Edgar Filing: EZCORP INC

10-Q

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 EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2015



¨	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.)

2500 Bee Cave Road, Building 1, Suite 200 Rollingwood, 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, 2015, 51,849,933 shares of the registrant’s Class A Non-voting Common Stock including redeemable 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.

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EZCORP, Inc.

INDEX TO FORM 10-Q



EXPLANATORY NOTE	3

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

Condensed Consolidated Balance Sheets as of June 30, 2015 and 2014 (Unaudited) and September 30, 2014	1

Condensed Consolidated Statements of Operations for the Three Months and Nine Months Ended June 30, 2015 and 2014 (Unaudited)	3

Condensed Consolidated Statements of Comprehensive (Loss) Income for the Three Months and Nine Months Ended June 30, 2015 and 2014 (Unaudited)	4

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended June 30, 2015 and 2014 (Unaudited)	5

Condensed Consolidated Statements of Stockholders’ Equity for the Nine Months Ended June 30, 2015 and 2014 (Unaudited)	7

Notes to Interim Condensed Consolidated Financial Statements (Unaudited)	8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	48

Item 3. Quantitative and Qualitative Disclosures about Market Risk	73

Item 4. Controls and Procedures	73

PART II — OTHER INFORMATION

Item 1. Legal Proceedings	75

Item 1A. Risk Factors	76

Item 6. Exhibits	77

SIGNATURES	78

EXHIBIT INDEX	79

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EXPLANATORY NOTE

Delayed Filing

We delayed the filing of this Quarterly Report on Form 10-Q for the third quarter of fiscal 2015 (ended June 30, 2015) pending the completion of a review and analysis of certain accounting issues relating to our Grupo Finmart loan portfolio. As a result of that review, we have restated our financial statements for the fiscal years ended September 30, 2014, 2013 and 2012 (including the quarterly periods within those years, other than the first quarter of fiscal 2012) and for the first quarter of fiscal 2015 in order to correct certain accounting errors related to our Grupo Finmart loan portfolio.

For discussion of the Grupo Finmart portfolio review, the accounting errors identified and the restatement adjustments applicable to fiscal 2014 and periods prior to September 30, 2014, see “Part II, Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Grupo Finmart Portfolio Review and Restatement” and Notes 2 and 19 of Notes to Consolidated Financial Statements included in "Part II, Item 8 — Financial Statements and Supplementary Data” in our Amended Annual Report on Form 10-K/A for the fiscal year ended September 30, 2014 (the "Amended FY14 Annual Report").

For a description of the restatement adjustments applicable to the first quarter of fiscal 2015, see "Part I, Item 2 — Management's Discussion and Analysis of Financial Condition and Results of Operations — Grupo Finmart Portfolio Review and Restatement" and Note 2 of Notes to Interim Condensed Consolidated Financial Statements included in "Part I, Item 1 — Financial Statements" in our Amended Quarterly Report on Form 10-Q/A for the quarter ended December 31, 2014 (the "Amended Q115 Quarterly Report").

Internal Control over Financial Reporting

Management reassessed its evaluation of the effectiveness of our internal control over financial reporting as of September 30, 2014, and concluded that a number of deficiencies in the design and operating effectiveness of our internal controls, collectively, represent material weaknesses in our internal control over financial reporting and, therefore, that we did not maintain effective internal control over financial reporting as of September 30, 2014, September 30, 2013 and September 30, 2012. For a description of the material weaknesses identified by management and management’s plan to remediate those material weaknesses, see “Part II, Item 9A — Controls and Procedures” in the Amended FY14 Annual Report.

The information in this Report pertaining to the third quarter and first nine months of fiscal 2014 (ended June 30, 2014) and as of September 30, 2014 reflects the restated financial statements for such periods, as set forth in the Amended FY14 Annual Report. The information in this Report pertaining to the first nine months of fiscal 2015 reflects the restated financial statements for the first quarter of fiscal 2015, as set forth in the Amended Q115 Quarterly Report.

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PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

EZCORP, Inc. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share amounts)

	June 30, 2015			June 30, 2014			September 30, 2014

	(Unaudited)
Assets:
Current assets:
Cash and cash equivalents	$	114,387		$	49,434		$	55,325
Restricted cash	28,015			49,129			63,495
Pawn loans	144,377			157,491			162,444
Consumer loans, net	57,737			64,787			63,995
Pawn service charges receivable, net	26,989			29,307			31,044
Consumer loan fees and interest receivable, net	18,180			15,032			12,647
Inventory, net	115,283			130,839			138,175
Deferred tax asset	24,428			15,302			17,572
Prepaid income taxes	44,986			43,677			57,069
Receivables, prepaid expenses and other current assets	33,947			75,161			33,097
Total current assets	608,329			630,159			634,863
Investment in unconsolidated affiliate	90,423			90,730			91,781
Property and equipment, net	101,135			109,458			105,900
Restricted cash, non-current	2,978			4,578			5,070
Goodwill	331,849			436,765			346,577
Intangible assets, net	60,575			78,745			66,086
Non-current consumer loans, net	82,739			84,630			85,004
Deferred tax asset	10,984			9,331			12,142
Other assets, net	54,246			76,137			63,121
Total assets (1)(3)	$	1,343,258		$	1,520,533		$	1,410,544

Liabilities, temporary equity and stockholders’ equity:
Current liabilities:
Current maturities of long-term debt	$	69,054		$	41,125		$	36,111
Current capital lease obligations	—			520			418
Accounts payable and other accrued expenses	84,036			89,217			94,993
Other current liabilities	6,124			8,716			8,595
Customer layaway deposits	9,635			8,206			8,097
Total current liabilities	168,849			147,784			148,214
Long-term debt, less current maturities	340,822			387,217			392,054
Deferred gains and other long-term liabilities	7,668			21,235			15,172
Total liabilities (2)(4)	517,339			556,236			555,440
Commitments and contingencies
Temporary equity:
Class A Non-voting Common Stock, subject to possible redemption at $10.06 per share; 1,168,456 shares issued and outstanding at redemption value as of June 30, 2015; and none as of June 30, 2014 and September 30, 2014	11,696			—			—
Redeemable noncontrolling interest	16,361			25,662			22,800
Total temporary equity	28,057			25,662			22,800
Stockholders’ equity:
Class A Non-voting Common Stock, par value $.01 per share; shares authorized: 100 million as of June 30, 2015 and 2014 and September 30, 2014; issued and outstanding: 50,681,477 as of June 30, 2015; 51,612,246 as of June 30, 2014; and 50,614,767 as of September 30, 2014	506			519			506
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	327,018			339,869			332,264
Retained earnings	512,694			610,050			509,586
Accumulated other comprehensive (loss) income	(42,386		)	68			(10,082		)
Treasury stock, at cost; none at June 30, 2015 and September 30, 2014 and 1 million shares at June 30, 2014	—			(11,901		)	—
EZCORP, Inc. stockholders’ equity	797,862			938,635			832,304
Total liabilities, temporary equity and stockholders’ equity	$	1,343,258		$	1,520,533		$	1,410,544

See accompanying notes to interim condensed consolidated financial statements.

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Assets and Liabilities of Consolidated Variable Interest Entities (See Note 17)

(1) Our consolidated assets as of June 30, 2015 and 2014 and September 30, 2014 include the following assets of our consolidated variable interest entities:



	June 30, 2015		June 30, 2014		September 30, 2014

	(Unaudited)
	(in thousands)
Restricted cash	$	1,617	$	17,422	$	1,921
Consumer loans, net	13,207		11,180		16,465
Consumer loan fees and interest receivable, net	4,979		2,458		3,058
Non-current consumer loans, net	30,238		25,043		35,780
Total assets	$	50,041	$	56,103	$	57,224

(2) Our consolidated liabilities as of June 30, 2015 and 2014 and September 30, 2014 include the following liabilities of our consolidated variable interest entities:



	June 30, 2015		June 30, 2014		September 30, 2014

	(Unaudited)
	(in thousands)
Accounts payable and other accrued expenses	$	3,988	$	1,090	$	2,105
Current maturities of long-term debt	46,039		20,095		25,438
Long-term debt, less current maturities	40,744		26,589		35,624
Total liabilities	$	90,771	$	47,774	$	63,167

Assets and Liabilities of Grupo Finmart Securitization Trust

(3) Our consolidated assets as of June 30, 2015 and 2014 and September 30, 2014 include the following assets of Grupo Finmart’s Securitization trust that can only be used to settle its liabilities:



	June 30, 2015		June 30, 2014		September 30, 2014

	(Unaudited)
			(in thousands)
Restricted cash	$	17,398	$	5,873	$	23,592
Consumer loans, net	37,288		42,936		41,588
Consumer loan fees and interest receivable, net	5,614		6,553		5,489
Restricted cash, non-current	117		16,660		133
Other assets, net	2,102		2,868		2,847
Total assets	$	62,519	$	74,890	73,649

(4) Our consolidated liabilities as of June 30, 2015 and 2014 and September 30, 2014 include the following liabilities for which the creditors of Grupo Finmart’s securitization trust do not have recourse to the general credit of EZCORP, Inc.:



	June 30, 2015		June 30, 2014		September 30, 2014

	(Unaudited)
			(in thousands)
Long-term debt, less current maturities	$	44,450	$	56,076	$	54,045

See accompanying notes to interim condensed consolidated financial statements.

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EZCORP, Inc. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended June 30,						Nine Months Ended June 30,
	2015			2014			2015			2014

	(Unaudited)
	(in thousands, except per share amounts)
Revenues:
Merchandise sales	$	93,137		$	89,170		$	310,628		$	298,211
Jewelry scrapping sales	10,588			20,273			47,521			74,169
Pawn service charges	57,599			59,917			181,996			183,212
Consumer loan fees and interest	50,796			52,734			164,084			162,715
Other revenues	870			1,040			2,936			3,714
Total revenues	212,990			223,134			707,165			722,021
Merchandise cost of goods sold	61,460			56,014			206,430			184,378
Jewelry scrapping cost of goods sold	8,580			15,131			37,609			55,262
Consumer loan bad debt	13,664			16,401			47,820			45,465
Net revenues	129,286			135,588			415,306			436,916
Operating expenses (income):
Operations	103,030			103,198			307,014			309,666
Administrative	12,602			14,205			31,803			49,925
Depreciation	7,551			7,460			22,823			22,214
Amortization	1,380			1,306			4,205			4,064
(Gain) loss on sale or disposal of assets	(6		)	134			879			(6,069		)
Restructuring	37			—			763			—
Total operating expenses	124,594			126,303			367,487			379,800
Operating income	4,692			9,285			47,819			57,116
Interest expense	9,659			7,439			32,989			18,604
Interest income	(347		)	(377		)	(1,393		)	(729		)
Equity in net income of unconsolidated affiliates	(1,822		)	(2,117		)	(338		)	(3,880		)
Impairment of goodwill	10,550			—			10,550			—
Impairment of investments	—			—			—			7,940
Other expense	750			265			3,368			539
(Loss) income from continuing operations before income taxes	(14,098		)	4,075			2,643			34,642
Income tax (benefit) expense	(4,131		)	406			774			6,081
(Loss) income from continuing operations, net of tax	(9,967		)	3,669			1,869			28,561
Loss from discontinued operations, net of tax	(270		)	(2,076		)	(1,991		)	(5,445		)
Net (loss) income	(10,237		)	1,593			(122		)	23,116
Net loss from continuing operations attributable to redeemable noncontrolling interest	(390		)	(2,337		)	(3,230		)	(5,686		)
Net (loss) income attributable to EZCORP, Inc.	$	(9,847	)	$	3,930		$	3,108		$	28,802

Basic (loss) earnings per share attributable to EZCORP, Inc.:
Continuing operations	$	(0.17	)	$	0.11		$	0.09		$	0.63
Discontinued operations	—			(0.04		)	(0.04		)	(0.10		)
Basic (loss) earnings per share	$	(0.17	)	$	0.07		$	0.05		$	0.53

Diluted (loss) earnings per share attributable to EZCORP, Inc.:
Continuing operations	$	(0.17	)	$	0.11		$	0.09		$	0.63
Discontinued operations	—			(0.04		)	(0.04		)	(0.10		)
Diluted (loss) earnings per share	$	(0.17	)	$	0.07		$	0.05		$	0.53

Weighted-average shares outstanding:
Basic	54,820			54,308			54,216			54,338
Diluted	54,866			54,395			54,280			54,529

Net (loss) income from continuing operations attributable to EZCORP, Inc.	$	(9,577	)	$	6,006		$	5,099		$	34,247
Loss from discontinued operations attributable to EZCORP, Inc.	(270		)	(2,076		)	(1,991		)	(5,445		)
Net (loss) income attributable to EZCORP, Inc.	$	(9,847	)	$	3,930		$	3,108		$	28,802

See accompanying notes to interim condensed consolidated financial statements.

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EZCORP, Inc. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

	Three Months Ended June 30,						Nine Months Ended June 30,
	2015			2014			2015			2014

	(Unaudited)
	(in thousands)
Net (loss) income	$	(10,237	)	$	1,593		$	(122	)	$	23,116
Other comprehensive (loss) income:
Foreign currency translation (loss) gain	(9,847		)	5,344			(38,066		)	7,767
Foreign currency translation reclassification adjustment realized upon impairment	—			—			—			375
Cash flow hedges:
Unrealized loss before reclassifications	—			(497		)	—			(1,169		)
Amounts reclassified from accumulated other comprehensive loss	35			272			422			814
Unrealized holding (loss) gain on available-for-sale arising during period	—			(77		)	—			540
Income tax benefit (expense)	1,370			(818		)	1,590			(1,201		)
Other comprehensive (loss) income, net of tax	(8,442		)	4,224			(36,054		)	7,126
Comprehensive (loss) income	$	(18,679	)	$	5,817		$	(36,176	)	$	30,242
Attributable to redeemable noncontrolling interest:
Net loss	(390		)	(2,337		)	(3,230		)	(5,686		)
Foreign currency translation (loss) gain	(626		)	477			(3,853		)	755
Amounts reclassified from accumulated other comprehensive loss (income)	9			(90		)	103			(142		)
Comprehensive loss attributable to redeemable noncontrolling interest	(1,007		)	(1,950		)	(6,980		)	(5,073		)
Comprehensive (loss) income attributable to EZCORP, Inc.	$	(17,672	)	$	7,767		$	(29,196	)	$	35,315

See accompanying notes to interim condensed consolidated financial statements.

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EZCORP, Inc. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Nine Months Ended June 30,
	2015			2014

	(Unaudited)
	(in thousands)
Operating activities:
Net (loss) income	$	(122	)	$	23,116
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization	27,024			28,083
Amortization (accretion) of debt discount (premium) and consumer loan premium (discount), net	6,512			(68		)
Consumer loan loss provision	23,465			28,901
Deferred income taxes	(5,742		)	(1,280		)
Impairment of goodwill	10,550			—
Restructuring	763			—
Amortization of deferred financing costs	3,423			4,166
Amortization of prepaid commissions	9,878			10,039
Other adjustments	1,215			(753		)
Loss (gain) on sale or disposal of assets	956			(6,137		)
Stock compensation (benefit) expense	(1,319		)	9,487
Income from investments in unconsolidated affiliates	(338		)	(3,880		)
Impairment of investments	—			7,940
Changes in operating assets and liabilities, net of business acquisitions:
Service charges and fees receivable	(5,360		)	1,577
Inventory	926			2,243
Receivables, prepaid expenses, other current assets and other assets	(39,237		)	(35,349		)
Accounts payable and other accrued expenses and deferred gains and other long-term liabilities	3,942			(9,476		)
Customer layaway deposits	1,127			(433		)
Restricted cash	(214		)	—
Prepaid income taxes	11,885			(20,048		)
Payments of restructuring charges	(3,668		)	—
Dividends from unconsolidated affiliates	4,842			5,129
Net cash provided by operating activities	50,508			43,257
Investing activities:
Loans made	(640,278		)	(705,181		)
Loans repaid	474,074			498,222
Recovery of pawn loan principal through sale of forfeited collateral	191,170			182,004
Additions to property and equipment	(22,849		)	(15,930		)
Acquisitions, net of cash acquired	(4,120		)	(12,990		)
Investments in unconsolidated affiliates	(12,140		)	—
Proceeds from sale of assets	—			10,631
Other investing activities	—			143
Net cash used in investing activities	(14,143		)	(43,101		)

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EZCORP, Inc. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Financing activities:
Taxes paid related to net share settlement of equity awards	(196		)	(1,990		)
Debt issuance costs	—			(12,686		)
Payout of deferred and contingent consideration	(6,000		)	(23,000		)
Proceeds from issuance of convertible notes	—			200,000
Purchase of convertible notes hedges	—			(40,395		)
Proceeds from issuance of warrants	—			21,824
Purchase of subsidiary shares from noncontrolling interest	(2,774		)	(21,139		)
Proceeds from settlement of forward currency contracts	2,313			—
Change in restricted cash	30,335			(40,761		)
Proceeds from revolving line of credit	—			389,900
Payments on revolving line of credit	—			(530,800		)
Proceeds from borrowings	69,296			154,406
Payments on borrowings and capital lease obligations	(64,586		)	(63,162		)
Repurchase of common stock	—			(11,901		)
Net cash provided by financing activities	28,388			20,296
Effect of exchange rate changes on cash and cash equivalents	(5,691		)	(118		)
Net increase in cash and cash equivalents	59,062			20,334
Cash and cash equivalents at beginning of period	55,325			29,100
Cash and cash equivalents at end of period	$	114,387		$	49,434

Non-cash investing and financing activities:
Pawn loans forfeited and transferred to inventory	$	170,185		$	171,288
Issuance of common stock, subject to possible redemption, due to acquisition	11,696			—
Deferred consideration	124			2,692
Issuance of common stock to 401(k) plan	—			557
Equity adjustment due to noncontrolling interest purchase	—			6,588
Receivable from issuance of convertible notes	—			30,000
Payable to purchase convertible notes hedges	—			6,059
Warrants receivable related to issuance of convertible notes	—			3,282
Deferred finance cost payable related to convertible notes	—			2,400
Payable to purchase additional shares of noncontrolling interest	322			8,636

See accompanying notes to interim condensed consolidated financial statements.

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EZCORP, Inc. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

	Common Stock					Additional Paid-in Capital				Retained Earnings			Accumulated Other Comprehensive (Loss) Income				Treasury Stock					EZCORP, Inc. Stockholders’ Equity
	Shares		Par Value														Shares		Par Value

	(Unaudited, except balances as of September 30, 2014 and 2013)
	(in thousands)
Balances as of September 30, 2013	54,240		$	543		$	320,537			$	581,248		$	(6,445	)		—		$	—		$	895,883
Issuance of common stock related to 401(k) match	45		1			557				—			—				—		—			558
Stock compensation	—		—			9,487				—			—				—		—			9,487
Purchase of subsidiary shares from noncontrolling interest	—		—			(13,259		)		—			(15		)		—		—			(13,274		)
Release of restricted stock	297		5			—				—			—				—		—			5
Tax deficiency of stock compensation	—		—			(569		)		—			—				—		—			(569		)
Taxes paid related to net share settlement of equity awards	—		—			(1,990		)		—			—				—		(1		)	(1,991		)
Effective portion of cash flow hedge	—		—			—				—			(213		)		—		—			(213		)
Net proceeds from sale of warrants	—		—			25,106				—			—				—		—			25,106
Unrealized loss on available-for-sale securities	—		—			—				—			351				—		—			351
Foreign currency translation adjustment	—		—			—				—			6,015				—		—			6,015
Foreign currency translation reclassification adjustment realized upon impairment	—		—			—				—			375				—		—			375
Purchase of treasury stock	—		—			—				—			—				1,000		(11,900		)	(11,900		)
Net income attributable to EZCORP, Inc.	—		—			—				28,802			—				—		—			28,802
Balances as of June 30, 2014	54,582		$	549		$	339,869			$	610,050		$	68			1,000		$	(11,901	)	$	938,635

Balances as of September 30, 2014	53,585		$	536		$	332,264			$	509,586		$	(10,082	)		—		$	—		$	832,304
Issuance of common stock related to 401(k) match	1		—			—				—			—				—		—			—
Stock compensation	—		—			(1,319		)		—			—				—		—			(1,319		)
Purchase of subsidiary shares from noncontrolling interest	—	—	—		—	(3,564		)	—	—		—	(72		)	—	—	—	—			(3,636		)
Release of restricted stock	66		—			—				—			—				—		—			—
Tax deficiency of stock compensation	—		—			(167		)		—			—				—		—			(167		)
Taxes paid related to net share settlement of equity awards	—		—			(196		)		—			—				—		—			(196		)
Amounts reclassified from accumulated other comprehensive loss	—		—			—				—			319				—		—			319
Foreign currency translation adjustment	—		—			—				—			(32,551		)		—		—			(32,551		)
Net income attributable to EZCORP, Inc.	—		—			—				3,108			—				—		—			3,108
Balances as of June 30, 2015	53,652		$	536		$	327,018			$	512,694		$	(42,386	)		—		$	—		$	797,862

See accompanying notes to interim condensed consolidated financial statements.

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EZCORP, Inc.

Notes to Interim Condensed Consolidated Financial Statements (Unaudited)

June 30, 2015

NOTE 1: ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

We are a leading provider of specialty consumer financial services. With approximately 7,100 teammates and 1,350 locations and branches, we provide collateralized, non-recourse loans, commonly known as pawn loans, and a variety of short-term and long-term consumer loans including single-payment and multiple-payment unsecured loans and single-payment and multiple-payment auto title loans, or fee-based credit services to customers seeking loans in the United States, Mexico and Canada. Subsequent to June 30, 2015, we discontinued our consumer loan operations in the United States.

We also own approximately 32% of Cash Converters International Limited ("Cash Converters International"), which is based in Australia and franchises and operates a worldwide network of over 750 locations that provide financial services and buy and sell second-hand goods.

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. Our management has included all adjustments it considers necessary for a fair presentation. These adjustments are of a normal, recurring nature except for those related to discontinued operations (described in Note 2). Furthermore, certain reclassifications of prior period amounts have been made to conform to the current period presentation. We have reclassified unamortized debt issuance costs of $16.0 million as of June 30, 2014 from "Other assets, net" to "Intangible assets, net" to conform to current period presentation.

The accompanying financial statements should be read in conjunction with the consolidated financial statements and notes included in our Amended Annual Report on Form 10-K/A for the year ended September 30, 2014 the "Amended FY14 Annual Report"). The balance sheet as of September 30, 2014 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-months ended June 30, 2015 (the "current quarter" and "current nine-month period") are not necessarily indicative of the results of operations for the full fiscal year.

These condensed consolidated financial statements include the accounts of EZCORP, Inc. ("EZCORP") and its consolidated subsidiaries. All inter-company accounts and transactions have been eliminated in consolidation. As of June 30, 2015, we owned 76% of the outstanding equity interests in Prestaciones Finmart, S.A.P.I. de C.V., SOFOM, E.N.R. ("Grupo Finmart"), doing business under the brands "Crediamigo" and "Adex," and therefore, include its results in our condensed consolidated financial statements.

To determine if we hold a controlling financial interest in an entity, we first evaluate if we are required to apply the variable interest entity (“VIE”) model to the entity; otherwise, the entity is evaluated under the voting interest model. Where we hold current or potential rights that give us the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance combined with a variable interest that gives us the right to receive potentially significant benefits or the obligation to absorb potentially significant losses, we have a controlling financial interest in that VIE. Rights held by others to remove the party with power over the VIE are not considered unless one party can exercise those rights unilaterally. Grupo Finmart has completed several transfers of consumer loans to various securitization trusts. We consolidate those securitization entities under the VIE model. See Note 17.

We account for our investment in Cash Converters International using the equity method.

Use of Estimates and Assumptions

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

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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.

There have been no changes in significant accounting policies as described in our Amended FY14 Annual Report, other than those described below.

Recently Adopted Accounting Policies

Common Stock, Subject to Possible Redemption

We account for shares subject to possible redemption in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 480 Distinguishing Liabilities from Equity. Under this standard, shares subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value and conditionally redeemable common shares (including shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, shares are classified as stockholders’ equity. The EZCORP common stock subject to possible redemption features certain redemption rights that are considered by the Company to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly as of March 31, 2015, the shares subject to possible redemption are presented as temporary equity, outside of the stockholders’ equity section of the Company’s condensed consolidated balance sheets.

Recently Issued Accounting Pronouncements

In September 2015, the FASB issued Accounting Standards Update ("ASU") 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments. This ASU requires reporting entities to recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. Measurement period adjustments were previously required to be retrospectively adjusted as of the acquisition date. The provisions of this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted. A reporting entity should apply the amendment prospectively. We do not anticipate that the adoption of ASU 2015-16 will have a material effect on our financial position, results of operations or cash flows.

In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory. This ASU requires reporting entities measuring inventories under the first-in, first-out or average cost methods to measure inventory at the lower of cost or net realizable value, where net realizable value is "estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation." Inventory was previously required to be measured at the lower of cost or market value, where the measurement of market value had several potential outcomes. The provisions of this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is permitted provided that presentation is applied to the beginning of the fiscal year of adoption. A reporting entity may apply the amendment prospectively. We have not completed the process of evaluating the impact that will result from adopting ASU 2015-11. Therefore we are unable to disclose the impact that adopting ASU 2015-11 will have on our financial position, results of operations and cash flows when such statement is adopted.

In April 2015, the FASB issued ASU 2015-03, Interest — Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. This ASU requires reporting entities to record costs paid to third parties that are directly related to issuing debt, and that otherwise would not be incurred, as a deduction to the corresponding debt for presentation purposes. In addition, in August 2015, FASB issued ASU 2015-15, Interest — Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements-Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting. Given the absence of authoritative guidance within ASU 2015-03 for debt issuance costs related to line-of-credit arrangements, ASU 2015-15 states the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The provisions of each ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted for each. A reporting entity may apply each amendment retrospectively and the adoption represents a change in accounting principle. The impact of adopting ASU 2015-15 would result in the election to continue to present debt issuance costs related to our revolving credit facilities as an asset. The impact of ASU 2015-03 on our consolidated financial statements as of June 30, 2015, June 30, 2014 and September 30, 2014 would include an estimated reclassification of unamortized debt issuance costs of $7.1 million, $11.0 million and $10.3 million, respectively, from "Intangible assets, net" to "Long-term debt, less current maturities" and $3.0 million, $4.0 million and $4.0 million, respectively, from "Intangible assets, net" to "Current maturities of long-term debt" within the

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condensed consolidated balance sheets. Other than these reclassification, the adoption of ASU 2015-03 is not expected to have an impact on our financial position, results of operations or cash flows.

In April 2015, the FASB issued ASU 2015-05, Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Customer's Accounting for Fees Paid in a Cloud Computing Arrangement. This ASU provides guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The provisions of this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted. A reporting entity may apply the amendment prospectively or retrospectively. We do not anticipate that the adoption of ASU 2015-05 will have a material effect on our financial position, results of operations or cash flows.

In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. This ASU provides guidance for reporting entities that are required to evaluate whether they should consolidate certain legal entities. The provisions of this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, provided that presentation is applied to the beginning of the fiscal year of adoption. A reporting entity may apply the amendment retrospectively or using a modified retrospective approach. We do not anticipate that the adoption of ASU 2015-02 will have a material effect on our financial position, results of operations or cash flows.

In November 2014, the FASB issued ASU 2014-16, Derivatives and Hedging (Topic 815): Determining Whether a Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share is More Akin to Debt or to Equity. This ASU requires reporting entities to determine the nature of a hybrid financial instrument host contract by considering all stated and implied substantive terms and features of the hybrid financial instrument, weighing each term and feature on the basis of relevant facts and circumstances. The provisions of this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, provided that presentation is applied to the beginning of the fiscal year of adoption. We do not anticipate that the adoption of ASU 2014-16 will have a material effect on our financial position, results of operations or cash flows.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). On August 12, 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606) to defer the effective date to December 15, 2017 for annual reporting periods beginning after that date. The FASB also permitted early adoption of the standard, but not before the original effective date of December 15, 2016. We have not completed the process of evaluating the impact that will result from adopting ASU 2014-09. Therefore we are unable to disclose the impact that adopting ASU 2014-09 will have on our financial position, results of operations and cash flows when such statement is adopted.

NOTE 2: DISCONTINUED OPERATIONS AND RESTRUCTURING

Discontinued Operations

During the fourth quarter of fiscal 2014, we implemented a plan to exit our online lending businesses in the United States and the United Kingdom. As a result of this plan, our online lending operations in the United States (EZOnline) and in the United Kingdom (Cash Genie) have been included as discontinued operations.

During the third quarter of fiscal 2013, we implemented a plan to close 107 legacy stores (57 in Mexico, 29 in Canada and 21 in the U.S.). These stores were generally older, smaller stores that did not fit our future growth profile.

See Note 18 for discussion of discontinued operations and restructuring actions subsequent to June 30, 2015.

Accrued lease termination costs, severance costs and other costs related to discontinued operations are included under "Accounts payable and other accrued expenses" in our condensed consolidated balance sheets. Changes in these amounts during the three and nine-month periods ended June 30, 2015 and 2014 are summarized as follows:



	Three Months Ended June 30, 2015			Nine Months Ended June 30, 2015

	(in millions)
Beginning balance	$	10.2		$	8.9
Charged to expense*	—			4.0
Cash payments	(0.1		)	(1.5		)
Other**	—			(1.3		)
Balance as of June 30, 2015	$	10.1		$	10.1

* We recorded additional one-time charges of $3.3 million related to Cash Genie regulatory compliance and $0.7 million related to severance costs during the nine-month period ended June 30, 2015.

** This balance consists of adjustments due to foreign currency effects and other individually immaterial adjustments.



	Three Months Ended June 30, 2014			Nine Months Ended June 30, 2014

	(in millions)
Beginning balance	$	2.2		$	7.1
Charged to expense	—			—
Cash payments	(0.5		)	(3.4		)
Other*	(0.8		)	(2.8		)
Balance as of June 30, 2014	$	0.9		$	0.9

* This balance consists of adjustments due to foreign currency effects and other individually immaterial adjustments related to negotiated lease termination amounts being lower than the initial lease buyout estimates recorded during fiscal 2013.

Discontinued operations for the three-month periods ended June 30, 2015 and 2014 include $0.1 million and $0.1 million of total revenues, respectively. Discontinued operations for the nine-month periods ended June 30, 2015 and 2014 include $1.7 million and $2.9 million of total revenues, respectively.

All revenue, expense and income reported in these condensed consolidated financial statements have been adjusted to reflect reclassification of all discontinued operations.

Restructuring

During the fourth quarter of fiscal 2014, we conducted a company-wide operational review to realign our organization to streamline operations and create synergies and efficiencies. The operational review resulted in the reduction of non-customer-facing overhead. Changes in the balance of restructuring costs during the three and nine-month periods ended June 30, 2015 resulting from this initiative are summarized as follows:



	Three Months Ended June 30, 2015			Nine Months Ended June 30, 2015

	(in thousands)
Beginning balance	$	3,885		$	6,121
Charged to expense	37			763
Cash payments	(706		)	(3,668		)
Balance as of June 30, 2015	$	3,216		$	3,216

The accrual for restructuring costs as of June 30, 2015 represents the amounts to be paid related to severance for employees that have been terminated or identified for termination as a result of the initiatives described above. We estimate we will make a portion of the remaining payments during fiscal 2015, at which time this initiative will be substantially complete. We continue to review the impact of these actions and will determine if, based on future operating results, additional actions to reduce operating expenses are necessary. The amount of any potential future charges for such actions will depend upon the nature, timing and extent of those actions.

NOTE 3: ACQUISITIONS

On February 19, 2015, we completed the acquisition of 12 pawn stores in Central Texas doing business under the "Cash Pawn" brand. The aggregate purchase price for the acquisition was $16.5 million, comprised of $5.0 million cash and 1,168,456 shares of our Class A Non-voting Common Stock (the "Shares"), valued at $10.01 per share less a $0.2 million Holding Period Adjustment discussed below. The Shares were issued in an unregistered private placement transaction pursuant to Section 4(a)(2) of the Securities Act of 1933 to a small number of related individuals and entities (the "Sellers") who were either "accredited investors" or "sophisticated investors." We have concluded that this acquisition was immaterial to our overall consolidated financial results and, therefore, have omitted the information required by ASC 805-10-50-2(h).

On the first anniversary of the closing date, the Sellers have the right to require us to repurchase the Shares for an aggregate price of $11.8 million (the "Put Option"). The Sellers may terminate the Put Option, in whole or in part, at any time. The Sellers are required to hold the Shares for a period of six months following the termination of the Put Option or such later date when we are in compliance with Rule 144(c) (the "Holding Period"). If the trading price of the Class A Non-voting Common Stock at the end of the Holding Period is less than $10.06 per share (the average closing sales price of the stock on The Nasdaq Stock Market for the five trading days immediately preceding the closing), then we will make an additional cash payment to the Sellers equal to the aggregate deficit, but such payment will not exceed $1.0 million. If the trading price of the Class A Non-voting Common Stock at the end of the Holding Period is more than $10.06 per share, then we will receive from the Sellers (either in cash or by returning a portion of the Shares) an amount equal to 50% of the aggregate excess, but such payment will not exceed $1.0 million (the "Holding Period Adjustment"). As of June 30, 2015, the Sellers had not terminated the Put Option in whole or in part.

The Put Option is not accounted for separately from the Shares and does not require bifurcation. The Shares are accounted for as common stock, subject to possible redemption under FASB ASC 480 Distinguishing Liabilities from Equity and are included in temporary equity in our condensed consolidated balance sheet as of June 30, 2015. The Holding Period Adjustment is accounted for as a contingent consideration asset under FASB ASC 805 Business Combinations, will be adjusted to fair value in subsequent reporting periods, and is recorded in our condensed consolidated balance sheet at its estimated fair value under "Other assets, net" as of June 30, 2015. See Note 14 for additional information regarding the Holding Period Adjustment.

See Note 18 for discussion of acquisitions subsequent to June 30, 2015.

NOTE 4: EARNINGS PER SHARE

The two-class method is utilized for the computation of earnings per share. The two-class method requires a portion of net income to be allocated to participating securities, which are unvested awards of share-based payments with non-forfeitable rights to receive dividends or dividend equivalents, if declared. Income allocated to these participating securities is excluded from net earnings allocated to common shares. There were no participating securities outstanding during the three and nine-month periods ended June 30, 2015 and 2014.

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 restricted stock awards and warrants.

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.

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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,
	2015			2014			2015			2014

	(in thousands, except per share amounts)
Net (loss) income from continuing operations attributable to EZCORP (A)	$	(9,577	)	$	6,006		$	5,099		$	34,247
Loss from discontinued operations, net of tax (B)	(270		)	(2,076		)	(1,991		)	(5,445		)
Net (loss) income attributable to EZCORP (C)	$	(9,847	)	$	3,930		$	3,108		$	28,802

Weighted-average outstanding shares of common stock (D)	54,820			54,308			54,216			54,338
Dilutive effect of restricted stock	46			87			64			191
Weighted-average common stock and common stock equivalents (E)	54,866			54,395			54,280			54,529

Basic (loss) earnings per share attributable to EZCORP:
Continuing operations (A / D)	$	(0.17	)	$	0.11		$	0.09		$	0.63
Discontinued operations (B / D)	—			(0.04		)	(0.04		)	(0.10		)
Basic (loss) earnings per share (C / D)	$	(0.17	)	$	0.07		$	0.05		$	0.53

Diluted (loss) earnings per share attributable to EZCORP:
Continuing operations (A / E)	$	(0.17	)	$	0.11		$	0.09		$	0.63
Discontinued operations (B / E)	—			(0.04		)	(0.04		)	(0.10		)
Diluted (loss) earnings per share (C / E)	$	(0.17	)	$	0.07		$	0.05		$	0.53

Potential common shares excluded from the calculation of diluted (loss) earnings per share:
Restricted stock	233			214			—			213
Warrants	14,317			14,317			14,317			14,317
Total potential common shares excluded	14,550			14,531			14,317			14,530

NOTE 5: STRATEGIC INVESTMENTS

Cash Converters International Limited

As of June 30, 2015, we owned 151,948,000 shares, or approximately 32%, of Cash Converters International, a company headquartered in Perth, Australia and publicly traded on the Australian Stock Exchange. Cash Converters International franchises and operates a worldwide network of over 750 specialty financial services and retail stores, with significant store concentrations in Australia and the United Kingdom, that buy and sell second-hand goods and provide pawn loans, short-term unsecured loans and other consumer finance products. Our initial total investment in Cash Converters International was acquired between November 2009 and November 2012 for approximately $68.8 million. An additional 15,100,000 shares were acquired in December 2014 for approximately $12.1 million in connection with a non-underwritten placement of 47,400,000 shares by Cash Converters International.

We account for our investment in Cash Converters International using the equity method. Since Cash Converters International’s fiscal year ends three-months prior to ours, we report the income from this investment on a three-month lag. Cash Converters International files semi-annual financial reports with the Australian Securities & Investments Commission for its fiscal periods ending December 31 and June 30. Due to the three-month lag, income reported for our nine-month periods ended June 30, 2015 and 2014 represents our percentage interest in the results of Cash Converters International’s operations from July 1, 2014 to March 31, 2015 and July 1, 2013 to March 31, 2014, respectively.

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During the three and nine-month periods ended June 30, 2015, our equity in Cash Converters International’s net loss was $1.8 million and $0.3 million, respectively. During the three and nine-month periods ended June 30, 2014 our equity in Cash Converters International’s net income was $2.1 million and $5.1 million, respectively.

Additionally, during the three and nine-month periods ended June 30, 2015, we received dividends of $2.4 million and $4.8 million, respectively. During the three and nine-month periods ended June 30, 2014, we received dividends of $2.5 million and $5.1 million, respectively.

The following table presents summary financial information for Cash Converters International’s most recently reported results as of June 30, 2015 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):



	December 31, 2014		December 31, 2013

	(in thousands)
Current assets	$	200,682	$	202,735
Non-current assets	157,737		148,011
Total assets	$	358,419	$	350,746

Current liabilities	$	75,700	$	77,263
Non-current liabilities	54,256		52,522
Shareholders’ equity:
Equity attributable to owners of the parent	228,462		224,026
Noncontrolling interest	1		(3,065		)
Total liabilities and shareholders’ equity	$	358,419	$	350,746



	Six Months Ended December 31,
	2014			2013

	(in thousands)
Gross revenues	$	167,206		$	143,517
Gross profit	104,852			91,605
(Loss) profit for the period attributable to:
Owners of the parent	$	(4,717	)	$	9,103
Noncontrolling interest	(179		)	(2,417		)
(Loss) profit for the year — net (loss) income	$	(4,896	)	$	6,686

Cash Converters International’s total assets increased 2% from December 31, 2013 to December 31, 2014. Cash Converters International's (loss) profit for the period attributable to the owners of the parent decreased from a $9.1 million profit in the six-month period ended December 31, 2013 to a loss of $4.7 million loss in the six-month period ended December 31, 2014. The loss is due to a charge that Cash Converters International incurred in December 2014 in connection with the termination of agency agreements with certain development agents. See Note 18 for further discussion of events impacting Cash Converters International's financial information subsequent to June 30, 2015.

Albemarle & Bond Holdings, PLC

Prior to the quarter ended March 31, 2014, we held an investment in Albemarle & Bond Holdings, PLC ("Albemarle & Bond"). Albemarle & Bond was primarily engaged in pawnbroking, retail jewelry sales, check cashing and lending in the United Kingdom. We accounted for this investment using the equity method.

In March 2014, Albemarle & Bond entered into bankruptcy reorganization in the United Kingdom, and on April 15, 2014 Albemarle & Bond announced that the majority of its business and assets had been sold. As a result, we recognized an other-than-temporary impairment of $7.9 million ($5.4 million, net of taxes) during the quarter ended March 31, 2014, which brought our carrying value of this investment to zero.

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Fair Value Measurements

The fair value for Cash Converters International as of June 30, 2015 and 2014 and September 30, 2014 was considered a Level 1 estimate within the fair value hierarchy of FASB ASC 820-10-50, and was calculated as (a) the quoted stock price on the Australian Stock Exchange as of June 30, 2015 and 2014 and September 30, 2014 multiplied by (b) the number of shares we owned as of June 30, 2015 and 2014 and September 30, 2014 multiplied by (c) the applicable foreign currency exchange rate as of June 30, 2015 and 2014 and September 30, 2014. We included no control premium for owning a large percentage of outstanding shares.

The table below summarizes the carrying amount and fair value of Cash Converters International as of the dates indicated:



	June 30, 2015		June 30, 2014		September 30, 2014

	(in thousands of U.S. dollars)
Recorded value	$	90,423	$	90,730	$	91,781
Fair value	81,426		139,213		128,956

The fair value of our investment in Cash Converters International was below the carrying value as of June 30, 2015. Given the decline in fair value began in the third quarter of fiscal 2015, we considered the guidance in ASC 320-10-S99-1 and ASC 323-10-35 and determined that the impairment was temporary as of June 30, 2015. See Note 18 for further discussion of the subsequent fair value of our investment in Cash Converters International.

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NOTE 6: GOODWILL AND OTHER INTANGIBLE ASSETS

The following table presents the balance of goodwill and each major class of intangible assets as of the specified dates:



	June 30, 2015		June 30, 2014		September 30, 2014

	(in thousands)
Goodwill	$	331,849	$	436,765	$	346,577

Indefinite-lived intangible assets, net:
Pawn licenses	$	8,836	$	8,836	$	8,836
Trade names	6,697		8,281		6,990
Domain name	—		228		13
Total indefinite-lived intangible assets, net	$	15,533	$	17,345	$	15,839

Definite-lived intangible assets, net:
Real estate finders’ fees	$	1,025	$	841	$	787
Non-compete agreements	303		431		391
Favorable lease	452		541		517
Franchise rights	1,062		1,294		1,222
Contractual relationship	10,364		14,164		13,222
Internally developed software	21,257		27,914		18,759
Deferred financing costs	10,434		16,003		15,143
Other	145		212		206
Total definite-lived intangible assets, net	$	45,042	$	61,400	$	50,247

Intangible assets, net	$	60,575	$	78,745	$	66,086

The following tables present the changes in the carrying value of goodwill during the periods presented:



	U.S. & Canada			Latin America			Other International		Consolidated

	(in thousands)
Balances as of September 30, 2014	$	239,179		$	107,398		$	—	$	346,577
Acquisitions	10,710			—			—		10,710
Impairment	(10,550		)	—			—		(10,550		)
Effect of foreign currency translation changes	—			(14,888		)	—		(14,888		)
Balances as of June 30, 2015	$	239,339		$	92,510		$	—	$	331,849



	U.S. & Canada		Latin America		Other International		Consolidated

	(in thousands)
Balances as of September 30, 2013	$	283,199	$	110,209	$	39,892	$	433,300
Effect of foreign currency translation changes	—		1,228		2,237		3,465
Balances as of June 30, 2014	$	283,199	$	111,437	$	42,129	$	436,765

On February 19, 2015, we completed the acquisition of 12 pawn stores in Central Texas doing business under the "Cash Pawn" brand. We recorded $10.7 million in goodwill pertaining to this acquisition. The acquisition was made as part of our continuing strategy to enhance our earnings over the long-term. 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 a greater presence in the Central Texas market, as well as the ability to further leverage our expense structure through increased scale. See Note 3 for additional information regarding the acquisition. See Note 18 for discussion of an additional acquisition completed subsequent to June 30, 2015.

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In accordance with ASC 350-20-35, Goodwill — Subsequent Measurement, we test goodwill and intangible assets with an indefinite useful life for potential impairment annually, or more frequently when there are events or circumstances that indicate that it is more likely than not that an impairment exists. During the nine-month period ended June 30, 2015, we evaluated such events and circumstances and concluded that there were indicators of impairment under ASC 350-20-35-3C. These indicators of impairment primarily include a continued decline in our stock price in addition to Consumer Financial Protection Bureau proposals issued in March 2015, whose impact was subsequently evaluated by management. We performed a quantitative Step 1 analysis under ASC 350-20-35 and determined that the fair value of each of our reporting units exceeded the carrying value, with the exception of our U.S. Financial Services reporting unit. The fair values of each reporting unit were determined based upon a discounted cash flow approach. We further measured the impairment of goodwill associated with the U.S. Financial Services reporting unit under Step 2 and determined that $10.6 million, the entire amount of goodwill associated with the U.S. Financial Services reporting unit, should be written-off during the three-month period ended June 30, 2015. The impairment was recorded under "Impairment of goodwill" on the condensed consolidated statements of operations under the U.S. and Canada segment. No other long-term assets were determined to be impaired as of June 30, 2015. We will further perform our required annual impairment test in the fourth quarter of our fiscal 2015. See Note 18 for discussion of goodwill and other long-term asset impairment that occurred subsequent to June 30, 2015, including impairments associated with our discontinuance of the U.S. Financial Services business announced in July 2015.

The amortization of most definite-lived intangible assets is recorded as amortization expense. The favorable lease asset and other intangibles are amortized to operations expense (rent expense) over the related lease terms. The deferred financing costs are amortized to interest expense over the life of the related debt instrument.

The following table presents the amount and classification of amortization recognized as expense in each of the periods presented, without regard for any subsequent impairments of intangible assets:



	Three Months Ended June 30,				Nine Months Ended June 30,
	2015		2014		2015		2014

	(in thousands)
Amortization expense in continuing operations	$	1,380	$	1,306	$	4,205	$	4,064
Amortization expense in discontinued operations	—		334		—		1,491
Operations expense	25		30		77		91
Interest expense	798		1,616		3,423		4,166
Total expense from the amortization of definite-lived intangible assets	$	2,203	$	3,286	$	7,705	$	9,812

The following table presents our estimate of the amount and classification of future amortization expense for definite-lived intangible assets, without regard for any subsequent impairments of intangible assets:



Fiscal Years Ended September 30,	Amortization Expense		Operations Expense		Interest Expense

	(in thousands)
2015	$	1,893	$	27	$	438
2016	6,762		106		1,754
2017	6,527		106		1,754
2018	5,556		106		1,754
2019	4,826		78		1,325

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

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NOTE 7: LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS

The following table presents our long-term debt instruments and balances under capital lease obligations outstanding as of June 30, 2015 and 2014 and September 30, 2014. The non-recourse debt matures at various months in the years so indicated in the table below:



	June 30, 2015					June 30, 2014					September 30, 2014
	Carrying Amount		Debt (Discount) Premium			Carrying Amount		Debt (Discount) Premium			Carrying Amount		Debt (Discount) Premium

	(in thousands)
Recourse to EZCORP:
2.125% cash convertible senior notes due 2019	$	191,792	$	(38,208	)	$	183,694	$	(46,306	)	$	185,693	$	(44,307	)
Cash convertible senior notes due 2019 embedded derivative	23,160		—			46,454		—			36,994		—
Capital lease obligations	—		—			520		—			418		—
Non-recourse to EZCORP:
Secured foreign currency debt up to $3 million due 2014	—		—			251		28			63		3
Secured foreign currency debt up to $9 million due 2014	—		—			—		—			86		—
Secured foreign currency debt up to $5 million due 2015	—		—			1,218		—			—		—
Secured foreign currency debt up to $19 million due 2015	—		—			5,516		—			—		—
Secured foreign currency debt up to $5 million due 2016	—		—			747		—			—		—
Secured foreign currency debt up to $16 million due 2016	1,767		—			—		—			4,796		—
Secured foreign currency debt up to $20 million due 2017	19,157		—			23,077		—			22,240		—
Consumer loans facility due 2019	46,552		—			56,075		—			54,045		—
10% unsecured notes due 2014	—		—			6,528		—			1,158		—
11% unsecured notes due 2014	—		—			111		—			—		—
9% unsecured notes due 2015	12,518		—			29,933		—			29,875		—
10% unsecured notes due 2015	—		—			700		—			943		—
11% unsecured notes due 2015	4,218		—			—		—			4,897		—
10% unsecured notes due 2016	821		—			122		—			118		—
13% unsecured notes due 2016	639		—			—		—			—		—
12% secured notes due 2016	3,216		22			—		—			3,881		174
12% secured notes due 2017	—		—			4,078		232			—		—
12% secured notes due 2019	—		—			23,153		—			—		—
12% secured notes due 2020	19,221		—			—		—			22,314		—
17% secured notes due 2015 consolidated from VIEs	21		—			5,131		—			3,207		—
15% secured notes due 2016 consolidated from VIEs	7,098		—			10,000		—			9,638		—
11% secured notes due 2017 consolidated from VIEs	57,247		—			16,474		—			14,982		—
11% secured notes due 2017 consolidated from VIEs	8,874		—			15,080		—			13,590		—
15% secured notes due 2017 consolidated from VIEs	13,575		—			—		—			19,645		—
Total	409,876		(38,186		)	428,862		(46,046		)	428,583		(44,130		)
Less current portion	69,054		22			41,645		233			36,529		177
Total long-term debt and capital lease obligations	$	340,822	$	(38,208	)	$	387,217	$	(46,279	)	$	392,054	$	(44,307	)

Domestic Line of Credit up to $200 Million Due 2015

On May 10, 2011, we entered into a senior secured credit agreement with a syndicate of five banks. The credit agreement provided for a four year $175 million revolving credit facility that we could, under the terms of the agreement, request to be increased to a total of $225 million. On May 31, 2013, we amended the senior secured credit agreement to increase our revolving credit facility from $175 million to $200 million. We used approximately $119.4 million of net proceeds from the

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2.125% cash convertible senior notes due 2019, as described below, to repay all outstanding borrowings under the senior secured credit agreement and terminated that agreement in June 2014.

2.125% Cash Convertible Senior Notes Due 2019

In June 2014 ("Original Issuance Date"), we issued $200.0 million aggregate principal amount of 2.125% cash convertible senior notes due 2019 (the “Cash Convertible Notes”). We granted the initial purchasers the option to purchase up to an additional $30.0 million aggregate principal amount of Cash Convertible Notes. Such option was exercised in full on June 27, 2014, and we issued an additional $30.0 million principal amount of Cash Convertible Notes on July 2, 2014. All of the Cash Convertible Notes were issued pursuant to an indenture dated June 23, 2014 (the "Indenture") by and between us and Wells Fargo Bank, National Association, as the trustee. The Cash Convertible Notes were issued in a private offering under Rule 144A under the Securities Act of 1933. The Cash Convertible Notes pay interest semi-annually in arrears at a rate of 2.125% per annum on June 15 and December 15 of each year, commencing on December 15, 2014, and will mature on June 15, 2019 (the "Maturity Date").

The Cash Convertible Notes are unsubordinated unsecured obligations and rank senior in right of payment to any of our indebtedness that is expressly subordinated in right of payment to the Cash Convertible Notes; equal in right of payment with all of our other unsecured unsubordinated indebtedness; and effectively junior to all debt or other obligations (including trade payables) of our wholly-owned subsidiaries. The Indenture governing the Cash Convertible Notes does not contain any financial covenants.

We incurred transaction costs of approximately $9.9 million related to the issuance of the Cash Convertible Notes, which we recorded as deferred financing costs included under “Intangible assets, net” in our condensed consolidated balance sheets. Deferred financing costs are being amortized to interest expense using the effective interest method over the expected term of the Cash Convertible Notes.

Under the terms of our Cash Convertible Notes, payment of dividends requires a conversion rate adjustment equal to the conversion rate in effect immediately prior to the open of business on the ex-dividend date for such dividend multiplied by the last reported sale price of the Class A Non-voting Common Stock (“Class A Common Stock”) on the trading day immediately preceding the ex-dividend date for such dividend, divided by the difference between the last reported sale price of the Class A Common Stock on the trading day immediately preceding the ex-dividend date for such dividend and the amount in cash per share we distribute to all or substantially all holders of Class A Common Stock. Should we pay dividends in the future, our certificate of incorporation provides that cash dividends on common stock, when declared, must be declared and paid at the same per share amounts on both classes of stock. Any future determination to pay cash dividends will be at the discretion of our Board of Directors.

See Note 18 for discussion of a default under the indenture subsequent to June 30, 2015.

Cash Convertible Notes Embedded Derivative

We account for the cash conversion feature of the Cash Convertible Notes as a separate derivative instrument (the “Cash Convertible Notes Embedded Derivative”), which had a fair value of $46.5 million on the issuance date that was recognized as the original issue discount of the Cash Convertible Notes. This original issue discount is being amortized to interest expense over the term of the Cash Convertible Notes using the effective interest method. As of June 30, 2015 and September 30, 2014, the Cash Convertible Notes Embedded Derivative was recorded as a non-current liability under "Long-term debt, less current maturities" in our condensed consolidated balance sheets, and will be marked to market in subsequent reporting periods. The classification of the Cash Convertible Notes Embedded Derivative liability as current or non-current on the condensed consolidated balance sheets corresponds with the classification of the net balance of the Cash Convertible Notes as discussed below.

The Cash Convertible Notes are convertible into cash, subject to satisfaction of certain conditions and during the periods described below, based on an initial conversion rate of 62.2471 shares of Class A Common Stock per $1,000 principal amount of Cash Convertible Notes (equivalent to an initial conversion price of approximately $16.065 per share of our Class A Common Stock). Upon conversion of a note, we will pay cash based on a daily conversion value calculated on a proportionate basis for each trading day in the applicable 80 trading day observation period as described in the Indenture. The conversion rate will not be adjusted for any accrued and unpaid interest.

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Holders may surrender their Cash Convertible Notes for conversion into cash prior to December 15, 2018 only under the following circumstances (the “Early Conversion Conditions”): (1) during any fiscal quarter commencing after the fiscal quarter ending on September 30, 2014 (and only during such fiscal quarter), if the last reported sale price of our Class A Common Stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price, as defined in the Indenture, per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our Class A Common Stock and the conversion rate on such trading day; or (3) upon the occurrence of specified corporate events, as defined in the Indenture. On or after December 15, 2018 until the close of business on the second scheduled trading day immediately preceding the Maturity Date, holders may convert their notes into cash at any time, regardless of the foregoing circumstances.

If a holder elects to convert its Cash Convertible Notes in connection with certain make-whole fundamental changes, as that term is defined in the Indenture, that occur prior to the Maturity Date, we will in certain circumstances increase the conversion rate for Cash Convertible Notes converted in connection with such make-whole fundamental changes by a specified number of shares of Class A Common Stock. In addition, the conversion rate is subject to customary anti-dilution adjustments (for example, certain dividend distributions or tender or exchange offer of our Class A Common Stock).

Upon the occurrence of a fundamental change, as defined in the Indenture, holders may require us to repurchase for cash all or any portion of the then outstanding Cash Convertible Notes at a repurchase price equal to 100% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest.

Impact of Early Conversion Conditions on Financial Statements

As of June 30, 2015, the Cash Convertible Notes were not convertible because the Early Conversion Conditions described above had not been met. Accordingly, the net balance of the Cash Convertible Notes of $191.8 million and $185.7 million was classified as a non-current liability in our condensed consolidated balance sheets as of June 30, 2015 and September 30, 2014, respectively. The classification of the Cash Convertible Notes as current or non-current in the condensed consolidated balance sheets is evaluated at each balance sheet date and may change from time to time depending on whether any of the Early Conversion Conditions has been met.

If any of the Early Conversion Conditions is met in any future fiscal quarter, we would classify our net liability under the Cash Convertible Notes as a current liability in the condensed consolidated balance sheets as of the end of that fiscal quarter. If none of the Early Conversion Conditions have been met in a future fiscal quarter prior to the one year period immediately preceding the Maturity Date, we would classify our net liability under the Cash Convertible Notes as a non-current liability in the condensed consolidated balance sheets as of the end of that fiscal quarter. If the note holders elect to convert their Cash Convertible Notes prior to maturity, any unamortized discount and transaction costs will be expensed at the time of conversion. If the entire outstanding principal amount had been converted on June 30, 2015, we would have recorded an expense of $45.2 million associated with the conversion, comprised of $38.2 million of unamortized debt discount and $7.0 million of unamortized debt issuance costs. As of June 30, 2015, none of the note holders had elected to convert their Cash Convertible Notes.

Cash Convertible Notes Hedges

In connection with the issuance of the Cash Convertible Notes, we purchased cash-settled call options (the “Cash Convertible Notes Hedges”) in privately negotiated transactions with certain of the initial purchasers or their affiliates (in this capacity, the “Option Counterparties”). The Cash Convertible Notes Hedges provide us with the option to acquire, on a net settlement basis, approximately 14.3 million shares of our Class A Common Stock at a strike price of $16.065, which is equal to the number of shares of our Class A Common Stock that notionally underlie the Cash Convertible Notes and corresponds to the conversion price of the Cash Convertible Notes. The Cash Convertible Notes Hedges have an expiration date that is the same as the Maturity Date of the Cash Convertible Notes, subject to earlier exercise. The Cash Convertible Notes Hedges have customary anti-dilution provisions similar to the Cash Convertible Notes. If we exercise the Cash Convertible Notes Hedges, the aggregate amount of cash we will receive from the option counterparties to the Cash Convertible Notes Hedges will cover the aggregate amount of cash that we would be required to pay to the holders of the converted Cash Convertible Notes, less the principal amount thereof. As of June 30, 2015, we have not purchased any shares under the Cash Convertible Notes Hedges.

The aggregate cost of the Cash Convertible Notes Hedges was $46.5 million (or $21.3 million net of the total proceeds from the Warrants sold, as discussed below). The Cash Convertible Notes Hedges are accounted for as a derivative asset and are recorded in the condensed consolidated balance sheets at their estimated fair value under "Other assets, net." The fair value of the Cash Convertible Notes Hedges was $23.2 million, $46.5 million and $37.0 million as of June 30, 2015, June 30, 2014 and September 30, 2014, respectively. The Cash Convertible Notes Embedded Derivative liability and the Cash Convertible Notes

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Hedges asset will be adjusted to fair value each reporting period and unrealized gains and losses will be reflected in the condensed consolidated statements of operations. The Cash Convertible Notes Embedded Derivative and the Cash Convertible Notes Hedges are designed to have similar fair values. Accordingly, the changes in the fair values of these instruments are expected to offset and not have a net impact on the condensed consolidated statements of operations.

The classification of the Cash Convertible Notes Hedges asset as current or long-term on the condensed consolidated balance sheets corresponds with the classification of the Cash Convertible Notes, which is evaluated at each balance sheet date and may change from time to time depending on whether any of the Early Conversion Conditions has been met.

Cash Convertible Notes Warrants

In connection with the issuance of the Cash Convertible Notes, we also sold net-share-settled warrants (the “Warrants”) in privately negotiated transactions with the Option Counterparties for the purchase of up to approximately 14.3 million shares of our Class A Common Stock at a strike price of $20.83 per share, for total proceeds of $25.1 million, net of issuance costs, which was recorded as an increase in stockholders' equity. The Warrants have customary anti-dilution provisions similar to the Cash Convertible Notes. As a result of the Warrants, we will experience dilution to our diluted earnings per share if our average closing stock price exceeds $20.83 for any fiscal quarter. The Warrants expire on various dates from September 2019 through February 2020 and must be settled in net shares of our Class A Common Stock. Therefore, upon expiration of the Warrants, we will issue shares of Class A Common Stock to the purchasers of the Warrants that represent the value by which the price of the Class A Common Stock exceeds the strike price stipulated within the particular warrant agreement. As of June 30, 2015, there were 14.3 million warrants outstanding.

Cash Convertible Notes Interest Expense

Total interest expense attributable to the Cash Convertible Notes for the three and nine-month periods ended June 30, 2015 was $3.6 million and $11.0 million, respectively, comprised of contractual interest expense of $1.2 million and $3.7 million, respectively, debt discount amortization of $2.1 million and $6.1 million, respectively, and deferred financing costs amortization of $0.3 million and $1.2 million, respectively. The effective interest rate for the three and nine-month periods ended June 30, 2015 was approximately 7.2%.

As of June 30, 2015, the remaining unamortized issuance discount and costs will be amortized over the next four years assuming no early conversion.

Non-Recourse Debt to EZCORP

On January 30, 2012, we acquired a 60% ownership interest in Grupo Finmart. On June 30, 2014, we acquired an additional 16% of the ordinary shares outstanding of Grupo Finmart, increasing our ownership percentage from 60% to 76%. Non-recourse debt amounts in the table previously presented represent Grupo Finmart’s third party debt. The holders of all unsecured notes have recourse solely to Grupo Finmart's net assets. All foreign currency debt is guaranteed by Grupo Finmart's loan portfolio or collateralized cash at Grupo Finmart’s option. As of June 30, 2015, Grupo Finmart’s foreign currency debt was guaranteed by consumer loans totaling $72.5 million, included under “Consumer loans, net” and “Non-current consumer loans, net” in our condensed consolidated balance sheets, and collateralized cash totaling $26.1 million, included under “Restricted cash” and “Restricted cash, non-current” in our condensed consolidated balance sheets.

Interest on secured foreign currency debt due 2016 is charged at the Mexican Interbank Equilibrium ("TIIE") plus a margin of 4.9%, or a total of 8.2% as of June 30, 2015 and requires monthly payments of $0.1 million with the remaining principal due at maturity. The 12% secured notes due 2016 require monthly payments of $3.2 million with the remaining principal due at maturity. The secured foreign currency debt due in 2017 has a 14.5% interest rate and requires monthly payments of $1.6 million, beginning May 2016, with the remaining principal due at maturity. The 12% secured notes due in 2020 require monthly payments of $1.1 million, beginning December 2018, with the remaining principal due at maturity. The entire principal balance of the 9% unsecured notes due 2015, 11% unsecured notes due 2015, 10% unsecured notes due 2016 and 13% unsecured notes due 2016 is due at maturity. Amounts due are in Mexican Pesos and are revalued each reporting period.

Consumer Loans Facility Due 2019

On February 17, 2014, Grupo Finmart entered into a new securitization transaction to transfer collection rights of certain eligible consumer loans to a bankruptcy remote trust in exchange for cash. The trust received financing as a result of the issuance of debt securities and delivered the proceeds of the financing to Grupo Finmart. The unrestricted cash received from this borrowing in the amount of $29.2 million was primarily used to repay the previous securitization borrowing facility due in 2017 and the transaction costs associated with this transaction. The cash proceeds of approximately $17.0 million are restricted primarily for $14.8 million of collection rights on the additional eligible loans from Grupo Finmart, which Grupo Finmart

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expects to deliver to the trust within the next 12 months, and $2.2 million of interest and trust maintenance costs to be recovered at repayment. The restricted cash proceeds of $14.8 million are recourse to Grupo Finmart unless additional eligible loans are delivered within the two year period specified in the agreement. The borrowing facility has a two year lending period, ending February 17, 2016, and fully and matures on March 19, 2019. Upon the termination of the lending period, Grupo Finmart has an option to start prepaying the principal early from the collection received by the trust. Grupo Finmart will continue to service the underlying loans in the trust.

As of June 30, 2015, the remaining deferred financing costs related to the consumer loans facility due 2019 totaling $2.1 million are included under "Intangible assets, net" in our condensed consolidated balance sheet and are being amortized to interest expense over the term of the agreement.

Grupo Finmart is the primary beneficiary of the securitization trust because Grupo Finmart has the power to direct the most significant activities of the trust through its role as servicer of all the receivables held by the trust and through its obligation to absorb losses or receive benefits that could potentially be significant to the trust. Consequently, we consolidate the trust.

Interest on the consumer loans facility due 2019 is charged at TIIE plus a margin of 2.5%, or a total of 5.8% as of June 30, 2015.

9% Unsecured Notes Due 2015

On May 15, 2013, Grupo Finmart issued and sold $30.0 million of 9% global registered notes due November 16, 2015. Notes with an aggregate principal amount of $14.0 million were originally purchased by EZCORP and, therefore, eliminated in consolidation in prior periods. On March 31, 2014, EZCORP sold its outstanding notes in the amount of $11.7 million to an outside party, thereby increasing the total consolidated notes balance. Grupo Finmart used a portion of the net proceeds of the offering to repay existing indebtedness and the remaining portion for general operating purposes. In December 2014, Grupo Finmart repaid $17.5 million of these outstanding notes.

Secured Notes Consolidated from VIEs

During the year ended September 30, 2014, Grupo Finmart entered into three separate agreements with third party investors and variable interest entities (“VIEs”) to securitize selected loans providing asset backed financing for operations. The VIEs issued promissory notes to the third party first beneficiaries of the VIEs. The VIEs are referred to as VIE C, VIE B and VIE A. The debt described below is collateralized by all of the assets of the VIEs as presented in footnote 1 to our interim condensed consolidated balance sheets. See discussion of the VIEs in Note 17.

In October 2013, VIE C issued $9.3 million of 17% Notes due May 2015 and $10.0 million of 15% Notes due October 2016 to the first beneficiary of VIE C. The debt was collateralized with the principal and interest collected from loan portfolios of VIE C. The 17% Notes due May 2015 and the 15% Notes due October 2016 require monthly payments of approximately and $0.4 million, each, comprised of interest and principal.

In March 2014, VIE B issued $16.0 million of 11% Notes due April 2017 to the first beneficiary of VIE B. In June 2014, VIE B issued $16.5 million of 11% Notes due July 2017 to the first beneficiary of VIE B. The debt was collateralized with the principal and interest collected from loan portfolios of VIE B. The 11% Notes due April 2017 and the 11% Notes due July 2017 require monthly payments of approximately $0.2 million each, comprised of interest and principal.

In June 2014, VIE A issued $21.8 million of 14.5% Notes due October 2017 to the first beneficiary of VIE A. The debt was collateralized with the principal and interest collected from loan portfolios of VIE A. The 14.5% Notes due October 2017 require monthly payments of approximately $0.3 million, comprised of interest and principal.

In October 2014, VIE B issued $43.8 million of 11% Notes due October 2017 to the first beneficiary of VIE B. The debt was collateralized with the principal and interest collected from loan portfolios of VIE B. The 11% Notes due October 2017 require monthly payments of approximately $0.6 million, comprised of interest and principal.

In December 2014, VIE B issued $21.9 million of 11% Notes due December 2017. The debt was collateralized with the principal and interest collected from loan portfolios of VIE B. The 11% Notes due December 2017 require monthly payments of $0.3 million, comprised of interest and principal.

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NOTE 8: COMMON STOCK AND STOCK COMPENSATION

Common Stock

In February 2015, we issued 1,168,456 shares of our Class A Non-voting Common Stock, valued at $10.01 per share, in connection with the acquisition of 12 pawn stores. These shares are subject to possible redemption and accounted for as temporary equity. See Note 1 and Note 3 for additional information regarding the acquisition and the shares issued in connection with the acquisition.

Stock Compensation

Our net (loss) income includes the following compensation expense (benefit) related to our stock compensation arrangements:



	Three Months Ended June 30,					Nine Months Ended June 30,
	2015		2014			2015			2014

	(in thousands)
Gross compensation cost	$	609	$	1,290		$	(1,319	)	$	9,487
Income tax expense (benefit)	206		(579		)	(649		)	(3,448		)
Net compensation expense (benefit)	$	815	$	711		$	(1,968	)	$	6,039

In June 2014, in connection with the issuance of the Convertible Notes discussed in Note 7, we repurchased 1.0 million shares of outstanding Class A common stock in privately negotiated transactions totaling $11.9 million. We recognized the total amount of the repurchased shares in Treasury Stock on our condensed consolidated balance sheet as of June 30, 2014.

NOTE 9: TEMPORARY EQUITY

The following table provides a summary of the activity in our temporary equity balances during the nine-month periods ended June 30, 2015 and 2014:



	Common Stock, Subject to Possible Redemption		Redeemable Noncontrolling Interest			Total Temporary Equity

	(in thousands)
Balances as of September 30, 2014	$	—	$	22,800		$	22,800
Issuance of common stock, subject to possible redemption	11,696		—			11,696
Sale of additional shares to parent	—		541			541
Net loss attributable to redeemable noncontrolling interest	—		(3,230		)	(3,230		)
Foreign currency translation adjustment attributable to redeemable noncontrolling interest	—		(3,853		)	(3,853		)
Effective portion of cash flow hedge	—		103			103
Balances as of June 30, 2015	$	11,696	$	16,361		$	28,057

Balance as of September 30, 2013	$	—	$	47,297		$	47,297
Sale of additional shares to parent	—		(16,562		)	(16,562		)
Net income attributable to redeemable noncontrolling interest	—		(5,686		)	(5,686		)
Foreign currency translation adjustment attributable to redeemable noncontrolling interest	—		755			755
Effective portion of cash flow hedge	—		(142		)	(142		)
Balance as of June 30, 2014	$	—	$	25,662		$	25,662

On April 1, 2015, we completed the acquisition of the remaining 41% outstanding equity interest in TUYO for $2.8 million in cash and a $0.3 million note payable over the next five years. Prior to this acquisition we owned a 59% interest in TUYO,

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included their results in our consolidated financial statements and included redeemable noncontrolling interest (related to the minority ownership) in temporary equity. Following our acquisition of the remaining outstanding equity interest in TUYO, we account for TUYO as a wholly-owned subsidiary.

See Note 18 for discussion of the acquisition of an additional interest in Grupo Finmart subsequent to June 30, 2015.

NOTE 10: 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 our 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 effective tax rate from continuing operations for the three-month period ended June 30, 2015 was 29% of pre-tax income compared to 10% for the three-month period ended June 30, 2014. The effective tax rate for the three-month period ended June 30, 2015 was higher primarily due to the elimination of the tax rate differential on discontinued foreign operations, a reduction of costs paid to offshore affiliates and lower non-U.S. undistributed earnings.

The effective tax rate from continuing operations for the nine-month period ended June 30, 2015 was 29% of pre-tax income compared to 18% for the nine-month period ended June 30, 2014. The effective tax rate for the nine-month period ended June 30, 2014 was lower primarily due to the elimination of the tax rate differential on discontinued foreign operations, a reduction of costs paid to offshore affiliates and lower non-U.S. undistributed earnings.

NOTE 11: CONTINGENCIES

We are involved in various claims, suits, investigations and legal proceedings, including those described below. Except as otherwise noted, we are unable to determine the ultimate outcome of any current litigation or regulatory actions. These matters are subject to inherent uncertainties and unfavorable rulings could occur. An unfavorable ruling could include monetary damages or an injunction prohibiting us from conducting our business as we currently do. Any unfavorable ruling or outcome could have a material adverse effect on our financial condition, results of operations or liquidity and could negatively affect our reputation. We have not recorded a liability for any of these matters as of June 30, 2015 because we do not believe that any loss was probable or that the amount of any probable loss could be reasonably estimated as that time.

The following descriptions include developments through the date of filing of this Report. For discussion of legal proceedings arising subsequent to June 30, 2015, see Note 18.

Shareholder derivative litigation — On July 28, 2014, Lawrence Treppel, a purported holder of Class A Non-voting Common Stock, filed a derivative action in the Court of Chancery of the State of Delaware styled Treppel v. Cohen, et al. (C.A. No. 9962-VCP). The complaint, as originally filed and as amended on September 23, 2014, names as defendants Phillip E. Cohen, the beneficial owner of all of our outstanding Class B Voting Common Stock; several current and former members of our Board of Directors (Joseph J. Beal, Sterling B. Brinkley, John Farrell, Pablo Lagos Espinosa, William C. Love, Thomas C. Roberts and Paul E. Rothamel); three entities controlled by Mr. Cohen (MS Pawn Limited Partnership, the record holder of our Class B Voting Common Stock; MS Pawn Corporation, the general partner of MS Pawn Limited Partnership; and Madison Park LLC); and EZCORP, Inc., as nominal defendant. The amended complaint asserts the following claims:


•	Claims against the current and former Board members for breach of fiduciary duties and waste of corporate assets in connection with the Board’s decision to enter into advisory services agreements with Madison Park from October 2004 to June 2014;


•	Claims against Mr. Cohen and MS Pawn Limited Partnership for aiding and abetting the breaches of fiduciary duties relating to the advisory services agreements with Madison Park; and


•	Claims against Mr. Cohen and Madison Park for unjust enrichment for payments under the advisory services agreements.

The plaintiff seeks (a) recovery for the Company in the amount of the damages the Company has sustained as a result of the alleged breach of fiduciary duties, waste of corporate assets and aiding and abetting, (b) disgorgement by Mr. Cohen and Madison Park of the benefits they received as a result of the related party transactions and (c) reimbursement of costs and expenses, including reasonable attorney’s fees.

On November 13, 2014, pursuant to the parties’ stipulation, the Court dismissed the action as to Mr. Brinkley, Mr. Rothamel and Mr. Lagos.

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Each of the remaining defendants have filed motions to dismiss, and a hearing on those motions was held before the Court on September 8, 2015. The parties are awaiting the Court's ruling on the motions to dismiss.

We intend to continue to defend vigorously against the claims asserted in this lawsuit. Although the lawsuit does not seek relief against the Company, we have certain indemnification obligations to the other defendants (including Madison Park and Mr. Cohen), which obligations include the payment of attorney’s fees in advance of the outcome. We cannot predict the outcome of this lawsuit, or the amount of time and expense that will be required to resolve it.

Federal securities litigation — On August 22, 2014, Jason Close, a purported holder of Class A Non-voting Common Stock, for himself and on behalf of other similarly situated holders of Class A Non-voting Common Stock, filed a lawsuit in the United States District Court for the Southern District of New York styled Close v. EZCORP, Inc., et al. (Case No. 1:14-cv-06834-ALC). The complaint names as defendants EZCORP, Inc., Paul E. Rothamel (our former chief executive officer) and Mark Kuchenrither (our current chief financial officer and our chief operating officer) and asserts violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. In general, the complaint alleges that the implementation of certain strategic and growth initiatives were less successful than represented by the defendants, that certain of the Company’s business units and investments were not performing as well as represented by the defendants and that, as a result, the defendants’ disclosures and statements about the Company’s business and operations were materially false and misleading at all relevant times.

On October 17, 2014, the Automotive Machinists Pension Plan, also purporting to be the holder of Class A Non-voting Common Stock and acting for itself and on behalf of other similarly situated holders of Class A Non-voting Common Stock, filed a lawsuit in the United Stated District Court for the Southern District of New York styled Automotive Machinists Pension Plan v. EZCORP, Inc., et al (Case No. 1:14-cv-8349-ALC). The complaint names EZCORP, Inc., Mr. Rothamel and Mr. Kuchenrither as defendants, but also names Mr. Cohen and MS Pawn Limited Partnership. The complaint likewise asserts violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as well as Rule 10b-5 promulgated thereunder, alleging generally that (1) EZCORP and the officer defendants (Mr. Rothamel and Mr. Kuchenrither) issued false and misleading statements and omissions concerning the business and prospects, and compliance history, of the Company’s online lending operations in the U.K. and the nature of the Company’s consulting relationship with entities owned by Mr. Cohen and the process the Board of Directors used in agreeing to it, and (2) Mr. Cohen and MS Pawn Limited Partnership, as controlling persons of EZCORP, participated in the preparation and dissemination of the Company’s disclosures and controlled the Company’s business strategy and activities.

On October 21, 2014, the plaintiff in the Automotive Machinists Pension Plan action filed a motion to consolidate the Close action and the Automotive Machinists Pension Plan action and to appoint the Automotive Machinists Pension Plan as the lead plaintiff. On November 18, 2014, the court consolidated the two lawsuits under the caption In Re EZCORP, Inc. Securities Litigation (Case No. 1:14-cv-06834-ALC), and on January 16, 2015, appointed the lead plaintiff and lead counsel.

On March 13, 2015, the lead plaintiff filed a Consolidated Amended Class Action Complaint (the "Amended Complaint"). The Amended Complaint asserts violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as well as Rule 10b-5 promulgated thereunder, alleging generally that:


•	EZCORP and the officer defendants (Mr. Rothamel and Mr. Kuchenrither) issued false and misleading statements and omissions regarding the Company's online lending operations in the U.K. (Cash Genie) and Cash Genie's compliance history;


•	EZCORP and the officer defendants issued false and misleading statements and omissions regarding the nature of the Company's consulting relationship with Madison Park LLC (an entity owned by Mr. Cohen) and the process the Board of Directors used in agreeing to it;


•	EZCORP's financial statements were false and misleading, and violated GAAP and SEC rules and regulations, by failing to properly recognize impairment charges with respect to the Company's investment in Albemarle & Bond; and


•	Mr. Cohen and MS Pawn Limited Partnership, as controlling persons of EZCORP, were aware of and controlled the Company's alleged false and misleading statements and omissions.

The defendants have filed motions to dismiss, and the parties have submitted their respective supporting and opposing briefs. That motion is pending before the Court.

We cannot predict the outcome of the litigation, but we intend to continue to defend vigorously against all allegations and claims.

SEC Investigation — On October 23, 2014, we received a notice from the Fort Worth Regional Office of the SEC that it was conducting an investigation into certain matters involving EZCORP, Inc. The notice was accompanied by a subpoena, directing

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us to produce a variety of documents, including all minutes and materials related to Board of Directors and Board committee meetings since January 1, 2009 and all documents and communications relating to our historical advisory services relationship with Madison Park (the business advisory firm owned by Mr. Cohen) and LPG Limited (a business advisory firm owned by Lachlan P. Given, our current Executive Chairman of the Board). The SEC has also issued subpoenas to current and former members of our Board of Directors requesting production of similar documents, as well as to certain third parties, and has conducted interviews with certain individuals. We continue to cooperate fully with the SEC in its investigation.

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NOTE 12: SEGMENT INFORMATION

Segment information is prepared on the same basis that our chief operating decision maker reviews financial information for operational decision-making purposes.

We currently report our 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 — Our equity interest in the net income of Cash Converters International

There are no inter-segment revenues, and the amounts below were determined in accordance with the same accounting principles used in our condensed consolidated financial statements. The following tables present operating segment information for the three and nine-month periods ended June 30, 2015 and 2014, including reclassifications discussed in Note 1 and adjustments to reflect reclassification of all discontinued operations discussed in Note 2.



	Three Months Ended June 30, 2015
	U.S. & Canada			Latin America			Other International			Total Segments			Corporate Items			Consolidated

	(in thousands)
Revenues:
Merchandise sales	$	77,690		$	15,447		$	—		$	93,137		$	—		$	93,137
Jewelry scrapping sales	9,702			886			—			10,588			—			10,588
Pawn service charges	49,609			7,990			—			57,599			—			57,599
Consumer loan fees and interest	33,815			16,981			—			50,796			—			50,796
Other revenues	554			316			—			870			—			870
Total revenues	171,370			41,620			—			212,990			—			212,990
Merchandise cost of goods sold	50,432			11,028			—			61,460			—			61,460
Jewelry scrapping cost of goods sold	7,713			867			—			8,580			—			8,580
Consumer loan bad debt	10,821			2,843			—			13,664			—			13,664
Net revenues	102,404			26,882			—			129,286			—			129,286
Segment and corporate expenses (income):
Operations	83,905			19,125			—			103,030			—			103,030
Administrative	—			—			—			—			12,602			12,602
Depreciation	4,542			1,249			—			5,791			1,760			7,551
Amortization	56			365			—			421			959			1,380
(Gain) loss on sale or disposal of assets	(29		)	7			—			(22		)	16			(6		)
Interest expense	3			5,882			—			5,885			3,774			9,659
Interest income	(11		)	(288		)	—			(299		)	(48		)	(347		)
Equity in net income of unconsolidated affiliate	—			—			(1,822		)	(1,822		)	—			(1,822		)
Impairment of goodwill	10,550			—			—			10,550			—			10,550
Restructuring	—			—			—			—			37			37
Other expense (income)	2			1,323			—			1,325			(575		)	750
Segment contribution (loss)	$	3,386		$	(781	)	$	1,822		$	4,427
(Loss) income from continuing operations before income taxes										$	4,427		$	(18,525	)	$	(14,098	)

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	Three Months Ended June 30, 2014
	U.S. & Canada				Latin America			Other International			Total Segments			Corporate Items			Consolidated

	(in thousands)
Revenues:
Merchandise sales	74,674				$	14,496		$	—		$	89,170		$	—		$	89,170
Jewelry scrapping sales	18,909				1,364			—			20,273			—			20,273
Pawn service charges	51,894				8,023			—			59,917			—			59,917
Consumer loan fees and interest	37,335				15,399			—			52,734			—			52,734
Other revenues	605				435			—			1,040			—			1,040
Total revenues	183,417				39,717			—			223,134			—			223,134
Merchandise cost of goods sold	46,190				9,824			—			56,014			—			56,014
Jewelry scrapping cost of goods sold	13,894				1,237			—			15,131			—			15,131
Consumer loan bad debt	10,408				5,993			—			16,401			—			16,401
Net revenues	112,925			—	22,663			—			135,588			—			135,588
Segment and corporate expenses (income):
Operations	81,605				21,593			—			103,198			—			103,198
Administrative	—				—			—			—			14,205			14,205
Depreciation	4,294				1,502			—			5,796			1,664			7,460
Amortization	84				329			—			413			893			1,306
Loss (gain) on sale or disposal of assets	129				11			—			140			(6		)	134
Interest expense	1				5,549			—			5,550			1,889			7,439
Interest income	—				(329		)	—			(329		)	(48		)	(377		)
Equity in net income of unconsolidated affiliate	—				—			(2,117		)	(2,117		)	—			(2,117		)
Other expense (income)	(7		)		468			—			461			(196		)	265
Segment contribution (loss)	$	26,819			$	(6,460	)	$	2,117		$	22,476
Income (loss) from continuing operations before income taxes											$	22,476		$	(18,401	)	$	4,075

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	Nine Months Ended June 30, 2015
	U.S. & Canada			Latin America			Other International			Total Segments			Corporate Items			Consolidated

	(in thousands)
Revenues:
Merchandise sales	$	260,718		$	49,910		$	—		$	310,628		$	—		$	310,628
Jewelry scrapping sales	44,311			3,210			—			47,521			—			47,521
Pawn service charges	158,961			23,035			—			181,996			—			181,996
Consumer loan fees and interest	114,339			49,745			—			164,084			—			164,084
Other revenues	2,051			885			—			2,936			—			2,936
Total revenues	580,380			126,785			—			707,165			—			707,165
Merchandise cost of goods sold	171,239			35,191			—			206,430			—			206,430
Jewelry scrapping cost of goods sold	34,661			2,948			—			37,609			—			37,609
Consumer loan bad debt	33,114			14,706			—			47,820			—			47,820
Net revenues	341,366			73,940			—			415,306			—			415,306
Segment and corporate expenses (income):
Operations	251,333			55,681			—			307,014			—			307,014
Administrative	—			—			—			—			31,803			31,803
Depreciation	13,480			3,988			—			17,468			5,355			22,823
Amortization	185			1,163			—			1,348			2,857			4,205
Loss on sale or disposal of assets	230			264			—			494			385			879
Interest expense	16			20,541			—			20,557			12,432			32,989
Interest income	(45		)	(1,216		)	—			(1,261		)	(132		)	(1,393		)
Equity in net income of unconsolidated affiliate	—			—			(338		)	(338		)	—			(338		)
Impairment of goodwill	10,550			—			—			10,550			—			10,550
Restructuring	—			—			—			—			763			763
Other expense (income)	12			3,489			—			3,501			(133		)	3,368
Segment contribution (loss)	$	65,605		$	(9,970	)	$	338		$	55,973
Income from continuing operations before income taxes										$	55,973		$	53,330		$	2,643

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	Nine Months Ended June 30, 2014
	U.S. & Canada			Latin America			Other International			Total Segments			Corporate Items			Consolidated

	(in thousands)
Revenues:
Merchandise sales	$	253,501		$	44,710		$	—		$	298,211		$	—		$	298,211
Jewelry scrapping sales	69,531			4,638			—			74,169			—			74,169
Pawn service charges	161,117			22,095			—			183,212			—			183,212
Consumer loan fees and interest	125,298			37,417			—			162,715			—			162,715
Other revenues	2,234			1,480			—			3,714			—			3,714
Total revenues	611,681			110,340			—			722,021			—			722,021
Merchandise cost of goods sold	155,046			29,332			—			184,378			—			184,378
Jewelry scrapping cost of goods sold	51,257			4,005			—			55,262			—			55,262
Consumer loan bad debt	32,372			13,093			—			45,465			—			45,465
Net revenues	373,006			63,910			—			436,916			—			436,916
Segment and corporate expenses (income):
Operations	251,549			58,117			—			309,666			—			309,666
Administrative	—			—			—			—			49,925			49,925
Depreciation	12,813			4,411			—			17,224			4,990			22,214
Amortization	287			1,553			—			1,840			2,224			4,064
(Gain) loss on sale or disposal of assets	(6,726		)	15			—			(6,711		)	642			(6,069		)
Interest expense	8			14,414			—			14,422			4,182			18,604
Interest income	(18		)	(596		)	—			(614		)	(115		)	(729		)
Equity in net income of unconsolidated affiliates	—			—			(3,880		)	(3,880		)	—			(3,880		)
Impairment of investments	—			—			7,940			7,940			—			7,940
Other expense (income)	(7		)	427			346			766			(227		)	539
Segment contribution (loss)	$	115,100		$	(14,431	)	$	(4,406	)	$	96,263
Income (loss) from continuing operations before income taxes										$	96,263		$	(61,621	)	$	34,642

NOTE 13: ALLOWANCE FOR LOSSES AND CREDIT QUALITY OF CONSUMER LOANS

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 reviewing 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 also inspect the automobile, title and reference to market values of used automobiles.

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. We review and analyze our loan portfolios based on aggregation of loans by type and duration of the loan products. Loan repayment trends and default rates are evaluated each month based on each loan portfolio and adjustments to loss allowance are made accordingly. A documented and systematic process is followed.

We consider consumer loans made at our storefronts to be in default if they have not been repaid or renewed by the maturity date. If one payment of a multiple-payment loan is delinquent, that one payment is considered in default. If more than one payment is delinquent at any time, the entire loan is considered in default. Although loans in default may be collected later, we

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charge the loan principal to consumer loan bad debt upon default, leaving only active loans in the reported balance. Accrued fees related to loans in default reduce fee revenue upon loan default, and increase fee revenue upon collection.

Auto title loans 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 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. 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.

Grupo Finmart customers obtain installment loans with a series of payments due over the stated loan term, which can be as long as four years. We recognize consumer loan interest related to loans we originate based on the percentage of consumer loans made that we believe to be collectible, and reserve the percentage of interest we expect not to collect, over the period in which payments are expected to be received under the effective interest method.

A number of circumstances cause delays in the receipt of payments on a Grupo Finmart loan. For example:


•	It often takes 90 days or more for the employer to set up initial payroll withholding and begin remitting payments to Grupo Finmart (a process referred to as “ratification”).


•	It is not unusual to have an interruption or delay in payments for a number of reasons, such as holidays, summer vacations, illness, convenio renewals, union permits and political elections.


•	Many convenios limit the amount that can be withheld from a borrower’s paycheck, and if the borrower has multiple loans outstanding, the withheld amount is generally used to repay the loans in the order in which they were made.


•	Some larger employers act as a consolidator and remitter on behalf of other smaller employers and the payment consolidation processes, or other issues with employer systems, sometimes cause interruptions in payments.

Incremental direct costs incurred (commissions), other than certain brokerage and other costs, are capitalized and deferred ratably over the life of the loans. Amortization of these costs are included in “Operations” expense in our consolidated statements of operations.

Loans to Grupo Finmart customers whose employment is continuing are referred to as “in-payroll” loans, while loans to Grupo Finmart customers whose employment is discontinued are referred to as “out-of-payroll” loans. A customer is generally considered to have discontinued their employment if they are no longer employed by the employer that is responsible for the payroll withholding. We establish reserves for Grupo Finmart loans as follows:


•	We reserve 100% of non-performing loans, which for this purpose we consider to be:


◦	Out-of-payroll loans for which Grupo Finmart is not receiving payments; and


◦	In-payroll loans for which Group Finmart has not received any payments for 180 consecutive days.


•	We also establish additional loan principal and accrued interest reserves for performing loans based on historical experience.

When we reserve 100% of a Grupo Finmart loan, we charge the loan principal to consumer loan bad debt expense, reduce interest revenue by the amount of unpaid interest theretofore accrued on the loan and cease accruing interest revenue. Future collections are recorded as a reduction of consumer loan bad debt expense (in the case of written-off principal) and an increase in consumer loan fee revenue (in the case of written-off accrued interest) after principal has been recovered.

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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 (Benefit)		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, 2015	$	12,217	$	(7,159	)	$	3,160	$	4,129	$	593		$	12,940	$	29,214
Three Months Ended June 30, 2014	8,585		(8,343		)	3,156		8,811		138			12,347		32,393
Nine Months Ended June 30, 2015	14,645		(23,239		)	9,946		11,987		(399		)	12,940		29,214
Nine Months Ended June 30, 2014	2,928		(37,146		)	24,040		22,370		155			12,347		32,393
Secured short-term consumer loans:
Three Months Ended June 30, 2015	$	816	$	(9,983	)	$	9,135	$	752	$	—		$	720	$	5,464
Three Months Ended June 30, 2014	1,814		(15,284		)	13,148		1,227		—			905		7,592
Nine Months Ended June 30, 2015	1,049		(37,375		)	33,872		3,174		—			720		5,464
Nine Months Ended June 30, 2014	1,804		(50,352		)	44,903		4,550		—			905		7,592
Unsecured long-term consumer loans:
Three Months Ended June 30, 2015	$	44,721	$	(2,894	)	$	255	$	2,855	$	(1,228	)	$	43,709	$	163,167
Three Months Ended June 30, 2014	26,965		(104		)	—		5,993		165			33,019		155,703
Nine Months Ended June 30, 2015	38,087		(3,162		)	255		14,518		(5,989		)	43,709		163,167
Nine Months Ended June 30, 2014	19,849		(193		)	—		13,102		261			33,019		155,703

The provisions presented in the table above include only principal and exclude 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 other accrued expenses" in our condensed consolidated balance sheets. Recoveries of unsecured long-term consumer loans are nil due to the nature of the loans charged-off.

On November 29, 2013, Grupo Finmart acquired an unsecured long-term consumer loan portfolio, consisting of approximately 10,500 payroll withholding loans, for a total purchase price of approximately $15.9 million. Of the total purchase price, a minimum of $11.7 million will be paid, of which approximately $10.5 million was paid at closing, $0.6 million was paid on April 30, 2014, and $0.6 million will be paid by November 28, 2014. The total price includes deferred consideration of approximately $4.2 million, subject to the performance of the portfolio and payable over the next 12 months as stipulated in the purchase agreement, of which approximately $2.1 million was paid on April 30, 2014. The remaining deferred consideration will be paid by November 28, 2014. The fair value of the loan portfolio was $11.8 million as of the acquisition date.

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The following table presents an aging analysis of past due financing receivables by portfolio segment:



	Days Past Due								Total Past Due		Current Receivable		Translation Adjustment		Total Financing Receivable		Allowance Balance		Recorded Investment > 90 Days Accruing
	1-30		31-60		61-90		>90		Total Past Due		Current Receivable		Translation Adjustment		Total Financing Receivable		Allowance Balance		Recorded Investment > 90 Days Accruing

	(in thousands)
Unsecured short-term consumer loans*:
June 30, 2014	$	1,381	$	2,106	$	1,327	$	6,399	$	11,213	$	2,989	$	—	$	14,202	$	10,481	$	—
Secured short-term consumer loans:
June 30, 2015	$	1,411	$	540	$	302	$	367	$	2,620	$	2,844	$	—	$	5,464	$	720	$	—
June 30, 2014	1,983		763		391		288		3,425		4,167		—		7,592		905		—
September 30, 2014	2,196		823		448		412		3,879		4,294		—		8,173		1,049		—
Unsecured long-term consumer loans:
June 30, 2015
Performing Loans	$	10,448	$	6,038	$	2,627	$	3,689	$	22,802	$	102,072	$	828	$	125,702	$	6,244	$	3,689
Non-Performing Loans	485		484		825		34,006		35,800		1,665		—		37,465		37,465		—
	$	10,933	$	6,522	$	3,452	$	37,695	$	58,602	$	103,737	$	828	$	163,167	$	43,709	$	3,689
June 30, 2014
Performing Loans	$	5,473	$	4,022	$	1,935	$	1,566	$	12,996	$	114,506	$	1,557	$	129,059	$	6,375	$	1,566
Non-Performing Loans	902		718		558		22,837		25,015		1,629		—		26,644		26,644		—
	$	6,375	$	4,740	$	2,493	$	24,403	$	38,011	$	116,135	$	1,557	$	155,703	$	33,019	$	1,566
September 30, 2014
Performing Loans	$	4,942	$	3,546	$	2,035	$	1,600	$	12,123	$	116,870	$	2,230	$	131,223	$	6,450	$	1,600
Non-Performing Loans	1,854		907		884		25,674		29,319		2,318		—		31,637		31,637		—
	$	6,796	$	4,453	$	2,919	$	27,274	$	41,442	$	119,188	$	2,230	$	162,860	$	38,087	$	1,600

* Unsecured short-term consumer loan amounts are included for the periods after the December 20, 2012 acquisition of Go Cash, and prior to our discontinuance of Go Cash operations as of September 30, 2014. As a result of our discontinuance of Go Cash, we wrote our unsecured short-term consumer loans down to net realized value, or a nominal amount, as of September 30, 2014.

NOTE 14: FAIR VALUE MEASUREMENTS

Recurring 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 market-based inputs or unobservable inputs that are corroborated by market data

Level 3 — Unobservable inputs that are not corroborated by market data

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The tables below present our financial assets (liabilities) that are measured at fair value on a recurring basis in our condensed consolidated balance sheets as of June 30, 2015 and 2014 and September 30, 2014:



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

	(in thousands)
Foreign currency forwards	$	8,440		$	—	$	8,440		$	—
Holding period adjustment	47			—		47			—
Cash Convertible Notes hedges	23,160			—		23,160			—
Contingent consideration	(2,836		)	—		—			(2,836		)
Cash Convertible Notes embedded derivative	(23,160		)	—		(23,160		)	—
Net financial assets (liabilities)	$	5,651		$	—	$	8,487		$	(2,836	)

	June 30, 2014			Fair Value Measurements Using
Financial (liabilities) assets	June 30, 2014			Level 1		Level 2			Level 3

	(in thousands)
Marketable equity securities	$	2,641		$	2,641	$	—		$	—
Cash Convertible Notes hedges	46,454			—		46,454			—
Contingent consideration	(4,383		)	—		—			(4,383		)
Cash Convertible Notes embedded derivative	(46,454		)	—		(46,454		)	—
Net financial (liabilities) assets	$	(1,742	)	$	2,641	$	—		$	(4,383	)

	September 30, 2014			Fair Value Measurements Using
Financial (liabilities) assets	September 30, 2014			Level 1		Level 2			Level 3

	(in thousands)
Foreign currency forwards	$	1,152		$	—	$	1,152		$	—
Cash Convertible Notes hedges	36,994			—		36,994			—
Contingent consideration	(3,758		)	—		—			(3,758		)
Cash Convertible Notes embedded derivative	(36,994		)	—		(36,994		)	—
Net financial (liabilities) assets	$	(2,606	)	$	—	$	1,152		$	(3,758	)

Grupo Finmart measured the value of the foreign currency forwards using Level 2 inputs such as estimations of expected cash flows, appropriately risk-adjusted discount rates and other 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 are recorded in the condensed consolidated balance sheets under "Other assets, net" and "Deferred gains and other long-term liabilities."

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 implied volatility, risk free interest rate and other factors. The Holding Period Adjustment is recorded in the condensed consolidated balance sheets under "Other assets, net."

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 implied volatility, risk free interest rate and other factors. The Cash Convertible Notes Hedges are recorded in the condensed consolidated balance sheets under "Other assets, net." The Cash Convertible Notes Embedded Derivative is recorded in the condensed consolidated balance sheets under "Long-term debt, less current maturities."

We used an income approach to measure the fair value of the contingent consideration using a risk-weighted discounted cash flow approach. Some of the significant inputs used for the valuation are not observable in the market and are thus Level 3 inputs. Contingent consideration is recorded in the condensed consolidated balance sheets under "Other current liabilities" and "Deferred gains and other long-term liabilities." Significant increases or decreases in the underlying assumptions used to value the contingent consideration could significantly increases or decrease the fair value estimates recorded in the condensed consolidated balance sheets.

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We measured the fair value of our marketable equity securities using Level 1 inputs. These assets were publicly traded equity securities for which market prices were readily available. Marketable equity securities are recorded in the condensed consolidated balance sheets under "Other assets, net." We sold all marketable equity securities during fiscal 2014.

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.

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Financial Assets, Temporary Equity and Liabilities Not Measured at Fair Value

The tables below present our financial assets, temporary equity and liabilities that are not measured at fair value on a recurring basis in our condensed consolidated balance sheets as of June 30, 2015 and 2014 and September 30, 2014:



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

	(in thousands)
Financial assets:
Cash and cash equivalents	$	114,387		$	114,387	$	114,387	$	—	$	—
Restricted cash	28,015			28,015		28,015		—		—
Pawn loans	144,377			144,377		—		—		144,377
Consumer loans, net	57,737			58,875		—		—		58,875
Pawn service charges receivable, net	26,989			26,989		—		—		26,989
Consumer loan fees and interest receivable, net	18,180			18,180		—		—		18,180
Restricted cash, non-current	2,978			2,978		2,978		—		—
Non-current consumer loans, net	82,739			85,304		—		—		85,304
Total	$	475,402		$	479,105	$	145,380	$	—	$	333,725

Temporary equity:
Common Stock, subject to possible redemption	$	11,696		$	11,241	$	—	$	—	$	11,241
Redeemable noncontrolling interest	16,361			33,297		—		—		33,297
Total	$	28,057		$	44,538	$	—	$	—	$	44,538

Financial liabilities:
2.125% cash convertible senior notes due 2019	$	191,792		$	181,746	$	—	$	181,746	$	—
Foreign currency debt	20,924		*	23,667		—		23,667		—
Consumer loans facility due 2019	46,552			45,843		—		45,843		—
Foreign currency unsecured notes	17,557		*	18,536		—		18,536		—
Foreign currency secured notes	23,076		*	25,639		—		25,639		—
Secured notes consolidated from VIEs	86,805		*	83,640		$	—	$	83,640	$	—
Total	$	386,706		$	379,071	$	—	$	379,071	$	—

* Portions of these amounts are included under "Current maturities of long-term debt" and "Long-term debt, less current maturities" in our condensed consolidated balance sheets.

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	Carrying Value			Estimated Fair Value
	June 30, 2014			June 30, 2014		Fair Value Measurement Using
	June 30, 2014			June 30, 2014		Level 1		Level 2		Level 3

	(in thousands)
Financial assets:
Cash and cash equivalents	$	49,434		$	49,434	$	49,434	$	—	$	—
Restricted cash	49,129			49,129		49,129		—		—
Pawn loans	157,491			157,491		—		—		157,491
Consumer loans, net	64,787			65,396		—		—		65,396
Pawn service charges receivable, net	29,307			29,307		—		—		29,307
Consumer loan fees and interest receivable, net	15,032			15,032		—		—		15,032
Restricted cash, non-current	4,578			4,578		4,578		—		—
Non-current consumer loans, net	84,630			85,304		—		—		85,304
Total	$	454,388		$	455,671	$	103,141	$	—	$	352,530

Temporary equity:
Redeemable noncontrolling interest	$	25,662		$	25,015	$	—	$	—	$	25,015

Financial liabilities:
2.125% cash convertible senior notes due 2019	$	183,694		$	183,694	$	—	$	183,694	$	—
Foreign currency debt	30,809		*	30,623		—		30,623		—
Consumer loans facility due 2019	56,075			56,216		56,216		—		—
Foreign currency unsecured notes	37,394		*	37,478		30,008		7,470		—
Foreign currency secured notes	27,231		*	26,617		—		26,617		—
Secured notes consolidated from VIEs	$	46,685	*	45,896		—		$	45,896	—
Total	$	381,888		$	380,524	$	86,224	$	294,300	$	—

* Portions of these amounts are included under "Current maturities of long-term debt" and "Long-term debt, less current maturities" in our condensed consolidated balance sheets.

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	Carrying Value			Estimated Fair Value
	September 30, 2014			September 30, 2014		Fair Value Measurement Using
	September 30, 2014			September 30, 2014		Level 1		Level 2		Level 3

	(in thousands)
Financial assets:
Cash and cash equivalents	$	55,325		$	55,325	$	55,325	$	—	$	—
Restricted cash	63,495			63,495		63,495		—		—
Pawn loans	162,444			162,444		—		—		162,444
Consumer loans, net	63,995			64,631		—		—		64,631
Pawn service charges receivable, net	31,044			31,044		—		—		31,044
Consumer loan fees and interest receivable, net	12,647			12,647		—		—		12,647
Restricted cash, non-current	5,070			5,070		5,070		—		—
Non-current consumer loans, net	85,004			86,364		—		—		86,364
Total	$	479,024		$	481,020	$	123,890	$	—	$	357,130

Temporary equity:
Redeemable noncontrolling interest	$	22,800		$	49,021	$	—	$	—	$	49,021

Financial liabilities:
2.125% cash convertible senior notes due 2019	$	185,693		$	185,738	$	—	$	185,738	$	—
Foreign currency debt	27,185		*	27,185		—		27,185		—
Consumer loans facility due 2019	54,045			54,178		54,178		—		—
Foreign currency unsecured notes	36,991		*	36,837		—		36,837		—
Foreign currency secured notes	26,195		*	26,144		—		26,144		—
Secured notes consolidated from VIEs	61,062		*	59,906		—		59,906		—
Total	$	391,171		$	389,988	$	54,178	$	335,810	$	—

* Portions of these amounts are included under "Current maturities of long-term debt" and "Long-term debt, less current maturities" in our condensed consolidated balance sheets.

Cash and cash equivalents and restricted cash bear interest at market rates and have maturities of less than 90 days, as applicable. Based on the short-term nature of these assets we estimate that their carrying value approximates fair value.

The maximum U.S. pawn loan term ranges between 30 and 120 days, with an additional grace period between 0 and 90 days. The maximum Mexico pawn loan term is 30 days, with an additional grace period up to 10 days. Significant increases or decreases in the underlying assumptions used to value the pawn loans could significantly increase or decrease the fair value estimates disclosed above. Based on the short-term collateralized nature of these assets we estimate that their carrying value approximates fair value.

Consumer loans, including long-term unsecured consumer loans made by Grupo Finmart, are carried in the condensed consolidated balance sheets net of the allowance for estimated loan losses, which is based on recent loan default experience adjusted for seasonal variations. Consumer loans, other than those made by Grupo Finmart, have relatively short maturity periods that are generally less than 12 months; therefore, we estimate that their carrying value approximates fair value. Consumer loans made by Grupo Finmart have an average stated 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.

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We record pawn service charges receivable using the interest method for all pawn loans we believe to be collectible. We base our estimate of collectible loans on several unobservable inputs, including recent redemption rates, historical trends in redemption rates and the amount of loans due in the following two months. Based on the short-term nature of these assets we estimate that their carrying value approximates fair value. Significant increases or decreases in the underlying assumptions used to value the pawn service charges receivable could significantly increase or decrease the fair value estimates disclosed above.

Consumer loan fees and interest receivable are carried net of the allowance for uncollectible consumer loan fees and interest receivable, which is based on recent loan default experience adjusted for seasonal variations and collection percentages. Based on the short-term nature of these assets we estimate that their carrying value approximates fair value. Significant increases or decreases in the underlying assumptions used to value the consumer loan fees and interest receivable could significantly increase or decrease the fair value estimates disclosed above.

The fair value of the redeemable noncontrolling interest 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 discount rates ranging from 5% to 10%, representing discounts for lack of control and lack of marketability 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 7.2%, which approximated the Company’s incremental borrowing rate. Significant increases or decreases in the underlying assumptions used to value the Common Stock, subject to possible redemption could significantly increase or decrease the fair value estimates disclosed above.

We measured the fair value of our 2.125% cash convertible senior notes due 2019 and the embedded derivative as of June 30, 2015 using quoted price inputs from Bloomberg. The 2.125% cash convertible senior notes due 2019 and the embedded derivative are not actively traded and thus the price inputs represent a Level 2 measurement. There was a change in the valuation technique we used to measure our 2.125% cash convertible senior notes due 2019 and the embedded derivative during the quarter ended March 31, 2015 as we believe the quoted price inputs obtained from Bloomberg more accurately represent the fair value of our 2.125% cash convertible senior notes due 2019 and the embedded derivative. As the 2.125% cash convertible senior notes due 2019 and the embedded derivative are not actively traded, the quoted price inputs obtained from Bloomberg are highly variable from day to day and thus could significantly increase or decrease the fair value estimates disclosed above.

We measured the fair value of our 2.125% cash convertible senior notes due 2019 and the embedded derivative using an income approach as of September 30, 2014. The fair value was based on the carrying value of the Cash Convertible Notes accreting to the $230.0 million redemption value using a discount rate of 7%, which approximated the Company’s incremental borrowing rate for a similar debt instrument (without the cash conversion feature) as of the date of issuance and thus utilizes Level 2 inputs.

Fair value measurements for our domestic line of credit were calculated using discount rates based on an estimated senior secured spread plus term matched risk-free rates as of the valuation dates.

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. For financial liability fair value measurements that are classified as Level 1 measurements, we utilized quoted price and yield inputs from Bloomberg and a price vendor authorized by the Comisión Nacional Bancaria y de Valores.

See Note 5 for discussion of the fair value of our investment in unconsolidated affiliate.

NOTE 15: DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Derivative Instruments Discontinued as Cash Flow Hedging Instruments

During the quarter ended June 30, 2013, Grupo Finmart completed a $30.0 million cross-border debt offering for which it has to pay interest on a semiannual basis at a fixed rate. Grupo Finmart uses derivative instruments (the "foreign currency forwards") to manage its exposure related to changes in the foreign currency exchange rate on this instrument through its maturity on November 16, 2015. Grupo Finmart does not enter into derivative instruments for any purpose other than cash flow hedging.

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At the beginning of the quarter ended December 31, 2014, we discontinued hedge accounting for our foreign currency forwards due to a determination that repayment of the $30.0 million cross-border debt was to occur prior to maturity. As such, not all of the forecasted interest payments are expected to occur, resulting in the discontinuance of hedge accounting. Further, Grupo Finmart repaid $17.5 million of the outstanding cross-border debt and received proceeds of $2.3 million from settlement of the portion of the foreign currency forwards attributable to the repaid cross-border debt during the quarter ended December 31, 2014.

Whenever hedge accounting is discontinued and the derivative remains outstanding, we continue to carry the derivative at its fair value on our condensed consolidated balance sheets and recognize any gains and losses currently in accumulated other comprehensive income attributable to any repaid portion of the hedged item in addition to any subsequent changes in the fair value of the derivative under "Other expense" in our condensed consolidated statements of operations. We amortize the gains and losses currently in accumulated other comprehensive income attributable to any remaining outstanding portion of the hedged item to earnings under "Other expense" in our condensed consolidated statements of operations over the remaining term of the outstanding hedged item.

Prior to the discontinuance of hedge accounting, changes in the fair value of the foreign currency forwards designated as hedging instruments that effectively offset the variability of cash flows associated with the exchange rate were reported in accumulated other comprehensive income. These amounts subsequently were reclassified into earnings in the same period or periods during which the hedged transaction affected earnings.

The following tables set forth certain information regarding our derivative instruments discontinued as cash flow hedging instruments:



		Fair Value of Derivative Instruments
Derivative Instrument	Balance Sheet Location	June 30, 2015		June 30, 2014		September 30, 2014

		(in thousands)
Foreign currency forwards — assets	Receivables, prepaid expenses and other current assets	$	2,833	$	1,496	$	2,420



	Amount of Loss Recognized in Other Comprehensive Income on Derivatives
	Three Months Ended June 30,				Nine Months Ended June 30,
Derivative Instrument	2015		2014		2015		2014

	(in thousands)
Foreign currency forwards	$	—	$	497	$	—	$	1,169



		Amount of Loss on Derivatives Reclassified into Income from Accumulated Other Comprehensive Income
		Three Months Ended June 30,				Nine Months Ended June 30,
Derivative Instrument	Income Statement Location	2015		2014		2015		2014

		(in thousands)
Foreign currency forwards	Other expense	$	35	$	272	$	422	$	814

Derivative Instruments Not Designated as Hedging Instruments

During the nine-month periods ended June 30, 2015 and 2014 and the fiscal year ended September 30, 2014, Grupo Finmart entered into a cross currency forward contract in connection with the formation of the VIEs and the related transfers of certain loans as described in Note 17. The Company guarantees the future cash outflows of the forward contract, which is included in the Company’s consolidated balance sheets and adjusted to fair value each reporting period through earnings.

As described in Note 7, in June 2014 we issued and settled $200.0 million aggregate principal amount of Cash Convertible Notes. We granted the initial purchasers the option to purchase up to an additional $30.0 million aggregate principal amount of Cash Convertible Notes. On June 27, 2014, such option was exercised in full. On July 2, 2014, the purchase of the additional $30.0 million of Cash Convertible Notes was settled. The conversion feature of the Cash Convertible Notes can only be settled in cash and is required to be bifurcated from the Cash Convertible Notes and treated as a separate derivative instrument. In order to offset the cash flow risk associated with the Cash Convertible Notes Embedded Derivative, we purchased Cash Convertible Notes Hedges, which are accounted for as derivative instruments. The Cash Convertible Notes Embedded Derivative and the Cash Convertible Notes Hedges are adjusted to fair value each reporting period and unrealized gains and

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losses are reflected in the condensed consolidated statements of operations. We expect that the realized gain or loss from the Cash Convertible Notes Hedges will substantially offset the realized loss or gain of the Cash Convertible Notes Embedded Derivative upon maturity of the Cash Convertible Notes. See Note 14 for additional information regarding the fair values of the Cash Convertible Notes Embedded Derivative and the Cash Convertible Notes Hedges.

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	June 30, 2015			June 30, 2014			September 30, 2014

		(in thousands)
Foreign currency forwards	Receivables, prepaid expenses and other current assets	$	8,440		$	—		$	1,152
Cash Convertible Notes hedges	Other assets, net	23,160			46,454			36,994
Cash Convertible Notes embedded derivative	Long-term debt, less current maturities	(23,160		)	(46,454		)	(36,994		)



		Amount of Unrealized Gain (Loss) on Derivatives
		Three Months Ended June 30,				Nine Months Ended June 30,
Derivative Instrument	Income Statement Location	2015		2014		2015		2014

		(in thousands)
Foreign currency forwards	Other expense	$	5,811	$	289	$	7,288	$	289

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NOTE 16: SUPPLEMENTAL CONSOLIDATED FINANCIAL INFORMATION

Supplemental Condensed Consolidated Balance Sheet Information

The following table provides information on net amounts included in pawn service charges receivable, consumer loan fees and interest receivable, inventory, receivables, prepaid expenses and other current assets and property and equipment:



	June 30, 2015			June 30, 2014			September 30, 2014

	(in thousands)
Pawn service charges receivable, net:
Gross pawn service charges receivable	$	36,237		$	39,287		$	41,351
Allowance for uncollectible pawn service charges receivable	(9,248		)	(9,980		)	(10,307		)
Total	$	26,989		$	29,307		$	31,044

Consumer loan fees and interest receivable, net:
Gross consumer loan fees and interest receivable	$	30,801		$	25,635		$	26,332
Allowance for uncollectible consumer loan fees and interest receivable	(12,621		)	(10,603		)	(13,685		)
Total	$	18,180		$	15,032		$	12,647

Inventory, net:
Inventory, gross	$	122,540		$	138,948		$	154,218
Inventory reserves	(7,257		)	(8,109		)	(16,043		)
Total	$	115,283		$	130,839		$	138,175

Property and equipment, net:
Property and equipment, gross	$	250,865		$	234,824		$	237,183
Accumulated depreciation	(149,730		)	(125,366		)	(131,283		)
Total	$	101,135		$	109,458		$	105,900

During the quarter ended December 31, 2013, we sold seven U.S. pawn stores (three in Louisiana, two in Mississippi, one in Alabama and one in Florida) for $11.0 million, of which $10.0 million was paid in cash and $1.0 million with a 14% promissory note due on December 31, 2018. The carrying value of the stores' net assets amounted to $3.7 million, primarily consisting of $1.5 million of pawn loans, $1.9 million of inventory, and $0.4 million of pawn service charge receivable, offset by $0.1 million of assumed liabilities. During the quarter ended December 31, 2013 we realized a gain of $6.3 million, which is included under "Loss (gain) on sale or disposal of assets" in the condensed consolidated statements of operations. In addition, we recorded a deferred gain of $0.7 million.

During the quarter ended March 31, 2014, we settled the promissory note for $0.9 million and realized the net deferred gain of $0.6 million which is included in our condensed consolidated statements of operations for the quarter ended March 31, 2014.

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NOTE 17: VARIABLE INTEREST ENTITIES

The Company performs ongoing qualitative assessments of VIEs it is involved with to determine if the Company has a controlling financial interest in the VIE and therefore is the VIE’s primary beneficiary. If it is determined to be the primary beneficiary, the Company consolidates the VIE in the Company’s Consolidated Financial Statements.

Consolidated Variable Interest Entities

During the year ended September 30, 2014 and the first quarter of fiscal 2015, Grupo Finmart participated in the formation of three VIEs that purchased Mexican Peso denominated long-term unsecured Mexican consumer loans originated by Grupo Finmart whose borrowers were Mexican government employees at the time of loan origination. Each VIE issued its notes to third party investors and used the related net proceeds to purchase the loans from Grupo Finmart at a premium over their principal amount. The creditors of the VIEs do not have recourse to the general credit of EZCORP, Inc. We consolidate these VIEs as we have the power to direct the activities that significantly affect each VIE’s economic performance and have the right to receive benefits or the obligation to absorb losses that could potentially be significant to each VIE.

The first VIE (“VIE C”) was formed in October 2013 as a trust with third party "Investor C" as the purchaser of its Mexican Peso denominated notes and the VIE’s first beneficiary. The second VIE (“VIE B”) was formed in March 2014 (amended in June, September and December 2014) as a trust with "Investor B" as the purchaser of the VIE’s U.S. Dollar denominated notes and the VIE’s first beneficiary. The third VIE (“VIE A”) was formed in June 2014 as a trust with "Investor A" as the purchaser of the VIE’s Mexican Peso denominated notes and the VIE’s first beneficiary. Grupo Finmart is the servicer of the VIEs’ loans. In August 2014, "Investors D" and "E" purchased a portion of VIE A’s notes from "Investor A" and became additional VIE A first beneficiaries. Each VIEs’ notes are payable solely from the VIE’s assets. Grupo Finmart receives 100% of VIE C and B cash flows and 50% of VIE A cash flows after: 1) the related VIE’s operating expenses are paid, and 2) the related VIE's notes are repaid. Grupo Finmart has an option to repurchase VIE A’s loans. VIE A is the only VIE for which Grupo Finmart can be terminated as servicer for reasons other than cause, with termination requiring unanimous first beneficiary approval.

VIE B has entered into foreign exchange forward contracts with Grupo Finmart to mitigate the risk associated with its U.S. Dollar denominated assets and Mexican Peso denominated liabilities. Grupo Finmart has entered into an offsetting foreign exchange forward contract with a third party. See Note 15 for additional information regarding the fair value of the forward contract.

The loans Grupo Finmart transferred to the VIEs at the date of transfer were as follows:



Description of Portfolio	Carrying (Par) Value of Principal of Loans Transferred		Carrying Value of Accrued Interest of Loans Transferred		Principal of VIE Promissory Note Issued at Par

	(in millions, except number of loans)
14,500 payroll loans transferred to VIE C in October 2013	$	14.0	$	0.7	$	19.3
7,500 in payroll loans transferred to VIE B in March 2014	10.0		1.3		16.0
7,100 in payroll loans transferred to VIE B in June 2014	10.0		2.1		16.5
8,500 in payroll loans transferred to VIE A in June 2014	14.0		2.3		21.8
16,135 in payroll loans transferred to VIE B in September 2014	26.7		3.3		43.8
10,900 payroll loans transferred to VIE B in December 2014	13.9		1.5		22.0

In evaluating whether we have the power to direct the activities of a VIE that most significantly impact its economic performance, we consider the purpose for which the VIE was created, the importance of each of the activities in which it is engaged and our decision-making role, if any, in those activities that significantly determine the entity’s economic performance as compared to other economic interest holders. This evaluation requires consideration of all facts and circumstances relevant to decision-making that affects the entity’s future performance and the exercise of professional judgment in deciding which decision-making rights are most important.

In determining whether we have the right to receive benefits or the obligation to absorb losses that could potentially be significant to a VIE, we evaluate all of our economic interests in the entity, regardless of form (debt, equity, management and servicing fees, and other contractual arrangements). This evaluation considers all relevant factors of the entity’s design, including: the entity’s capital structure, contractual rights to earnings or losses, subordination of our interests relative to those of other investors, as well as any other contractual arrangements that might exist that could have the potential to be economically significant. The evaluation of each of these factors in reaching a conclusion about the potential significance of our economic interests is a matter that requires the exercise of professional judgment.

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The assets of the VIEs can be used only to settle obligations of the VIEs. Information about our involvement with VIEs has been aggregated as the VIEs are similar and we believe separate reporting would not provide more useful information. The assets and liabilities of our consolidated VIEs described above are presented in our condensed consolidated balance sheets and are net of intercompany balances which are eliminated in our condensed consolidated financial statements.

The loans the VIEs purchased from Grupo Finmart are reflected in our consolidated financial statements at amortized cost based on Grupo Finmart’ s pre-transfer basis. We did not recognize any gain or loss as a result of the loan transfer to the VIEs or from the consolidation of the VIEs. The excess of the principal amount of each VIE’s notes payable over the principal amount of the VIE’s loans (this is the unamortized loan premium paid by the VIEs) is to be repaid using a portion of the VIE’s loan interest as the coupon of the VIEs’ loans are greater than the coupon of the VIE’s notes payable.

Income (principally, interest and fees on loans) earned by our consolidated VIEs was $7.3 million and $3.8 million for the three-months ended June 30, 2015 and 2014, respectively and $27.8 million and $8.0 million for the nine-months ended June 30, 2015 and 2014, respectively. Related expenses consisting primarily of interest expense, foreign exchange losses and consumer loan bad debt expense were $4.2 million and $1.6 million for the three-months ended June 30, 2015 and 2014, respectively and $21.2 million and $3.1 million for the nine-months ended June 30, 2015 and 2014, respectively. These amounts do not include intercompany transactions which are eliminated in our condensed consolidated financial statements.

See "Non-recourse debt to EZCORP, Inc." in Note 7 for a description of debt, and "Derivative instruments discontinued as cash flow hedging instruments" in Note 15 for a description of derivatives, related to our consolidated VIEs.

Non-Consolidated Variable Interest Entities

The Company holds a significant variable interest in two VIEs for which it is not the primary beneficiary and, therefore, were not consolidated, as discussed below.

Letters of Credit

We issue letters of credit (“LOC”) to enhance the creditworthiness of our customers seeking unsecured loans from unaffiliated lenders. The letters of credit 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 funds fees. In addition we post as cash collateral a specified percentage of the maximum exposure for LOC losses.

Our current carrying value of cash collateral and other assets, is included in “Prepaid expenses and other assets” in our consolidated balance sheets, expected LOC losses and accounts payable are included in “Accounts payable and other accrued expenses” in our consolidated balance sheets, maximum exposure for losses on letters of credit if all brokered loans defaulted and none was collected including the portion of that exposure secured by titles to customers’ automobiles, not included in our consolidated balance sheets, is summarized below:



	June 30, 2015		June 30, 2014		September 30, 2014

	(in thousands)
Consumer loans:
Cash collateral and other assets	$	6,614	$	11,363	$	9,135
Expected LOC losses	3,180		3,069		4,708
Accounts payable	718		2,180		1,026
Maximum exposure for LOC losses*	20,514		29,430		29,502

* These amounts are not recorded in our condensed consolidated balance sheets. Of the total maximum exposure for LOC losses as of June 30, 2015 and 2014 and September 30, 2014, $5.6 million, $7.5 million and $7.8 million, respectively, was secured by titles to customers' automobiles.

NOTE 18: SUBSEQUENT EVENTS

We have analyzed our operations subsequent to June 30, 2015 to the date this Report is filed, and have determined that we do not have any material subsequent events to disclose in these financial statements other than the events described below.

Cash Converters International Limited

Subsequent to June 30, 2015, the fair value of our investment in Cash Converters International continued to decline. We note the following factors as key drivers in decline in fair value beginning in the third quarter of fiscal 2015:

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•

On May 1, 2015, Cash Converters International released a quarterly update for the period ended March 31, 2015 noting a decline in its United Kingdom financial services performance due to Policy Statement 14/16 promulgated by the U.K. Financial Conduct Authority which became effective on January 2, 2015. The legislation provides regulatory guidance on high cost short-term credit rates. Cash Converters International stated that transition to these requirements was completed during the quarter ended March 31, 2015 and that it expects improve its U.K. financial services performance going forward.


•	On June 18, 2015, Cash Converters International reached an agreement to pay $17.7 million toward settlement of a class-action lawsuit brought by its customers alleging that Cash Converters International charged excessive interest on short-term loans.

•

On August 5, 2015, Westpac Banking Corporation ("Westpac") informed Cash Converters International that it had made the decision to cease to provide banking and financial products and services to its customers who provide Short Term Credit Contracts or Small Amount Credit Contracts under section 5(1) of the National Consumer Credit Protection Act 2009. As Cash Converters International is a licensed provider of financial series under the terms of the National Consumer Credit Protection Act 2009, Westpac will not continue to provide services to Cash Converters International; however, they will provide Cash Converters International with time to establish alternative funding arrangements. Cash Converters International has drawn approximately AUD $59 million from its securitization facility with Westpac.

The fair value decline may be other-than-temporary in periods subsequent to June 30, 2015. We further estimate that our carrying value in Cash Converters International will exceed the fair value by approximately $29.4 million as of September 30, 2015 based upon the stock price and exchange rates as of that date, which may cause an other-than-temporary impairment in our investment in future reporting periods. In subsequent periods, we will consider the guidance in ASC 320-10-S99-1 and ASC 323-10-35 in evaluating whether the impairment is other-than-temporary and whether to measure and recognize any other-than-temporary impairment.

Discontinued Operations and Restructuring

On July 27, 2015, the Company's Board of Directors approved a restructuring plan that includes:


•	Exiting our U.S. Financial Services business ("USFS") and ceasing the employment of the employees related to that business; and


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

Under the new strategy, the Company will (a) focus on growing our core pawn operations in the U.S. and Mexico and our Grupo Finmart business in Mexico and (b) simplify our operating structure by moving from a divisional to a functional business model.

As part of the exit of our USFS business, we have closed 480 USFS locations and ceased the employment of approximately 1,000 employees associated with that business. We currently expect to have substantially completed the USFS exit activities by December 31, 2015.

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The following table sets forth our current estimate of the major types of costs and charges associated with the closing of the USFS business. The ranges set forth below are only estimates, and the actual costs or charges incurred in connection with the closure of USFS could differ materially from the ranges described below.



	Range of Amounts
	(in millions)
Category of Costs or Charge
Store exit costs (a)	$	5.0	-	$	8.0
Employee severance and retention payments (b)	4.0		-	5.0
Asset impairment or write-down (c)	29.0		-	31.0
Total (d)	$	38.0	-	$	44.0



(a)	Represents the estimated costs to exit the USFS store locations, including lease termination costs, costs to restore leased premises to pre-lease condition and contract termination expenses.
(b)	Includes one-time termination benefits to be paid to affected employees, as well as retention payments to selected employees.
(c)	Includes impairment or write-down of long-lived assets (including goodwill and other intangibles), as well as additional bad debt provision in anticipation of the increased difficulty in collecting outstanding consumer loans during the closure process. Of this amount, $10.6 million was recorded during the three-month period ended June 30, 2015 as a result of the impairment of USFS goodwill. See Note 6.
(d)	Of this amount, $9.0 million to $13.0 million will result in potential future cash expenditures.

Of these costs and charges, $10.6 million was recorded as expense in the third quarter of fiscal 2015, and we expect between $26.0 million and $32.0 million will be recorded as expense in the fourth quarter of fiscal 2015 and the remaining amount will be recognized as an expense in the first quarter of fiscal 2016.

In addition to the exit of our USFS business, we will simplify our operating structure by moving from a divisional to a functional business model. This will include a number of initiatives designed to enhance efficiencies and reduce costs. These initiatives will include the closure of 54 underperforming locations (17 in U.S. Pawn, 9 in Empeño Fácil, 17 in TUYO, and 11 in Canada) and ceasing the employment of approximately 300 employees. We currently expect to have substantially completed these initiatives by December 31, 2015.

The following table sets forth our current estimate of the major types of costs and charges associated with the simplification of our operating structure. The ranges set forth below are only estimates, and the actual costs or changes incurred could differ materially from the ranges described below.



	Range of Amounts
	(in millions)
Category of Costs or Charge
Facilities exit costs (a)	$	18.0	-	$	20.0
Employee severance and retention payments (b)	1.0		-	2.0
Asset impairment or write-down (c)	18.0		-	19.0
Total (d)	$	37.0	-	$	41.0



(a)	Represents the estimated costs to exit the store locations described above, restore leased premises to pre-lease condition and reduce our lease commitments for other facilities. These amounts include non-cash components of $10.0 million to $11.0 million.
(b)	Includes one-time termination benefits to be paid to affected employees, as well as retention payments to selected employees.
(c)	Includes impairment or write-down of long-lived assets (including goodwill and other intangibles).
(d)	Of this amount, $9.0 million to $11.0 million will result in potential future cash expenditures.

We expect between $36.0 million and $40.0 million of these costs and charges will be recorded as an expense in the Company's financial statements for the fourth quarter of fiscal 2015, while the remaining amount will be recorded as an expense in the first quarter of fiscal 2016.

Acquisitions

On August 17, 2015, we completed the acquisition of 13 pawn stores in Oregon and Arizona doing business under the "USA Pawn" brand. The aggregate purchase price was $12.3 million in cash. We have concluded that this acquisition was immaterial to our overall consolidated financial results and, therefore, have omitted the information required by ASC 805-10-50-2(h).

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As of June 30, 2015 we owned 76% of the outstanding equity interest in our consolidated subsidiary Grupo Finmart. On August 31, 2015, we acquired an additional 18% of the outstanding ordinary shares of Grupo Finmart for $29.6 million of cash, increasing our ownership percentage to 94%, with the remaining 6% held by minority shareholders. This transaction was treated as an equity transaction as required by ASC 810-10.

Event of Default and Election to Pay Additional Interest

Under the Indenture relating to our Cash Convertible Notes (see Note 7 — 2.125% Cash Convertible Senior Notes Due 2019), we are required to file with the Trustee our annual, quarterly and other periodic reports within 15 days after those reports are required to be filed with the Securities and Exchange Commission (the “SEC”). As previously disclosed, we did not timely file with the SEC or the Trustee our Quarterly Report on Form 10-Q for the period ended March 31, 2015 (the “Q2 Quarterly Report”) and, thus, were in default under the Indenture as of May 26, 2015. We notified the Trustee of such default on June 22, 2015, as required by the Indenture.

Under the Indenture, such default does not constitute an Event of Default (as defined in the Indenture) until the Trustee notifies us in writing of the default and we do not cure the default within 60 days after the receipt of such notice. We received a Notice of Default from the Trustee regarding our failure to timely file the Q2 Quarterly Report on July 29, 2015. The 60-day cure period specified in the Indenture expired on September 27, 2015, and an Event of Default under the Indenture existed as of that date.

The Indenture provides that we may elect, as the sole and exclusive remedy for the Event of Default during the first 180 days after the occurrence of the Event of Default, to pay additional interest on the Cash Convertible Notes at a rate equal to 0.50% per annum of the principal amount of the Notes (the “Additional Interest”). We elected to pay such Additional Interest and notified the Trustee of such election, and the Trustee notified the holders of Cash Convertible Notes, all in accordance with the terms of the Indenture.

The Additional Interest will accrue on all outstanding Cash Convertible Notes from, and including, September 27, 2015 (the date on which the Event of Default occurred) to the earlier of (a) the date on which the Event of Default is cured or waived or (b) March 24, 2016 (the 180^th day from and after the date on which the Event of Default occurred). The Additional Interest will be payable in the same manner and on the same dates as the stated interest payable on the Cash Convertible Notes.

Contemporaneous with the filing of this Report, we have also filed our Amended Annual Report on Form 10-K/A for the year ended September 30, 2014, our Amended Quarterly Report on Form 10-Q/A for the quarter ended December 31, 2014 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2015. We will promptly submit all such reports to the Trustee. This action will cure the Event of Default, and Additional Interest will cease accruing on the Cash Convertible Notes at that time.

Federal Securities Litigation

On July 20, 2015, Wu Winfred Huang, a purported holder of Class A Non-voting Common Stock, for himself and on behalf of other similarly situated holders of Class A Non-voting Common Stock, filed a lawsuit in the United States District Court for the Western District of Texas styled Huang v. EZCORP, Inc., et al. (Case No. 1:15-cv-00608-SS). The complaint names as defendants EZCORP, Inc., Stuart I. Grimshaw (our chief executive officer) and Mark E. Kuchenrither (our former chief financial officer) and asserts violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The complaint relates to the Company’s announcement on July 17, 2015 that it will restate the financial statements for fiscal 2014 and the first quarter of fiscal 2015, and alleges generally that the Company issued materially false or misleading statements concerning the Company, its finances, business operations and prospects and that the Company misrepresented the financial performance of the Grupo Finmart business.

On August 14, 2015, a substantially identical lawsuit, styled Rooney v. EZCORP, Inc., et al. (Case No. 1:15-cv-00700-SS) was also filed in the United States District Court for the Western District of Texas. On September 28, 2015, the plaintiffs in these two lawsuits filed an agreed stipulation to be appointed co-lead plaintiffs and agreed that their two actions should be consolidated. On November 3, 2015, the Court entered an order consolidating the two actions under the caption In re EZCORP, Inc. Securities Litigation (Master File No. 1:15-cv-00608-SS), and appointed the two plaintiffs as co-lead plaintiffs, with their respective counsel appointed as co-lead counsel.

This case is in the very early stages. We cannot predict the outcome of the litigation, but we intend to defend vigorously against all allegations and claims.

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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 the Amended FY14 Annual Report. See also "Cautionary Statement Regarding Risks and Uncertainties That May Affect Future Results."

Overview of Operations

EZCORP is a Delaware corporation headquartered in Austin, Texas. We are a leading provider of specialty consumer financial services. With approximately 7,100 teammates and approximately 1,350 locations and branches, we provide collateralized, non-recourse loans, commonly known as pawn loans, and a variety of short-term and long-term consumer loans including single-payment and multiple-payment unsecured loans and single-payment and multiple-payment auto title loans, or fee-based credit services to customers seeking loans in the United States, Mexico and Canada. Subsequent to March 31, 2015, we discontinued our consumer loan operations in the United States.

We own a 76% interest in Prestaciones Finmart, S.A.P.I. de C.V., SOFOM, E.N.R. ("Grupo Finmart" doing business under the names "Crediamigo" and "Adex"), a payroll withholding lender headquartered in Mexico City; and a 100% interest in Renueva Commercial S.A.P.I. de C.V. ("TUYO"), a company headquartered in Mexico City that owns and operates buy/sell stores in Mexico City and the surrounding metropolitan area. Prior to April 1, 2015 we owned a 59% interest in TUYO. Effective April 1, 2015, we acquired the remaining 41% interest in TUYO for $2.8 million in cash and a $0.3 million note payable over the next five years. Since that date, TUYO has been a wholly owned subsidiary.

As of June 30, 2015, we operated a total of 1,350 locations, consisting of:


•	519 U.S. pawn stores (operating primarily as EZPAWN or Value Pawn & Jewelry);


•	480 U.S. financial services stores (operating primarily as EZMONEY);


•	241 Mexico pawn stores (operating as Empeño Fácil);


•	51 Grupo Finmart financial services branches in Mexico (operating as Crediamigo or Adex);


•	25 Canada financial services stores (operating as CASHMAX);


•	20 Mexico buy/sell stores (operating as TUYO or Cash Converters); and


•	14 Canada buy/sell and financial services stores (operating as Cash Converters).

We own approximately 32% of Cash Converters International Limited, based in Australia, which franchises and operates a worldwide network of over 750 locations that provide financial services and buy and sell second-hand goods.

We have completed the acquisition of 13 additional U.S. pawn stores subsequent to March 31, 2015. We intend to continue to pursue accretive acquisitions.

Our business consists of three reportable segments:


•	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 — Our equity interest in the net income of Cash Converters International

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The following tables present store data by segment:



	Three Months Ended June 30, 2015
	Company-owned Stores
	U.S. & Canada	Latin America		Other International	Consolidated		Franchises
Stores in operation:
Beginning of period	1,038	312		—	1,350		2
De novo	—	1		—	1		—
Sold, combined or closed	—	(1	)	—	(1	)	(1	)
End of period	1,038	312		—	1,350		1



	Three Months Ended June 30, 2014
	Company-owned Stores
	U.S. & Canada		Latin America		Other International	Consolidated		Franchises
Stores in operation:
Beginning of period	1,037		318		—	1,355		5
De novo	5		—		—	5		—
Sold, combined or closed	(1	)	(3	)	—	(4	)	—
End of period	1,041		315		—	1,356		5



	Nine Months Ended June 30, 2015
	Company-owned Stores
	U.S. & Canada		Latin America		Other International	Consolidated		Franchises
Stores in operation:
Beginning of period	1,044		314		—	1,358		5
De novo	12		4		—	16		—
Acquired	12		—		—	12		—
Sold, combined or closed	(30	)	(6	)	—	(36	)	(4	)
End of period	1,038		312		—	1,350		1



	Nine Months Ended June 30, 2014
	Company-owned Stores
	U.S. & Canada		Latin America		Other International	Consolidated		Franchises
Stores in operation:
Beginning of period	1,030		312		—	1,342		8
De novo	19		6		—	25		—
Sold, combined or closed	(8	)	(3	)	—	(11	)	(3	)
End of period	1,041		315		—	1,356		5

Pawn Activities

At our pawn stores, we offer secured loans, which are typically small, non-recourse loans collateralized by tangible personal property. As of June 30, 2015, we had an aggregate pawn loan principal balance of $144.4 million. We earn pawn service charge revenue on our pawn loans. During the quarter ended June 30, 2015, pawn service charges accounted for approximately 27% of our total revenues and 45% of our net revenues. During the nine-month period ended June 30, 2015, pawn service charges accounted for approximately 26% of our total revenues and 44% of our net revenues.

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While allowable service charges vary by state and loan size, most of our U.S. pawn loans earn 20% per month. The total U.S. pawn loan primary term ranges between 30 and 120 days, with an additional grace period between 0 and 90 days. Individual loans vary depending on the valuation of each item pawned, but typically average approximately $98 to $112.

In Mexico, pawn service charges range from 4% to 21% per month, including applicable taxes, averaging approximately 16% per month. The total Mexico pawn loan primary term is 30 days, with an additional grace period up to 10 days. Individual loans are made in Mexican pesos and vary depending on the valuation of each item pawned, but typically average approximately U.S. $61 to $72.

In our pawn stores, buy/sell stores and certain financial services stores in Canada, we acquire inventory for retail sales through pawn loan forfeitures, purchases of customers’ merchandise and purchases of new or refurbished merchandise from third party vendors. We believe our ability to offer quality secondhand goods and refurbished goods at prices significantly lower than original retail prices attracts value-conscious customers. 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. Improper value assessment in the lending or purchasing process can result in lower margins or reduced marketability of the merchandise.

Our inventory is stated at the lower of cost or market. 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 retains much greater commodity value. The total allowance was 5.9% of gross inventory as of June 30, 2015, compared to 5.8% as of June 30, 2014 and 10.4% as of September 30, 2014. The increase in valuation allowance from June 30, 2014 to September 30, 2014 is reflective of periodic analyses conducted to value the inventory based on aging, profitability, sell-through rates and shrink in each classification, including jewelry and general merchandise. We experienced a decrease in aged inventory from the prior year end and an associated increase in margin compression associated with its disposition. The net result on the overall valuation allowance was a decrease from the period year end. The decrease in valuation allowance from September 30, 2014 to June 30, 2015 is reflective of our focus on reducing our aged inventory balances.

Consumer Loan Activities

Outside of Texas, we earn loan fee revenue on our consumer loans. As of June 30, 2015, we offered single-payment unsecured consumer loans in 118 U.S. financial services stores, nine U.S. pawn stores and 39 Canadian financial services stores. The average single-payment loan amount was approximately $500 to $530 and the term is generally less than 30 days, averaging approximately 20 to 30 days. We typically charge a fee of 10% to 18% of the loan amount. In 120 of our U.S. financial services stores, we offer multiple-payment unsecured consumer loans. These loans carry a term of up 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, local ordinances and loan terms, but over the entire loan term total approximately 45% to 175% of the original principal amount of the loan. Multiple-payment loan principal amounts range from $100 to $3,500, but average approximately $560 to $575.

As of June 30, 2015, we offered credit services to customers seeking consumer loans from unaffiliated lenders in 274 U.S. financial services stores and two U.S. pawn stores. In these locations, we act as a credit services organization ("CSO") on behalf of customers in accordance with applicable state and local laws. 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 different types of consumer loans from the unaffiliated lenders. For credit services in connection with arranging a single-payment loan (average loan amount of approximately $510 to $550), our fee is approximately 22% to 44% of the loan amount. For credit services in connection with arranging an unsecured multiple-payment loan (average loan amount of approximately $840 to $930), our fee is 175% of the initial loan amount. For credit services in connection with arranging single-payment auto title loans (average loan amount of approximately $1,210 to $1,280), the fee is up to 30% of the loan amount. Prior to April 2015, we also assisted customers in obtaining longer term multiple-payment auto title loans from unaffiliated lenders. Multiple-payment auto title loans typically carry terms of five months with up to ten equal installments. Multiple-payment auto title loan principal amounts range from $150 to $10,000, but averaged approximately $960 to $1,310 for the six-month period ended March 31, 2015, with a fee of 45% to 150% of the initial loan amount.

As of June 30, 2015, 419 of our U.S. financial services stores and two 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 $50 to $20,000, but average approximately $1,010 to $1,080. We earn a fee of 9% to 30% of auto title loan amounts. Prior to April 2015, we assisted customers in Texas in obtaining multiple-payment auto title loans from unaffiliated lenders. These loans typically carry terms of five months with up

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to ten equal installments. Principal amounts range from $150 to $10,000, but average approximately $960 to $1,310 for the six-month period ended March 31, 2015, with a fee of 45% to 150% of the initial loan amount.

In Mexico, Grupo Finmart offers multiple-payment consumer loans that are collected through payroll deductions. The average loan originated during the nine-month period ended June 30, 2015 was approximately $1,390 to $1,520 with a stated term of 30 months. Stated interest rates approximate 72% annually.

Subsequent to June 30, 2015, we discontinued our consumer loan operations in the United States.

International Growth

Within our Mexican consumer loan business, we anticipate Grupo Finmart will continue to sign new contracts with federal, state and local governments as well as further penetrate the existing contracts. As of June 30, 2015, our lending penetration into the booked contracts was approximately 4%, which indicates further growth opportunities. In addition, we are seeking to diversify our product offerings to this customer base. We expect to continue to obtain local financing to fund Grupo Finmart’s lending growth, and we anticipate this financing will continue to be non-recourse to EZCORP.

We intend to continue to maximize lending opportunity in key product categories as well as evaluate potential acquisition targets in our Mexican pawn business, but will adjust growth from time-to-time to conform to near-term market conditions. The Mexican pawn environment has mirrored the U.S. pawn environment as gold prices have dropped and the industry has seen a shift from gold and jewelry pawn activity to general merchandise pawn activity. We intend to secure local financing for our Mexican pawn growth.

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 availability of excess jewelry inventory and timing of decisions to scrap excess jewelry inventory.

The payroll withholding lending business is less impacted by seasonality, with the exception of the summer months when new loan originations tend to moderate.

Regulatory Developments

The Consumer Financial Protection Bureau has published proposals for payday, installment and auto title lending

In March 2015, the CFPB published certain proposals for regulating the types of loans that we currently offer in our U.S. Financial Services business, including payday loans, installment loans and auto title loans (the "CFPB Proposals"). Under the CFPB Proposals, a lender would be required to perform a debt-to-income and repayment analysis of the consumer to ensure that the consumer can afford the loan and repay it without incurring increasing costs. The CFPB Proposals offer two different approaches for lenders — one based on "prevention" and the other based on "protection."

•

Prevention — Under the prevention approach, a lender would be required to verify income, major financial obligations, borrowing history and living expenses during the loan term and the 60 days following and determine whether the customer will have enough remaining income to repay the loan without reborrowing. In order to make a second or third loan within 60 days of any previous loan, the lender must conduct the ability-to-repay assessment and document improved financial condition. The lender would be required to enforce a 60-day "cooling off" period after the third loan sequence (generally, an original loan or a renewal or rollover of a loan by any lender). A consumer may only have one short-term loan from any lender outstanding at any time.

•

Protection — Under the protection approach for short-term loans, the lender is not required to assess ability to repay, but is required to verify income and borrowing history. A consumer may only have one short-term loan from any lender outstanding at any time. The consumer may have no more than three loans with a period of 60 days, and in each rolling 12-month period, the consumer may not have more than six short-term loans and may not be indebted more than 90 days in the aggregate. Under the protection approach, the loan amount may not be more than $500 and the term may not be more than 45 days. Only one finance charge may be collected per period, and no vehicles may be taken as collateral. The terms and conditions of the loan must provide for either the amortization of the principal by thirds over three loan sequences or a no-cost extended payment plan.

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Under the protection approach for longer term loans, the lender is not required to assess ability to repay, but is required to verify income and borrowing history. There is a maximum interest rate, a maximum loan amount and a minimum amortization period. A consumer may only have one longer term loan from any lender outstanding at any time, and the lender may only provide two loans within a six-month period. Alternatively, the loan payment may not exceed 5% of the consumer's gross income for the payment period, a consumer may only have one longer term loan from any lender outstanding at any given time, and the lender may provide only two loans within a 12-month period.

The CFPB Proposals would also require lenders to provide advance three-day written notice prior to each attempt to collect payment from the customer's checking, savings or prepaid account and would require lenders to obtain new payment authorization after two consecutive failed payment attempts.

The CFPB Proposals are in the early stages of the rulemaking process, and any final rules based on these proposals could be significantly different from the CFPB Proposals. Consequently, it is not possible at the present time to accurately assess the impact of the CFPB final rules on our U.S. Financial Services business. However, if the CFPB Proposals were to be enacted as final rules in their current form, we would expect that the profitability, and perhaps the viability, of our U.S. Financial Services business as we currently conduct it would be adversely affected. The effective date for implementation of new rules based on the CFPB Proposals is not known at this time, although it is not expected to be before 2017.

As stated in the CFPB Proposals, the CFPB is not currently considering proposals that would impose new federal regulatory requirements on certain categories of loans, including non-recourse pawn loans with a contractual duration of 45 days or less where the lender takes possession of the collateral.

Subsequent to June 30, 2015, we discontinued our consumer loan operations in the United States.

Certain Accounting Matters

Critical Accounting Policies

Subsequent to our Amended Annual Report on Form 10-K/A for the year ended September 30, 2014 we adopted two new critical accounting policies related to our Class A Non-voting Common Stock, subject to possible redemption, that was issued in connection with our acquisition of 12 pawn stores operating under the "Cash Pawn" brand that occur on February 19, 2015 as described in Note 3 of "Part I, Item 1 — Condensed Consolidated Financial Statements and Supplementary Data," and the classification of our debt issuance costs.

Recently Adopted Accounting Pronouncements

Common Stock, Subject to Possible Redemption

Recently Issued Accounting Pronouncements

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lower of cost or net realizable value, where net realizable value is "estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation." Inventory was previously required to be measured at the lower of cost or market value, where the measurement of market value had several potential outcomes. The provisions of this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is permitted provided that presentation is applied to the beginning of the fiscal year of adoption. A reporting entity may apply the amendment prospectively. We have not completed the process of evaluating the impact that will result from adopting ASU 2015-11. Therefore we are unable to disclose the impact that adopting ASU 2015-11 will have on our financial position, results of operations and cash flows when such statement is adopted.

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result from adopting ASU 2014-09. Therefore we are unable to disclose the impact that adopting ASU 2014-09 will have on our financial position, results of operations and cash flows when such statement is adopted.

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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Results of Operations

Non-GAAP Financial Information

In addition to the financial information prepared in conformity with generally accepted accounting principles in the United States of America ("GAAP"), we provide certain other non-GAAP financial information on a constant currency basis ("constant currency"). We use constant currency results to evaluate results of the Latin America segment operations, which are denominated in Mexican pesos and believe that presentation of constant currency results is meaningful and useful in understanding the activities and business metrics of our Latin America operations and reflect an additional way of viewing aspects of our business that, when viewed with its GAAP results, provide a more complete understanding of factors and trends affecting our business. We provide non-GAAP financial information for informational purposes and to enhance understanding of our GAAP condensed consolidated financial statements. Readers should consider the information in addition to, but not instead of or superior to, our financial statements prepared in accordance with GAAP. This non-GAAP financial information may be determined or calculated differently by other companies, limiting the usefulness of those measures for comparative purposes.

Constant currency results reported herein are calculated by translating condensed consolidated balance sheet and condensed consolidated statement of operations items denominated in Mexican pesos to U.S. dollars using the exchange rate from the prior-year comparable period, as opposed to the current comparable period, in order to exclude the effects of foreign currency rate fluctuations. For condensed consolidated balance sheet items, the end of period rate at June 30, 2014 of 13.0 to 1 was used, compared to the end of period rate at June 30, 2015 of 15.7 to 1. For condensed consolidated statement of operations items, the average closing daily exchange rate for the appropriate period was used. The average exchange rate for the prior year three and nine-month periods ended June 30, 2014 was 13.0 to 1 and 13.1 to 1, respectively, as compared to the current three and nine-month periods ended June 30, 2015 rates of 15.3 to 1 and 14.7 to 1, respectively.

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Three Months Ended June 30, 2015 vs. Three Months Ended June 30, 2014

Summary Financial Data

The following table presents selected summary financial data for our three-month periods ended June 30, 2015 and 2014 (the "current quarter" and "prior-year quarter," respectively). This table, as well as the discussion that follows, should be read with the accompanying condensed consolidated financial statements and related notes.



	Three Months Ended June 30,						Percentage Change
	2015			2014			Percentage Change

	(in thousands)
Revenues:
Merchandise sales	$	93,137		$	89,170		4	%
Jewelry scrapping sales	10,588			20,273			(48	)%
Pawn service charges	57,599			59,917			(4	)%
Consumer loan fees and interest	50,796			52,734			(4	)%
Other revenues	870			1,040			(16	)%
Total revenues	212,990			223,134			(5	)%
Merchandise cost of goods sold	61,460			56,014			10	%
Jewelry scrapping cost of goods sold	8,580			15,131			(43	)%
Consumer loan bad debt	13,664			16,401			(17	)%
Net revenues	129,286			135,588			(5	)%
(Loss) income from continuing operations, net of tax	(9,967		)	3,669			*
Loss from discontinued operations, net of tax	(270		)	(2,076		)	(87	)%
Net (loss) income	(10,237		)	1,593			*
Net loss from continuing operations attributable to redeemable noncontrolling interest	(390		)	(2,337		)	(83	)%
Net (loss) income attributable to EZCORP	$	(9,847	)	$	3,930		*

Net earning assets:
Pawn loans	$	144,377		$	157,491		(8	)%
Consumer loans, net	57,737			64,787			(11	)%
Inventory, net	115,283			130,839			(12	)%
Non-current consumer loans, net	82,739			84,630			(2	)%
Consumer loans outstanding with unaffiliated lenders**	16,156			24,944			(35	)%
Total net earning assets	$	416,292		$	462,691		(10	)%

* Represents an increase or decrease in excess of 100% or not meaningful.

** Consumer loans outstanding with unaffiliated lenders "CSO loans" are not recorded in our condensed consolidated balance sheets.

Income from continuing operations, net of tax decreased $13.6 million from the prior-year quarter to a loss of $10.0 million in the current quarter. This decrease was primarily due to a $6.3 million decrease in net revenues, a $10.6 million impairment of goodwill charge, partially offset by a $1.7 million decrease in operating expenses and a $4.5 million decrease in income tax expense.

The $6.3 million decrease in net revenues was primarily attributable to:


•	A $9.7 million decrease in jewelry scrapping revenues, or a $3.1 million decrease in jewelry scrapping sales gross profit, primarily due to a decrease in proceeds realized per gram of gold jewelry scrapped coupled with a decrease in gold volume;


•	A $1.9 million decrease in revenue related to consumer loan fees and interest;


•	A $1.5 million decrease in merchandise sales gross profit primarily as we increased our efforts to reshape our inventory profile and improve the velocity of our inventory turns; partially offset by


•	A $2.7 million decrease in consumer loan bad debt primarily due to a decrease in bad debt reserve.

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The $1.7 million decrease in operating expense was primarily attributable to a $1.6 million decrease in administrative expense.

The $10.6 million of impairment of goodwill was associated with the U.S. Financial Services reporting unit.

Income tax expense decreased $4.5 million to a benefit primarily due to a decrease in income from continuing operations before taxes.

Net earning assets including CSO loans were $416.3 million at quarter end, an overall decrease of 10% from the prior-year quarter. Net earning assets including CSO loans decreased 10% from the prior-year quarter. This decrease was primarily due to regulatory changes in Texas ordinance cities. Furthermore, inventory decreased 12% from the prior-year quarter. This decrease was primarily due to our efforts to reduce our aged inventory profile.

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U.S. & Canada

The following table presents selected summary financial data from continuing operations for the U.S. & Canada segment:



	Three Months Ended June 30,						Percentage Change
	2015			2014			Percentage Change

	(in thousands)
Revenues:
Merchandise sales	$	77,690		$	74,674		4	%
Jewelry scrapping sales	9,702			18,909			(49	)%
Pawn service charges	49,609			51,894			(4	)%
Consumer loan fees and interest	33,815			37,335			(9	)%
Other revenues	554			605			(8	)%
Total revenues	171,370			183,417			(7	)%
Merchandise cost of goods sold	50,432			46,190			9	%
Jewelry scrapping cost of goods sold	7,713			13,894			(44	)%
Consumer loan bad debt	10,821			10,408			4	%
Net revenues	102,404			112,925			(9	)%
Segment expenses (income):
Operations	83,905			81,605			3	%
Depreciation	4,542			4,294			6	%
Amortization	56			84			(33	)%
(Gain) loss on sale or disposal of assets	(29		)	129			*
Interest expense	3			1			*
Interest income	(11		)	—			*
Impairment of goodwill	10,550			—			*
Other expense (income)	2			(7		)	*
Segment contribution	$	3,386		$	26,819		(87	)%
Other data:
Gross margin on merchandise sales	35		%	38		%
Gross margin on jewelry scrapping sales	21		%	27		%
Gross margin on total sales	33		%	36		%
Net earning assets — continuing operations	$	261,379		$	292,341		(11	)%
Average pawn loan balance per pawn store at period end	$	247		$	285		(13	)%
Average monthly yield on pawn loan portfolio**	13.9		%	13.7		%
Pawn loan redemption rate	85		%	85		%
Consumer loan bad debt as a percentage of consumer loan fees	32		%	28		%

* Represents an increase or decrease in excess of 100% or not meaningful.

** Average monthly 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.

At the end of the current quarter, we had 1,038 stores in the U.S. and Canada segment.

Total merchandise sales increased $3.0 million, or 4%, from the prior-year quarter to $77.7 million. Same-store merchandise sales increased $0.5 million, or 1%, from the prior-year quarter, and new and acquired stores, net of closed stores, contributed sales of $2.5 million. Gross margin on merchandise sales was 35% during the current quarter, down from 38% in the prior-year quarter, primarily as a result of our efforts to reduce our aged inventory profile. General merchandise inventory held for a year or more constituted 5% of our total general merchandise inventory at the end of the current quarter down from 7% at the end of the prior-year quarter. Jewelry inventory held for a year or more constituted 16% of our total jewelry inventory at the end of the current quarter down from 29% at the end of the prior-year quarter. We expect continued downward pressure on retail gross

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margins through the remainder of this fiscal year as we continue to focus on reducing our aged inventory balances. Margins should improve over time as we sell through the aged inventory.

Gross profit on jewelry scrapping sales decreased $3.0 million, or 60%, from the prior-year quarter to $2.0 million. Gross profit on jewelry scrapping represented 2% of total net revenues, down from 4% in the prior-year quarter. Jewelry scrapping revenues decreased $9.2 million, or 49%, due to a 7% decrease in proceeds realized per gram of gold jewelry scrapped coupled with a 46% decrease in gold volume. The decrease in volume was primarily due to our continued strategy to retail rather than scrap jewelry in addition to an overall decline due to the market price of gold. Same-store jewelry scrapping sales decreased $9.5 million, or 50%, and new and acquired stores, net of closed stores contributed $0.3 million. Jewelry scrapping sales include $1.4 million and $2.5 million of loose diamonds removed from scrap jewelry and sold in the current quarter and prior-year quarter, respectively. Scrap cost of goods sold decreased $6.2 million from the prior-year quarter, primarily due to a decrease in volume.

Pawn service charge revenues decreased $2.3 million, or 4%, from the prior-year quarter to $49.6 million primarily due to a 6% decrease in the average monthly pawn loan balance outstanding during the current quarter. This decrease was partially offset by a slight increase in the average monthly loan portfolio yield to 13.9% in the current quarter from 13.7% in the prior-year quarter. Same-store pawn service charge revenues decreased $3.2 million, or 6%, from the prior-year quarter, and new and acquired stores, net of closed stores contributed pawn service charge revenues of $0.9 million.

Consumer loan fees and interest decreased $3.5 million, or 9%, from the prior-year quarter to $33.8 million. The overall decrease in consumer loan fees and interest was primarily due to a decrease in consumer loan balances in Texas ordinance cities. Of our U.S. Financial Services stores, 57% are located in Texas, and 37% of the Texas stores are located in ordinance cities. Total consumer loan bad debt as a percentage of consumer loan fees increased from the prior-year quarter to 32%.

Total segment expenses increased $12.9 million to $99.0 million (58% of revenues) during the current quarter from $86.1 million (47% of revenues) in the prior-year quarter. This increase was primarily due to a $10.6 million of impairment of goodwill associated with the U.S. Financial Services reporting unit that was recorded in the current-year quarter. See Note 6 of Notes to Interim Condensed Consolidated Financial Statements included in "Part I, Item 1 — Financial Statements." This amount will reduce the amount of charges associated with the closing of the U.S. Financial Services that will be recorded in the fourth quarter of fiscal 2015 (ended September 30, 2015), as described in Note 18 of Notes to Interim Condensed Consolidated Financial Statements included in "Part I, Item 1 — Financial Statements."

In the current-year quarter, the U.S. & Canada segment delivered a contribution of $3.4 million, a $23.4 million decrease compared to the prior-year quarter. This decrease was primarily due to a $10.5 million reduction in net revenues driven by a $1.2 million, $3.0 million and $3.9 million decrease in merchandise sales gross profit, jewelry scrapping sales gross profit and consumer loan fees and interest net revenue, respectively, in addition to a $12.9 million increase in segment expenses.

As a result of the discontinued operation of USFS as described in Note 18 of Notes to Interim Consolidated Financial Statements included in "Part I, Item 1 — Financial Statements," we expect "Consumer loan fees and interest," "Consumer loan bad debt," and related segment expenses will be substantially eliminated in future periods.

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Latin America

Constant currency results reported herein are calculated by translating balance sheet and income statement items denominated in Mexican pesos using the exchange rate from the prior-year comparable period, as opposed to the current period, in order to exclude the effects of foreign currency rate fluctuations. The following discussion presents constant currency results. The following table presents selected summary financial data from continuing operations for the Latin America segment, including constant currency results, after translation to U.S. dollars from its functional currency of the Mexican peso:



	Three Months Ended June 30,									Percentage Change GAAP		Percentage Change Constant Currency
	2015			2015 Constant Currency***			2014			Percentage Change GAAP		Percentage Change Constant Currency

	(in USD thousands)
Revenues:
Merchandise sales	$	15,447		$	18,180		$	14,496		7	%	25	%
Jewelry scrapping sales	886			1,043			1,364			(35	)%	(24	)%
Pawn service charges	7,990			9,404			8,023			—	%	17	%
Consumer loan fees and interest	16,981			19,985			15,399			10	%	30	%
Other revenues	316			372			435			(27	)%	(14	)%
Total revenues	41,620			48,984			39,717			5	%	23	%
Merchandise cost of goods sold	11,028			12,979			9,824			12	%	32	%
Jewelry scrapping cost of goods sold	867			1,020			1,237			(30	)%	(18	)%
Consumer loan bad debt	2,843			3,346			5,993			(53	)%	(44	)%
Net revenues	26,882			31,639			22,663			19	%	40	%
Segment expenses (income):
Operations	19,125			22,509			21,593			(11	)%	4	%
Depreciation	1,249			1,470			1,502			(17	)%	(2	)%
Amortization	365			430			329			11	%	31	%
Loss on sale or disposal of assets	7			8			11			(36	)%	(27	)%
Interest expense	5,882			6,923			5,549			6	%	25	%
Interest income	(288		)	(339		)	(329		)	(12	)%	3	%
Other expense	1,323			1,557			468			*		*
Segment loss	$	(781	)	$	(919	)	$	(6,460	)	(88	)%	(86	)%
Other data:
Gross margin on merchandise sales	29		%	29		%	32		%
Gross margin on jewelry scrapping sales	2		%	2		%	10		%
Gross margin on total sales	27		%	27		%	30		%
Net earning assets — continuing operations	$	154,922		$	187,098		$	163,008		(5	)%	15	%
Average pawn loan balance	$	16,170		$	19,528		$	16,509		(2	)%	18	%
Inventory held for one year or more	$	1,430		$	1,723		$	5,791		(75	)%	(70	)%
Inventory, net	$	18,850		$	22,765		$	23,597		(20	)%	(4	)%
Average pawn loan balance per pawn store at period end	$	68		$	82		$	70		(3	)%	17	%
Average monthly yield on pawn loan portfolio**	16.1		%	16.1		%	16.3		%
Pawn loan redemption rate	76		%	76		%	76		%
Consumer loan bad debt as a percentage of consumer loan fees	17		%	17		%	39		%

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* Represents an increase or decrease in excess of 100% or not meaningful.

** Average monthly 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.

*** For income statement items, the average closing daily exchange rate for the appropriate period was used. For balance sheet items, the end of the period rate for the appropriate period end was used.

The average exchange rate used to translate current quarter results from Mexican pesos to U.S. dollars was 15.3 to 1, an 18% change from the prior-year quarter rate of 13.0 to 1. For balance sheet items, the end of period rate at June 30, 2014 of 13.0 to 1 was used, compared to the end of period rate at June 30, 2015 of 15.7 to 1. At the end of the current quarter, we had 312 stores in the Latin America segment operating under various brands including Empeño Fácil, Crediamigo, Adex and TUYO.

Our Mexico pawn operations continued to perform well, with core pawn revenue increasing 22% from the prior-year quarter to $27.6 million. Merchandise sales increased $3.7 million, or 25%, from the prior-year quarter to $18.2 million. Merchandise sales gross margin was 29% during the current quarter, down from 32% during the prior-year quarter, primarily as a result of our efforts to reduce our aged inventory profile. General merchandise inventory held for a year or more decreased by 70% compared to the prior-year quarter and as of the end of the quarter represented 7% of total inventory compared to 25% in the prior-year quarter. We expect continued downward pressure on retail gross margins through the remainder of this fiscal year as we continue to focus on reducing our aged inventory balances. Margins should improve over time as we sell through the aged inventory.

Pawn service charge revenues increased $1.4 million, or 17%, from the prior-year quarter. The average pawn loan balance during the period increased by 18% to $19.5 million and the average pawn loan portfolio yield from the prior-year quarter remained flat.

Consumer loan fees and interest increased $4.6 million, or 30%, from the prior-year quarter to $20.0 million. The increase was driven primarily by a strong demand for loans at Grupo Finmart.

Other revenues decreased $0.1 million, or 14%, from the prior-year quarter to $0.4 million.

Consumer loan bad debt decreased $2.6 million from the prior-year quarter to $3.3 million primarily due to a decrease in bad debt reserve.

Total segment expenses increased $3.4 million, or 12%, to $32.6 million during the current quarter from $29.1 million in the prior-year quarter. The increase was primarily due to:


•	A $1.4 million increase in net interest expense;


•	A $1.1 million increase in other expense primarily due to fair value adjustments on foreign currency derivative instruments not designated as hedging instruments; and


•	A $0.9 million increase in operations expense primarily due to the prior-year quarter including higher wages and commissions expenses and costs associated with various business growth initiatives which were not incurred during the current quarter.

The current quarter segment loss for the Latin America segment was $0.9 million compared to a segment loss of $6.5 million in the prior-year quarter. The decrease was primarily due to an increase in consumer loan fees and interest due to growth in Grupo Finmart loan originations in addition to lower than anticipated consumer loan bad debt.

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Other International

The following table presents selected summary financial data from continuing operations for the Other International segment:



	Three Months Ended June 30,						Percentage Change
	2015			2014			Percentage Change

	(in thousands)
Segment income:
Equity in net income of unconsolidated affiliate	$	(1,822	)	$	(2,117	)	(14	)%
Segment contribution	$	1,822		$	2,117		(14	)%

Segment contribution from the Other International segment decreased $0.3 million from the prior-year quarter to $1.8 million in the current quarter due to a decrease in equity in net income of unconsolidated affiliate from Cash Converters International.

On June 18, 2015, Cash Converters International reached an agreement to pay $17.7 million to settle a class-action lawsuit brought by its customers alleging that Cash Converters International charged excessive interest on short-term loans. Due to the three-month lag in reporting, the financial impact to EZCORP (charge of $3.7 million) will be reflected in our financial statements for the fourth quarter of fiscal 2015.

The fair value of our investment in Cash Converters International was below the carrying value as of June 30, 2015. Given the decline in fair value began in the third quarter of fiscal 2015, we believe that the impairment was temporary as of June 30, 2015. The fair value decline may be other-than-temporary in future periods subsequent to June 30, 2015. We further estimate that our carrying value in Cash Converters International will exceed the fair value by approximately $29.4 million as of September 30, 2015 based upon the stock price and exchange rates as of that date, which may cause an other-than-temporary impairment in our investment in future reporting periods.

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Other Items

The following table reconciles our consolidated segment contribution discussed above to net (loss) income attributable to EZCORP, including items that affect our consolidated financial results but are not allocated among segments:



	Three Months Ended June 30,						Percentage Change
	2015			2014			Percentage Change

	(in thousands)
Segment contribution	$	4,427		$	22,476		(80	)%
Corporate expenses (income):
Administrative	12,602			14,205			(11	)%
Depreciation	1,760			1,664			6	%
Amortization	959			893			7	%
Loss (gain) on sale or disposal of assets	16			(6		)	*
Interest expense	3,774			1,889			100	%
Interest income	(48		)	(48		)	—	%
Restructuring	37			—			*
Other income	(575		)	(196		)	*
(Loss) income from continuing operations before income taxes	(14,098		)	4,075			*
Income tax (benefit) expense	(4,131		)	423			*
(Loss) income from continuing operations, net of tax	(9,967		)	3,652			*
Loss from discontinued operations, net of tax	(270		)	(2,076		)	(87	)%
Net loss	(10,237		)	1,576			*
Net loss from continuing operations attributable to redeemable noncontrolling interest	(390		)	(4,042		)	(90	)%
Net (loss) income attributable to EZCORP	$	(9,847	)	$	5,618		*

* Represents an increase or decrease in excess of 100% or not meaningful.

Consolidated income from continuing operations, net of tax decreased $11.6 million from the prior-year quarter to a loss of $10.0 million in the current quarter due to a $23.4 million decrease in contribution from the U.S. & Canada segment, a $0.3 million decrease in contribution from the Other International segment and a $0.1 million increase in corporate expenses, partially offset by a $5.7 million increase in contribution from the Latin America segment.

Total corporate expenses increased $0.1 million, or 1%, from the prior-year quarter to $18.5 million, primarily due to:


•	A $1.9 million increase in interest expense primarily due to the $2.1 million of debt discount amortization in the current quarter pertaining to our 2.125% Cash Convertible Notes issued in June 2014; partially offset by


•	A $1.6 million decrease in administrative expense primarily due to a $3.1 million decrease in wages and benefits, partially offset by a $1.4 million increase in professional fees; and


•	A $0.4 million increase in other income primarily due to an increase in foreign currency transaction gains.

Income tax expense decreased $4.6 million primarily due to the $16.2 million decrease in pre-tax (loss) income from continuing operations.

The current quarter net loss attributable to EZCORP was $9.8 million, a $13.4 million decrease from the prior-year quarter net income attributable to EZCORP of $5.6 million.

Nine Months Ended June 30, 2015 vs. Nine Months Ended June 30, 2014

Summary Financial Data

The following table presents selected, unaudited, consolidated financial data for our nine-month periods ended June 30, 2015 and 2014 (the "current nine-month period" and "prior-year nine-month period," respectively). This table, as well as the discussion that follows, should be read with the accompanying unaudited financial statements and related notes.

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	Nine Months Ended June 30,						Percentage Change
	2015			2014			Percentage Change

	(in thousands)
Revenues:
Merchandise sales	$	310,628		$	298,211		4	%
Jewelry scrapping sales	47,521			74,169			(36	)%
Pawn service charges	181,996			183,212			(1	)%
Consumer loan fees and interest	164,084			162,715			1	%
Other revenues	2,936			3,714			(21	)%
Total revenues	707,165			722,021			(2	)%
Merchandise cost of goods sold	206,430			184,378			12	%
Jewelry scrapping cost of goods sold	37,609			55,262			(32	)%
Consumer loan bad debt	47,820			45,465			5	%
Net revenues	415,306			436,916			(5	)%
Income from continuing operations, net of taxes	1,869			28,561			*
Loss from discontinued operations, net of tax	(1,991		)	(5,445		)	(63	)%
Net (loss) income	(122		)	23,116			*
Net loss from continuing operations attributable to redeemable noncontrolling interest	(3,230		)	(5,686		)	(43	)%
Net income attributable to EZCORP	$	3,108		$	28,802		(89	)%

* Represents an increase or decrease in excess of 100% or not meaningful.

Income from continuing operations, net of tax, decreased $26.7 million from the prior-year nine-month period to $1.9 million in the current nine-month period. This decrease was primarily due to a $21.6 million decrease in net revenues, a $14.4 million increase in interest expense, a decrease of $3.5 million in equity in net income of unconsolidated affiliates from the prior-year nine-month period and a $10.6 million goodwill impairment charge attributable to the U.S. Financial Services reporting unit, partially offset by a $2.6 million decrease in impairment on investments and a $5.3 million decrease in income tax expense.

The $21.6 million decrease in net revenues was primarily attributable to:


•	A $9.6 million decrease in merchandise sales gross profit primarily due to our efforts to reshape our inventory profile and increase the velocity of inventory;


•	A $9.0 million decrease in jewelry scrapping sales gross profit primarily due to a decrease in proceeds realized per gram of gold jewelry scrapped coupled with a decrease in gold volume; and


•	A $2.0 million decrease in consumer loan fees and interest, or a $1.0 million decrease in consumer loan fees and interest gross profit.

The $14.4 million increase in interest expense was primarily due to $6.1 million of debt discount amortization in the current nine-month period pertaining to our 2.125% cash convertible senior notes due 2019 issued in June 2014, a $1.2 million ($0.8 million, net of taxes) increase due to charges associated with interest payments made to the Internal Revenue Service pertaining to the audit of our fiscal 2010 return and an overall increase in interest expense due to higher average corporate debt outstanding in the current nine-month period, partially offset by a decrease in amortization of deferred financing costs primarily due to the prior-year quarter including additional accelerated amortization of deferred financing costs incurred in connection with the February 17, 2014 repayment of Grupo Finmart's consumer loans facility due 2017.

Equity in net income of unconsolidated affiliates decreased $3.5 million from the prior-year nine-month period. This decrease was primarily due to a one-time contract termination charge incurred by Cash Converters International in the current nine-month period.

The decrease in impairment on investments of $7.9 million ($5.4 million, net of taxes) is due to the prior-year nine-month period impairment of our investment in Albemarle & Bond, which brought our carrying value of this investment to zero.

Income tax expense decreased $5.3 million primarily due to a decrease in income from continuing operations before tax.

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U.S. & Canada

The following table presents selected summary financial data from continuing operations for the U.S. & Canada segment:



	Nine Months Ended June 30,						Percentage Change
	2015			2014			Percentage Change

	(in thousands)
Revenues:
Merchandise sales	$	260,718		$	253,501		3	%
Jewelry scrapping sales	44,311			69,531			(36	)%
Pawn service charges	158,961			161,117			(1	)%
Consumer loan fees and interest	114,339			125,298			(9	)%
Other revenues	2,051			2,234			(8	)%
Total revenues	580,380			611,681			(5	)%
Merchandise cost of goods sold	171,239			155,046			10	%
Jewelry scrapping cost of goods sold	34,661			51,257			(32	)%
Consumer loan bad debt	33,114			32,372			2	%
Net revenues	341,366			373,006			(8	)%
Segment expenses (income):
Operations	251,333			251,549			—	%
Depreciation	13,480			12,813			5	%
Amortization	185			287			(36	)%
Loss (gain) on sale or disposal of assets	230			(6,726		)	*
Interest expense	16			8			100	%
Interest income	(45		)	(18		)	100	%
Impairment of goodwill	10,550			—			*
Other expense (income)	12			(7		)	*
Segment contribution	$	65,605		$	115,100		(43	)%
Other data:
Gross margin on merchandise sales	34		%	39		%
Gross margin on jewelry scrapping sales	22		%	26		%
Gross margin on total sales	32		%	36		%
Average pawn loan balance per pawn store at period end	$	247		$	285		(13	)%
Average monthly yield on pawn loan portfolio**	13.8		%	13.6		%
Pawn loan redemption rate	85		%	84		%
Consumer loan bad debt as a percentage of consumer loan fees	29		%	26		%

* Represents an increase or decrease in excess of 100% or not meaningful.

** Average monthly 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.

Total merchandise sales increased $7.2 million, or 3%, from the prior-year nine-month period to $260.7 million. Same-store merchandise sales increased $2.3 million, or 1%, and new and acquired stores net of closed stores contributed $4.9 million. Gross margin on merchandise sales was 34% during the current nine-month period, down from 39% in the prior-year nine-month period, primarily as a result of our efforts to reduce our aged inventory profile.

Gross profit on jewelry scrapping sales decreased $8.6 million, or 47%, from the prior-year nine-month period to $9.7 million. Gross profit on jewelry scrapping represented 3% of total net revenues, down from 5% in the prior-year nine-month period. Jewelry scrapping revenues decreased $25.2 million, or 36%, due to a 7% decrease in proceeds realized per gram of gold jewelry scrapped, coupled with a 32% decrease in gold volume. The decrease in volume was primarily due to our continued strategy to retail rather than scrap jewelry in addition to an overall decline due to the market price of gold. Same-store jewelry scrapping sales decreased $25.4 million, or 37%, and new and acquired stores, net of closed stores contributed $0.2 million.

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Jewelry scrapping sales include $6.3 million and $9.7 million of loose diamonds removed from scrap jewelry and sold in the current nine-month period and prior-year nine-month period, respectively. Scrap cost of goods sold decreased $16.6 million from the prior-year nine-month period, primarily due to a decrease in volume.

Pawn service charge revenues decreased $2.2 million, or 1%, from the prior-year nine-month period to $159.0 million due to a 3% decrease in the average monthly pawn loan balance outstanding during the current nine-month period. Same-store pawn service charge revenues decreased $3.1 million, or 2%, from the prior-year nine-month period, and new and acquired stores, net of closed stores contributed pawn service charge revenues of $0.9 million.

Consumer loan fees and interest decreased $11.0 million, or 9%, from the prior-year nine-month period to $114.3 million. The overall decrease in consumer loan fees and interest was primarily due to a decrease in consumer loan balances in Texas ordinance cities, mainly Houston. Total consumer loan bad debt as a percentage of consumer loan fees increased slightly from the prior-year nine-month period to 29%.

Total segment expenses increased $17.9 million to $275.8 million (48% of revenues) during the current nine-month period from $257.9 million (42% of revenues) in the prior-year nine-month period. This increase was primarily due to a $7.0 million decrease in gain on sale or disposal of assets due to the prior-year nine-month period including a $6.8 million gain realized on a sale of seven U.S. pawn stores (three in Louisiana, two in Mississippi, one in Alabama and one in Florida), and $10.6 million in impairment of goodwill associated with the U.S. Financial Services reporting unit that was recorded in the current nine-month period. See Note 6 of Notes to Interim Condensed Consolidated Financial Statements included in "Part I, Item 1 — Financial Statements." The $10.6 million of goodwill impairment will reduce the amount of charges associated with the closing of the U.S. Financial Services that will be recorded in the fourth quarter of fiscal 2015 (ended September 30, 2015), as described in Note 18 of Notes to Interim Condensed Consolidated Financial Statements included in "Part I, Item 1 — Financial Statements."

In the current nine-month period, the U.S. & Canada segment delivered a contribution of $65.6 million, a $49.5 million decrease compared to the prior-year nine-month period. The decrease was primarily due to a $31.6 million decrease in net revenues driven by a $9.0 million, $8.6 million and $11.7 million decrease in merchandise sales gross profit, jewelry scrapping sales gross profit and consumer loan fees and interest net revenue, respectively, in addition to the $17.9 million increase in segment expenses described above.

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Latin America



	Nine Months Ended June 30,									Percentage Change GAAP		Percentage Change Constant Currency
	2015			2015 Constant Currency***			2014			Percentage Change GAAP		Percentage Change Constant Currency

	(in USD thousands)
Revenues:
Merchandise sales	$	49,910		$	56,006		$	44,710		12	%	25	%
Jewelry scrapping sales	3,210			3,602			4,638			(31	)%	(22	)%
Pawn service charges	23,035			25,848			22,095			4	%	17	%
Consumer loan fees and interest	49,745			55,821			37,417			33	%	49	%
Other revenues	885			993			1,480			(40	)%	(33	)%
Total revenues	126,785			142,270			110,340			15	%	29	%
Merchandise cost of goods sold	35,191			39,490			29,332			20	%	35	%
Jewelry scrapping cost of goods sold	2,948			3,308			4,005			(26	)%	(17	)%
Consumer loan bad debt	14,706			16,502			13,093			12	%	26	%
Net revenues	73,940			82,970			63,910			16	%	30	%
Segment expenses (income):
Operations	55,681			62,482			58,117			(4	)%	8	%
Depreciation	3,988			4,475			4,411			(10	)%	1	%
Amortization	1,163			1,305			1,553			(25	)%	(16	)%
Loss on sale or disposal of assets	264			296			15			*		*
Interest expense	20,541			23,050			14,414			43	%	60	%
Interest income	(1,216		)	(1,365		)	(596		)	*		*
Other expense	3,489			3,915			427			*		*
Segment loss	$	(9,970	)	$	(11,188	)	$	(14,431	)	(31	)%	(22	)%
Other data:
Gross margin on merchandise sales	29		%	29		%	34		%
Gross margin on jewelry scrapping sales	8		%	8		%	14		%
Gross margin on total sales	28		%	28		%	32		%
Average pawn loan balance	$	14,640		$	17,681		$	14,978		(2	)%	18	%
Average pawn loan balance per pawn store at period end	$	68		$	82		$	70		(3	)%	17	%
Average monthly yield on pawn loan portfolio**	16.3		%	16.3		%	16.4		%
Pawn loan redemption rate	77		%	77		%	77		%
Consumer loan bad debt as a percentage of consumer loan fees	30		%	30		%	35		%

* Represents an increase or decrease in excess of 100% or not meaningful.

** Average monthly 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 current nine-month period results from Mexican pesos to U.S. dollars was 14.7 to 1, a 12% change from the prior-year nine-month period’s rate of 13.1 to 1.

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Core pawn revenue increased 23% from the prior-year nine-month period to $81.9 million, while merchandise sales increased $11.3 million, or 25%, to $56.0 million. Merchandise sales gross margin was 29% during the current nine-month period, down from 34% during the prior-year nine-month period, primarily as a result of our efforts to reshape our inventory profile. General merchandise inventory held for a year or more decreased 70%.

Pawn service charge revenues increased $3.8 million, 17%, from the prior-year nine-month period to $25.8 million. The increase was primarily due to an increase in the average pawn loan balance outstanding from the prior-year nine-month period of 18% to $17.7 million.

Consumer loan fees and interest increased $18.4 million, or 49% from the prior-year nine-month period to $55.8 million. The increase was driven primarily by strong demand for loans at Grupo Finmart.

Other revenues decreased $0.5 million, or 33% from the prior-year nine-month period to $1.0 million.

Consumer loan bad debt increased $3.4 million from the prior-year nine-month period to $16.5 million primarily due to a increase in bad debt reserve.

Total segment expenses increased $15.8 million, or 20%, on a constant currency basis to $94.2 million from the prior-year nine-month period. The increase was primarily due to:

•

A $7.9 million increase in net interest expense primarily due to consolidated VIE debt and a higher weighted-average debt outstanding as compared to the prior-year, offset by a decrease in the weighted-average rate of Grupo Finmart's third party debt. The weighted-average rate on Grupo Finmart's third party debt, excluding the consolidated VIE debt, decreased to 9% from 10% in the prior-year quarter. At June 30, 2015 Grupo Finmart had outstanding debt of $108.1 million, excluding the consolidated VIE debt, and outstanding consolidated VIE debt of $86.8 million;


•	A $4.4 million increase in operations expense primarily due to a $3.8 million increase in salaries; and


•	A $3.5 million increase in other expense due to fair value adjustments on foreign currency derivative instruments not designated as hedging instruments.

In the current nine-month period the segment loss for the Latin America segment decreased by $3.2 million, or 22%, to $11.2 million as compared to a segment loss of $14.4 million in the prior-year nine-month period. The decrease in segment loss is primarily due to an increase in consumer loan fees and interest due to growth in Grupo Finmart loan originations in addition to a lower than anticipated consumer loan bad debt.

Other International

The following table presents selected summary financial data from continuing operations for the Other International segment:



	Nine Months Ended June 30,						Percentage Change
	2015			2014			Percentage Change

	(in thousands)
Segment expenses (income):
Equity in net income of unconsolidated affiliates	$	(338	)	$	(3,880	)	(91	)%
Impairment of investments	—			7,940			(100	)%
Other expense	—			346			(100	)%
Segment contribution (loss)	$	338		$	(4,406	)	*

* Represents an increase or decrease in excess of 100% or not meaningful.

Segment contribution from the Other International segment increased $4.7 million from the prior-year nine-month period to $0.3 million in the current nine-month period primarily due to:

•

A $3.5 million decrease in equity in net income of unconsolidated affiliates primarily due to a $4.7 million decrease in Cash Converters International’s net income primarily attributable to a $5.9 million charge that Cash Converters International incurred in December 2014 in connection with the termination of agency agreements with certain development agents, offset by a $1.2 million increase in equity in net income of unconsolidated affiliates due to no reported earnings from Albemarle & Bond in the current nine-month period as compared to a reported loss in the prior-year nine-month period; and

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•	A decrease in impairment of investments due to the prior-year nine-month period other-than-temporary impairment of $7.9 million ($5.4 million, net of taxes) in Albemarle & Bond, which brought our carrying value of this investment to zero.

Other Items

The following table reconciles our consolidated segment contribution discussed above to net income attributable to EZCORP, including items that affect our consolidated financial results but are not allocated among segments:



	Nine Months Ended June 30,						Percentage Change
	2015			2014			Percentage Change

	(in thousands)
Segment contribution	$	55,973		$	96,263		(42	)%
Corporate expenses (income):
Administrative	31,803			49,925			(36	)%
Depreciation	5,355			4,990			7	%
Amortization	2,857			2,224			28	%
Loss on sale or disposal of assets	385			642			(40	)%
Interest expense	12,432			4,182			*
Interest income	(132		)	(115		)	15	%
Restructuring	763			—			*
Other income	(133		)	(227		)	(41	)%
Income from continuing operations before income taxes	2,643			34,642			(92	)%
Income tax expense	774			6,081			(87	)%
Income from continuing operations, net of tax	1,869			28,561			*
Loss from discontinued operations, net of tax	(1,991		)	(5,445		)	(63	)%
Net (loss) income	(122		)	23,116			*
Net loss from continuing operations attributable to redeemable noncontrolling interest	(3,230		)	(5,686		)	(43	)%
Net income attributable to EZCORP	$	3,108		$	28,802		(89	)%

* Represents an increase or decrease in excess of 100% or not meaningful.

Consolidated income from continuing operations, net of tax, decreased $26.7 million from the prior-year nine-month period to $1.9 million in the current nine-month period primarily due to a $49.5 million decrease in contribution from the U.S. & Canada segment, partially offset by a $4.5 million decrease in loss contributed from the Latin America segment, a $4.7 million increase from the Other International segment and a $8.3 million decrease in corporate expenses.

Total corporate expenses decreased $8.3 million, or 13%, from the prior-year nine-month period to $53.3 million, primarily due to:

•

A $18.1 million decrease in administrative expenses primarily due to an $8.0 million retirement benefit expense for our former Executive Chairman, discretionary bonuses, and one-time charges relating to reorganization and outsourcing of our internal audit department that were incurred in the prior-year nine-month period, in addition to a $7.7 million decrease in stock-based compensation attributable to grants forfeited in addition to no new grants issued during fiscal 2015 and an overall decrease in wages and benefits in the current nine-month period; partially offset by


•	A $8.3 million increase in interest expense due to $6.1 million of debt discount amortization in the current nine-month period pertaining to our 2.125% Cash Convertible Notes issued in June 2014, a $1.2 million increase due to charges associated with interest payments made to the Internal Revenue Service pertaining to the audit of our fiscal 2010

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return and an overall increase in interest expense due to higher average corporate debt outstanding in the current nine-month period; and


•	A $0.8 million increase in restructuring expense due to ongoing charges pertaining to the restructuring initiated in the fourth quarter of fiscal 2014.

Income tax expense decreased $5.3 million primarily due to the decrease in pre-tax income from continuing operations.

During the current nine-month period net income attributable to EZCORP was $3.1 million, a $25.7 million decrease from the prior-year nine-month period net income of $28.8 million.

Liquidity and Capital Resources

Cash Flows

The table below presents a summary of the sources and uses of our cash:



	Nine Months Ended June 30,						Percentage Change
	2015			2014			Percentage Change

	(in thousands)
Cash flows from operating activities	$	50,508		$	43,257		17	%
Cash flows from investing activities	(14,143		)	(43,101		)	(67	)%
Cash flows from financing activities	28,388			20,296			40	%
Effect of exchange rate changes on cash and cash equivalents	(5,691		)	(118		)	*
Net increase in cash and cash equivalents	$	59,062		$	20,334		*

* Represents an increase or decrease in excess of 100% or not meaningful.

The increase in cash flows from operating activities was primarily due to a $34.6 million increase from changes in operating assets and liabilities, partially offset by a $23.3 million decrease in net income plus several non-cash items and $3.7 million in restructuring payments.

The increase in cash flows from investing activities was primarily due to a $49.9 million increase in proceeds related to loan activities (net loans repaid and recovery of pawn loan principal through sale of forfeited collateral), and an $8.9 million decrease in acquisitions, net of cash acquired, partially offset by a $12.1 million investment in Cash Converters International in order to maintain our equity ownership percentage in connection with a non-underwritten placement of shares, a $6.9 million increase in additions to property and equipment and a $10.6 million decrease in proceeds from sale of assets.

The increase in cash flows from financing activities was primarily due to a $140.9 million decrease in net payments on our revolving line of credit that was terminated in June 2014, a $12.7 million decrease in debt issuance costs, a $17.0 million decrease in payout of deferred and contingent consideration, a $71.1 million increase in restricted cash, $2.3 million in proceeds from settlement of forward currency contracts, $11.9 million in common stock repurchased in June 2014 and an $18.4 million decrease in purchases in subsidiary shares from noncontrolling interests, partially offset by a $181.4 million decrease in net proceeds from our 2.125% Cash Convertible Senior Notes Due 2019 and related embedded derivative, hedges and warrants in June 2014 and a $86.5 million increase in net payments on our outstanding bank borrowings.

Total debt and capital lease obligations outstanding decreased by $19.0 million, or 4%, to $409.9 million as compared to the prior-year quarter. The total amount includes the effects of consolidated VIE debt as discussed in further detail below. Of this amount, $108.1 million was non-recourse to EZCORP and attributable to Grupo Finmart. The overall increase in debt was primarily due to $215.0 million of our 2.125% Cash Convertible Senior Notes Due 2019 and embedded derivative issued in June and July 2014 outstanding as of June 30, 2015, offset by continued repayments by Grupo Finmart on their outstanding debt that is non-recourse to EZCORP.

The net effect of these and other smaller items was a $59.1 million increase in cash on hand, providing a $114.4 million ending cash balance. Of the aforementioned ending cash balance, approximately 36%, or $21.2 million, is held by foreign subsidiaries and is not available to fund domestic operations as we intend to permanently reinvest earnings from foreign operations.

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Contractual Obligations

In the Amended FY14 Annual Report, we reported that we had $759.2 million in total contractual obligations as of September 30, 2014. There have been no material changes to this total obligation during the current nine-month period, other than (a) the Additional Interest due on the Cash Convertible Notes, as described in further detail below, (b) changes in our real estate obligations described below, (c) additional debt issued by our consolidated VIEs and (d) ordinary fulfillment of obligations.

In December 2014, we entered into a non-cancelable 13-year operating lease for our corporate offices, with rent payments beginning February 2016 and ending March 2029. Annual rent escalates from $3.0 million at lease inception to $4.6 million in the terminal year of the lease. The lease includes two five year extension options at the end of the initial lease term. The estimated minimum future rental payments under the lease are approximately $57.1 million. We intend to initiate subleases pertaining to our corporate operating office lease.

During the second quarter of fiscal 2015, we entered into non-cancelable subleases for our Miami and Mexico City regional offices for estimated minimum future sublease payments of approximately $8.7 million. Sublease payments are expected to partially offset our operating lease obligations over the nine-year period beginning March 2015 and ending September 2024 (in the case of the Miami lease) and the three-year period beginning March 2015 and ending June 2018 (in the case of the Mexico City lease). Annual total sublease payments escalate from $0.6 million at sublease inception to $1.0 million in the terminal year of the last sublease.

We are obligated under letters of credit issued to unaffiliated lenders as part of our credit service operations. As of June 30, 2015, our maximum exposure for losses on letters of credit, if all brokered loans defaulted and none were collected, was $20.5 million. Of that total, $5.6 million was secured by titles to customers’ automobiles. These amounts include principal, interest and insufficient funds fees.

We are responsible for the maintenance, property taxes and insurance at most of our locations. In the fiscal year ended September 30, 2014, these collectively amounted to $22.8 million.

Of our 480 U.S. financial services stores, 198 adjoin a pawn store and are covered by the same lease agreement. The lease agreements at approximately 97% of the remaining 282 free-standing U.S. financial services 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. The space currently utilized by stores adjoining pawn stores could be re-incorporated into the pawn operations.

Sources of Cash

In February 2015, we completed the acquisition of 12 pawn stores in Central Texas doing business under the "Cash Pawn" brand. The aggregate purchase price for the acquisition was $16.5 million, comprised of $5.0 million cash and 1,168,456 shares of our Class A Non-voting Common Stock (the "Shares"), valued at $10.06 per share (the average closing sales price of the stock on The Nasdaq Stock Market for the five trading days immediately preceding the closing), less a $0.2 million Holding Period Adjustment. The Shares were issued in an unregistered private placement transaction pursuant to Section 4(a)(2) of the Securities Act of 1933 to a small number of related individuals and entities (the "Sellers") who were either "accredited investors" or "sophisticated investors."

On the first anniversary of the closing date, the Sellers have the right to require us to repurchase the Shares for an aggregate price of $11.8 million (the "Put Option"). The Sellers may terminate the Put Option, in whole or in part, at any time. The Sellers are required to hold the Shares for a period of six months following the termination of the Put Option (the "Holding Period"). If the trading price of the Class A Non-voting Common Stock at the end of the Holding Period is less than $10.06 per share, then we will make an additional cash payment to the Sellers equal to the aggregate deficit, but such payment will not exceed $1.0 million. If the trading price of the Class A Non-voting Common Stock at the end of the Holding Period is more than $10.06 per share, then we will receive from the Sellers (either in cash or by returning a portion of the Shares) an amount equal to 50% of the aggregate excess, but such payment will not exceed $1.0 million (the "Holding Period Adjustment"). As of June 30, 2015, the Sellers had not terminated the Put Option in whole or in part.

The Put Option is not accounted for separately from the Shares and does not require bifurcation. The Shares are accounted for as common stock, subject to possible redemption under FASB ASC 480 Distinguishing Liabilities from Equity and are included in temporary equity in our condensed consolidated balance sheet as of June 30, 2015. The Holding Period Adjustment is accounted for as a contingent consideration asset under FASB ASC 805 Business Combinations, will be adjusted to fair value in subsequent reporting periods, and is recorded in our balance sheet at its estimated fair value under "Other assets, net" as of June 30, 2015.

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In June and July 2014, we issued $230.0 million aggregate principal amount of Cash Convertible Notes. All of the Cash Convertible Notes were issued pursuant to an indenture dated June 23, 2014 (the "Indenture") by and between us and Wells Fargo Bank, National Association as the trustee. The Cash Convertible Notes were issued in a private offering and resold pursuant to Rule 144A under the Securities Act of 1933. The Cash Convertible Notes pay interest semi-annually in arrears at a rate of 2.125% per annum on June 15 and December 15 of each year, commencing on December 15, 2014, and will mature on June 15, 2019 (the "Maturity Date"). Upon conversion or maturity, the Cash Convertible Notes will be settled only in cash (including, in the case of conversion, an amount of cash representing the net value attributable to certain increases in the price of our Class A Non-voting Common Stock).

Prior to December 15, 2018, the Cash Convertible Notes will be convertible only upon the occurrence of certain events and during certain periods, and thereafter, at any time prior to the close of business on the second scheduled trading day immediately preceding the Maturity Date, as described in the indenture. The Cash Convertible Notes are convertible into cash based on an initial conversion rate of 62.2471 shares of Class A Non-voting Common Stock per $1,000 principal amount of Cash Convertible Notes (equivalent to an initial conversion price of approximately $16.065 per share of our Class A Non-voting Common Stock). The conversion rate will not be adjusted for any accrued and unpaid interest.

We entered into hedges with counterparties to limit our exposure to the additional cash payments above the $230.0 million aggregate principal amount of the Cash Convertible Notes that may be due to the holders upon conversion. In separate transactions, we sold warrants with a strike price of $20.83 per share.

The Cash Convertible Notes are our unsubordinated unsecured obligations and rank senior in right of payment to any of our indebtedness that is expressly subordinated in right of payment to the Cash Convertible Notes; equal in right of payment with all of our other unsecured unsubordinated indebtedness; and effectively junior to all debt or other obligations (including trade payables) of our wholly-owned subsidiaries.

As of June 30, 2015, the Cash Convertible Notes are not convertible because the conversion conditions have not been met. Accordingly, the net balance of the Cash Convertible Notes of $191.8 million is classified as a non-current liability on our condensed consolidated balance sheets as of June 30, 2015.

For an additional description of the Cash Convertible Notes, the conversion terms thereof and the hedges and warrants transactions, see Note 7 "Long-term Debt and Capital Lease Obligations" in the notes to our condensed consolidated financial statements.

As of June 30, 2015, Grupo Finmart's third party debt (non-recourse to EZCORP), excluding debt consolidated under VIEs was $108.1 million, with a weighted-average interest rate of 9%. Since the acquisition of Grupo Finmart in January 2012, Grupo Finmart's debt has decreased $1.7 million, and its weighted-average interest rate has decreased 10 percentage points, primarily due to debt refinancing. This refinancing effort was a key assumption in our investment analysis and will result in significantly reduced interest expenses going forward.

During fiscal 2014 and the quarter ended December 31, 2014, Grupo Finmart completed several transfers of consumer loans to consolidated VIEs, which were funded with debt proceeds. The debt outstanding from these transfers was $86.8 million as of June 30, 2015. See "Secured notes consolidated from VIEs" in Note 7 of Notes to Interim Condensed Consolidated Financial Statements included in "Part I, Item 1 — Financial Statements" for an additional description of these proceeds.

The $108.1 million Grupo Finmart debt, excluding debt consolidated under VIEs, and $86.8 million debt consolidated under VIEs comprise the $194.9 million total debt outstanding of Grupo Finmart.

In July 2012 Grupo Finmart transferred certain consumer loans to a bankruptcy remote trust in a securitization transaction. The securitization borrowing facility had a maximum capacity of approximately $115.4 million. On February 17, 2014, Grupo Finmart repaid this facility and entered into a new securitization transaction to transfer collection rights of certain eligible consumer loans to a bankruptcy remote trust. As of June 30, 2015, $46.6 million was outstanding under the securitization borrowing facility. The trust received financing as a result of the issuance of debt securities and delivered the proceeds of the financing to Grupo Finmart. The unrestricted cash received from this borrowing in the amount of $29.2 million was primarily used to repay the previous securitization borrowing facility due in 2017 and the transaction costs associated with this transaction. The cash proceeds of approximately $17.0 million is restricted primarily for $14.8 million of collection rights on the additional eligible loans from Grupo Finmart, which Grupo Finmart expects to deliver to the trust within the next 12 months, and $2.2 million of interest and trust maintenance costs to be recovered at repayment. The restricted cash proceeds of $14.8 million are recourse to Grupo Finmart unless additional eligible loans are delivered within two-year period specified in the agreement.

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We anticipate that cash flow from operations and our cash on hand will be adequate to fund our contractual obligations, planned store growth, capital expenditures and working capital requirements during the remainder of the fiscal year. In addition, we expect to continue to obtain local financing to fund Grupo Finmart’s lending growth and our Mexican pawn growth.

Off-Balance Sheet Arrangements

We issue letters of credit to enhance the creditworthiness of our credit service customers seeking unsecured consumer 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 condensed consolidated balance sheets 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 under "Accounts payable and other accrued expenses" in our condensed consolidated balance sheets, which as of June 30, 2015, was $3.2 million. At that date, our maximum exposure for losses on letters of credit, if all brokered loans defaulted and none were collected, was $20.5 million. This amount includes principal, interest and insufficient funds fees.

We have no other off-balance sheet arrangements.

Cautionary Statement Regarding Risks and Uncertainties That May Affect Future Results

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 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 the Amended FY14 Annual Report.

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.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Market risks relating to our operations result primarily from changes in interest rates, gold values and foreign currency exchange rates, and are described in detail in "Part II, Item 7A — Quantitative and Qualitative Disclosures about Market Risk" of the Amended FY14 Annual Report. There have been no material changes to our exposure to market risks since September 30, 2014.

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.

Background

The Company recently completed a comprehensive review of our Grupo Finmart loan portfolio, and as a result of issues identified in that review, our Board of Directors, on the recommendation of the Audit Committee and in consultation with management and our independent registered public accounting firms, concluded that our previously issued financial statements

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for fiscal 2014, 2013 and 2012 (including the interim periods within those years, other than the first quarter of fiscal 2012) and the unaudited financial statements for the first quarter of fiscal 2015 should no longer be relied upon because of certain accounting errors in those financial statements. Accordingly, we have restated our previously issued financial statements for those periods. See the Explanatory Note preceding Part I of this Report.

As a result of management’s review of the Grupo Finmart portfolio issues, we have identified deficiencies in our internal controls which are discussed more fully below. These deficiencies failed to prevent or detect accounting errors, which led to the restatement described above. The deficiencies, collectively, represent material weaknesses in our internal control over financial reporting and require corrective and remedial actions.

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) 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.

In connection with the preparation of this Report, our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2015. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of June 30, 2015 due to the existence of the material weaknesses in internal control over financial reporting described below (which we view as an integral part of our disclosure controls and procedures). Based on the completion of the review of the Grupo Finmart loan portfolio and the performance of additional procedures designed to ensure the reliability of our financial reporting, we believe that the consolidated financial statements included in this Report fairly present, in all material respects, our financial position, results of operations and cash flows as of the dates, and for the periods, presented, in conformity with U.S. GAAP.

Management's Report on Internal Control Over Financial Reporting

Management, under the supervision of the Chief Executive Officer and the Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting and for the assessment of the effectiveness of our internal control over financial reporting. Internal control over financial reporting (as defined in Rules 13a-15(f) and 15d(f) under the Exchange Act) is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with U.S. GAAP. Internal control over financial reporting includes those policies and procedures that (a) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of assets, (b) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, (c) provide reasonable assurance that receipts and expenditures are being made only in accordance with appropriate authorization of management and the Board of Directors, and (d) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the financial statements.

In connection with the preparation of our original Annual Report on Form 10-K for the year ended September 30, 2014, we presented a Management's Report on Internal Control Over Financial Reporting in which our Chief Executive Officer and Chief Financial Officer at the time concluded that our internal control over financial reporting was effective as of September 30, 2014. In connection with the preparation of the Amended FY14 Annual Report, our management, under the supervision and with the participation of our current Chief Executive Officer and Chief Financial Officer, reevaluated the effectiveness of our internal control over financial reporting as of September 30, 2014, and concluded that we did not maintain effective internal control over financial reporting as of September 30, 2014 due to the identification of material weaknesses. See "Part II, Item 9A — Controls and Procedures — Management's Report on Internal Control Over Financial Reporting (Revised)" in the Amended FY14 Annual Report. For the same reasons, management also has concluded that we did not maintain effective internal control over financial reporting as of September 30, 2013 or September 30, 2012.

Management identified a number of deficiencies in the design and operating effectiveness of the Company’s internal controls as of September 30, 2014 that represent material weaknesses in our internal control over financial reporting. These deficiencies are the result of management’s failure to design, implement and maintain adequate operational and internal controls and processes to (1) identify complex transactions requiring specialized accounting expertise and other financial reporting requirements and (2) monitor and report the performance of the Grupo Finmart loan portfolio. The deficiencies in our internal control over financial reporting resulted in the accounting errors that led to the restatement of previously issued financial statements described above.

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For a complete description of the identified material weaknesses and the control and other deficiencies that contributed to them, see "Part II, Item 9A — Controls and Procedures" in our Amended FY14 Annual Report.

Remediation Plan

Our management is in the process of designing and implementing remediation efforts intended to address the material weaknesses discussed above. These remediation efforts will be focused on:


•	Establishing and maintaining appropriate operational and risk assessment processes, as well as transactional controls, at both the Grupo Finmart and EZCORP level in order to (1) ensure engagement and utilization of appropriately qualified U.S. GAAP experts where required and (2) provide appropriate access and visibility to loan performance information;


•	Hiring additional internal resources and improving the organizational structure; and


•	Enhancing the overall control environment within both EZCORP and Grupo Finmart.

Management, under the supervision of the Audit Committee, will develop a comprehensive remediation plan, including a detailed plan and timetable for implementation, and will report regularly to the Audit Committee regarding the status of the implementation activities.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended June 30, 2015 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting, other than the effects of the remediation discussed above.

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.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

We are currently subject to various litigation and regulatory actions. In addition to the matters described in Note 11 and Note 17 of Notes to Interim Condensed Consolidated Financial Statements included in "Part I, Item 1 — Financial Statements," we are from time to time subject to other legal and regulatory actions, including the following:

•

CFPB — Since February 2014, we have received several Civil Investigative Demands ("CIDs") from the Consumer Financial Protection Bureau ("CFPB") requiring the production of documents and oral testimony from Company representatives. We continue to cooperate fully with the CFPB in its investigation, have provided the CFPB with most of the information requested and are in the process of responding to certain follow-up requests.

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On April 13, 2015, we received a NORA ("Notice of Opportunity to Respond and Advise") call from the CFPB, in which the CFPB staff asserted alleged violations of federal consumer financial protection laws. We submitted our written response to the NORA allegations on May 1, 2015, in which we stated our position with respect to each of the alleged violations. There can be no assurance that the CFPB will not require us to pay fines, penalties and/or customer restitution to address the alleged violations.

•

FCA — In the course of evaluating and preparing our Cash Genie business for compliance with the new guidelines and rules published by the Financial Conduct Authority ("FCA"), we noted three issues primarily related to our legacy business, self-reported those to the FCA in June 2014 and have been in regular dialogue with the FCA regarding those issues since. In July 2014, we agreed to the imposition of a Voluntary Requirement formalizing our commitment to review and evaluate the issues under the oversight of an independent "skilled person" appointed by the FCA to determine whether customers have been adversely affected by those issues and, if so, to assess the redress that would be appropriate. Grant Thornton LLP was selected as the skilled person to oversee the process (referred to as a "section 166 process"), and that process was recently completed. During the section 166 process, an additional issue was identified and discussed with the FCA.

In July 2015, we reached an agreement with the FCA regarding the redress to be offered to the customers affected by these issues and have substantially completed the redress scheme. In connection with discontinuing the Cash Genie operations, we accrued $6.5 million in anticipation of the requirement for customer redress, which was recorded in discontinued operations in the fourth quarter of 2014. The agreed upon redress scheme called for an incremental $3.3 million, and we recorded that incremental expense in discontinued operations in the second quarter of fiscal 2015. The redress scheme also called for the write-off or write-down of consumer loan balances that had previously been charged to bad debt expense, and we did not incur any additional expense associated with the write-off or write-down.

We are unable to determine the ultimate outcome of any current litigation or regulatory actions. These matters are subject to inherent uncertainties and unfavorable rulings could occur. An unfavorable ruling could include monetary damages or an injunction prohibiting us from conducting our business as we currently do. Any unfavorable ruling or outcome could have a material adverse effect on our results of operations and could negatively affect our reputation.

We have procured management liability insurance policies that should protect us from much of the potential exposure related to the shareholder derivative litigation and the federal securities litigation described in Note 11 and Note 17 of Notes to Interim Condensed Consolidated Financial Statements included in "Part I, Item 1 — Financial Statements." However, under the terms of those policies, we bear the first $1 million of costs or liability associated with those actions. Consequently, we expect that our results of operations will be adversely affected by the current litigation until we exhaust the retention under our management liability insurance policies. In addition, to the extent that our ultimate liability in the current litigation or any subsequent litigation that is included in the same policy year exceeds the management liability policy limits, our results of operations could be adversely affected.

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 the Amended FY14 Annual Report. These factors are further supplemented by those discussed in "Part II, Item 7A — Quantitative and Qualitative Disclosures about Market Risk" of the Amended FY14 Annual Report and in “Part I, Item 3 — Quantitative and Qualitative Disclosures about Market Risk” and "Part II, Item 1 — Legal Proceedings" of this Report.

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Item 6. Exhibits

The following exhibits are filed with, or incorporated by reference into, this report.



Exhibit No.		Description of Exhibit
31.1*		Certification of Stuart I. Grimshaw, 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 Mark Ashby, 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 Stuart I. Grimshaw, Chief Executive Officer, and Mark S. Ashby, 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



*	Filed herewith.
**	Furnished herewith.
***	Filed herewith as Exhibit 101 to this report are the following formatted in XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of June 30, 2015, June 30, 2014 and September 30, 2014; (ii) Condensed Consolidated Statements of Operations for the three and nine-months ended June 30, 2015 and June 30, 2014; (iii) Condensed Consolidated Statements of Comprehensive (Loss) Income for the three and nine-months ended June 30, 2015 and June 30, 2014 (iv) Condensed Consolidated Statements of Cash Flows for the nine-months ended June 30, 2015 and June 30, 2014; and (v) Notes to Interim Condensed Consolidated Financial Statements.

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SIGNATURES

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:	November 9, 2015	/s/ Mark S. Ashby
		Mark S. Ashby, Chief Financial Officer (principal financial and accounting officer)

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EXHIBIT INDEX



Exhibit No.		Description of Exhibit
31.1*		Certification of Stuart I. Grimshaw, 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 Mark Ashby, 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 Stuart I. Grimshaw, Chief Executive Officer, and Mark S. Ashby, 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



*	Filed herewith.
**	Furnished herewith.
***	Filed herewith as Exhibit 101 to this report are the following formatted in XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of June 30, 2015, June 30, 2014 and September 30, 2014; (ii) Condensed Consolidated Statements of Operations for the three and nine-months ended June 30, 2015 and June 30, 2014; (iii) Condensed Consolidated Statements of Comprehensive (Loss) Income for the three and nine-months ended June 30, 2015 and June 30, 2014 (iv) Condensed Consolidated Statements of Cash Flows for the three and nine-months ended June 30, 2015 and June 30, 2014; and (v) Notes to Interim Condensed Consolidated Financial Statements.