Prior year figures have been reclassified to conform to this presentation and margins have been recalculated accordingly throughout management’s discussion and analysis.
Three Months Ended June 30, 2012 vs. Three Months Ended June 30, 2011
The following table presents selected, unaudited, consolidated financial data for our three-month periods ended June 30, 2012 and 2011 (the “current quarter” and “prior quarter," respectively):

| Three Months Ended June 30, |  | Percentage Change
| 2012 |  | 2011 |
| (In thousands) |  |
Revenues: |  |  |  |  |
Sales | $ | 117,932 |  |  | $ | 115,345 |  |  | 2.2 | %
Pawn service charges | 56,163 |  |  | 48,365 |  |  | 16.1 | %
Consumer loan fees | 53,504 |  |  | 38,870 |  |  | 37.6 | %
Other | 1,365 |  |  | 572 |  |  | 138.6 | %
Total revenues | 228,964 |  |  | 203,152 |  |  | 12.7 | %
Cost of goods sold | 72,453 |  |  | 69,128 |  |  | 4.8 | %
Consumer loan bad debt | 11,251 |  |  | 11,027 |  |  | 2.0 | %
Net revenues | $ | 145,260 |  |  | $ | 122,997 |  |  | 18.1 | %
Net income attributable to EZCORP, Inc. | $ | 28,523 |  |  | $ | 26,527 |  |  | 7.5 | %

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Nine Months Ended June 30, 2012 vs. Nine Months Ended June 30, 2011
The following table presents selected, unaudited, consolidated financial data for our nine-month periods ended June 30, 2012 and 2011 (the “current nine-month period” and “prior nine-month period,” respectively):

| Nine Months Ended June 30, |  | Percentage Change
| 2012 |  | 2011 |
| (In thousands) |  |
Revenues: |  |  |  |  |
Sales | $ | 409,401 |  |  | $ | 363,658 |  |  | 12.6 | %
Pawn service charges | 172,399 |  |  | 144,944 |  |  | 18.9 | %
Consumer loan fees | 148,911 |  |  | 125,652 |  |  | 18.5 | %
Other | 3,404 |  |  | 978 |  |  | 248.1 | %
Total revenues | 734,115 |  |  | 635,232 |  |  | 15.6 | %
Cost of goods sold | 244,463 |  |  | 219,258 |  |  | 11.5 | %
Consumer loan bad debt | 28,742 |  |  | 27,795 |  |  | 3.4 | %
Net revenues | $ | 460,910 |  |  | $ | 388,179 |  |  | 18.7 | %
Net income attributable to EZCORP, Inc. | $ | 105,136 |  |  | $ | 85,794 |  |  | 22.5 | %

Segment Results of Operations
Three Months Ended June 30, 2012 vs. Three Months Ended June 30, 2011
The following discussion compares our results of operations for the quarter ended June 30, 2012 to the quarter ended June 30, 2011. It should be read with the accompanying unaudited financial statements and related notes.
In the current quarter, consolidated total revenues increased 13%, or $25.8 million, to $229.0 million, compared to the prior year quarter. The increase was primarily driven by a 16% increase in pawn service charges, a 38% increase in consumer loan fees, which includes consumer loan fees of $17.8 million and $3.9 million from Crediamigo and Cash Genie, respectively, and an 18% increase in merchandise sales, partially offset by a 17% decrease in jewelry scrapping sales. Net revenues of $145.3 million, increased $22.3 million, or 18%, and store operations increased $9.0 million or 13%. Administrative expenses of $22.7 million increased $8.3 million, $4.9 million of which result from the consolidation of Crediamigo and Cash Genie, neither of which are store-based operations, and therefore, the majority of their cost base is included in administrative expenses. After a $2.7 million increase in depreciation and amortization, a $0.3 million increase in interest, a $1.5 million decrease in income tax expense and the $1.2 million in net income attributable to the noncontrolling interest, net income attributable to EZCORP, Inc. increased 8% to $28.5 million.
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U.S. & Canada
The following table presents selected financial data for the U.S. & Canada segment:

| Three Months Ended June 30,
| 2012 |  | 2011
| (In thousands)
Merchandise sales | $ | 65,799 |  |  | $ | 58,173 |
Jewelry scrapping sales | 37,456 |  |  | 46,514 |
Pawn service charges | 49,979 |  |  | 43,846 |
Consumer loan fees | 39,243 |  |  | 38,870 |
Other revenues | 649 |  |  | 566 |
Total revenues | 193,126 |  |  | 187,969 |
Merchandise cost of goods sold | 38,519 |  |  | 32,924 |
Jewelry scrapping cost of goods sold | 24,415 |  |  | 28,951 |
Consumer loan bad debt | 9,368 |  |  | 11,027 |
Net revenues | 120,824 |  |  | 115,067 |
Operations expense: |  |  |
Store operations | 65,975 |  |  | 61,347 |
Administrative | 5,970 |  |  | 4,293 |
Depreciation | 3,622 |  |  | 2,828 |
Amortization | 142 |  |  | 117 |
Loss on sale or disposal of assets | 93 |  |  | 157 |
Interest | (1 | ) |  | 20 |
Other | 614 |  |  | 2 |
Segment contribution | $ | 44,409 |  |  | $ | 46,303 |
Other data: |  |  |
Gross margin on merchandise sales | 41.5 | % |  | 43.4 | %
Gross margin on jewelry scrapping sales | 34.8 | % |  | 37.8 | %
Gross margin on total sales | 39.0 | % |  | 40.9 | %
Average pawn loan balance per pawn store at period end | $ | 285 |  |  | $ | 293 |
Average yield on pawn loan portfolio (a) | 164 | % |  | 157 | %
Pawn loan redemption rate | 83 | % |  | 82 | %
Consumer loan bad debt as a percentage of consumer loan fees | 24 | % |  | 28 | %

(a) | Average yield on pawn loan portfolio is calculated as pawn service charge revenues for the period divided by the average pawn loan balance during the period.

The U.S. & Canada segment total revenues increased $5.2 million, or 3% from the prior year quarter to $193.1 million. Same store total revenues decreased $9.4 million, or 5%, and new and acquired stores net of closed stores contributed $14.6 million. In the current quarter, we acquired 9 pawn stores in the U.S. for $11.3 million. As part of this acquisition, we began operations in the state of Minnesota, bringing the total number of states in which we operate to 24 at June 30, 2012.
Our current quarter pawn service charge revenue increased 14%, or $6.1 million, from the prior year quarter to $50.0 million. Same store pawn service charges increased $3.2 million, or 7%, with new and acquired stores net of closed stores contributing $2.9 million. The same store improvement was due to a 2% increase in average same store pawn loan balance coupled with a higher yield.
The current quarter merchandise sales gross profit increased $2.0 million, or 8%, from the prior year quarter to $27.3 million.
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This was due to an increase of $8.1 million in sales from new and acquired stores net of closed stores, partially offset by a 1%, or $0.5 million decrease in same store sales and a 1.9 percentage point decrease in gross margins. The decrease in gross margins is due to a shift in sales mix from jewelry sales to general merchandise. On a same store basis, general merchandise sales were up 9% while jewelry sales were down 19%.
Gross profit on jewelry scrapping sales decreased $4.5 million, or 26%, from the prior year quarter to $13.0 million. Jewelry scrapping revenues decreased $9.1 million, or 19%, due to a 28% decrease in gold volume partially offset by a 10% increase in proceeds realized per gram of gold jewelry scrapped. Same store jewelry scrapping sales decreased $12.0 million, or 26%, and new and acquired stores contributed $3.1 million. Jewelry scrapping sales include the sale of approximately $2.1 million of loose diamonds removed from scrap jewelry in the current quarter and $2.6 million in the prior year quarter. Scrap cost of goods decreased $4.5 million, or 16%, as a result of a 13% increase average cost per gram of jewelry scrapped and the decrease in volume.
Declining volume in both gold purchases and forfeited collateral from pawn loans resulted in the decline in gold scrapping volume in the quarter, continuing a trend that started in the prior year quarter. Although the percentage of our pawn balance represented by jewelry has remained relatively unchanged over time in dollar terms, volumes measured in grams have declined as prices have risen. Redemption rates for pawned jewelry have also risen gradually reaching 86% in the current quarter. Same store purchases of gold jewelry decreased 38% in the current quarter, also continuing a recent trend. As a result of fewer forfeited items and purchases, scrap sales decreased 26% in the quarter on a same store basis.
The current quarter’s consumer loan fees remained relatively constant at $39.2 million, a 1% increase over the prior year quarter; however, net fees increased 7%, reflecting a significant improvement in bad debt performance. Consumer loan bad debt as a percentage of fees is 24% in the current quarter compared to 28% in the prior year quarter. The improvement in bad debt was due to continuing improvements in the store level execution of servicing the customer and the loan, as well as enhanced productivity measurement tools and enhanced use of technology in our collections department.
Total segment operations expense increased to $76.4 million (40% of revenues) in the current quarter from $68.8 million (37% of revenues) in the prior year quarter. Store operations expense increased $4.6 million, or 8%, due to higher operating costs resulting from new and acquired stores. Administrative expenses increased 39%, or $1.7 million, to $6.0 million mainly due to increased labor, benefits and additional investments made in infrastructure to support our growth. Depreciation and amortization increase d 28%, or $0.8 million, from the prior year quarter to $3.8 million, mainly due to assets placed in service at new and acquired stores.
In the current quarter, U.S. & Canada delivered a segment contribution of $44.4 million, a $1.9 million decrease compared to the prior year quarter driven by the challenges related to jewelry merchandise sales and gold scrap sales; however, other elements of the business continued to show strength, offsetting to a large extent, the challenges in the gold and jewelry environment.
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Latin America
The following table presents selected financial data for the Latin America segment after translation to U.S. dollars from its functional currency of the Mexican peso:

| Three Months Ended June 30,
| 2012 |  | 2011
| (In thousands)
Merchandise sales | $ | 10,159 |  |  | $ | 6,401 |
Jewelry scrapping sales | 4,518 |  |  | 4,257 |
Pawn service charges | 6,184 |  |  | 4,519 |
Consumer loan fees | 10,381 |  |  | — |
Other revenues | 558 |  |  | 6 |
Total revenues | 31,800 |  |  | 15,183 |
Merchandise cost of goods sold | 5,735 |  |  | 3,767 |
Jewelry scrapping cost of goods sold | 3,784 |  |  | 3,486 |
Consumer loan bad debt | 632 |  |  | — |
Net revenues | 21,649 |  |  | 7,930 |
Operations expense: |  |  |
Store operations | 8,792 |  |  | 5,406 |
Administrative | 4,335 |  |  | 1,014 |
Depreciation | 1,054 |  |  | 639 |
Amortization | 999 |  |  | 104 |
(Gain)/loss on sale or disposal of assets | (4 | ) |  | 12 |
Interest, net | 22 |  |  | 2 |
Other | (13 | ) |  | 2 |
Segment contribution | $ | 6,464 |  |  | $ | 751 |
Other data: |  |  |
Gross margin on merchandise sales | 43.5 | % |  | 41.1 | %
Gross margin on jewelry scrapping sales | 16.2 | % |  | 18.1 | %
Gross margin on total sales | 35.1 | % |  | 31.9 | %
Average pawn loan balance per pawn store at period end | $ | 60 |  |  | $ | 63 |
Average yield on pawn loan portfolio (a) | 187 | % |  | 187 | %
Pawn loan redemption rate | 75 | % |  | 73 | %
Consumer loan bad debt as a percentage of consumer loan fees | 6 | % |  | N/A |

(a) | Average yield on pawn loan portfolio is calculated as pawn service charge revenues for the period divided by the average pawn loan balance during the period.

The average exchange rate used to translate Latin America’s current quarter results from Mexican pesos to U.S. dollars was 13.5 to 1, 15% weaker than the prior year quarter’s rate of 11.7 to 1. Total revenues increased 109% in U.S. dollars and 142% in peso terms. Operating expenses increased 112% in U.S. dollars and 135% increase in peso terms. In the current quarter, we opened 19 de novo stores.
The Latin America segment total revenues increased $16.6 million, or 109%, in the current quarter to $31.8 million. Same store total revenues increased 4% to $15.8 million, and new and acquired stores contributed $16.0 million. The overall increase in total revenues was mostly due the inclusion of $10.4 million Crediamigo consumer loan fees, a $4.0 million increase in merchandise and jewelry scrapping sales and $1.7 million increase in pawn service charges.
Latin America’s pawn service charge revenues increased $1.7 million, or 37%, in the current quarter to $6.2 million. Same store pawn service charges increased 7% to $4.8 million and new and acquired stores contributed $1.3 million. The total increase
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was due to a 37% increase in outstanding pawn loan balance from the prior year quarter. On a same store basis the average pawn loan balance during the period increased 4%.
Merchandise gross profit increased $1.8 million or 68%, from the prior year quarter to $4.4 million. The increase was due to a $1.1 million, or 17%, same store sales increase and $2.7 million in sales from new and acquired stores coupled with a 2.4 percentage point increase in gross margins to 43.5%.
Gross profit on jewelry scrapping sales remained relatively constant at $0.7 million. Jewelry scrapping revenues increased 6% to $4.5 million, as the 5% decrease in gold volume was mostly offset by an 8% increase in proceeds realized per gram of gold jewelry scrapped. Same store jewelry scrapping sales decreased $0.9 million, or 21%, and new and acquired stores contributed $1.1 million. Scrap cost of goods increased $0.3 million or 9%.
The Crediamigo acquisition marks our initial entry into the non-secured loan business in Mexico. In the current quarter, Crediamigo contributed total revenues of $10.8 million and net revenues of $10.2 million after bad debt as a percentage of consumer loan fees of 6%.
Total segment operations expense increased to $15.2 million (48% of revenues) in the current quarter from $7.2 million (47% of revenues). Stores operations expenses increased $3.4 million, or 63%, due to higher operating costs resulting from the addition of 68 Empeño Fácil stores since the prior year quarter and $1.5 million related to Crediamigo sales commissions. Segment administrative expenses increased $3.3 million from the prior year quarter to $4.3 million mainly due to Crediamigo administrative expenses and other acquisition costs. Depreciation and amortization increased $1.3 million from the prior year quarter to $2.1 million, mainly due to depreciation of assets placed in service at new stores and amortization of acquisition related intangible assets.
In the current quarter, Crediamigo refinanced a portion of its $92.2 million of third party debt at a lower interest rate. This refinancing led to a one-time reduction in interest expense of $2.8 million due to the acceleration of the amortization of the debt premium associated with the refinanced debt. The lower interest rate will result in reduced interest expense going forward. Crediamigo is continuing to refinance other portions of its debt at lower interest rates.
In the current quarter, Latin America's segment contribution increased $5.7 million to $6.5 million. Contribution margin increased 15.4 percentage points to 20.3% from the prior year quarter. For the current quarter Latin America's segment contribution represents 12% of consolidated segment contribution compared to 1% a year ago, this 11 percentage point increase makes Latin America our fastest growing segment.
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Other International
The following table presents selected financial data for the Other International segment:

| Three Months Ended June 30,
| 2012 |  | 2011
| (In thousands)
Consumer loan fees | $ | 3,880 |  |  | $ | — |
Other revenues | 158 |  |  |
Total revenues | 4,038 |  |  | — |
Consumer loan bad debt | 1,251 |  |  | — |
Net revenues | 2,787 |  |  | — |
Operations expense: |  |  |
Store operations | 942 |  |  | — |
Administrative | 1,870 |  |  | 506 |
Depreciation | 73 |  |  | — |
Amortization | 21 |  |  | — |
Loss on sale or disposal of assets | 223 |  |  | — |
Interest | (1 | ) |  | — |
Equity in net income of unconsolidated affiliates | (4,197 | ) |  | (4,099 | )
Other | (441 | ) |  | (107 | )
Segment contribution | $ | 4,297 |  |  | $ | 3,700 |
Other data: |  |  |
Consumer loan bad debt as a percent of consumer loan fees | 32 | % |  | N/A |

On April 14, 2012, we acquired a 72% interest in Cash Genie, an online lending business in the U.K. Since acquisition, Cash Genie's consumer loan fees were $3.9 million, with bad debt as a percentage of fees at 32%. After operations and administrative expenses, and other smaller items, Cash Genie broke even for the quarter.
Our equity in the net income of unconsolidated affiliates (Albemarle & Bond and Cash Converters International) increased 2% from the prior year quarter to $4.2 million. As we recognize their earnings on a three month lag, our current quarter equity in their net income represents our estimate of their earnings from January 1, 2012 to March 31, 2012.
In the current quarter, segment contribution from the Other International segment increased $0.6 million to $4.3 million. For the current quarter, the segment's contribution represents 8% of total contribution compared to 7% in the prior year quarter.
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Other Items
The following table reconciles our consolidated store operating income discussed above to net income, including items that affect our consolidated financial results but are not allocated among segments:

| Three Months Ended June 30,
| 2012 |  | 2011
| (In thousands)
Segment contribution | $ | 55,170 |  |  | $ | 50,754 |
Administrative expenses | 10,522 |  |  | 8,566 |
Depreciation and amortization | 1,466 |  |  | 991 |
Interest, net | 877 |  |  | 543 |
Consolidated income before income taxes | 42,305 |  |  | 40,654 |
Income tax expense | 12,594 |  |  | 14,127 |
Net income | 29,711 |  |  | 26,527 |
Net income attributable to noncontrolling interest | 1,188 |  |  | — |
Net income attributable to EZCORP, Inc. | $ | 28,523 |  |  | $ | 26,527 |

Corporate expenses increased $2.7 million, or 27%, to $12.9 million mainly as a result of a 62% increase in interest expense due to greater utilization of our revolver, a 23% increase in administrative expenses due to continued investment in growth and profitability initiatives and a 48% increase in depreciation due to new assets placed in service as a result of investment in infrastructure to support our globalization strategy.
Consolidated income before taxes increased $1.7 million, or 4%, to $42.3 million due to an $5.7 million and $0.6 million increase in contribution from the Latin America and Other International segments respectively, partially offset by an $1.9 million decrease in contribution from the U.S. & Canada segment and a $2.7 million increase in corporate expenses.
Income tax expense decreased $1.5 million, or 11%, due to a 4.9 percentage points decrease in the quarter's effective tax rate from 35% to 30.1%, as our effective tax rate for the year was reduced from 35% to 33.5%, reflecting the success and growth of our business in areas outside of the United States.
In the current quarter, net income attributable to EZCORP, Inc. increased $2.0 million, or 8%, to $28.5 million, after a $1.2 million of net income attributable to the noncontrolling interest.
Nine Months Ended June 30, 2012 vs. Nine Months Ended June 30, 2011
The following discussion compares our results of operations for the nine-month period ended June 30, 2012 to the nine-month period ended June 30, 2011. It should be read with the accompanying unaudited financial statements and related notes.
In the current nine-month period, consolidated total revenues increased 16%, or $98.9 million, to $734.1 million, compared to the prior nine-month period. Same store total revenues increased $3.9 million, or 1%, and new and acquired stores contributed $95.0 million. Net income attributable to EZCORP, Inc. increased 23% to $105.1 million.
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U.S. & Canada
The following table presents selected financial data for the U.S. & Canada segment:

| Nine Months Ended June 30,
| 2012 |  | 2011
| (In thousands)
Merchandise sales | $ | 227,849 |  |  | $ | 196,898 |
Jewelry scrapping sales | 139,736 |  |  | 138,068 |
Pawn service charges | 154,854 |  |  | 133,355 |
Consumer loan fees | 127,061 |  |  | 125,652 |
Other revenues | 2,444 |  |  | 944 |
Total revenues | 651,944 |  |  | 594,917 |
Merchandise cost of goods sold | 132,469 |  |  | 112,605 |
Jewelry scrapping cost of goods sold | 87,102 |  |  | 87,416 |
Consumer loan bad debt | 26,136 |  |  | 27,795 |
Net revenues | 406,237 |  |  | 367,101 |
Operations expense: |  |  |
Store operations | 203,190 |  |  | 182,769 |
Administrative | 17,841 |  |  | 14,103 |
Depreciation | 10,121 |  |  | 8,194 |
Amortization | 414 |  |  | 353 |
Gain on sale or disposal of assets | (82 | ) |  | (15 | )
Interest, net | 3 |  |  | 20 |
Other | 345 |  |  | 5 |
Segment contribution | $ | 174,405 |  |  | $ | 161,672 |
Other data: |  |  |
Gross margin on merchandise sales | 41.9 | % |  | 42.8 | %
Gross margin on jewelry scrapping sales | 37.7 | % |  | 36.7 | %
Gross margin on total sales | 40.3 | % |  | 40.3 | %
Average pawn loan balance per pawn store at period end | $ | 285 |  |  | $ | 293 |
Average yield on pawn loan portfolio (a) | 160 | % |  | 159 | %
Pawn loan redemption rate | 83 | % |  | 82 | %
Consumer loan bad debt as a percentage of consumer loan fees | 21 | % |  | 22 | %

(a) | Average yield on pawn loan portfolio is calculated as pawn service charge revenues for the period divided by the average pawn loan balance during the period.

The U.S. & Canada segment total revenues increased $57.0 million, or 10%, from the prior nine-month period to $651.9 million. Same store total revenues stayed relatively constant at $592.9 million. New and acquired stores total revenue for the nine-month period was $59.0 million. In the current nine-month period, we acquired 26 pawn stores, seven retail stores, 15 financial services stores in the U.S. and one retail store in Canada for $73.4 million. As part of these acquisitions, we began operations in the states of Pennsylvania, Virginia, Hawaii and Minnesota, bringing the total number of states in which we operate at June 30, 2012 to 24.
Our current nine-month period pawn service charge revenue increased 16%, or $21.5 million, from the prior nine-month period to $154.9 million. Same store pawn service charges increased 10.3 million, or 8%, with new and acquired stores net of closed stores contributing $11.2 million. The same store improvement was due to a 6% increase in average same store pawn loan balance.
The current nine-month period merchandise sales gross profit increased $11.1 million, or 13%, from the prior nine-month
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period to $95.4 million. This was due to $30.1 million in sales from new and acquired stores net of closed stores, a $0.9 million increase in same store sales, partially offset by a 0.9 percentage point decrease in gross margins. The decrease in gross margins is primarily due to a shift in sales mix from jewelry sales to general merchandise. On a same store basis, general merchandise sales were up 8% while jewelry sales were down 15%.
Gross profit on jewelry scrapping sales increased $2.0 million, or 4%, from the prior nine-month period to $52.6 million. Jewelry scrapping revenues increased $1.7 million, or 1%, due to an 18% increase in proceeds realized per gram of gold jewelry scrapped mostly offset by a 17% decrease in gold volume. Same store jewelry scrapping sales decreased $11.6 million, or 8%, and new and acquired stores contributed $13.1 million. Jewelry scrapping sales include the sale of approximately $7.8 million of loose diamonds removed from scrap jewelry in the current period and $4.0 million in the prior year period. The increase in cost per gram was mostly offset by the decrease in volume, and as a result scrap cost of goods remained relatively constant at $87.1 million.
The current nine-month period consumer loan fees increased $1.4 million, or 1%. Same store consumer loan fees remained relatively constant at $122.5 million, and consumer loan fees from new and acquired stores were $4.6 million. Consumer loan bad debt as a percentage of fees decreased 1.6 percentage points to 21%.
Total segment operations expense increased to $231.8 million (36% of revenues) in the current nine-month period from $205.4 million (35% of revenues) in the prior nine-month period. The dollar increase was due to an 11%, or $20.4 million, increase in store operations expenses due to operating costs resulting from new and acquired stores, a 27%, or $3.7 million increase in administrative expenses from the prior year period to $17.8 million mainly due to increased labor, benefits and additional investments made in infrastructure to support our growth, a 23%, or $2.0 million increase in depreciation and amortization from the prior year period to $10.5 million, mainly due to assets placed in service at new and acquired stores, and $0.3 million increase in other expenses.
In the current nine-month period U.S. & Canada delivered a segment contribution of $174.4 million, a $12.7 million increase compared to the prior nine-month period. While have experienced some challenges related to jewelry merchandise sales and gold scrap sales, other elements of the business have continued to show strength, offsetting to a large extent, the challenges in the gold and jewelry environment.
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Latin America
The following table presents selected financial data for the Latin America segment after translation to U.S. dollars from its functional currency of the Mexican peso:

| Nine Months Ended June 30,
| 2012 |  | 2011
| (In thousands)
Merchandise sales | $ | 30,000 |  |  | $ | 17,329 |
Jewelry scrapping sales | 11,816 |  |  | 11,363 |
Pawn service charges | 17,545 |  |  | 11,589 |
Consumer loan fees | 17,764 |  |  | — |
Other revenues | 802 |  |  | 34 |
Total revenues | 77,927 |  |  | 40,315 |
Merchandise cost of goods sold | 16,061 |  |  | 10,036 |
Jewelry scrapping cost of goods sold | 8,831 |  |  | 9,201 |
Consumer loan bad debt | 1,140 |  |  | — |
Net revenues | 51,895 |  |  | 21,078 |
Operations expense: |  |  |
Store operations | 23,001 |  |  | 14,533 |
Administrative | 9,964 |  |  | 3,030 |
Depreciation | 2,576 |  |  | 1,723 |
Amortization | 2,651 |  |  | 301 |
(Gain)/loss on sale or disposal of assets | (3 | ) |  | 13 |
Interest, net | 1,755 |  |  | 4 |
Other | 3 |  |  | 3 |
Segment contribution | $ | 11,948 |  |  | $ | 1,471 |
Other data: |  |  |
Gross margin on merchandise sales | 46.5 | % |  | 42.1 | %
Gross margin on jewelry scrapping sales | 25.3 | % |  | 19.0 | %
Gross margin on total sales | 40.5 | % |  | 33.0 | %
Average pawn loan balance per pawn store at period end | $ | 60 |  |  | $ | 63 |
Average yield on pawn loan portfolio (a) | 195 | % |  | 184 | %
Pawn loan redemption rate | 76 | % |  | 73 | %
Consumer loan bad debt as a percentage of consumer loan fees | 6 | % |  | N/A |

(a) | Average yield on pawn loan portfolio is calculated as pawn service charge revenues for the period divided by the average pawn loan balance during the period.

The average exchange rate used to translate Latin America’s results from Mexican pesos to U.S. dollars was 13.4 to 1, 10% higher than the prior year’s rate of 12.1 to 1. Total revenues increased 93% in U.S. dollars and 111% in peso terms. Operating expenses increased 104% in U.S. dollars and 120% increase in peso terms. In the current nine-month period, we opened 46 de novo stores and on January 30, 2012 acquired 60% interest in Crediamigo, a specialty consumer finance company headquartered in Mexico City, with 45 loan servicing locations throughout the country. Crediamigo is included in our results for five months of the nine-month period.
The Latin America segment total revenues increased $37.6 million, or 93%, in the current nine-month period to $77.9 million. Same store total revenues increased $3.6 million, or 9%, and new and acquired stores contributed $34.0 million. The overall increase in total revenues was mostly due to the $17.8 million Crediamigo consumer loan fees, $13.1 million
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increase in merchandise and jewelry scrapping sales and a $6.0 million increase in pawn service charges.
Latin America’s pawn service charge revenues increased $6.0 million, or 51%, in the current nine-month period to $17.5 million. Same store pawn service charges increased approximately $1.8 million, or 15%, and new and acquired stores contributed $4.2 million. The total increase was due to a 37% increase in outstanding pawn loan balance coupled with a 11 percentage point increase in the pawn yield. The yield increased primarily due to a 3 percentage point increase in the loan redemption rate as we continued to focus on loan values.
Merchandise gross profit increased $6.6 million, or 91%, from the prior nine-month period to $13.9 million. The increase was due to a $4.1 million, or 24%, same store sales increase and $8.6 million in sales from new and acquired stores coupled with a 4.4 percentage point increase in gross margins to 46.5%.
Gross profit on jewelry scrapping sales increased $0.8 million, or 38%, from the prior nine-month period to $3.0 million. Jewelry scrapping revenues increased 4% to $11.8 million, as the 15% decrease in gold volume was offset by a 17% increase in proceeds realized per gram of gold jewelry scrapped. Same store jewelry scrapping sales decreased $2.4 million, or 21%, and new and acquired stores contributed $2.9 million. Scrap cost of goods decreased $0.4 million or 4.0%, as the the decrease in volume, was partially offset by a 7% increase in cost per gram.
The Crediamigo acquisition marks our initial entry into the non-secured loan business in Mexico. In the current nine-month period Crediamigo contributed total revenues of $18.2 million and net revenues of $17.0 million after bad debt as a percentage of consumer loan fees of 6%.
Total operations expense increased to $39.9 million (51% of revenues) in the current nine-month period from $19.6 million (49% of revenues). The dollar increase was due to a 58%, or $8.5 million, increase in store operations expenses due to higher operating costs resulting from the addition of 68 Empeño Fácil stores since the end of the prior nine-month period and $2.8 million related to Crediamigo commissions, a $6.9 million increase in administrative expenses from the prior nine-month period to $10.0 million, mainly due to Crediamigo administrative expenses and other acquisition costs, a $3.2 million increase in depreciation and amortization from the prior nine-month period to $5.3 million, mainly due to depreciation of assets placed in service at new stores and amortization of acquisition related intangible assets, as well as a $1.8 million increase in net interest expense related to Crediamigo’s debt.
In June 2012, Crediamigo refinanced a portion of its $92.2 million of third party debt at a lower interest rate. This refinancing led to a one-time reduction in interest expense of $2.8 million due to the acceleration of the amortization of the debt premium associated with the refinanced debt. The lower interest rate will result in reduced interest expense going forward. Crediamigo is continuing to refinance other portions of its debt at lower interest rates.
In the current nine-month period, the $30.8 million greater net revenues were significantly offset by the $20.3 million higher operations expense, resulting in a $10.5 million increase in contribution for the Latin America segment. Contribution margin increased 11.7 percentage points to 15.3%. For the current nine-month period Latin America's segment contribution represents 6% of consolidated segment contribution compared to 1% a year ago, this 5.0 percentage point increase makes Latin America our fastest growing segment.
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Other International
The following table presents selected financial data for the Other International segment:

| Nine Months Ended June 30,
| 2012 |  | 2011
| (In thousands)
Consumer loan fees | $ | 4,086 |  |  | $ | — |
Other | 158 |  |  | — |
Total revenues | 4,244 |  |  | — |
Consumer loan bad debt | 1,466 |  |  | — |
Net revenues | 2,778 |  |  | — |
Operations expense: |  |  |
Store operations | 1,288 |  |  | — |
Administrative | 2,292 |  |  | 558 |
Depreciation | 109 |  |  | — |
Amortization | 21 |  |  | — |
Loss on sale or disposal of assets | 223 |  |  | — |
Interest, net | (1 | ) |  | — |
Equity in net income of unconsolidated affiliates | (12,935 | ) |  | (12,157 | )
Other | (505 | ) |  | (168 | )
Segment contribution | $ | 12,286 |  |  | $ | 11,767 |
Other data: |  |  |
Consumer loan bad debt as a percent of consumer loan fees | 36 | % |  | N/A |

In the first quarter of fiscal 2012 we began offering consumer loans online in the U.K. On April 14, we acquired a 72% interest in Cash Genie, an online lending business in the U.K. and consolidated with our existing U.K. operations. For the current nine-month period consumer loan fees were $4.1 million with bad debt as a percentage of fees at 36%.
Our equity in the net income of unconsolidated affiliates increased $0.8 million, or 6%, from the prior nine-month period to $12.9 million. The increase is due to a strong performance from Albermarle & Bond offset by a slight decrease by Cash Converters International due to a series of one-time costs.
In the current nine-month period, operations expenses were $3.4 million, which include $2.9 million of Cash Genie expenses.
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Other Items
The following table reconciles our consolidated store operating income discussed above to net income, including items that affect our consolidated financial results but are not allocated among segments:

| Nine Months Ended June 30,
| 2012 |  | 2011
| (In thousands)
Segment contribution | $ | 198,639 |  |  | $ | 174,910 |
Administrative expenses | 33,664 |  |  | 38,559 |
Depreciation | 3,999 |  |  | 2,753 |
Interest, net | 1,937 |  |  | 1,127 |
Consolidated income before income taxes | 159,039 |  |  | 132,471 |
Income tax expense | 52,603 |  |  | 46,677 |
Net income | 106,436 |  |  | 85,794 |
Net income attributable to noncontrolling interest | 1,300 |  |  | — |
Net income attributable to EZCORP, Inc. | $ | 105,136 |  |  | $ | 85,794 |

Corporate expenses decreased $2.8 million, or 7%, to $39.6 million as a result of a $4.9 million decrease in administrative expenses to $33.7 million. This decrease is primarily due to a pre-tax charge of $10.9 million related to the retirement of our former Chief Executive officer in the prior nine-month period. This charge included $3.4 million attributable to a cash payment and $7.5 million attributable to the accelerated vesting of restricted stock. Excluding this charge, administrative expenses increased $6.0 million, mostly related to an increase in professional fees associated with our continued investment in growth and profitability initiatives. In the current nine-month period interest expense increased 72% due to greater utilization of our revolver and depreciation increased 45% due to assets placed in service as we continue to invest in the infrastructure to support our growth.
Consolidated income before taxes increased $26.6 million, or 20%, to $159.0 million mostly due to a $12.7 million , $10.5 million and $0.5 million increase in contribution from the U.S. & Canada, Latin America and Other International segments respectively, partially offset by a $2.8 million decrease in corporate expenses .
In the current nine-month period, income tax expense increased $5.9 million, or 13%, to $52.6 million. The current nine-month period effective tax rate is 33.1% compared to 35.2% in the prior nine-month period. The decrease is primarily due to the determination that the undistributed earnings of non-U.S. subsidiaries on which income taxes were previously recorded will not be repatriated in the foreseeable future, as well as the recognition of state net operating losses.
In the current nine-month period, net income attributable to EZCORP, Inc. increased $19.3 million, or 23%, to $105.1 million, after $1.3 million of net income attributable to the noncontrolling interest.
Liquidity and Capital Resources
In the current nine-month period, our $104.1 million cash flow from operations consisted of (i) net income plus several non-cash items, aggregating to $130.2 million, net of (ii) $26.1 million of normal, recurring changes in operating assets and liabilities. In the prior nine-month period, our $107.3 million cash flow from operations consisted of (i) net income plus several non-cash items, aggregating to $118.3 million, net of (ii) $11.0 million of normal, recurring changes in operating assets and liabilities. The primary differences in cash flow from operations between the current and prior years were the contributions from acquisitions, organic growth throughout our other operations and revenue streams, and the decrease in stock compensation expense from the prior year which was primarily attributable to the retirement of our former CEO, net of higher taxes paid.
The $162.0 million of net cash used in investing activities during the current nine-month period was funded by cash flow from operations, cash on hand and borrowings on our line of credit facility. We received $5.6 million in dividends from our unconsolidated affiliates. We invested $125.2 million in cash to acquire 48 stores in the U.S., one store in Canada, a 60% interest in Crediamigo, a decision science model for the underwriting of consumer loans and a 72% interest in Cash Genie. Other significant investments in the period were the $33.2 million in additions of property and equipment. Partially offsetting these investments was the $9.1 million of loans made in excess of customer loan repayments and the recovery of principal through the sale of forfeited pawn loan collateral. We also paid $1.2 million of withholding tax upon the net share settlement of restricted stock vesting, net of related tax benefits.
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The net effect of these and other smaller cash flows was a $27.9 million increase in cash on hand, providing a $51.9 million ending cash balance.
Below is a summary of our cash needs to meet future aggregate contractual obligations:

|  |  | Payments due by Period
Contractual Obligations | Total |  | Less than 1 year |  | 1-3 years |  | 3-5 years |  | More than 5 years
| (In thousands)
Long-term debt obligations* | $ | 195,356 |  |  | $ | 17,974 |  |  | $ | 157,541 |  |  | $ | 19,841 |  |  | $ | — |
Interest on long-term debt obligations | 42,925 |  |  | 19,197 |  |  | 20,909 |  |  | 2,819 |  |  | — |
Operating lease obligations | 201,136 |  |  | 51,747 |  |  | 78,976 |  |  | 42,020 |  |  | 28,393 |
Capital lease obligations | 1,284 |  |  | 451 |  |  | 833 |  |  | — |  |  | — |
Total | $ | 440,701 |  |  | $ | 89,369 |  |  | $ | 258,259 |  |  | $ | 64,680 |  |  | $ | 28,393 |
* Excludes debt premium related to Crediamigo |  |  |  |  |  |  |  |  |

In addition to the contractual obligations in the table above, we are obligated under letters of credit issued to unaffiliated lenders as part of our credit service operations. At June 30, 2012, our maximum exposure for losses on letters of credit, if all brokered loans defaulted and none was collected, was $24.8 million. Of that total, $4.7 million was secured by titles to customers’ automobiles. These amounts include principal, interest and insufficient funds fees.
In addition to the operating lease obligations in the table above, we are responsible for the maintenance, property taxes and insurance at most of our locations. In the fiscal year ended September 30, 2011, these collectively amounted to $17.4 million.
The operating lease obligations in the table above include expected rent for all our store locations through the end of their current lease terms. Of the 443 U.S. EZMONEY financial services stores, 159 adjoin an EZPAWN store. The lease agreements at approximately 94% of the remaining 284 free-standing EZMONEY stores contain provisions that limit our exposure for additional rent to only a few months if laws were enacted that had a significant negative effect on our operations at these stores.
In the remaining three months of the fiscal year ending September 30, 2012, we plan to open approximately 36 new stores for an aggregate investment of $6.2 million of capital expenditures plus the funding of working capital and start-up losses related to these store openings. We believe new stores will create a drag on earnings and liquidity until their second year of operations.
On May 10, 2011, we entered into a new senior secured credit agreement with a syndication 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 all other outstanding debt. The new credit facility increases our available credit and provides greater flexibility to make investments and acquisitions both domestically and internationally. Terms of the credit agreement require, among other things, that we meet certain financial covenants. We were in compliance with all covenants at June 30, 2012 and expect to remain in compliance based on our expected future performance. At June 30, 2012, we had borrowed $114.7 million, leaving $60.3 available on the facility.
We anticipate that cash flow from operations, cash on hand and availability under our revolving credit facility will be adequate to fund our contractual obligations, planned store growth, capital expenditures and working capital requirements during the coming year.
We have an effective “shelf” Registration Statement on Form S-4 covering an aggregate of 2.0 million shares of our Class A Common Stock that we may offer from time to time in connection with future acquisitions of businesses, assets or securities. We have issued an aggregate of approximately 843,000 shares of Class A Common Stock in connection with acquisitions of several pawn stores and the acquisition of a 72% interest in Cash Genie, leaving approximately 1.2 million shares covered by the registration statement and available for issuance in future acquisitions.
On February 3, 2012, we filed with the United States Securities and Exchange Commission a “shelf” registration statement on Form S-3 registering the offer and sale of an indeterminate amount of a variety of securities, including debt securities (and related guarantees), equity securities, warrants to purchase debt or equity securities, stock purchase contracts and stock purchase units. The proceeds of any offering and sale under that registration statement will be used for general corporate purposes, including debt reduction or refinancing, acquisitions, capital expenditures and working capital. Unless otherwise indicated in connection with a particular offering of debt securities, each of our domestic subsidiaries will fully and
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unconditionally guarantee on a joint and several basis our payment obligations under such debt securities. As of June 30, 2012, we had not issued any securities under this registration statement.
Off-Balance Sheet Arrangements
We issue letters of credit (“LOCs”) to enhance the creditworthiness of our credit service customers seeking signature loans and auto title loans from unaffiliated lenders. The LOCs assure the lenders that if borrowers default on the loans, we will pay the lenders, upon demand, the principal and accrued interest owed them by the borrowers plus any insufficient funds fees or late fees. We do not record on our balance sheet the loans related to our credit services as the loans are made by unaffiliated lenders. We do not consolidate the unaffiliated lenders’ results with our results as we do not have any ownership interest in the lenders, do not exercise control over them and do not otherwise meet the criteria for consolidation as prescribed by FASB ASC 810-10-25 regarding variable interest entities.
We include an allowance for Expected LOC Losses in “Accounts payable and other accrued expenses” on our balance sheet. At June 30, 2012, the allowance for Expected LOC Losses was $1.8 million. At that date, our maximum exposure for losses on letters of credit, if all brokered loans defaulted and none were collected, was $24.8 million. This amount includes principal, interest and insufficient funds fees.
We have no other off-balance sheet arrangements.
Seasonality
Historically, pawn service charges are highest in our fourth fiscal quarter (July through September) due to a higher average loan balance during the summer lending season. Merchandise sales are highest in the first and second fiscal quarters (October through March) due to the holiday season, jewelry sales surrounding Valentine’s Day and the impact of tax refunds in the United States. Jewelry scrapping sales are heavily influenced by the timing of decisions to scrap excess jewelry inventory. Jewelry scrapping sales generally are greatest during our fourth fiscal quarter (July through September). This results from relatively low jewelry merchandise sales in that quarter and the higher loan balance, leading to a higher dollar amount of loan forfeitures in the summer lending season providing more inventory available for sale.
Consumer loan fees are generally highest in our third and fourth fiscal quarters (April through September) due to a higher average loan balance during the summer lending season. Consumer loan bad debt, both in dollar terms and as a percentage of related fees, is highest in the third and fourth fiscal quarters and lowest in the second fiscal quarter due primarily to the impact of tax refunds.
The net effect of these factors is that net revenues and net income typically are strongest in the fourth fiscal quarter and weakest in the third fiscal quarter. Our cash flow typically is greatest in the second fiscal quarter due to a high level of loan redemptions and sales in the U.S. income tax refund season.
Use of Estimates and Assumptions
Management’s Discussion and Analysis of Financial Condition and Results of Operations is based upon our condensed consolidated financial statements, which have been prepared according to accounting principles generally accepted in the United States for interim financial information. 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.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market risk related to interest rates, gold values and changes in foreign currency exchange rates.
Our earnings are affected by changes in interest rates as our debt has a variable rate. If interest rates average 50 basis points more than our current rate in the remaining three months of the fiscal year ending September 30, 2012, our interest expense during that period would increase by approximately $143,000. This amount is determined by considering the impact of the hypothetical interest rate change on our variable-rate debt at June 30, 2012.
Our earnings and financial position are affected by changes in gold values and the resulting impact on pawn lending, jewelry sales and jewelry cost of goods sold. The proceeds of scrap sales and our ability to sell jewelry inventory at an acceptable margin depend on gold values. The impact on our financial position and results of operations of a hypothetical change in gold values cannot be reasonably estimated. In the first quarter of fiscal 2012, we began using derivative financial instruments, in order to manage our commodity price risk associated with the forecasted sales of gold scrap. These derivatives are not designated as hedges as they do not meet the hedge accounting requirements of the Derivatives and Hedging topic of the FASB codification, and changes in their fair value are recorded directly in earnings. For further discussion, you should read “Part I, Item 1A—Risk Factors” of our Annual Report on Form 10-K for the year ended September 30, 2011.
Our earnings and financial position are affected by foreign exchange rate fluctuations related to our equity investments in Albemarle & Bond and Cash Converters International, our Empeño Fácil pawn operations and Crediamigo operations in Mexico, our operations in Canada and our Cash Genie operations in the U.K. Albemarle & Bond and Cash Genie's functional currency is the British pound, Cash Converters’ International functional currency is the Australian dollar, Empeño Fácil and Crediamigo’s functional currency is the Mexican peso and our Canada operations’ functional currency is the Canadian dollar. The impact on our results of operations and financial position of hypothetical changes in foreign currency exchange rates cannot be reasonably estimated due to the interrelationship of operating results and exchange rates.
The translation adjustment from Albemarle & Bond representing the weakening in the British pound during the quarter ended March 31, 2012 (included in our June 30, 2012 results on a three-month lag) was a $0.8 million decrease to stockholders’ equity. The translation adjustment from Cash Genie also represents the weakening in the British pound, was a $0.6 million decrease to stockholders' equity. On June 30, 2012, the British pound weakened to £1.00 to $1.5615 U.S. from $1.5987 at March 31, 2012.
The translation adjustment from Cash Converters International representing the strengthening in the Australian dollar during the quarter ended December 31, 2011 (included in our June 30, 2012 results on a three-month lag) was a $1.0 million increase to stockholders’ equity. On June 30, 2012, the Australian dollar weakened to $1.00 Australian dollar to $1.0159 U.S. from $1.0385 at March 31, 2012.
The translation adjustment from Latin America representing the weakening of the Mexican peso during the quarter ended June 30, 2012 was a $6.4 million decrease to stockholders’ equity. We have currently assumed permanent reinvestment of earnings and capital in Mexico. Accumulated translation gains or losses related to any future repatriation of earnings or capital would impact our earnings in the period of repatriation. On June 30, 2012, the peso weakened to $1.00 Mexican peso to $0.0732 U.S. from $0.0778 at March 31, 2012.
The translation adjustment from our Canadian operations representing the weakening of the Canadian dollar during the quarter ended June 30, 2012 was immaterial. On June 30, 2012, the Canadian dollar weakened to $1.00 Canadian dollar to $.9758 U.S. from $1.0027 at March 31, 2012.
We cannot predict the future valuation of foreign currencies or how further movements in them could affect our future earnings or financial position.
Forward-Looking Information
This Quarterly Report on Form 10-Q, including Management’s Discussion and Analysis of Financial Condition and Results of Operations, includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. We intend that all forward-looking statements be subject to the safe harbors created by these laws. All statements, other than statements of historical facts, regarding our strategy, future operations, financial position, future revenues, projected costs, prospects, plans and objectives are forward-looking statements. These statements are often, but not always, made with words or phrases like “may,” “should,” “could,” “will,” “predict,” “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “projection” and similar expressions. Such statements are only predictions of the outcome and timing of future events based on our current expectations and currently available information and, accordingly, are subject to substantial risks, uncertainties and assumptions. Actual results could differ materially from those expressed in the forward-looking statements due to a number of risks and uncertainties, many of which are beyond our control. In addition, we
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cannot predict all of the risks and uncertainties that could cause our actual results to differ from those expressed in the forward-looking statements. Accordingly, you should not regard any forward-looking statements as a representation that the expected results will be achieved. Important risk factors that could cause results or events to differ from current expectations are identified and described in “Part II, Item 1A—Risk Factors” of this Quarterly Report and “Part I, Item 1A—Risk Factors” of our Annual Report on Form 10-K for the year ended September 30, 2011.
We specifically disclaim any responsibility to publicly update any information contained in a forward-looking statement except as required by law. All forward-looking statements attributable to us are expressly qualified in their entirety by this cautionary statement.
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Item 4. Controls and Procedures
This report includes the certifications of our Chief Executive Officer and Chief Financial Officer required by Rule 13a-14 of the Securities Exchange Act of 1934 (the “Exchange Act). See Exhibits 31.1 and 31.2. This Item 4 includes information concerning the controls and control evaluations referred to in those certifications.
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) are designed to ensure that information required to be disclosed in the reports we file or submit under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures. Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, our management evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2012. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2012.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the third quarter of fiscal 2012 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on Internal Controls
Notwithstanding the foregoing, management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system will be met. Limitations inherent in any control system include the following:

• | Judgments in decision-making can be faulty, and control and process breakdowns can occur because of simple errors or mistakes.

• | Controls can be circumvented by individuals, acting alone or in collusion with others, or by management override.

• | The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

• | Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with associated policies or procedures.

• | The design of a control system must reflect the fact that resources are constrained, and the benefits of controls must be considered relative to their costs.

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.
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PART II
Item 1. Legal Proceedings
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. However, we cannot give any assurance as to their ultimate outcome.
Item 1A. Risk Factors
Important risk factors that could affect our operations and financial performance, or that could cause results or events to differ from current expectations, are described in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the year ended September 30, 2011. These factors are supplemented by those discussed under “Quantitative and Qualitative Disclosures about Market Risk” in Part I, Item 3 of this report and in Part II, Item 7A of our Annual Report on Form 10-K for the year ended September 30, 2011.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
On April 2, 2012, we issued 108,402 of our Class A Non-voting common stock, par value of $0.01 per share, valued at $3.6 million to the Halbert Group, LLC. as partial compensation for a multi-year consulting arrangement involving our information technology systems. The shares are subject to transfer and vesting restrictions. The shares will vest, and those restrictions will lapse, pro rata on the first, second and third anniversaries of the date of grant, subject to the achievement of performance goals consistent with the IT multi-year plan. These securities were issued in an exempt private placement pursing to regulation D (Rule 506) under the Securities Act of 1933, as well as pursuant to Section 4(5) of such Act.
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Item 6. Exhibits

Exhibit No. |  |  | Description of Exhibit
31.1 |  |  | Certification of Paul E. Rothamel, Chief Executive Officer, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 |  |  | Certification of Stephen A. Stamp, Chief Financial Officer, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 |  |  | Certifications of Paul E. Rothamel, Chief Executive Officer, and Stephen A. Stamp, Chief Financial Officer , pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS* |  |  | XBRL Instance Document
101.SCH* |  |  | XBRL Taxonomy Extension Schema Document
101.CAL* |  |  | XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB* |  |  | XBRL Taxonomy Label Linkbase Document
101.DEF* |  |  | XBRL Taxonomy Extension Definition Linkbase Document
101.PRE* |  |  | XBRL Taxonomy Extension Presentation Linkbase Document

* | Attached as Exhibit 101 to this report are the following formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets at June 30, 2012, June 30, 2011 and September 30, 2011; (ii) Consolidated Statements of Income for the three and nine months ended June 30, 2012 and June 30, 2011; (iii) Consolidated Statements of Comprehensive Income for three and nine months ended June 30, 2012 and June 30, 2011 (iv) Consolidated Statements of Cash Flows for the nine months ended June 30, 2012 and June 30, 2011; and (v) Notes to Consolidated Financial Statements.

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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

|  |  | EZCORP, INC.
Date: | August 8, 2012 |  | /s/ Stephen A. Stamp
|  |  | Stephen A. Stamp Senior Vice President and Chief Financial Officer

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EXHIBIT INDEX

Exhibit No. |  | Description of Exhibit
31.1 |  | Certification of Paul E. Rothamel, Chief Executive Officer, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 |  | Certification of Stephen A. Stamp, Chief Financial Officer, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 |  | Certifications of Paul E. Rothamel, Chief Executive Officer, and Stephen A. Stamp, Chief Financial Officer , pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS* |  | XBRL Instance Document
101.SCH* |  | XBRL Taxonomy Extension Schema Document
101.CAL* |  | XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB* |  | XBRL Taxonomy Label Linkbase Document
101.DEF* |  | XBRL Taxonomy Extension Definition Linkbase Document
101.PRE* |  | XBRL Taxonomy Extension Presentation Linkbase Document

* | Attached as Exhibit 101 to this report are the following formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets at June 30, 2012, June 30, 2011 and September 30, 2011; (ii) Consolidated Statements of Income for the three and nine months ended June 30, 2012 and June 30, 2011; (iii) Consolidated Statements of Comprehensive Income for the three and nine months ended June 30, 2012 and June 30, 2011 (iv) Consolidated Statements of Cash Flows for the nine months ended June 30, 2012 and June 30, 2011; and (v) Notes to Consolidated Financial Statements.

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