XML 37 R22.htm IDEA: XBRL DOCUMENT
v3.5.0.2

Fair Value Measurements | 9 Months Ended
--- | ---
Jun. 30, 2016
Fair Value Disclosures [Abstract] |
FAIR VALUE MEASUREMENTS | NOTE 14: FAIR VALUE MEASUREMENTS In accordance with FASB ASC 820-10, our assets and liabilities discussed below are classified in one of the following three categories based on the inputs used to develop their fair values:
• | Level 1: Quoted market prices in active markets for identical assets or liabilities
• | Level 2: Other observable market-based inputs or unobservable inputs that are corroborated by market data
• | Level 3: Unobservable inputs that are not corroborated by market data
Recurring Fair Value Measurements The tables below present our financial assets (liabilities) that were measured at fair value on a recurring basis as of June 30, 2016 and 2015 and September 30, 2015:
|  | June 30, 2016 |  | Fair Value Measurements Using
Financial assets (liabilities) | Level 1 |  | Level 2 |  | Level 3
|  | (in thousands)
Foreign currency forwards |  | $ | 7,044 |  |  | $ | — |  |  | $ | 7,044 |  |  | $ | — |
Cash Convertible Notes Hedges |  | 16,200 |  |  | — |  |  | 16,200 |  |  | — |
Cash Convertible Notes Embedded Derivative |  | (16,200 | ) |  | — |  |  | (16,200 | ) |  | — |
Net financial assets |  | $ | 7,044 |  |  | $ | — |  |  | $ | 7,044 |  |  | $ | — |
|  | June 30, 2015 |  | Fair Value Measurements Using
Financial assets (liabilities) | Level 1 |  | Level 2 |  | Level 3
|  | (in thousands)
Foreign currency forwards |  | $ | 11,273 |  |  | $ | — |  |  | $ | 11,273 |  |  | $ | — |
Holding Period Adjustment |  | 47 |  |  | — |  |  | 47 |  |  | — |
Cash Convertible Notes Hedges |  | 23,160 |  |  | — |  |  | 23,160 |  |  | — |
Cash Convertible Notes Embedded Derivative |  | (23,160 | ) |  | — |  |  | (23,160 | ) |  | — |
Contingent consideration |  | (2,836 | ) |  | — |  |  | — |  |  | (2,836 | )
Net financial assets (liabilities) |  | $ | 8,484 |  |  | $ | — |  |  | $ | 11,320 |  |  | $ | (2,836 | )
|  | September 30, 2015 |  | Fair Value Measurements Using
Financial assets (liabilities) | Level 1 |  | Level 2 |  | Level 3
|  | (in thousands)
Foreign currency forwards |  | $ | 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 |  | (2,601 | ) |  | — |  |  | — |  |  | (2,601 | )
Net financial assets (liabilities) |  | $ | 7,640 |  |  | $ | — |  |  | $ | 14,173 |  |  | $ | (6,533 | )
We measured the value of the forward currency forwards using Level 2 inputs such as estimations of expected cash flows, appropriately risk-adjusted discount rates and available observable inputs (term of the forward, notional amount, discount rates based on local and foreign rate curves, and a credit value adjustment to consider the likelihood of nonperformance). Forward contracts were recorded in the condensed consolidated balance sheets under “Current assets held for sale” and "Non-current assets held for sale." We measured the fair value of the Holding Period Adjustment using an option pricing model based on observable Level 1 and Level 2 inputs such as conversion price of underlying shares, current share price, implied volatility, risk free interest rate and other factors. The Holding Period Adjustment was recorded in the condensed consolidated balance sheets under "Other assets, net" and had no value as of June 30, 2016. We measured the fair value of the Cash Convertible Notes Hedges and the Cash Convertible Notes Embedded Derivative using an option pricing model based on observable Level 1 and Level 2 inputs such as conversion price of underlying shares, current share price, implied volatility, risk free interest rate and other factors. The Cash Convertible Notes Hedges were recorded in the condensed consolidated balance sheets under “Other assets, net.” The Cash Convertible Notes Embedded Derivative was recorded in the condensed consolidated balance sheets under “Long-term debt, less current maturities.” On April 26, 2013, Grupo Finmart purchased 100% of the outstanding shares of Fondo ACH, S.A. de C.V., a specialty consumer finance company. The total purchase price was performance-based and was to be determined over a period of four years from the date of purchase and was initially due on January 2, 2017 based on interest income generated by the acquired portfolios and new loans made through Fondo ACH's contractual relationships. We previously used an income approach to measure the fair value of the contingent consideration using a probability-weighted discounted cash flow approach. Some of the significant inputs used for the valuation were not observable in the market and are thus were Level 3 inputs. Contingent consideration was recorded in the condensed consolidated balance sheets under "Current liabilities held for sale" and "Non-current liabilities held for sale." During the three-months ended June 30, 2016, we negotiated a final settlement amount of the contingent consideration and recorded a valuation adjustment of $1.1 million, included in "Loss from discontinued operations, net of tax" in our condensed consolidated statements of operations, to arrive at the $1.5 million balance of the contingent consideration liability. During fiscal 2015, we granted awards to employees based upon underlying shares that were not issued, and therefore we accounted for these as phantom share-based awards under FASB ASC 718-30. These awards are recorded in the condensed consolidated balance sheets under “Accounts payable, accrued expenses and other current liabilities” for unvested share-based payment awards. 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 | — |
During the nine-months ended June 30, 2016, we settled and released $0.1 million of phantom share-based awards and reclassified $3.8 million of phantom share-based awards from liability awards to equity awards recorded in the condensed consolidated balance sheets under "Additional paid-in capital" reducing our balance in phantom share-based awards to zero as of March 31, 2016. There were no transfers in or out of Level 1 or Level 2 for financial assets or liabilities measured at fair value on a recurring basis during the periods presented. Financial Assets, Temporary Equity and Financial Liabilities Not Measured at Fair Value Our financial assets, temporary equity and financial liabilities as of June 30, 2016 and 2015 and September 30, 2015 that were not measured at fair value in our condensed consolidated balance sheets, inclusive of Grupo Finmart balances as discussed in Note 2, are as follows:
|  | Carrying Value |  | Estimated Fair Value
|  | June 30, 2016 |  | June 30, 2016 |  | Fair Value Measurement Using
|  | Level 1 |  | Level 2 |  | Level 3
|  | (in thousands)
Financial assets: |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 29,380 |  |  | $ | 29,380 |  |  | $ | 29,380 |  |  | $ | — |  |  | $ | — |
Cash and cash equivalents — discontinued operations* |  | 1,728 |  |  | 1,728 |  |  | 1,728 |  |  | — |  |  | — |
Restricted cash |  | 5,000 |  |  | 5,000 |  |  | 5,000 |  |  | — |  |  | — |
Restricted cash — discontinued operations* |  | 11,654 |  |  | 11,654 |  |  | 11,654 |  |  | — |  |  | — |
Pawn loans |  | 160,269 |  |  | 160,269 |  |  | — |  |  | — |  |  | 160,269 |
Consumer loans, net — discontinued operations* |  | 19,905 |  |  | 34,896 |  |  | — |  |  | — |  |  | 34,896 |
Pawn service charges receivable, net |  | 29,643 |  |  | 29,643 |  |  | — |  |  | — |  |  | 29,643 |
Consumer loan fees and interest receivable, net — discontinued operations* |  | 11,390 |  |  | 11,390 |  |  | — |  |  | — |  |  | 11,390 |
Investment in unconsolidated affiliate |  | 57,656 |  |  | 49,194 |  |  | 49,194 |  |  | — |  |  | — |
Restricted cash, non-current — discontinued operations* |  | 2,226 |  |  | 2,226 |  |  | 2,226 |  |  | — |  |  | — |
Non-current consumer loans, net — discontinued operations* |  | 51,504 |  |  | 90,291 |  |  | — |  |  | — |  |  | 90,291 |
|  | $ | 380,355 |  |  | $ | 425,671 |  |  | $ | 99,182 |  |  | $ | — |  |  | $ | 326,489 |
Temporary equity: |  |  |  |  |  |  |  |  |  |
Redeemable noncontrolling interest — discontinued operations* |  | $ | (2,410 | ) |  | $ | 3,109 |  |  | $ | — |  |  | $ | — |  |  | $ | 3,109 |
Financial liabilities: |  |  |  |  |  |  |  |  |  |
Cash Convertible Notes |  | $ | 195,221 |  |  | $ | 190,762 |  |  | $ | — |  |  | $ | 190,762 |  |  | $ | — |
Foreign currency debt — discontinued operations* |  | 14,826 |  |  | 15,079 |  |  | — |  |  | 15,079 |  |  | — |
Consumer loans facility due 2019 — discontinued operations* |  | 25,669 |  |  | 25,894 |  |  | — |  |  | 25,894 |  |  | — |
Foreign currency unsecured notes — discontinued operations* |  | 17,665 |  |  | 17,772 |  |  | — |  |  | 17,772 |  |  | — |
Foreign currency secured notes — discontinued operations* |  | 18,068 |  |  | 18,722 |  |  | — |  |  | 18,722 |  |  | — |
Secured notes consolidated from VIEs — discontinued operations* |  | 40,843 |  |  | 37,779 |  |  | — |  |  | 37,779 |  |  | — |
|  | $ | 312,292 |  |  | $ | 306,008 |  |  | $ | — |  |  | $ | 306,008 |  |  | $ | — |
|  | Carrying Value |  | Estimated Fair Value
|  | June 30, 2015 |  | June 30, 2015 |  | Fair Value Measurement Using
|  | Level 1 |  | Level 2 |  | Level 3
|  | (in thousands)
Financial assets: |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 113,405 |  |  | $ | 113,405 |  |  | $ | 113,405 |  |  | $ | — |  |  | $ | — |
Cash and cash equivalents — discontinued operations* |  | 982 |  |  | 982 |  |  | 982 |  |  | — |  |  | — |
Restricted cash |  | 218 |  |  | 218 |  |  | 218 |  |  | — |  |  | — |
Restricted cash — discontinued operations* |  | 27,797 |  |  | 27,797 |  |  | 27,797 |  |  | — |  |  | — |
Pawn loans |  | 144,377 |  |  | 144,377 |  |  | — |  |  | — |  |  | 144,377 |
Consumer loans, net — discontinued operations* |  | 36,719 |  |  | 47,605 |  |  | — |  |  | — |  |  | 47,605 |
Pawn service charges receivable, net |  | 26,989 |  |  | 26,989 |  |  | — |  |  | — |  |  | 26,989 |
Consumer loan fees and interest receivable, net — discontinued operations* |  | 13,595 |  |  | 13,595 |  |  | — |  |  | — |  |  | 13,595 |
Investment in unconsolidated affiliate |  | 90,423 |  |  | 81,426 |  |  | 81,426 |  |  | — |  |  | — |
Restricted cash, non-current — discontinued operations* |  | 2,978 |  |  | 2,978 |  |  | 2,978 |  |  | — |  |  | — |
Non-current consumer loans, net — discontinued operations* |  | 82,739 |  |  | 107,268 |  |  | — |  |  | — |  |  | 107,268 |
|  | $ | 540,222 |  |  | $ | 566,640 |  |  | $ | 226,806 |  |  | $ | — |  |  | $ | 339,834 |
Temporary equity: |  |  |  |  |  |  |  |  |  |
Common Stock, subject to possible redemption |  | $ | 11,696 |  |  | $ | 11,241 |  |  | $ | — |  |  | $ | — |  |  | $ | 11,241 |
Redeemable noncontrolling interest — discontinued operations* |  | 16,318 |  |  | 33,297 |  |  | — |  |  | — |  |  | 33,297 |
|  | $ | 28,014 |  |  | $ | 44,538 |  |  | $ | — |  |  | $ | — |  |  | $ | 44,538 |
Financial liabilities: |  |  |  |  |  |  |  |  |  |
Cash Convertible Notes |  | $ | 184,765 |  |  | $ | 181,746 |  |  | $ | — |  |  | $ | 181,746 |  |  | $ | — |
Foreign currency debt — discontinued operations* |  | 20,602 |  |  | 23,667 |  |  | — |  |  | 23,667 |  |  | — |
Consumer loans facility due 2019 — discontinued operations* |  | 43,900 |  |  | 45,843 |  |  | — |  |  | 45,843 |  |  | — |
Foreign currency unsecured notes — discontinued operations* |  | 18,082 |  |  | 18,536 |  |  | — |  |  | 18,536 |  |  | — |
Foreign currency secured notes — discontinued operations* |  | 22,117 |  |  | 25,639 |  |  | — |  |  | 25,639 |  |  | — |
Secured notes consolidated from VIEs — discontinued operations* |  | 86,815 |  |  | 83,640 |  |  | — |  |  | 83,640 |  |  | — |
|  | $ | 376,281 |  |  | $ | 379,071 |  |  | $ | — |  |  | $ | 379,071 |  |  | $ | — |
|  | Carrying Value |  | Estimated Fair Value
|  | September 30, 2015 |  | September 30, 2015 |  | Fair Value Measurement Using
|  | 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* |  | 3,235 |  |  | 5,467 |  |  | — |  |  | — |  |  | 5,467 |
|  | $ | 14,931 |  |  | $ | 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 ASU 2014-08.
Based on the short-term nature of cash and cash equivalents, restricted cash, pawn loans, pawn service charges receivable and consumer loan fees and interest receivable, we estimate that their carrying value approximates fair value. Significant increases or decreases in the underlying assumptions used to value the pawn loans, pawn service charges receivable and consumer loan fees and interest receivable could significantly increase or decrease the fair value estimates disclosed above. Consumer loans made by Grupo Finmart have an average contractual term of approximately 30 months. We estimated the fair value of the Grupo Finmart consumer loans by applying an income approach (the present value of future cash flows). Key assumptions include an annualized probability of default as well as a discount rate based on the funding rate plus the portfolio liquidity risk. Significant increases or decreases in the underlying assumptions used to value the consumer loans could significantly increase or decrease the fair value estimates disclosed above. The inputs used to generate the fair value of our investment in unconsolidated affiliate Cash Converters International were considered Level 1 inputs. These inputs are comprised of (a) the quoted stock price on the Australian Stock Exchange multiplied by (b) the number of shares we owned multiplied by (c) the applicable foreign currency exchange rate as of the end of our reporting period. We included no control premium for owning a large percentage of outstanding shares. See Note 5 for discussion of the fair value compared to the carrying value of our investment in Cash Converters International. The fair value of the redeemable noncontrolling interest as of June 30, 2016 was calculated based on the minority interest percentage of the sale price in the definitive agreement as discussed in Note 18. The fair value of the redeemable noncontrolling interest prior to June 30, 2016 was estimated by applying an income approach based on significant Level 3 inputs that are not observable in the market. Key assumptions include discount rates up to 24%, representing the discount that market participants would consider when estimating the fair value of the noncontrolling interest. Significant increases or decreases in the underlying assumptions used to value the redeemable noncontrolling interest could significantly increase or decrease the fair value estimates disclosed above. The fair value of the common stock, subject to possible redemption was estimated by applying an income approach. This fair value measurement is based on significant Level 3 inputs that are not observable in the market. Key assumptions include a discount rate of 7%, which approximated the Company’s incremental borrowing rate. We measured the fair value of our Cash Convertible Notes using quoted price inputs from Bloomberg. The Cash Convertible Notes are not actively traded and thus the price inputs represent a Level 2 measurement. As the Cash Convertible Notes are not actively traded, the quoted price inputs obtained from Bloomberg are highly variable from day to day and thus the fair value estimates disclosed above could significantly increase or decrease. We utilize credit quality-related zero rate curves, quoted price and yield inputs for Mexican Pesos built by a price vendor authorized by the Comisión Nacional Bancaria y de Valores to determine the fair value measurements of the remaining financial liabilities that are classified as Level 2 measurements.

X
- References No definition available. + Details
Name: | us-gaap_FairValueDisclosuresAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=66048111&loc=d3e19207-110258 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14172-108612 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 28 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14064-108612 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=73719730&loc=d3e13537-108611 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 16 -URI http://asc.fasb.org/extlink&oid=73719730&loc=d3e13504-108611 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=73719730&loc=d3e13433-108611 + Details
Name: | us-gaap_FairValueDisclosuresTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration