Fair Value Measurements, Derivatives and Other (Tables)

12 Months Ended

Sep. 30, 2016

Financial assets that are measured at fair value on a recurring basis

The tables below present our financial assets (liabilities) that were measured at fair value on a recurring basis as of September 30, 2016 and 2015:



	September 30, 2016			Fair Value Measurements Using
Financial (liabilities) assets:	September 30, 2016			Level 1		Level 2			Level 3

	(in thousands)
Guarantee asset	$	1,209		$	—	$	—		$	1,209
Guarantee liability	(1,258		)	—		—			(1,258		)
Convertible Notes Hedges	37,692			—		37,692			—
Convertible Notes Embedded Derivative	(37,692		)	—		(37,692		)	—
Net financial liabilities	$	(49	)	$	—	$	—		$	(49	)

	September 30, 2015			Fair Value Measurements Using
Financial assets (liabilities):	September 30, 2015			Level 1		Level 2			Level 3

	(in thousands)
Foreign currency forwards — discontinued operations*	$	14,169		$	—	$	14,169		$	—
Holding Period Adjustment	4			—		4			—
Cash Convertible Notes Hedges	10,505			—		10,505			—
Cash Convertible Notes Embedded Derivative	(10,505		)	—		(10,505		)	—
Phantom share-based awards	(3,932		)	—		—			(3,932		)
Contingent consideration — discontinued operations*	(2,601		)	—					(2,601		)
Net financial assets (liabilities)	$	7,640		$	—	$	14,173		$	(6,533	)


*	See Note 1 for discussion of operations discontinued subsequent to the adoption of FASB ASU 2014-08.

Valuation techniques

The fair value of fiscal 2015 phantom share-based awards that were estimated using the Monte Carlo simulation model incorporated the closing share price of our Class A Common Stock on the date of grant (considered, for this purpose, to be October 1, 2014), as well as the following assumptions, which we consider to be Level 3 inputs under the fair value hierarchy:



Expected volatility of EZCORP, Inc. Class A Common Stock	49.7	%
Risk-free interest rate	1.9	%
Expected term in years	6
Cost of equity	11.5	%
Dividend yield	—

Financial assets and liabilities not measured at fair value in the consolidated balance sheet

Our financial assets, temporary equity and liabilities as of September 30, 2016 and 2015 that were not measured at fair value in our consolidated balance sheets, inclusive of Grupo Finmart balances as discussed in Note 3, are as follows:



	Carrying Value		Estimated Fair Value
	September 30, 2016		September 30, 2016		Fair Value Measurement Using
	September 30, 2016		September 30, 2016		Level 1		Level 2		Level 3

	(in thousands)
Financial assets:
Cash and cash equivalents	$	65,737	$	65,737	$	65,737	$	—	$	—
Restricted cash	7,089		7,089		7,089		—		—
Pawn loans	167,329		167,329		—		—		167,329
Pawn service charges receivable, net	31,062		31,062		—		—		31,062
Notes receivable, net	41,946		41,946		—		—		41,946
Non-current notes receivable, net	41,119		41,119		—		—		41,119
Investment in unconsolidated affiliate	37,128		37,128		37,128		—		—
	$	391,410	$	391,410	$	109,954	$	—	$	281,456

Financial liabilities:
Cash Convertible Notes	$	197,954	$	227,332	$	—	$	227,332	$	—
Term Loan Facility	47,965		—		—		—		48,688
	$	245,919	$	227,332	$	—	$	227,332	$	48,688



	Carrying Value		Estimated Fair Value
	September 30, 2015		September 30, 2015		Fair Value Measurement Using
	September 30, 2015		September 30, 2015		Level 1		Level 2		Level 3

	(in thousands)
Financial assets:
Cash and cash equivalents	$	56,244	$	56,244	$	56,244	$	—	$	—
Cash and cash equivalents — discontinued operations*	2,880		2,880		2,880
Restricted cash	144		144		144		—		—
Restricted cash — discontinued operations*	14,993		14,993		14,993
Pawn loans	159,964		159,964		—		—		159,964
Consumer loans, net — discontinued operations*	31,824		43,731		—		—		43,731
Pawn service charges receivable, net	30,852		30,852		—		—		30,852
Consumer loan fees and interest receivable, net — discontinued operations*	19,105		19,105		—		—		19,105
Investment in unconsolidated affiliate	56,182		56,182		56,182		—		—
Restricted cash, non-current — discontinued operations*	2,883		2,883		2,883		—		—
Non-current consumer loans, net — discontinued operations*	75,824		104,194		—		—		104,194
	$	450,895	$	491,172	$	133,326	$	—	$	357,846

Temporary equity:
Common stock, subject to possible redemption	$	11,696	$	11,438	$	—	$	—	$	11,438
Redeemable noncontrolling interest — discontinued operations*	4,040		5,467		—		—		5,467
	$	15,736	$	16,905	$	—	$	—	$	16,905

Financial liabilities:
Cash Convertible Notes	$	187,471	$	169,050	$	—	$	169,050	$	—
Foreign currency debt — discontinued operations*	18,505		19,851		—		19,851		—
Consumer loans facility due 2019 — discontinued operations*	40,493		40,774		—		40,774		—
Foreign currency unsecured notes — discontinued operations*	20,987		20,477		—		20,477		—
Foreign currency secured notes — discontinued operations*	20,286		22,476		—		22,476		—
Secured notes consolidated from VIEs — discontinued operations*	73,264		68,685		—		68,685		—
	$	361,006	$	341,313	$	—	$	341,313	$	—


*	See Note 1 for discussion of operations discontinued subsequent to the adoption of FASB ASU 2014-08.

Maximum loss exposure for letter of credit losses

The following table presents the carrying amount and classification of the assets and liabilities compared to the maximum exposure to loss for each asset and liability:



		September 30, 2016
Instrument	Balance Sheet Location	Asset (Liability) Recorded in Consolidated Balance Sheet				Maximum Exposure to Loss

		(in thousands)
Notes receivable	Notes receivable, net (including discount of $3.8 million)	$	41,946			$	41,946
Guarantee asset	Prepaid expenses and other current assets	1,209				—
Notes receivable	Non-current notes receivable, net (including discount of $2.9 million)	41,119				41,119
Guarantee liability	Accounts payable, accrued expenses and other current liabilities	(1,258		)	*	—


*	Maximum exposure to loss under the guarantee liability is $25.3 million. However such amount is included within the maximum exposure to loss for the notes receivable above, as the guarantee liability is a guarantee by us of Grupo Finmart’s repayment of our notes receivable owed by Grupo Finmart.

Fair value of derivative financial instruments

The following tables set forth certain information regarding our derivative instruments not designated as hedging instruments:



		Fair Value Asset (Liability) of Derivative Instruments
Derivative Instrument	Balance Sheet Location	September 30, 2016			September 30, 2015

		(in thousands)
Foreign currency forwards — discontinued operations	Current and non-current assets held for sale	$	—		$	14,169
Guarantee asset	Prepaid expenses and other current assets	1,209			—
Guarantee liability	Accounts payable, accrued expenses and other current liabilities	(1,258		)	—
Convertible Notes Hedges	Other assets, net	37,692			10,505
Cash Convertible Notes Embedded Derivative	Long-term debt, less current maturities	(37,692		)	(10,505		)

Derivative financial instruments loss (gain) recognized in other comprehensive income



		Amount of Unrealized (Loss) Gain on Derivatives
		Fiscal Year Ended September 30,
Derivative Instrument	Income Statement Location	2016			2015		2014

		(in thousands)
Foreign currency forwards — discontinued operations	Loss from discontinued operations, net of tax*	$	(3,848	)	$	9,529	$	1,152


*	Amount is partially offset by gains and losses caused by related foreign currency fluctuations. The fiscal 2016 amount represents the loss on derivative prior to disposition of Grupo Finmart discussed in Note 3.