UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-K

þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 000-19424

EZCORP, INC.

(Exact name of registrant as specified in its charter)

Delaware		74-2540145
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1901 Capital Parkway
Austin, Texas		78746
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code:
(512) 314-3400

Securities Registered Pursuant to Section 12(b) of the Act:

Title of Each Class		Name of Each Exchange on Which Registered
Class A Non-voting Common Stock, $.01 par value per share		The NASDAQ Stock Market
		(NASDAQ Global Select Market)

Securities Registered Pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No þ

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 þ No o

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 þ No o

Indicate by check mark if disclosures of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

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 þ		Accelerated filer o		Non-accelerated filer o		Smaller reporting company o
				(Do not check if a 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 o No þ

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. The aggregate market value of the Class A Non-voting Common Stock held by non-affiliates of the registrant was $1,449 million, based on the closing price on the NASDAQ Stock Market on March 31, 2011.

As of October 31, 2011, 47,387,572 shares of the registrant’s Class A Non-voting Common Stock, par value $.01 per share and 2,970,171 shares of the registrant’s Class B Voting Common Stock, par value $.01 per share were outstanding.

Documents incorporated by reference: None

 

 

EZCORP, INC.
YEAR ENDED SEPTEMBER 30, 2011
INDEX TO FORM 10-K

Item		Page
No.		No.
INTRODUCTION
PART I
1. Business			3
1A. Risk Factors			16
1B. Unresolved Staff Comments			20
2. Properties			21
3. Legal Proceedings			23
4. Removed and Reserved			23
PART II
5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities			24
6. Selected Financial Data			26
7. Management’s Discussion and Analysis of Financial Condition and Results of Operations			27
7A. Quantitative and Qualitative Disclosures About Market Risk			47
8. Financial Statements and Supplementary Data			48
9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure			81
9A. Controls and Procedures			81
9B. Other Information			83
PART III
10. Directors, Executive Officers and Corporate Governance			84
11. Executive Compensation			89
12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			106
13. Certain Relationships and Related Transactions, and Director Independence			108
14. Principal Accountant Fees and Services			111
PART IV
15. Exhibits and Financial Statement Schedules			112
Signatures			115
Exhibit Index			116
EX-21.1
EX-23.1
EX-31.1
EX-31.2
EX-32.1
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

PART I

This report contains forward-looking statements that are based on our current expectations. Actual results in future periods may differ materially from those expressed or implied by those forward-looking statements because of a number of risks and uncertainties. For a discussion of risk factors affecting our business and prospects, see “Part I — Item 1A — Risk Factors.”

Item 1. Business

General

EZCORP, Inc. is a Delaware corporation headquartered in Austin, Texas. We are a leading provider of specialty consumer financial services and a reseller of second-hand goods. We provide collateralized, non-recourse loans, commonly known as pawn loans, and a variety of financial services including payday loans, installment loans and auto title loans, or fee-based credit services to customers seeking loans.

At September 30, 2011, we operated a total of 1,111 locations, consisting of 433 U.S. pawn stores (operating as EZPAWN or Value Pawn), 178 pawn stores in Mexico (operating as Empeño Fácil or Empeñe Su Oro), 436 U.S. financial services stores (operating primarily as EZMONEY), 49 financial services stores in Canada (operating as CASHMAX) and 15 financial and retail services stores in Canada (operating as Cash Converters). We own almost 30% of Albemarle & Bond Holdings, PLC, one of the United Kingdom’s largest pawnbroking businesses with over 150 stores, and almost 33% of Cash Converters International Limited, which franchises and operates a worldwide network of over 600 locations that provide financial services and buy and sell second-hand goods. In fiscal 2011, we acquired the Cash Converters master franchise rights in Canada and became the franchisor of 13 franchised stores. We are in the process of rebranding the majority of our Canadian stores as “Cash Converters” stores and introducing into them the buying and selling of second-hand goods.

At our pawn stores, we offer pawn loans, which are non-recourse loans collateralized by tangible personal property, and sell merchandise to customers looking for good value. The merchandise we sell consists of second-hand collateral forfeited from our pawn lending activities or purchased from customers and new or refurbished merchandise from third party vendors. At our financial services stores and at some of our pawn stores, we offer a variety of loan products, including single-payment, non-collateralized payday loans with maturity dates typically ranging from 7 to 30 days; non-collateralized installment loans that may be repaid over extended periods of up to seven months; 30-day loans secured by automobile titles; and revolving lines of credit both unsecured and secured by automobile titles. In our Cash Converters stores, we also buy and sell second-hand goods. Our financial services stores in Texas do not offer loan products themselves, but rather offer credit services to help customers obtain loans from independent third-party lenders. Some of our Texas pawn stores also offer credit services in addition to pawn loans.

In many of our stores and online, customers may obtain our general-purpose, branded reloadable debit cards (called the “Change Card”). Customers may elect to deposit their payroll to the card either through direct deposit or by loading paper checks onto the card, and may elect to receive loan proceeds on the card. Among other services, customers may then use the cards to withdraw cash, make purchases at any vendor accepting branded debit cards, pay bills online, establish a savings account and invest in a mutual fund. The cards are issued by a bank, and we receive a portion of the fees charged for activity on the cards.

Our business consists of three reportable segments. The U.S. Pawn Operations segment operates only in the United States. The Empeño Fácil segment operates only in Mexico. The EZMONEY Operations segment operates 430 stores in the United States and 64 stores in Canada. For revenues, profitability, assets and other information attributable to each of our segments, see Note R, “Operating Segment Information” to our consolidated financial statements contained in Item 8 of this annual report.

The following table presents store data by segment:

		Fiscal Year Ended September 30, 2011
		Company-owned Stores
										EZMONEY
		U.S. Pawn Operations				Empeño Fácil				Operations				Consolidated				Franchises
Stores in operation:
Beginning of period			396				115				495				1,006				—
New openings			10				57				15				82				1
Acquired			34				6				—				40				13
Sold, combined or closed			(1	)			—				(16	)			(17	)			(1	)
End of period			439				178				494				1,111				13

The following components comprised our total revenues:

		Fiscal Years Ended September 30,
		2011				2010				2009
Merchandise sales			33	%			33	%			35	%
Jewelry scrapping sales			24	%			24	%			20	%
Pawn service charges			23	%			22	%			22	%
Signature loan (including credit service) fees			17	%			19	%			22	%
Auto title loan (including credit service) fees			3	%			2	%			1	%
Total revenues			100	%			100	%			100	%

Pawn and Retail Activities

Our pawn stores make pawn loans, which are typically small, non-recourse loans collateralized by tangible personal property. At September 30, 2011, we had an aggregate pawn loan principal balance of $145.3 million, and the average pawn loan was approximately $120. We earn pawn service charge revenue on our pawn lending. In the year ended September 30, 2011 (“fiscal 2011”), pawn service charges accounted for approximately 23% of our total revenues and 38% of our net revenues.

While allowable service charges vary by state and loan size, a majority of our U.S. pawn loans earn 20% per month. Our average U.S. pawn loan amount typically ranges between $125 and $135 but varies depending on the valuation of each item pawned. The total U.S. loan term ranges between 60 and 120 days, consisting of the primary term and grace period. In Mexico, pawn service charges range from 15% to 21% per month including applicable taxes, with the majority of loans earning 21%. The total Mexico pawn loan term is 40 days, consisting of the primary term and grace period. Individual loans are made in Mexican pesos and vary depending on the valuation of each item pawned, but typically equate to between $65 and $70 U.S. dollars. In fiscal 2011, 2010 and 2009, approximately 81%, 80% and 79%, respectively, of our pawn loans were redeemed in full or were renewed or extended.

Collateral for our pawn loans consists of tangible personal property, generally jewelry, consumer electronics, tools, sporting goods and musical instruments. Approximately 62% of our pawn loan collateral is jewelry, and the vast majority of that is gold jewelry. We do not evaluate the creditworthiness of a pawn customer, but rely on the estimated resale value of the collateral and the perceived probability of the loan’s redemption. We generally lend from 25% to 65% of the pledged property’s estimated resale value depending on an evaluation of these factors. The sources of information we use to determine the resale value of collateral include our computerized valuation software, gold values, internet retail and auction sites, catalogues, newspaper advertisements and previous sales of similar merchandise.

The collateral is held through the duration of the loan, which the customer may renew or extend by paying accrued pawn service charges. Through our lending guidelines, we maintain an annual redemption rate (the percentage of loans made that are repaid, renewed or extended) between 79% and 82%. If a customer does not repay, renew or extend a loan, the collateral is forfeited to us and becomes inventory available for sale. We do not record loan losses or charge-offs of pawn loans because the principal amount of an unpaid loan becomes the inventory carrying cost of the forfeited collateral. We provide an inventory valuation allowance to ensure that this forfeited collateral is valued at the lower of cost or market.

The table below shows our dollar amount of pawn loan activity for fiscal 2011, 2010 and 2009:

		Fiscal Years Ended September 30,
		2011				2010				2009
		(In millions)
Loans made		$	505.2			$	416.4			$	340.3
Loans repaid			(273.5	)			(222.2	)			(181.3	)
Loans forfeited			(215.3	)			(177.8	)			(155.7	)
Loans acquired in business acquisitions			8.6				2.7				23.3
Change due to foreign currency exchange fluctuations			(0.9	)			0.4				(0.9	)
Net increase in pawn loans outstanding at the end of the year		$	24.1			$	19.5			$	25.7
Loans renewed		$	173.4			$	124.8			$	107.1
Loans extended		$	979.6			$	805.3			$	592.4

The redemption rate of pawn loans and the gross profit realized on the sale of forfeited collateral are dependent on the loan value of customer merchandise. Jewelry, which makes up approximately 62% of the value of collateral, can be appraised based on weight, gold content, style and value of gemstones. Other items pawned typically consist of consumer electronics, tools, sporting goods, and musical instruments. These are evaluated based on recent sales experience and the selling price of similar new merchandise, adjusted for age, wear, and obsolescence.

At the time a pawn transaction is made, a pawn loan agreement (called a pawn ticket) is given to the customer. The pawn ticket shows the name and address of the pawn store and the customer, the customer’s identification information, the date of the loan, a detailed description of the pledged goods, the amount financed, the pawn service charge, the maturity date of the loan, the total amount that must be paid to redeem the loan and the annual percentage rate.

In our pawn stores and certain financial services stores, we acquire inventory for retail sales through pawn loan forfeitures and through purchases of customers’ merchandise and purchases of new or refurbished merchandise from third party vendors. The gross profit on sales of inventory depends primarily on our assessment of the loan or purchase value at the time the property is either accepted as loan collateral or purchased. Improper value assessment in the lending or purchasing process can result in lower margins or reduced marketability of the merchandise. During fiscal 2011, 2010 and 2009, we realized gross margins on sales of 43%, 42% and 40%, respectively.

Jewelry sales represent approximately half of our total sales, with the remaining sales consisting primarily of consumer electronics, tools, sporting goods and musical instruments. We believe our ability to offer quality second-hand goods and refurbished goods at prices significantly lower than original retail prices attracts value-conscious customers.

During the three most recent fiscal years, sources of inventory additions were:

		Fiscal Years Ended September 30,
		2011				2010				2009
Forfeited pawn loan collateral			68	%			69	%			69	%
Purchases from customers			30	%			30	%			22	%
Acquired in business acquisitions			2	%			1	%			9	%

For fiscal 2011, 2010 and 2009, retail activities and jewelry scrapping (sales of precious metals and gemstones to refiners and gemstone wholesalers) accounted for approximately 57%, 56% and 55% of our total revenues, or 37%, 36% and 35% net revenues respectively, after deducting the cost of goods sold. As a significant portion of our inventory and sales involve gold jewelry, our results can be heavily influenced by the market price of gold, which has increased over the past several years.

Customers may purchase an extended return plan (called a “product protection plan”) that allows them to return or exchange certain general (non-jewelry) merchandise sold through our retail pawn operations within three to six months of purchase. We recognize the fees for this service as revenue ratably over the three to six month period.

We also offer a jewelry VIP package, which guarantees customers a minimum future pawn loan amount on the item sold, allows them full credit if they trade in the item to purchase a more expensive piece of jewelry, and provides minor repair service on the item sold. These fees are recognized upon sale. Customers may also purchase an item on layaway by paying a minimum layaway deposit of typically 10% to 20% of the item’s sale price. We hold the item for a 60 to 180-day period, during which the customer is required to pay the balance of the sales price. The initial deposit and subsequent payments are recorded as customer layaway deposits. Layaways are recorded as sales when paid in full. As of September 30, 2011, we held $6.2 million in customer layaway deposits. We record product protection, jewelry VIP and layaway fees as sales revenue, as they are incidental to sales of 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 9.5% of gross inventory at September 30, 2011 compared to 7.4% at September 30, 2010. The higher valuation allowance is reflective of a shift in inventory from jewelry to general merchandise, as the change in the aging of inventory remained relatively flat, with 12.2% aged greater than one year at September 30, 2011 compared to 12.0% at September 30, 2010.

Financial Services

We also offer a variety of financial services to customers who do not have access to other sources of credit. Many customers find our financial services a more attractive alternative than borrowing from friends or family or incurring insufficient fund fees, overdraft protection fees, utility reconnect fees and other charges imposed when they have insufficient cash to meet their needs. By utilizing our financial services, customers can exercise greater control of their personal finances without damaging the relationships they have with their merchants, service providers and family members.

The specific financial services offered varies by location, but generally include some or all of the following:

Signature Loans — Short-term non-collateralized loans are sometimes referred to as signature loans. We offer three principal types of signature loans:

	•		Payday loans — Payday loans are short-term loans (generally less than 30 days and averaging about 16 days) with due dates corresponding to the customer’s next payday. Principal amounts of payday loans can be up to $1,500, but average approximately $435. We typically charge a fee of 15% to 22% of the loan amount for a 7 to 23-day period.
	•		Installment loans —Installment loans are subject to state law and typically carry a term of four to seven months, with a series of equal installment payments due monthly, semi-monthly or on customers’ paydays. Total interest and fees on these loans vary in accordance with state law and loan terms, but over the entire loan term, total approximately 45% to 130% of the original principal amount of the loan. Installment loan principal amounts range from $100 to $3,000, but average approximately $530.
	•		Line of credit —Revolving lines of credit operate similarly to a typical credit card. Customers may borrow as needed, may fully repay borrowed amounts at any point, and are billed at regular intervals with certain minimum principal and fee payment requirements due in each billing cycle. Billing cycle due dates range from two weeks to a month and generally correspond with customers’ paydays. Customers may borrow up to their approved credit line, and may re-borrow any repaid amounts. We provide lines of credit ranging from $100 to $700 and typically charge an annual fee of $30 per account and a monthly fee approximating 43% of the amount borrowed.

Auto Title Loans — We offer two principal types of auto title loans:

•

Single payment auto title loans —Single payment auto title loans are 30-day loans collateralized by the titles to customers’ automobiles. Loan principal amounts range from $100 to $10,000, but average about $810. Loan amounts are established based on customers’ income levels, an inspection

			of the automobile and title and reference to market values of used automobiles. We earn a fee of 12.5% to 25% of auto title loan amounts.
	•		Auto title line of credit —the terms and fee structure of auto title lines of credit are similar to those of unsecured lines of credit described above, except that they are secured by the titles to customers’ automobiles. We provide lines of credit ranging from $100 to $8,000 and typically charge an initial lien fee per account and a monthly fee approximating 25% of the amount borrowed.

Debit Cards — In many of our stores and online, customers may obtain general-purpose, branded reloadable debit cards. Customers may elect to deposit their payroll to the card either through direct deposit or by loading paper checks onto the card, and may elect to receive certain types of loan proceeds on the card. Among other services, customers may then use the cards to withdraw cash, make purchases at any vendor accepting branded debit cards, pay bills online, and invest in a mutual fund. The cards are issued by a more bank, and we receive a portion of the fees charged for activity on the cards.

In our Texas stores, we do not offer loans themselves, but offer fee-based credit services to customers seeking loans. In these locations, we act as a credit services organization (or “CSO”) on behalf of customers in accordance with applicable state and local laws, and offer advice and assistance to customers in obtaining loans from unaffiliated lenders. Our services include arranging loans with independent third-party lenders, assisting in the preparation of loan applications and loan documents and accepting loan payments for the lenders. We do not make, fund or participate in the loans made by the lenders, but we assist customers in obtaining credit and enhance their creditworthiness by issuing letters of credit to guarantee customers’ payment obligations to the independent third-party lenders. For credit services in connection with arranging a payday loan (average loan amount of about $520), our fee is 21.75% of the loan amount. For credit services in connection with arranging an unsecured installment loan (average loan amount of about $2,015), our fee is 10% of the initial loan amount with each semi-monthly or bi-weekly installment payment. For credit services in connection with arranging an auto title loan (average loan amount of about $840), the fee is 25% of the loan amount.

Single-payment payday loans are considered defaulted if they are not repaid or renewed by the maturity date, outstanding amounts on unsecured lines of credit are considered defaulted if customers do not timely make one required scheduled payment and installment loans are considered defaulted if the customer has failed to make two consecutive installment payments. Although defaulted loans may be collected later, we charge the loan principal to bad debt upon default, leaving only active loans in the reported balance. Subsequent collections of principal are recorded as a reduction of bad debt at the time of collection. Accrued service charges related to defaulted loans are deducted from service charge revenue upon loan default, and increase service charge revenue upon subsequent collection. We provide for a valuation allowance on both the principal and service charges receivable based on recent default and collection experience. Our signature loan balance represents the principal amount of all active (non-defaulted) loans, net of this valuation allowance.

If a credit service customer defaults on a loan, we pay the lender the principal and accrued interest due under the loan and an insufficient funds fee or late fee and charge those amounts to bad debt expense. We then attempt to collect those amounts from the customer. Subsequent recoveries are recorded as a reduction of bad debt at the time of collection. We also record as bad debt expense an accrual of expected losses for principal, interest and insufficient fund fees and late fees we expect to pay the lenders on default of the lenders’ current loans. This estimate is based on recent default and collection experience and the amount of loans the lenders have outstanding.

The table below shows the dollar amount of our signature loan activity for the three most recent fiscal years. For purposes of this table, signature loan balances include the principal portion of payday loans and installment loans (net of valuation allowance) recorded on our balance sheet and the principal portion of such active brokered loans outstanding from unaffiliated lenders, which is not included on our balance sheet. In fiscal 2011, new loans were renewed 1.5 times on average, down from 1.8 times in fiscal 2010 and 1.9 times in fiscal 2009.

		Fiscal Years Ended September 30,
		2011				2010				2009
		(In millions)
Combined signature loans:
Loans made		$	249.4			$	233.8			$	217.3
Loans repaid			(216.7	)			(200.7	)			(184.0	)
Loans forfeited, net of collections on bad debt			(34.1	)			(30.7	)			(32.6	)
Net increase in signature loans outstanding at the end of the year		$	(1.4	)		$	2.4			$	0.7
Loans renewed		$	366.5			$	425.5			$	437.6
Loans made by unaffiliated lenders (credit services only):
Loans made		$	113.7			$	114.0			$	114.0
Loans repaid			(94.1	)			(92.5	)			(90.6	)
Loans forfeited, net of collections on bad debt			(21.6	)			(21.5	)			(23.9	)
Net increase in loans outstanding at the end of the year		$	(2.0	)		$	—			$	(0.5	)
Loans renewed		$	336.9			$	364.1			$	366.7
Loans made by us:
Loans made		$	135.7			$	119.8			$	103.3
Loans repaid			(122.6	)			(108.2	)			(93.4	)
Loans forfeited, net of collections on bad debt			(12.5	)			(9.2	)			(8.7	)
Net increase in loans outstanding at the end of the year		$	0.6			$	2.4			$	1.2
Loans renewed		$	29.6			$	61.4			$	70.9

Signature loans are unsecured, and their profitability is highly dependent on our ability to manage the default rate and collect defaulted loan principal, interest and insufficient fund fees. In determining whether to lend or provide credit services, we perform a review of customer information, such as making a credit reporting agency inquiry, evaluating and verifying income sources and levels, verifying employment and verifying a telephone number where the customers may be contacted.

We began offering auto title loans in September 2008. The table below shows the dollar amount of our auto title loan activity for the three most recent fiscal years. For purposes of this table, auto title loan balances include the principal portion of auto title loans (net of valuation allowance) recorded on our balance sheet and the principal portion of active brokered auto title loans outstanding from unaffiliated lenders, which is not included on our balance sheet.

		Fiscal Years Ended September 30,
		2011				2010				2009
		(In millions)
Combined auto title loans:
Loans made		$	27.8			$	25.3			$	5.6
Loans repaid			(24.5	)			(14.7	)			(2.5	)
Loans forfeited, net of collections on bad debt			(4.0	)			(4.5	)			(0.4	)
Loans acquired in business acquisition			—				—				1.1
Net increase in auto title loans outstanding at the end of the year		$	(0.7	)		$	6.1			$	3.8
Loans renewed		$	70.5			$	56.8			$	14.0
Loans made by unaffiliated lenders (credit services only):
Loans made		$	16.3			$	16.0			$	3.3
Loans repaid			(15.7	)			(9.3	)			(1.0	)
Loans forfeited, net of collections on bad debt			(1.4	)			(2.1	)			(0.2	)
Loans acquired in business acquisition			—				—				—
Net increase in loans outstanding at the end of the year		$	(0.8	)		$	4.6			$	2.1
Loans renewed		$	56.0			$	40.7			$	4.9
Loans made by us:
Loans made		$	11.5			$	9.3			$	2.3
Loans repaid			(8.8	)			(5.4	)			(1.5	)
Loans forfeited, net of collections on bad debt			(2.6	)			(2.4	)			(0.2	)
Loans acquired in business acquisition			—				—				1.1
Net increase in loans outstanding at the end of the year		$	0.1			$	1.5			$	1.7
Loans renewed		$	14.5			$	16.1			$	9.1

Auto title loans are secured by the titles to customers’ automobiles. Lending decisions and loan amounts are determined based on customers’ income levels, an inspection of the automobile and title and reference to market values of used automobiles. Through charges to bad debt expense, we provide a bad debt allowance on the current and delinquent balances of auto title loans and auto title lines of credit, and increase the allowance as the loans age or in response to other potential indicators of loss. Auction proceeds from repossessed automobiles are recorded as an offset to bad debt.

At the time a signature loan or auto title loan is made, a loan agreement and credit services agreement, when applicable, are given to the borrower. It presents the name and address of the lender, the borrower and the credit services company when applicable, the borrower’s identification information, the date of the loan, the amount financed, the interest or service charges due on maturity, the maturity date of the loan, the total amount that must be paid and the annual percentage rate. At the time a line of credit is granted, customers receive a similar agreement specifying the terms of the credit line, fees and annual percentage rate and repayment terms.

Seasonality

Historically, pawn service charges are highest in our fourth fiscal quarter (July through September) due to a higher average loan balance during the summer lending season. Merchandise sales are highest in the first and second fiscal quarters (October through March) due to the holiday season, jewelry sales surrounding Valentine’s Day and the impact of tax refunds in the United States. Jewelry scrapping sales are heavily influenced by the timing of decisions to scrap excess jewelry inventory. Jewelry scrapping sales generally are greatest during our fourth fiscal quarter (July through September). This results from relatively low jewelry merchandise sales in that quarter and the higher loan balance, leading to a higher dollar amount of loan forfeitures in the summer lending season providing more inventory available for sale.

Signature loan and auto title loan fees are generally highest in our third and fourth fiscal quarters (April through September) due to a higher average loan balance during the summer lending season. Signature loan and auto title

loan bad debt, both in dollar terms and as a percentage of related fees, is highest in the third and fourth fiscal quarters and lowest in the second fiscal quarter due primarily to the impact of tax refunds in the U.S.

The net effect of these factors is that net revenues and net income typically are strongest in the fourth fiscal quarter and weakest in the third fiscal quarter. Our cash flow typically is greatest in the second fiscal quarter due to a high level of loan redemptions and sales in the U.S. income tax refund season.

Operations

A typical company pawn store employs approximately six full-time equivalent employees (“FTEs”), consisting of a store manager, an assistant manager and four pawnbrokers. Each store manager is responsible for ensuring that the store is run in accordance with our policies, procedures and operating guidelines, and reports to an area manager. Area managers are responsible for the performance of all stores within their area and report to one of our regional directors. Managers and regional directors receive incentive compensation based on their performance in comparison to an operating budget. Our U.S. pawnbrokers are also eligible to receive incentive compensation based on the store’s performance and their individual productivity performance. The incentive compensation for our pawn employees typically ranges between 5% and 30% of their total compensation.

Financial services stores typically employ two to three FTEs per location, consisting of a store manager and one or two customer service representatives. Each store manager is responsible for ensuring that the store is run in accordance with our policies, procedures and operating guidelines, and reports to an area manager, who is responsible for the stores within a specific operating area and reports to a regional director. Managers and regional directors receive incentive compensation based on their performance in comparison to an operating budget.

In the majority of our financial services stores, store employees attempt to collect defaulted signature loans in the first 30 days after default. After the initial 30 days, our centralized collection center assumes collection responsibility for these stores’ loans. The centralized collection center also collects defaulted signature loans for all other locations from the date of default. After attempting to collect for approximately 90 days, we generally sell the remaining defaulted signature loans to a third party or refer them to an outside collection agency for a contingency fee.

We have an internally developed store level point of sale system that automates the recording of pawn, merchandise purchase and sale transactions. We also have a separate loan management computer system specifically designed to handle signature loan and auto title loan transactions. We have redundant backup systems in the event of a system failure or natural disaster. Financial data from all stores is processed at the corporate office each day, and the preceding day’s data are available for management review via our internal network. Our communications network provides information access between the stores and the corporate office.

Our internal audit staff monitors the perpetual inventory system, lending practices, regulatory compliance and compliance with our policies and procedures. Each location is typically audited several times annually, adjusted based on estimated risk.

As of September 30, 2011, we employed approximately 5,600 people. We believe that our success is dependent upon our employees’ ability to provide prompt and courteous customer service and to execute our operating procedures and standards. We seek to hire people who will become long-term, career employees. To achieve our long-range personnel goals, we offer a structured career development program for all of our field associates. This program encompasses computer-based training, formal structured classroom training and supervised on-the-job training. All store associates, including managers, must meet certain competency criteria prior to hire or promotion and participate in on-going training classes and formal instructional programs. Our career development program develops and advances our employees and provides training for the efficient integration of experienced managers and associates from outside the company.

Trademarks and Trade Names

We operate our U.S. pawn stores principally under the names “EZPAWN” or “Value Pawn” and the Mexico pawn stores under the names “EMPEñO FáCIL” and “EMPEñE SU ORO AL INSTANTE.” Our U.S. financial services

stores operate under a variety of names, including “EZMONEY Payday Loans,” “EZ Loan Services,” “EZ Payday Advance,” “AAA Payday Loans” and “EZPAWN Payday Loans” and our CSO stores operate under the name “EZMONEY Loan Services.” Our financial services stores in Canada operate under the names “CASHMAX” or “Cash Converters.” We have registered with the United States Patent and Trademark Office the names EZPAWN, EZMONEY and EZCORP, among others. We hold a trademark in Mexico for the name “EMPEñO FáCIL” and are the master franchisee in Canada for the “Cash Converters” brand.

Growth and Expansion

We plan to expand the number of locations we operate through opening new locations and through acquisitions. We believe that in the near term the largest growth opportunities are with new pawn stores in Mexico and the U.S., Cash Converters stores in Canada, pawn store acquisitions in the United States and online lending, both in the U.S. and internationally. We continually evaluate and test new products and formats, which may result in further expansion opportunities.

In fiscal 2011, we acquired 34 U.S. pawn stores, six Mexico pawn stores and the trademark and licensing rights of Cash Converters in Canada for a total of $75.2 million. The U.S. pawn stores were located in the Chicago area, Georgia, Florida, Iowa, Wisconsin and Utah, and the Mexico stores were in the states of Hidalgo and Tlaxcala. During fiscal 2011, we also opened 10 pawn stores in the United States, 57 pawn stores in Mexico, 10 financial services and 5 financial and retail services stores in Canada. In fiscal 2012, we plan to open approximately 55 to 65 pawn stores in Mexico, 12 to 15 pawn stores in the United States, and 10 Canadian Cash Converters locations.

All licensing rights and stores were acquired as part of our continuing strategy to acquire pawn stores and other assets to enhance and diversify our earnings. The results of all acquired stores have been consolidated with our results since their acquisition.

The cost of opening new stores varies based on the size, type and location of stores opened. During fiscal 2011, the new U.S. pawn stores opened required an average property and equipment investment of approximately $326,000. The new Canadian financial services stores required an average property and equipment investment of approximately $83,000 and the financial and retail services stores required an average property and equipment investment of approximately $184,000. In fiscal 2011 we opened 43 full line pawn stores and 14 Empeñe Su Oro jewelry-only pawn stores and for a total of 57 new pawn stores in Mexico. The full line pawn stores required an average property and equipment investment of approximately $130,000 and the jewelry-only stores required an average property and equipment investment of approximately $50,000.

Our ability to add new stores is dependent on several variables, such as the availability of acceptable sites or acquisition candidates, the regulatory environment, local zoning ordinances, access to capital and the availability of qualified personnel.

Competition

We encounter significant competition in connection with all of our activities. These competitive conditions may adversely affect our revenues, profitability and ability to expand. In our lending businesses, we compete with other pawn stores, payday lenders, credit service organizations, banks, credits unions and other financial institutions, such as consumer finance companies. Other lenders may lend money on an unsecured basis, at interest rates that may be lower than our service charges, and on other terms that may be more favorable than ours or through other market channels, such as online which some customers may prefer. We believe that the primary elements of competition are the quality of customer service and relationship management, convenience, store location, a customer friendly environment and the ability to loan competitive amounts at competitive rates. In addition, we believe the ability to compete effectively will be based increasingly on strong general management, regional focus, automated management information systems, access to capital, superior customer service and the ability to offer certain services online.

Our competitors for merchandise sales include numerous retail and wholesale stores, including jewelry stores, discount retail stores, consumer electronics stores, other pawn stores, other resale stores, electronic commerce

retailers and auction sites. Competitive factors in our retail operations include the ability to provide the customer with a variety of merchandise at an exceptional value and convenience.

In offering general purpose, reloadable debit cards, our competitors include other specialty financial service providers, banks and credit unions as well as specialists in offering debit cards. Competitive factors in our debit card operations include offering competitive, comprehensive services at competitive rates.

The pawn industry in the United States is large and highly fragmented. The industry consists of approximately 13,000 pawn stores owned primarily by independent operators who own one to three locations, and we consider the industry relatively mature. We are the second largest operator of pawn stores in the United States, with 433 locations at September 30, 2011. The three largest pawn store operators account for approximately ten percent of the total estimated pawn stores in the United States.

The pawn industry in Mexico is also fragmented, but less so than in the United States. The industry consists of approximately 5,000 pawn stores owned by independent operators and chains, including some not-for-profit organizations. The pawn industry, particularly full-line stores offering general merchandise and jewelry loans and resale, remains in more of an expansion stage in Mexico than in the United States. The market for gold-only pawn stores is still in an expansion phase in Mexico, although is closer to maturity than full-line stores.

The specialty financial services industry in the United States is mature and is larger and more concentrated than the pawn industry. The industry consists of a number of online lenders and approximately 20,000 locations that are either mono-line stores offering only short-term consumer loans, or other businesses offering short-term consumer loans in addition to other products and services, such as check cashing stores, automobile title loan stores, pawn stores and stores offering reloadable debit cards. The ten largest short-term consumer loan companies, including us, operate approximately 45% of the total number of physical locations, and online competition has increased in recent years. Recently, several national and regional banks have begun offering cash advance products with similar characteristics and rate structures to our short-term consumer loans.

The specialty financial services industry in Canada remains in a growth stage. The industry consists of approximately 1,500 locations that are either mono-line stores offering only short-term consumer loans or other businesses offering short-term consumer loans in addition to other products and services, such as check cashing stores, pawn stores and stores offering reloadable debit cards or bank accounts. The Canadian short-term consumer loan industry is highly concentrated, with the three largest companies operating approximately 74% of the total number of locations.

Strategic Investments

Albemarle & Bond — At September 30, 2011, we held almost 30% of the outstanding shares of Albemarle & Bond Holdings PLC. At June 30, 2011, the latest date at which Albemarle & Bond has publicly reported results, Albemarle & Bond operated over 150 locations in the United Kingdom that offer pawn loans, payday loans, installment loans, check cashing and retail jewelry. For Albemarle & Bond’s fiscal year ended June 30, 2011, its gross revenues increased 24% to £101.9 million ($162.0 million), its net income increased 6% over the prior year to approximately £15.3 million ($24.3 million), and its diluted earnings per share increased 7% to £0.2770 ($0.4406). Albemarle & Bond is based in Bristol, England, and its stock is publicly traded on the Alternative Investment Market of the London Stock Exchange. We are its largest single shareholder and currently hold three of the nine seats on Albemarle & Bond’s board of directors. We account for our investment in Albemarle & Bond under the equity method. In fiscal 2011, our interest in Albemarle & Bond’s income was $7.3 million and we received dividends of $3.2 million. Based on the closing price and exchange rates on September 30, 2011, the market value of our investment in Albemarle & Bond was approximately $91.7 million compared to its book value of $48.4 million.

Cash Converters International — At September 30, 2011, we owned 124,418,000 shares, or approximately 33% of the total ordinary shares of Cash Converters International Limited, which is a publicly traded company headquartered in Perth, Australia. We acquired the shares between November 2009 and May 2010 for approximately $57.8 million. As its largest single shareholder and pursuant to a shareholder agreement, we hold two of the five seats on Cash Converters’ board of directors. Cash Converters franchises and operates a worldwide

network of approximately 600 specialty financial services and retail stores that provide pawn loans, short-term unsecured loans, and other consumer finance products, and buy and sell second-hand goods. Cash Converters has significant store concentrations in Australia and the United Kingdom. In the short-term, we expect Cash Converters will continue buying back franchised locations and converting them into company operated stores as well as increasing its portfolio of short-term consumer loans in Australia and the U.K. If proposed Australian legislation limiting fees on short-term consumer loans is passed, Cash Converters has indicated it may limit its short-term consumer lending in Australia and redirect capital elsewhere, including a greater focus on the United Kingdom.

For its fiscal year ended June 30, 2011, Cash Converters’ gross revenue improved 48% to AUS $186.1 million (U.S. $184.0 million), net income improved 27% to AUS $27.6 million (U.S. $27.3 million), and diluted earnings per share increased 10% to AUS $0.0723 (U.S. $0.0710). For the year, Cash Converters paid dividends of AUS $0.0325 (U.S. $0.0321) per share. We account for our investment in Cash Converters under the equity method. In fiscal 2011, our interest in Cash Converters’ income was $8.9 million and we received dividends of $4.1 million. Based on the closing price and exchange rates on September 30, 2011, the market value of our investment in Cash Converters was approximately $53.6 million compared to its book value of $71.9 million.

In March 2011, we entered into an agreement with Cash Converters to increase our ownership to approximately 53% and to enter into two joint ventures to develop the Cash Converters business in areas outside of Australia and the United Kingdom. In August 2011 and before the plan had been submitted to Cash Converters’ shareholders for approval, we terminated that agreement as a result of the introduction of proposed legislation in Australia that could have an adverse effect on Cash Converters’ signature loan business there. We continue to hold our existing 33% investment in Cash Converters, as well as the Cash Converters master franchise rights in Canada. We have already converted 10 of our existing Canadian financial services stores to the Cash Converters brand and have added the Cash Converters buy/sell model, and we expect to convert most of the remaining stores during fiscal 2012. In addition, in October 2011 we acquired substantially all the assets of Cash Converters United LC, including seven stores doing business under the Cash Converters brand in Virginia and Pennsylvania, the exclusive right to develop Cash Converters stores in Virginia, North Florida and Eastern Pennsylvania, and a right of first refusal to acquire the Cash Converters franchise rights in the District of Columbia and 17 other states in the East, South, Midwest and Southwest.

Regulation

Our operations are subject to extensive regulation under various federal, state and local laws and regulations, and we believe that we conduct our business in material compliance with all of these rules. The following is a general description of significant regulations affecting our business. For a geographic breakdown of our operating locations, see “Item 2 — Properties.”

Pawn Regulations

Our pawn stores are regulated by the states in which they are located and, in some cases, by individual municipalities or other local authorities. The applicable statutes, ordinances and regulations vary from location to location and typically impose licensing requirements for pawn stores or individual pawn store employees. Licensing requirements typically relate to financial responsibility and character, and may establish restrictions on where pawn stores can operate. Additional rules regulate various aspects of the day-to-day pawn operations, including the service charges and interest rates that a pawn store may charge, the maximum amount of a pawn loan, the minimum or maximum term of a pawn loan, the content and format of the pawn ticket and the length of time after a loan default that a pawn store must hold a pawned item before it can be sold. Failure to observe applicable regulations could result in a revocation or suspension of pawn licenses, the imposition of fines or requirements to refund service charges and fees, and other civil or criminal penalties. We must also comply with various federal requirements regarding the disclosure of interest, fees, total payments and annual percentage rate related to each pawn loan transaction. Additional federal regulations applicable to our pawn lending business are described in “Other Federal Regulations” below.

Most of our pawn stores, voluntarily or pursuant to applicable laws, provide periodic (generally daily) reports to local law enforcement agencies. These reports provide local law enforcement with information about the items received from customers (whether through pawn or purchase), including a detailed description of the goods involved

and the name and address of the customer. If we accept as collateral or purchase merchandise from a customer and it is determined that our customer was not the rightful owner, the merchandise is subject to recovery by the rightful owner. Historically, we have not experienced a material number of claims of this nature.

We do not purchase, sell or make pawn loans on handguns or assault weapons. Some of our pawn stores in the U.S. handle other types of firearms, such as sporting rifles and other long guns, and each of those shops maintains a federal firearms license as required by federal law. The federal Gun Control Act of 1968 and regulations issued by the Bureau of Alcohol, Tobacco, and Firearms also require each pawn store dealing in firearms to maintain a permanent written record of all receipts and dispositions of firearms. In addition, we must comply with the Brady Handgun Violence Prevention Act, which requires us to conduct a background check before releasing, selling or otherwise disposing of firearms.

Mexico regulates various aspects of the pawn industry at the federal, state and local level. Regulations issued by the federal consumer protection agency, Procuraduría Federal del Consumidor (PROFECO), govern the form of pawn loan contracts and consumer disclosures, but the regulations do not impose interest rate or service charge limitations on pawn loans. Pawn stores, like other businesses in Mexico, are also subject to a variety of regulations in such areas as tax compliance, customs, consumer protection and employment.

Short-Term Consumer Loan Regulations

Each state in which we offer short-term consumer loan products has specific laws and regulations dealing with the conduct of this business. These laws and regulations vary in scope, but generally require licensing of locations, establish loan terms, provide for consumer protections and disclosures, and permit periodic regulatory examinations. In the case of payday loans, most applicable laws and regulations limit the amount of fees that may be charged, establish maximum loan amounts and duration, and restrict the customer’s ability to renew or extend the loan. Some states require reporting of customers’ payday loan activities to a state-wide database, and prohibit the making of payday loans to customers who have payday loans outstanding with other lenders. Some municipalities in which we operate also impose various rules and regulations, primarily related to zoning and licensing requirements, but in some cases related to loan terms (such as maximum loan amounts, maximum number of renewals or extensions and mandatory principal paydowns). Failure to observe applicable legal requirements could result in a loss of license, the imposition of fines or customer refunds, and other civil or criminal penalties.

We must also comply with various federal requirements (including the Truth in Lending Act and Regulation Z) regarding the disclosure of interest, fees, total payments and annual percentage rate related to each loan transaction. With respect to our debt collection activities, we comply with the federal Fair Debt Collection Practices Act and similar state laws regulating debt collection practices. Additional federal regulations applicable to our short-term consumer loan business are described in “Other Federal Regulations” below.

In Texas, we do not make loans to customers, but rather offer fee-based credit services, including assistance in arranging loans with independent third-party lenders. As required by state law, we are registered as a Credit Services Organization (“CSO”) in order to provide such services and, pursuant to new state laws effective January 1, 2012, will be licensed as a Credit Access Business (“CAB”). The applicable CSO law requires us to provide each customer with an upfront disclosure statement describing, among other things, the services to be provided and the fees to be charged and, upon entering into a transaction, with a written contract fully describing the services provided. The law prohibits us from receiving compensation solely for referring a customer to a lender and also provides for other disclosure requirements, cancellation rights for customers, and prohibitions on fraudulent or deceptive conduct. The new law governing CABs requires us to provide conspicuous notices regarding fees and certain other disclosures and requires us to report certain information regarding customer transactions to the Office of the Consumer Credit Commissioner. Violations of these laws could subject us to criminal and civil liability. The independent lenders are not required to be licensed and are not regulated by any state agency so long as the interest rate charged on the loan does not exceed 10% per annum. The lenders are also permitted to charge late fees and insufficient funds fees. The lenders are subject to the federal regulations described below with regard to their lending activities.

Legislators and regulators frequently scrutinize the legislative and regulatory environment for short-term lending, often proposing additional legislative and regulatory restrictions ranging from additional disclosure requirements to

limits on rates and fees. In some cases, rate and fee limits would effectively prohibit certain short-term lending products, such as payday loans, because it would no longer be economically feasible for most lenders to offer such products.

The Dodd-Frank Wall Street Reform and Consumer Protection Act was enacted in July 2010. This new federal law, among other things, establishes a Bureau of Consumer Financial Protection, which will regulate companies that offer or supply consumer financial products and services, including payday loans, pawn loans and other products and services that we offer. The act contains provisions relating to the establishment of the bureau, the transfer of authority and staff from existing federal regulatory agencies and the provision of funding for the bureau. Those provisions are still in the implementation stage, and until the bureau has become operational and begins to propose rules and regulations that apply to our activities, it is not possible to accurately predict what affect the bureau will have on our business.

There can be no assurance that legislative or regulatory efforts to eliminate or restrict the availability of certain short-term loan products, including payday loans and auto title loans, will not be successful, despite significant customer demand. To the extent such efforts are successful, our short-term consumer loan business could be adversely affected. See “Item 1A — Risk Factors.”

Other Federal Regulations

All of our lending activities, both pawn loans and short-term consumer loans, are subject to other state and federal statutes and regulations, including the following:

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We are subject to the federal Gramm-Leach-Bliley Act and its underlying regulations, as well as various state laws and regulations relating to privacy and data security. Under these regulations, we are required to disclose to our customers our policies and practices relating to the protection of customers’ nonpublic personal information. These regulations also require us to ensure that our systems are designed to protect the confidentiality of customers’ nonpublic personal information, and many of these regulations dictate certain actions that we must take to notify customers if their personal information is disclosed in an unauthorized manner. In addition, the Federal Fair and Accurate Credit Transactions Act requires us to adopt written guidance and procedures for detecting, preventing and mitigating identity theft, and to adopt various policies and procedures (including employee training) that address the importance of protecting non-public personal information and aid in detecting and responding to suspicious activity or identify theft “red flags.”

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The federal Equal Credit Opportunity Act prohibits discrimination against any credit applicant on the basis of any protected category such as race, color, religion, national origin, sex, marital status or age. If we deny an application for credit, we are required to provide the applicant with a Notice of Adverse Action, informing the applicant of the action taken regarding the credit application, a statement of the prohibition on discrimination, the name and address of both the creditor and the federal agency that monitors compliance, and the applicant’s right to learn the specific reasons for the denial.

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Under the USA PATRIOT Act, we must maintain an anti-money laundering compliance program that includes the development of internal policies, procedures, and controls; the designation of a compliance officer; an ongoing employee training program; and an independent audit function to test the program.

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We are also subject to the Bank Secrecy Act and its underlying regulations, which requires us to report and maintain records of certain high-dollar transactions. In addition, federal regulations require us to report certain suspicious transactions to the Financial Crimes Enforcement Network of the Treasury Department (“FinCen”). Generally, a transaction is considered to be suspicious if we know, suspect or have reason to suspect that the transaction (a) involves funds derived from illegal activity or is intended to hide or disguise such funds, (b) is designed to evade the requirements of the Bank Secrecy Act or (c) appears to serve no legitimate business or lawful purpose.

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Federal law limits the annual percentage rate that may be charged on loans made to active duty military personnel and their immediate families at 36%. This 36% annual percentage rate cap applies to a variety of loan products, including signature loans, though it does not apply to pawn loans. We do not make signature

loans to active duty military personnel or their immediate families because it is not economically feasible for us to do so at these rates.

Available Information

We maintain an Internet website at www.ezcorp.com. All of our reports filed with the Securities and Exchange Commission (the “SEC”), including annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and Section 16 filings are accessible, free of charge, through the Investor Relations section of our website as soon as reasonably practicable after electronic filing. The public may read and copy any materials that we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Room 1580, Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov. Information on our website is not incorporated by reference into this report.

Item 1A. Risk Factors

There are many risks and uncertainties that may affect the operations, performance, development and results of our business. Many of these risks are beyond our control. The following is a description of the important risk factors that may affect our business. If any one or more of these risks actually occur, our business, financial condition or results of operations would likely suffer.

	•		Changes in laws and regulations affecting our financial services and products could have a material adverse effect on our operations and financial performance. Our financial products and services are subject to extensive regulation under various federal, state, local and international laws and regulations. There have been, and continue to be, legislative and regulatory efforts to regulate, prohibit or severely restrict some of the types of short-term financial services and products we offer, particularly payday loans and auto title loans.
			As noted above under “Item 1 — Business — Regulation,” the Dodd-Frank Wall Street Reform and Consumer Protection Act establishes a Bureau of Consumer Financial Protection, which will have the power to, among other things, regulate companies that offer or supply payday loans, pawn loans and other products and services that we offer. Until the bureau has become operational and begins to propose rules and regulations that apply to our activities, it is not possible to accurately predict what affect the bureau will have on our business. There can be no assurance that the bureau will not propose and enact rules or regulations that would have a material adverse effect on our operations and financial performance.
			Adverse legislation could also be enacted in any state or municipality in which we operate. If such legislation is enacted in any particular jurisdiction, we generally evaluate our business in the context of the new legislation and determine whether we can continue to operate in that jurisdiction with new or modified products or whether it is feasible to enhance our business with additional product offerings. In any case, if we are unable to continue to operate profitably under the new law, we may decide to close or consolidate stores, resulting in decreased revenues, earnings and assets.
			In addition, any financial services business that we undertake directly in international jurisdictions, as well as the financial services businesses conducted by our strategic affiliates, are subject to a variety of regulation by international governmental authorities. Adverse legislation or regulations could be enacted in any of such international jurisdictions, with the result that the financial services business in that jurisdiction becomes less profitable or unprofitable. For example, in August 2011, legislation was proposed in Australia that would, among other things, limit the interest charged on certain consumer loans and prohibit loan extensions and refinancings. If this legislation is enacted in its currently proposed form, Cash Converters International’s consumer loan business in Australia may be adversely affected, which could have the effect of decreasing Cash Converters International’s revenues and earnings.
			Many of the legislative and regulatory efforts that are adverse to the short-term consumer loan industry are

			the result of the negative characterization of the industry by some consumer advocacy groups and some media reports that do not focus on the credit risk and high transaction costs of serving our segment. We can give no assurance that there will not be further negative characterizations of our industry or that legislative or regulatory efforts to eliminate or restrict the availability of certain short-term loan products, including payday loans and auto title loans, will not be successful despite significant customer demand for such products. Such efforts, if successful, could have a material adverse effect on our operations or financial performance.
	•		A significant or sudden decrease in gold values may have a material impact on our earnings and financial position. Gold jewelry comprises a significant portion of the collateral security for our pawn loans and our inventory, and gold scrapping accounts for a significant portion of our revenues and gross profit. Pawn service charges, sales proceeds and our ability to liquidate excess jewelry inventory at an acceptable margin are dependent upon gold values. The impact on our financial position and results of operations of a hypothetical decrease in gold values cannot be reasonably estimated because the market and competitive response to changes in gold values is not known; however, a significant decline in gold values could result in decreases in sales, sales margins, and pawn service charge revenues.
	•		A significant portion of our business is concentrated in Texas. Over half of our financial services stores and almost half of our domestic pawn stores are located in Texas, and those stores account for a significant portion of our revenues and profitability. The legislative, regulatory and general business environment in Texas has been, and continues to be, relatively favorable for our business activities. We have been successful in growing and expanding our businesses in areas outside Texas for the past several years, and we expect that our business in other areas (including Mexico and Canada) will continue to grow faster than our business in Texas. In the foreseeable future, however, a negative legislative or regulatory change in Texas could have a material adverse effect on our overall operations and financial performance.
	•		A significant change in foreign currency exchange rates could have a material adverse impact on our earnings and financial position. We have foreign operations in Mexico and Canada and equity investments in the United Kingdom and Australia. Our assets, investments in, earnings from and dividends from each of these must be translated to U.S. dollars from their respective functional currencies of the Mexican peso, Canadian dollar, British pound and the Australian dollar. A significant weakening of any of these foreign currencies could result in lower assets and earnings in U.S. dollars, resulting in a material adverse impact on our financial position, results of operations and cash flows.
	•		Prolonged periods of economic recession and unemployment could adversely affect our lending and retail businesses. All of our businesses, like other businesses, are subject to fluctuations based on varying economic conditions. Economic conditions and general consumer confidence affect the demand for our retail products and the ability and willingness of our customers to utilize our loan products and services. Our signature loan products and services require the customer to have a verifiable recurring source of income. Consequently, we may experience reduced demand for our signature loan products during prolonged periods of high unemployment. Weakened economic conditions may also result in an increase in loan defaults and loan losses. Even in the current economic environment, we have been able to efficiently manage our bad debt through our underwriting and collection efforts. There can be no assurance that we will be able to sustain our current bad debt rates or that we will not experience increasing difficulty in collecting defaulted loans.
	•		A significant portion of our short-term consumer loan revenues and profitability is dependent upon the ability and willingness of unaffiliated lenders to make loans to our customers. In Texas, where over half of our financial services stores are located, we do not make short-term consumer loans to customers, but assist customers in arranging loans with unaffiliated lenders. Our short-term consumer loan business could be adversely affected if (a) we were to lose our current relationships with unaffiliated lenders and were unable to establish a relationship with another unaffiliated lender who was willing and able to make short-term loans to our Texas customers or (b) the unaffiliated lenders are unable to obtain capital or other sources of funding at appropriate rates.

	•		Achievement of our growth objectives is dependent upon our ability to open and acquire new stores. Our expansion strategy includes opening new stores and acquiring existing stores. The success of this strategy is subject to numerous factors that cannot be predicted or controlled, such as the availability of acceptable locations, the ability to obtain required government permits and licenses, the availability of attractive acquisition candidates and our ability to attract, train and retain qualified associates. Failure to achieve our expansion goals would adversely affect our prospects and future results of operations.
	•		Changes in the business, regulatory or political climate in Mexico or Canada could adversely affect our operations in those countries, which could adversely affect our growth plans. Our growth plans include significant expansion in Mexico and Canada. Changes in the business, regulatory or political climate in either of those countries, or significant fluctuations in currency exchange rates could affect our ability to expand or continue our operations there, which could have a material adverse impact on our prospects, results of operations and cash flows.
	•		Drug related violence could adversely affect our operations and growth plans in Mexico. To date, the drug related violence in Mexico has been most prevalent along the United States border and other areas where we do not have a significant presence, and has had little effect on our operations. If the violence were to spread to other areas of Mexico, where we have a greater presence, it could affect our ability to expand or continue our operations there, which could have a material adverse impact on our prospects, results of operations, cash flows and assets.
	•		Fluctuations in our sales, pawn loan balances, sales margins, pawn redemption rates and loan default and collection rates could have a material adverse impact on our operating results. We regularly experience fluctuations in a variety of operating metrics. Changes in any of these metrics, as might be caused by changes in the economic environment, competitive pressures, changes in customers’ tastes and preferences or a significant decrease in gold prices could materially and adversely affect our profitability and ability to achieve our planned results of operations.
	•		Changes in our liquidity and capital requirements or in banks’ abilities or willingness to lend to us could limit our ability to achieve our plans. We require continued access to capital. A significant reduction in cash flows from operations or the availability of credit could materially and adversely affect our ability to achieve our planned growth and operating results. We currently have a credit agreement with a syndicate of banks. If one of those lenders is unable to provide funding in accordance with its commitment, our available credit could be reduced by the amount of that lender’s commitment.
	•		Changes in competition from various sources could have a material adverse impact on our ability to achieve our plans. We encounter significant competition from other pawn stores, cash advance companies, credit service organizations, online lenders, consumer finance companies and other forms of financial institutions and other retailers, many of which have significantly greater financial resources than we do. Significant increases in the number or size of competitors or other changes in competitive influences could adversely affect our operations through a decrease in the number or quality of loan products and services we are able to provide or our ability to liquidate forfeited collateral at acceptable margins.
	•		Infrastructure failures and breaches in data security could harm our business. We depend on our information technology infrastructure to achieve our business objectives. If a problem, such as a computer virus, intentional disruption by a third party, natural disaster, telecommunications system failure or lost connectivity impairs our infrastructure, we may be unable to process transactions or otherwise carry on our business. An infrastructure disruption could damage our reputation and cause us to lose customers and revenue, result in the unintentional disclosure of company or customer information, and require us to incur significant expense to eliminate these problems and address related data security concerns.
	•		We are beginning to implement an online short-term consumer lending business, which will be subject to additional risks. We recently announced the formation of an eCommerce and Card Services division, which among things, will be responsible for developing an online short-term consumer lending

			business. In addition to being subject to the various federal, state and local regulations that are applicable to short-term consumer lending generally, this business will also be subject to other regulations and risks. For example, we will be dependent on third parties, referred to as lead providers, to provide us with prospective new customers. Generally, lead providers operate separate websites to attract prospective customers and then sell those “leads” to online lenders. As a result, the success of our online consumer lending business will depend substantially on the willingness and ability of lead providers to send us customer leads at prices acceptable to us. The loss or a reduction in leads from lead providers, or the failure of our lead providers to maintain quality and consistency in their programs or services, could reduce our customer prospects and could have a material adverse effect on the success of this line of business. Furthermore, the lead providers’ failure to comply with applicable laws or regulations, or any changes in laws or regulations applicable to lead providers, could have an adverse effect on our online consumer lending business.
	•		One person beneficially owns all of our voting stock and controls the outcome of all matters requiring a vote of stockholders, which may influence the value of our publicly traded non-voting stock. Phillip E. Cohen is the beneficial owner of all of our Class B Voting Common Stock and controls the outcome of all issues requiring a vote of stockholders. All of our publicly traded stock is non-voting stock. Consequently, stockholders other than Mr. Cohen have no vote with respect to the election of directors or any other matter requiring a vote of stockholders. This lack of voting rights may adversely affect the market value of the publicly traded Class A Non-voting Common Stock.
	•		We may be subject to litigation proceedings that could harm our business. Currently and from time to time, we are defendants in various legal and regulatory actions. While we cannot determine the ultimate outcome of these actions, we believe their resolution will not have a material adverse effect on our financial condition, results of operations or liquidity. However, litigation is 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. If we were to receive an unfavorable ruling in a matter, our business and results of operations could be materially harmed.
	•		We invest in companies for strategic reasons and may not realize a return on our investments. We currently have significant investments in Albemarle & Bond Holdings PLC and Cash Converters International Limited, both of which are publicly traded companies based outside the United States. We have made these investments, and may in the future make additional investments in these or other companies, to further our strategic objectives. The success of these strategic investments is dependent on a variety of factors, including the business performance of the companies in which we invest and the market’s assessment of that performance. If the business performance of any of these companies suffers, then the value of our investment may decline. If we determine that an other-than-temporary decline in the fair value exists for one of our equity investments, we will be required to write down that investment to its fair value and recognize the related write-down as an investment loss. Furthermore, there can be no assurance that we will be able to dispose of some or all of an investment on favorable terms, should we decide to do so in the future. Any realized investment loss would adversely affect our results of operations.
	•		We may incur property, casualty or other losses not covered by insurance. We maintain a program of insurance coverage for various types of property, casualty and other risks. The types and amounts of insurance that we obtain vary from time to time, depending on availability, cost and our decisions with respect to risk retention. The policies are subject to deductibles and exclusions that result in our retention of a level of risk on a self-insurance basis. Losses not covered by insurance could be substantial and may increase our expenses, which could harm our results of operations and financial condition.
	•		Our acquisitions, investments and other transactions could disrupt our ongoing business and harm our results of operations. In pursuing our business strategy, we routinely conduct discussions, evaluate opportunities and enter into agreements regarding possible acquisitions, investments and other transactions. These transactions may involve significant challenges and risks, including risks that we may not realize the expected return on an acquisition or investment, that we may not be able to retain key personnel of an acquired business, or that we may experience difficulty in integrating acquired businesses into our business systems and processes. If we do enter into agreements with respect to acquisitions, investments or other

			transactions, we may fail to complete them due to inability to obtain required regulatory or other approvals or other factors. Furthermore, acquisitions, investments and other transactions require substantial management resources and have the potential to divert our attention from our existing business. These factors could harm our business and results of operations.
	•		We face other risks discussed under Quantitative and Qualitative Disclosures about Market Risk in Item 7A of this Form 10-K.

Item1B. Unresolved Staff Comments

None.

Item 2. Properties

Our typical pawn store is a freestanding building or part of a retail strip center with contiguous parking. Store interiors are designed to resemble small retail operations and attractively display merchandise by category. Distinctive exterior design and attractive in-store signage provide an appealing atmosphere to customers. The typical pawn store has approximately 1,800 square feet of retail space and approximately 3,200 square feet dedicated to collateral storage. Approximately 30% of our pawn stores in Mexico are gold jewelry-only pawn stores with no retail activities, which typically occupy 500 to 1,000 square feet. Financial services stores are designed to resemble a bank interior. The typical financial services store is approximately 1,000 to 1,500 square feet and is located in a retail strip center. Some of our financial services stores adjoin a pawn location and occupy approximately 300 to 500 square feet, with a different entrance, signage, décor, and staffing. From the customers’ perspective, these are viewed as a separate business, but they are covered by the same lease agreement. We maintain property and general liability insurance for each of our stores. Our stores are open six or seven days a week.

We lease substantially all of our locations, and generally lease facilities for a term of three to ten years with one or more renewal options. Our existing leases expire on dates ranging between December 31, 2011 and July 31, 2026, with a small number of leases on month-to-month terms. All leases provide for specified periodic rental payments at market rates. Most leases require us to maintain the property and pay the cost of insurance and taxes. We believe the termination of any one of our leases would not have a material adverse effect on our operations. Our strategy generally is to lease rather than own space for our stores unless we find what we believe is a superior location at an attractive price.

Below is a summary of changes in the number of store locations during fiscal 2011, 2010 and 2009

		Fiscal Years Ended September 30,
		2011				2010				2009
Store count at beginning of fiscal year			1,006				910				809
New stores opened			82				111				42
Acquired stores			40				16				78
Stores closed or consolidated			(17	)			(31	)			(19	)
Store count at end of fiscal year			1,111				1,006				910

In 2011, we opened 57 Empeño Fácil pawn stores in Mexico, 10 CASHMAX financial services stores and five Cash Converters financial and retail services stores in Canada and 10 U.S pawn stores. We also acquired 34 pawn stores in the U.S. and six pawn stores in Mexico during fiscal 2011.

On an ongoing basis, we may close or consolidate under-performing store locations. In fiscal 2011, we closed five U.S. financial services stores and two financial services stores in Canada, consolidated nine U.S. financial services stores into other existing U.S. financial services stores and consolidated one U.S. pawn store into an existing pawn store. In fiscal 2010, we closed 10 financial services stores and consolidated 19 financial services stores into other existing financial services stores and consolidated two U.S. pawn stores into existing pawn stores.

Of our 436 U.S. financial services stores, 158 adjoin a pawn store, but they are covered by the same lease agreement. The lease agreements at approximately 94% of the remaining 278 free-standing U.S. financial services stores contain provisions that limit our exposure for additional rent at these stores to only a few months if laws were enacted that had a significant negative effect on our operations at these stores. If such laws were passed, the space currently utilized by stores adjoining pawn stores could be re-incorporated into the pawn operations. Following the passage of such laws in fiscal 2010, we closed or consolidated 11 signature loan stores in Colorado and Wisconsin, resulting in a total rent exposure of approximately $0.2 million.

The following table presents the number of pawn and financial services store locations by state or province as of September 30, 2011:

		Pawn				Financial Services				Total
		Locations				Locations				Locations
United States:
Texas			186				286				472
Florida			93				—				93
Colorado			38				28				66
Wisconsin			3				35				38
Oklahoma			21				6				27
Idaho			—				20				20
Utah			7				14				21
Alabama			7				9				16
Nevada			16				—				16
Indiana			15				—				15
Iowa			11				—				11
Kansas			—				13				13
Missouri			—				13				13
South Dakota			—				7				7
Tennessee			7				—				7
Nebraska			—				5				5
Illinois			15				—				15
Georgia			7				—				7
Louisiana			3				—				3
Mississippi			3				—				3
Arkansas			1				—				1
Total United States Locations			433				436				869
Mexico:
Guanajuato			24				—				24
Veracruz			25				—				25
Jalisco			16				—				16
Puebla			18				—				18
Mexico			30				—				30
Tamaulipas			12				—				12
Michoacán			10				—				10
Querétaro			6				—				6
Oaxaca			8				—				8
Aguascalientes			5				—				5
Tabasco			10				—				10
San Luis Potosí			4				—				4
Hidalgo			4				—				4
Tlaxcala			3				—				3
Chiapas			2				—				2
Campeche			1				—				1
Total Mexico Locations			178				—				178
Canada:
Ontario			—				64				64
Total Canada Locations			—				64				64
Total Company			611				500				1,111

In addition to our store locations, we lease our corporate office space in Austin, Texas (68,900 square feet), Dallas Texas (2,900 square feet), Querétaro, Mexico (6,700 square feet), and Ontario, Canada (4,200 square feet).

The following table presents store data by segment as of September 30, 2011:

		Company-owned Stores
		U.S. Pawn				Empeño				EZMONEY
		Operations				Fácil				Operations				Consolidated				Franchises
Pawn stores			433				178				—				611				—
Financial services stores adjoining U.S. pawn stores			6				—				152				158				—
Financial services stores — free standing			—				—				342				342				13
Total stores in operation			439				178				494				1,111				13

Item 3. Legal Proceedings

Currently and from time to time, we are defendants in various legal and regulatory actions. While we cannot determine the ultimate outcome of these actions, we believe their resolution will not have a material adverse effect on our financial condition, results of operations or liquidity. However, we cannot give any assurance as to their ultimate outcome.

Item 4. Removed and Reserved

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

Our Class A Non-voting Common Stock (“Class A Common Stock”) is traded on The NASDAQ Stock Market (NASDAQ Global Select Market) under the symbol “EZPW.” As of October 31, 2011, there were 100 stockholders of record of our Class A Common Stock. There is no trading market for our Class B Voting Common Stock (“Class B Common Stock”), which was held by one stockholder as of October 31, 2011.

The high and low per share sales price for our Class A Common Stock for the past two fiscal years, as reported by The NASDAQ Stock Market, were as follows:

		High				Low
Fiscal 2011:
Fourth quarter ended September 30, 2011		$	38.66			$	27.10
Third quarter ended June 30, 2011			35.98				27.78
Second quarter ended March 31, 2011			31.80				25.56
First quarter ended December 31, 2010			28.75				19.23
Fiscal 2010:
Fourth quarter ended September 30, 2010		$	20.80			$	17.88
Third quarter ended June 30, 2010			23.75				10.07
Second quarter ended March 31, 2010			22.19				16.43
First quarter ended December 31, 2009			17.72				12.75

On September 30, 2011, the closing sales price of our Class A Common Stock, as reported by the NASDAQ Stock Market, was $28.54 per share.

We have not declared or paid any dividends during the past two fiscal years, and currently do not anticipate paying any cash dividends in the immediate future. Under the terms of our credit agreement, which expires December 31, 2015, payment of dividends is restricted. 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.

Stock Performance Graph

The following table compares cumulative total stockholder returns for our Class A Common Stock for the last five fiscal years, with the cumulative total return on the NASDAQ Composite Index (ticker symbol IXIC) and the NASDAQ Other Financial Index (ticker symbol IXFN) over the same period. The graph shows the value, at the end of each of the last five fiscal years, of $100 invested in our Class A Common Stock or the indices on September 30, 2006. The graph depicts the change in the value of our Class A Common Stock relative to the indices at the end of each fiscal year and not for any interim period. Historical stock price performance is not necessarily indicative of future stock price performance.

     

Item 6. Selected Financial Data

The following selected financial information should be read in conjunction with, and is qualified in its entirety by the accompanying consolidated financial statements and related notes:

Selected Financial Data

		Fiscal Years Ended September 30,
		2011				2010				2009				2008				2007
						(In thousands, except per share and store figures)
Operating Data:
Sales		$	494,562			$	411,865			$	329,923			$	234,679			$	194,305
Pawn service charges			201,135				163,695				130,169				94,244				73,551
Signature loan fees			150,250				139,315				133,344				128,478				104,347
Auto title loan fees			21,701				17,707				3,589				—				—
Other			1,669				463				431				2				12
Total revenues			869,317				733,045				597,456				457,403				372,215
Cost of goods sold			295,620				251,122				203,589				139,402				118,007
Signature loan bad debt			36,328				31,709				33,553				37,150				28,508
Auto title loan bad debt			2,431				2,735				380				—				—
Net revenues			534,938				447,479				359,934				280,851				225,700
Store operating expenses			267,052				236,664				206,237				158,927				133,180
Administrative expenses			75,270				52,740				40,497				34,951				27,171
Depreciation and amortization			18,344				14,661				12,746				12,354				9,812
(Gain) loss on disposal of assets			309				1,528				(1,024	)			939				(72	)
Interest expense (income), net			1,653				1,199				1,144				(57	)			(1,373	)
Equity in net income of unconsolidated affiliates			(16,237	)			(10,750	)			(5,016	)			(4,342	)			(2,945	)
Other			(164	)			(93	)			38				8				—
Income before income taxes			188,711				151,530				105,312				78,071				59,927
Income tax expense			66,552				54,236				36,840				25,642				22,053
Net income		$	122,159			$	97,294			$	68,472			$	52,429			$	37,874
Earnings per common share, diluted		$	2.43			$	1.96			$	1.42			$	1.21			$	0.88
Cash dividends per common share		$	—			$	—			$	—			$	—			$	—
Weighted average common shares and share equivalents, diluted			50,369				49,576				48,076				43,327				43,230
Stores operated at end of period			1,111				1,006				910				809				731

		September 30,
		2011				2010				2009				2008				2007
										(In thousands)
Balance Sheet Data:
Pawn loans		$	145,318			$	121,201			$	101,684			$	75,936			$	60,742
Signature loans			11,389				10,775				8,357				7,124				4,814
Auto title loans			3,222				3,145				1,663				1				—
Inventory			90,373				71,502				64,001				43,209				37,942
Working capital			291,968				232,713				228,796				159,918				124,871
Total assets			756,450				606,412				492,517				308,720				251,186
Long-term debt			17,500				25,000				35,000				—				—
Stockholders’ equity			664,248				519,428				415,685				273,050				215,925

Item 7. 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 I, Item 1A — Risk Factors” of this report.

The following table presents summary consolidated financial data for our fiscal years ended September 30, 2011 (“current year” or “fiscal 2011”), September 30, 2010 (“prior year” or “fiscal 2010”) and September 30, 2009 (“fiscal 2009”).

Summary Financial Data

		Fiscal Years Ended September 30,
		2011				2010				2009
						(In thousands)
Revenues:
Sales		$	494,562			$	411,865			$	329,923
Pawn service charges			201,135				163,695				130,169
Signature loan fees			150,250				139,315				133,344
Auto title loan fees			21,701				17,707				3,589
Other			1,669				463				431
Total revenues			869,317				733,045				597,456
Cost of goods sold			295,620				251,122				203,589
Signature loan bad debt			36,328				31,709				33,553
Auto title loan bad debt			2,431				2,735				380
Net revenues		$	534,938			$	447,479			$	359,934
Net Income		$	122,159			$	97,294			$	68,472

In fiscal 2011, we reclassified fees from our Product Protection Plan and Jewelry VIP Program as well as layaway fees from “Other” revenue to “Sales,” as fees from these products are incidental to sales of merchandise. Prior year figures have been reclassified to conform to this presentation and margins have been recalculated accordingly throughout management’s discussion and analysis.

Overview

We are a leading provider of specialty consumer financial services. We provide collateralized, non-recourse loans, commonly known as pawn loans, and a variety of short-term consumer loans including payday loans, installment loans and auto title loans, and in Texas only, fee-based credit services to customers seeking loans.

At September 30, 2011, we operated a total of 1,111 locations, consisting of 433 U.S. pawn stores (operating as EZPAWN or Value Pawn), 178 pawn stores in Mexico (operating as Empeño Fácil or Empeñe Su Oro), 436 U.S. financial services stores (operating primarily as EZMONEY), 49 financial services stores in Canada (operating as CASHMAX) and 15 financial and retail services stores (operating as Cash Converters). In addition, we are the franchisor for 13 franchised Cash Converters stores in Canada. We also own almost 30% of Albemarle & Bond Holdings PLC, one of the U.K.’s largest pawnbroking businesses with over 150 stores, and almost 33% of Cash Converters International Limited, which franchises and operates a worldwide network of over 600 locations that buy and sell second-hand merchandise and offer financial services.

Our business consists of three reportable segments: The U.S. Pawn Operations, which operates only in the United States; Empeño Fácil, which operates only in Mexico; and EZMONEY Operations which operates 430 stores in the United States and 64 stores in Canada. The following tables present stores by segment:

		Fiscal Year Ended September 30, 2011
		Company-owned Stores
		U.S. Pawn				Empeño				EZMONEY
		Operations				Fácil				Operations				Consolidated				Franchises
Stores in operation:
Beginning of period			396				115				495				1,006				—
New openings			10				57				15				82				1
Acquired			34				6				—				40				13
Sold, combined, or closed			(1	)			—				(16	)			(17	)			(1	)
End of period			439				178				494				1,111				13
Average number of stores during the period			415				145				497				1,058				6

		Fiscal Year Ended September 30, 2010
		Company-owned Stores
		U.S. Pawn				Empeño				EZMONEY
		Operations				Fácil				Operations				Consolidated				Franchises
Stores in operation:
Beginning of period			375				62				473				910				—
New openings			7				53				51				111				—
Acquired			16				—				—				16				—
Sold, combined, or closed			(2	)			—				(29	)			(31	)			—
End of period			396				115				495				1,006				—
Average number of stores during the period			381				84				481				946				—

		Fiscal Year Ended September 30, 2009
		Company-owned Stores
		U.S. Pawn				Empeño				EZMONEY
		Operations				Fácil				Operations				Consolidated				Franchises
Stores in operation:
Beginning of period			300				38				471				809				—
New openings			—				23				19				42				—
Acquired			77				1				—				78				—
Sold, combined, or closed			(2	)			—				(17	)			(19	)			—
End of period			375				62				473				910				—
Average number of stores during the period			360				45				473				878				—

Pawn and Retail Activities

We earn pawn service charge revenues on our pawn lending. While allowable service charges vary by state and loan size, a majority of our U.S. pawn loans earn 20% per month. Our average U.S. pawn loan amount typically ranges between $125 and $135 but varies depending on the valuation of each item pawned. The total U.S. loan term ranges between 60 and 120 days, consisting of the primary term and grace period. In Mexico, pawn service charges range from 15% to 21% per month, including applicable taxes, with the majority of loans earning 21%. The total Mexico pawn loan term is 40 days, consisting of the primary term and grace period. Individual loans are made in Mexican pesos depending on the valuation of each item pawned, but typically equate to between $65 and $70 U.S. dollars.

In our pawn stores and certain financial services stores, we acquire inventory for retail sales through pawn loan forfeitures and through purchases of customers’ merchandise and purchases of new or refurbished merchandise from third party vendors. The gross profit on sales of inventory depends primarily on our assessment of the loan or purchase value at the time the property is either accepted as loan collateral or purchased. Margins achieved upon

sale of inventory are a function of the assessment of value at the time the pawn loan was originated or, in the case of purchased merchandise, the purchase price.

We record an inventory valuation allowance for obsolete or slow-moving inventory based on the type and age of merchandise. We generally establish a higher allowance percentage on general merchandise, as it is more susceptible to obsolescence, and establish a lower allowance percentage on jewelry, as it generally has greater inherent commodity value. At September 30, 2011 our total allowance was 9.5% of gross inventory compared to 7.4% at September 30, 2010. Changes in the valuation allowance are charged to merchandise cost of goods sold.

Signature Loan and Auto Title Loan Activities

At September 30, 2011, 286 of our U.S. financial services stores and 25 of our U.S. pawn stores in Texas offered credit services to customers seeking short-term consumer loans from unaffiliated lenders. We do not participate in any of the loans made by the lenders, but earn a fee for helping customers obtain credit and for enhancing customers’ creditworthiness by providing letters of credit to the unaffiliated lenders. Customers may obtain two types of signature loans from the unaffiliated lenders. In all stores offering signature loan credit services, customers can obtain payday loans, with principal amounts up to $1,500 but averaging about $520. Terms of these loans are generally less than 30 days, averaging about 16 days, with due dates corresponding with the customers’ next payday. We typically earn a fee of 22% of the loan amount for our credit services offered in connection with payday loans. In 286 of the U.S. financial services stores offering credit services, customers can obtain longer-term unsecured installment loans from the unaffiliated lenders. The installment loans offered in connection with our credit services typically carry terms of about five months with ten equal installment payments, including principal amortization, due on customers’ paydays. Installment loan principal amounts range from $1,525 to $3,000, but average about $2,015. With each semi-monthly or bi-weekly installment payment, we earn a fee of 10% of the initial loan amount. At September 30, 2011, payday loans comprised 94% of the balance of signature loans brokered through our credit services, and installment loans comprised the remaining 6%.

Outside of Texas, we earn signature loan fee revenue on our payday loans. In 15 U.S. pawn stores, 74 U.S. financial services stores and 64 Canadian financial services stores we make payday loans subject to state or provincial law. The average payday loan amount is approximately $435 and the term is generally less than 30 days, averaging about 16 days. We typically charge a fee of 15% to 22% of the loan amount. In 117 of our U.S. financial services stores and three U.S. pawn stores, we make installment loans subject to state law. These installment loans carry a term of four to seven months, with a series of equal installment payments including principal amortization, due monthly, semi-monthly or on the customers’ paydays. Total interest and fees on these loans vary in accordance with state law and loan terms, but over the entire loan term, total approximately 45% to 130% of the original principal amount of the loan. We began offering installment loans rather than payday loans in Colorado in August 2010, in Wisconsin in January 2011 and in Missouri in June 2011. Installment loan principal amounts range from $100 to $3,000, but average approximately $530.

At September 30, 2011, 397 of our U.S. financial services stores and 44 of our U.S. pawn stores offered auto title loans or, in Texas, credit services to assist customers in obtaining auto title loans from unaffiliated lenders. Auto title loans are 30-day loans secured by the titles to customers’ automobiles. Loan principal amounts range from $100 to $10,000, but average about $810. We earn a fee of 12.5% to 25% of auto title loan amounts.

Acquisitions

In the fiscal year ended September 30, 2010, we acquired 16 pawn stores located in the Chicago metropolitan area, Central and South Florida, Corpus Christi, Texas and Las Vegas, Nevada for approximately $21.8 million in cash. In the year ended September 30, 2011, we acquired 40 pawn stores located in the Chicago metropolitan area, Georgia, Central and South Florida, Iowa, Wisconsin, Utah and the Mexican states of Hidalgo and Tlaxcala for approximately $66.2 million in cash and the issuance of approximately 0.2 million shares of EZCORP stock valued at $7.3 million. All stores were acquired as part of our continuing strategy to acquire pawn stores to enhance and diversify our earnings. The results of all acquired stores have been consolidated with our results since their acquisition. In April 2011 we also acquired the trademark and licensing rights of Cash Converters in Canada, including rights to receive fees from 13 stores operated by franchisees in Canada.

Other

Included in the current year-to-date period results is a pre-tax administrative expense charge of $10.9 million related to the October 2010 retirement of our former Chief Executive Officer, including $3.4 million attributable to a cash payment and $7.5 million attributable to the vesting of restricted stock. The current year-to-date period income tax expense reflects a $3.8 million tax benefit related to this charge.

Critical Accounting Policies and Estimates

Management’s Discussion and Analysis of Financial Condition and Results of Operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. 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 to be 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 from the estimates under different assumptions or conditions.

We believe the following critical accounting policies and estimates could have a significant impact on our results of operations. You should refer to Note A of our consolidated financial statements for a more complete review of other accounting policies and estimates used in the preparation of our consolidated financial statements.

Pawn Loan and Sales Revenue Recognition: We record pawn service charges using the interest method for all pawn loans we believe to be collectible. We base our estimate of collectible loans on several factors, including recent redemption rates, historical trends in redemption rates and the amount of loans due in the following two months. Unexpected variations in any of these factors could change our estimate of collectible loans, affecting our earnings and financial condition. If a pawn loan is not repaid, we value the forfeited collateral (inventory) at the lower of cost (pawn loan principal) or market value of the property. We record sales revenue and the related cost when this inventory is sold, or when we receive the final payment on a layaway sale. Sales tax collected upon the sale of inventory is excluded from the amount recognized as sales and instead recorded as a liability in “Accounts payable and other accrued expenses” on our balance sheets until remitted to the appropriate governmental authorities.

Signature Loan Credit Service Fee Revenue Recognition: We earn credit service fees when we assist customers in obtaining signature loans from unaffiliated lenders. We initially defer recognition of the fees we expect to collect, net of direct expenses, and recognize that deferred net amount over the life of the related loans. We reserve the percentage of credit service fees we expect not to collect. Accrued fees related to defaulted loans reduce credit service fee revenue upon loan default, and increase credit service fee revenue upon collection. Signature loan credit service fee revenue is included in “Signature loan fees” on our statements of operations.

Signature Loan Credit Service Bad Debt: We issue letters of credit to enhance the creditworthiness of our customers seeking signature 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, accrued interest and late fees owed to the lenders by the borrowers plus any insufficient funds fees. Although amounts paid under letters of credit may be collected later, we charge those amounts to signature loan bad debt upon default. We record recoveries under the letters of credit as a reduction of bad debt at the time of collection. After attempting collection of bad debts internally, we occasionally sell them to an unaffiliated company as another method of recovery, and record the proceeds from such sales as a reduction of bad debt at the time of the sale.

The majority of our credit service customers obtain short-term signature loans with a single maturity date. These short-term loans, with maturity dates averaging about 16 days, are considered defaulted if they have not been repaid or renewed by the maturity date. Other credit service customers obtain installment loans with a series of payments due over as much as a seven-month period. If one payment of an installment loan is delinquent, that one payment is

considered defaulted. If more than one installment payment is delinquent at any time, the entire loan is considered defaulted.

Allowance for Losses on Signature Loan Credit Services: We provide an allowance for losses we expect to incur under letters of credit for brokered signature loans that have not yet matured. The allowance is based on recent loan default experience adjusted for seasonal variations. It includes all amounts we expect to pay to the unaffiliated lenders upon loan default, including loan principal, accrued interest and insufficient funds fees, net of the amounts we expect to collect from borrowers (collectively, “Expected LOC Losses”). Changes in the allowance are charged to signature loan bad debt. We include the balance of Expected LOC Losses in “Accounts payable and other accrued expenses” on our balance sheets. Based on the expected loss and collection percentages, we also provide an allowance for the signature loan credit service fees we expect not to collect, and charge changes in this allowance to signature loan fee revenue.

Signature Loan Revenue Recognition: We accrue fees in accordance with state and provincial laws on the percentage of signature loans (payday loans and installment loans) we have made that we believe to be collectible. Accrued fees related to defaulted loans reduce fee revenue upon loan default, and increase fee revenue upon collection.

Signature Loan Bad Debt: We consider a payday loan defaulted if it has not been repaid or renewed by the maturity date. If one payment of an installment loan is delinquent, that one payment is considered defaulted. If more than one installment payment is delinquent at any time, the entire installment loan is considered defaulted. Although defaulted loans may be collected later, we charge the loan principal to signature loan bad debt upon default, leaving only active loans in the reported balance. We record collections of principal as a reduction of signature loan bad debt when collected. After attempting collection of bad debts internally, we occasionally sell them to an unaffiliated company as another method of recovery and record the proceeds from such sales as a reduction of bad debt at the time of sale.

Signature Loan Allowance for Losses: We provide an allowance for losses on signature loans that have not yet matured and related fees receivable, based on recent loan default experience adjusted for seasonal variations. We charge any changes in the principal valuation allowance to signature loan bad debt. We record changes in the fee receivable valuation allowance to signature loan fee revenue.

Auto Title Loan Credit Service Fee Revenue Recognition: We earn auto title credit service fees when we assist customers in obtaining auto title loans from unaffiliated lenders. We recognize the fee revenue ratably over the life of the loan, and reserve the percentage of fees we expect not to collect. Auto title loan credit service fee revenue is included in “Auto title loan fees” on our statements of operations.

Bad Debt and Allowance for Losses on Auto Title Loan Credit Services: We issue letters of credit to enhance the creditworthiness of our customers seeking auto title 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, all amounts owed to the lenders by the borrowers plus any late fees. Through a charge to auto title loan bad debt, we provide an allowance for losses we expect to incur under letters of credit for brokered auto title loans, and record actual charge-offs against this allowance. The allowance includes all amounts we expect to pay to the unaffiliated lenders upon loan default, including principal, accrued interest and late fees, net of the amounts we expect to collect from borrowers or through the sale of repossessed vehicles. We include the allowance for expected losses in “Accounts payable and other accrued expenses” on our balance sheets.

Auto Title Loan Revenue Recognition: We accrue fees in accordance with state laws on the percentage of auto title loans we have made that we believe to be collectible. We recognize the fee revenue ratably over the life of the loan.

Auto Title Loan Bad Debt and Allowance for Losses: 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 and related fees receivable. We charge any increases in the principal valuation allowance to auto title loan bad debt and charge uncollectable loans against this allowance. We record changes in the fee receivable valuation allowance to auto title loan fee revenue.

Income Taxes: We account for income taxes using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying value of assets and liabilities and their tax basis and for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the related temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized when the rate change is enacted.

Stock Compensation: We account for stock compensation in accordance with the fair value recognition provisions of FASB ASC 718-10-25 (Compensation — Stock Compensation). The fair value of restricted shares is measured as the closing market price of our stock on the date of grant, which is amortized over the vesting period for each grant. When granted, our policy is to estimate the grant-date fair value of options using the Black-Scholes-Merton option-pricing model and amortize that fair value to compensation expense on a ratable basis over the options’ vesting periods.

Fair Value of Financial Instruments: We have elected not to measure at fair value any eligible items for which fair value measurement is optional. We determine the fair value of financial instruments by reference to various market data and other valuation techniques, as appropriate. Unless otherwise disclosed, the fair values of financial instruments approximate their recorded values, due primarily to their short-term nature. The recorded value of our outstanding debt is assumed to estimate its fair value, as it has no prepayment penalty and a floating interest rate based on market rates.

Acquisitions: We adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805-10-65 (Business Combinations — Revised) on October 1, 2009, and have applied it prospectively to all business acquisitions completed since that date. In accordance with FASB ASC 805-10-65, we allocate the total acquisition price to the fair value of assets and liabilities acquired and now immediately expense transaction costs that would have been included in the purchase price allocation under previous accounting standards.

Results of Operations

Fiscal 2011 Compared to Fiscal 2010

The following discussion compares our results of operations for the year ended September 30, 2011 to the year ended September 30, 2010. It should be read with the accompanying consolidated financial statements and related notes.

In fiscal 2011, consolidated total revenues increased 19%, or $136.3 million, to $869.3 million, compared to the prior year. Same store total revenues increased $70.4 million, or 10%, and new and acquired stores contributed $65.9 million. Net income increased 26% or $24.9 million. Excluding the onetime $10.9 million charge related to the retirement of our former Chief Executive Officer and the related tax benefit, net income increased 33% to $129.3 million from $97.3 million in the prior year.

U.S. Pawn Operations Segment

The following table presents selected financial data for the U.S. Pawn Operations segment:

		Fiscal Years Ended September 30,
		2011				2010
		(Dollars in thousands)
Merchandise sales		$	256,643			$	226,424
Jewelry scrapping sales			195,276				163,667
Pawn service charges			184,234				154,505
Signature loan fees			2,501				1,930
Auto title loan fees			1,539				1,659
Other			634				442
Total revenues			640,827				548,627
Merchandise cost of goods sold			147,239				131,825
Jewelry scrapping cost of goods sold			120,767				104,531
Signature loan bad debt			923				641
Auto title loan bad debt			165				236
Net revenues			371,733				311,394
Operations expense			177,191				161,145
Store operating income		$	194,542			$	150,249
Other data:
Gross margin on merchandise sales			42.6	%			41.8	%
Gross margin on jewelry scrapping sales			38.2	%			36.1	%
Gross margin on total sales			40.7	%			39.4	%
Average pawn loan balance per pawn store at period end		$	311			$	292
Average yield on pawn loan portfolio (a)			158	%			156	%
Pawn loan redemption rate			81.1	%			80.5	%

The U.S. Pawn Operations segment total revenues increased $92.2 million, or 17%, from the prior year to $640.8 million. Same store total revenues increased $46.7 million, or 9% and new and acquired stores net of closed stores contributed $45.5 million. The overall increase in total revenues comprised a $61.8 million increase in merchandise and jewelry scrapping sales, a $29.7 million increase in pawn service charges, and minor increases in loan fees and other revenues. In fiscal 2011, we acquired 34 U.S. pawn stores for $68.3 million, and we opened 10 new U.S. pawn stores. As part of these acquisitions, we began operations in three new states; Iowa, Utah and Wisconsin, bringing the total number of states in which we have pawn operations to 16 at September 30, 2011.

Our current year U.S. pawn service charge revenue increased 19%, or $29.7 million, from the prior year to $184.2 million. Same store pawn service charges increased $18.4 million, or 12%, with new and acquired stores net of closed stores contributing $11.3 million. The same store improvement was due to a higher average same store pawn loan balance coupled with higher yield. The yield improved primarily due to a slightly higher loan redemption rate as we continued to focus on loan values and better qualifying customers to determine those that prefer to sell their merchandise rather than use it as collateral for a loan. Inventory purchases represented 30% of all inventory additions during the year.

The current year merchandise sales gross profit increased $14.8 million, or 16%, from the prior year to $109.4 million. This was due to a $13.0 million, or 6%, increase in same store sales, a $17.2 million increase in sales from new and acquired stores net of closed stores, and a 0.8 percentage point improvement in gross margins.

Gross profit on jewelry scrapping sales increased $15.4 million, or 26%, from the prior year to $74.5 million. Jewelry scrapping revenues increased $31.6 million, or 19%, due to a 28% increase in proceeds realized per gram of gold jewelry scrapped partially offset by a 9% decrease in gold volume. Same store jewelry scrapping sales increased $15.7 million, or 10%, and new and acquired stores contributed $15.9 million. Jewelry scrapping sales include the sale of approximately $8.1 million of loose diamonds removed from scrap jewelry in the current year and $3.2 million in the prior year. As a result of the higher average cost per gram of jewelry scrapped, scrap cost of goods increased $16.2 million, or 16%.

Operations expense increased to $177.2 million (48% of net revenues) in the current year from $161.1 million (52% of net revenues) in the prior year. The dollar increase in expense was primarily due to higher operating costs resulting from new and acquired stores. The improvement as a percent of net revenues is from greater scale at same stores and from expense management improvements made at acquired and existing stores.

In the current year, the $60.1 million greater net revenue from pawn activities, the $0.2 higher signature and auto title loan contribution, and the $16.0 million higher operations expense resulted in a $44.3 million overall increase in store operating income from the U.S. Pawn Operations segment. For the current year, the U.S. Pawn segment contributed 73% of consolidated store operating income compared to 71% in the prior year.

Empeño Fácil Segment

The following table presents selected financial data for the Empeño Fácil segment after translation to U.S. dollars from its functional currency of the Mexican peso:

		Fiscal Years Ended September 30,
		2011				2010
		(Dollars in thousands)
Merchandise sales		$	25,237			$	14,030
Jewelry scrapping sales			15,997				7,389
Pawn service charges			16,901				9,190
Other			122				—
Total revenues			58,257				30,609
Merchandise cost of goods sold			14,672				8,459
Jewelry scrapping cost of goods sold			12,205				6,137
Net revenues			31,380				16,013
Operations expense			20,636				11,658
Store operating income		$	10,744			$	4,355
Other data:
Gross margin on merchandise sales			41.9	%			39.7	%
Gross margin on jewelry scrapping sales			23.7	%			16.9	%
Gross margin on total sales			34.8	%			31.9	%
Average pawn loan balance per pawn store at period end		$	61			$	63
Average yield on pawn loan portfolio (a)			187	%			182	%
Pawn loan redemption rate			73.5	%			75.2	%

The average exchange rate used to translate Empeño Fácil’s current year results from Mexican pesos to U.S. dollars was 12.1 pesos to the dollar, 6% stronger than in the prior year. Store operating income increased 147% in U.S. dollars and 134% in peso terms. The 96% increase in net revenues was partially offset by higher costs from new stores. We expect new stores will be a drag on earnings until they become profitable in their second year of operation. Approximately 32% of the stores open at September 30, 2011 had been open less than one year. We opened 57 new stores in the current year, 14 of which are Empeñe Su Oro jewelry-only pawn stores. These jewelry-

only stores are smaller and require less staff than our full-line pawn stores, but also carry smaller average loan balances per store.

Empeño Fácil’s total revenues increased $27.6 million, or 90%, in the current year to $58.3 million. Same store total revenues increased $10.5 million or 34%, and new and acquired stores contributed $17.1 million. The overall increase in total revenues comprised a $19.8 million increase in merchandise and jewelry scrapping sales, a $7.7 million increase in pawn service charges and a $0.1 million increase in other revenues.

Empeño Fácil’s pawn service charge revenues increased $7.7 million, or 84%, in the current year to $16.9 million. Same store pawn service charges increased approximately $3.4 million, or 37%, and new and acquired stores contributed $4.3 million. The same store increase was due to an improvement in the average pawn loan yield coupled with an increase in average loan balance during the period. The yield increased primarily due to an increase in pawn service charge rates in certain geographic areas compared to the prior year, partially offset by a lower loan redemption rate.

Merchandise gross profit increased $5.0 million, or 90%, from the prior year to $10.6 million. This was due to a $4.2 million, or 30%, same store sales increase and $7.0 million in sales from new and acquired stores in addition to a 2.2 percentage point increase in gross margins to 41.9%.

Gross profit on jewelry scrapping sales increased $2.5 million, or 203%, from the prior year to $3.8 million. Jewelry scrapping revenues increased $8.6 million, or 116%, due to 107% increase in gold volume and a 5% increase in proceeds realized per gram of gold jewelry scrapped. Same store jewelry scrapping sales increased $2.9 million, or 40%, and new and acquired stores contributed $5.7 million. The significant volume increase and the margin increase are due primarily to the continued maturation of our Empeñe Su Oro jewelry-only stores. As a result of the greater volume, scrap cost of goods increased $6.1 million.

Operations expense increased to $20.6 million (66% of net revenues) in the current year from $11.7 million (73% of net revenues) in the prior year. The increase was due primarily to the addition of 63 stores through greenfield and acquisitions.

In the current year, the $15.4 million greater net revenues were partially offset by the $9.0 million higher operations expense, resulting in a $6.4 million increase in store operating income for the segment. Empeño Fácil contributed 4% of consolidated store operating income in the current year compared to 2% in the prior year.

EZMONEY Operations Segment

The following table presents selected financial data for the EZMONEY Operations segment:

		Fiscal Years Ended September 30,
		2011				2010
		(Dollars in thousands)
Signature loan fees		$	147,749			$	137,385
Auto title loan fees			20,162				16,048
Merchandise sales			203				—
Jewelry scrapping sales			1,206				355
Other			913				21
Total revenues			170,233				153,809
Signature loan bad debt			35,405				31,068
Auto title loan bad debt			2,266				2,499
Merchandise cost of goods sold			149				—
Jewelry scrapping cost of goods sold			588				170
Net revenues			131,825				120,072
Operations expense			69,225				63,861
Store operating income		$	62,600			$	56,211
Other data:
Signature loan bad debt as a percent of signature loan fees			24.0	%			22.6	%
Auto title loan bad debt as a percent of auto title loan fees			11.2	%			15.6	%
Average signature loan balance per store offering signature loans at period end (a)		$	63			$	67
Average auto title loan balance per store offering auto title loans at period end (b)		$	21			$	23

The EZMONEY Operations segment total revenues increased $16.4 million, or 11%, to $170.2 million, compared to the prior year. This was due to a $13.1 million, or 9%, increase in same store total revenues and $3.3 million of total revenues at new stores net of closed or consolidated stores. The overall increase in total revenues comprised a $10.4 million increase in signature loan revenues, including installment loans and payday loans, a $4.1 million increase in auto title loan fees and smaller increases in other revenues. In August 2010, January 2011 and July 2011 we introduced installment loans as a replacement product for payday loans in Colorado, Wisconsin and Missouri, respectively following the introduction of new laws governing payday loans in those states. This contributed to the migration of some of our signature loan balances from payday loans to installment loans.

In the current year, we opened 15 stores in Canada and closed two, bringing our total at September 30, 2011 to 64. Also, in the current year, we closed 14 EZMONEY stores in the U.S., bringing our total there to 430.

EZMONEY’s total signature loan revenues increased $10.4 million or 8% and same store signature loan revenues increased $8.0 million, or 6% due to the growth in loan volume, particularly installment loans, which continue to mature following their introduction in Colorado, Wisconsin and Missouri as a replacement for payday loans. Signature loan net revenue increased $6.0 million, or 6%, compared to fiscal 2010 to $112.3 million due to increased loan volume offset by a 1.4 percentage point increase in bad debt expressed as a percentage of fees to

24.0%. The increase in bad debt was in part due to the transition to a lower yielding product in Colorado and in part due to operational changes, including underwriting changes, made during the year, which have since been addressed.

The segment’s net revenues from auto title loans increased $4.3 million or 32% to $17.9 million compared to $13.5 million in the prior year. Same store auto title loan fees increased $4.3 million or 28%. The same store increase resulted primarily from an increase in gross revenues as the product matures, partially offset by the regulatory elimination of auto tile loans in Wisconsin from January 1, 2011 to June 30, 2011, and a 4.4 percentage point improvement in bad debt to 11.2% of related fees. The improvement in bad debt was due to improvements in execution, enhanced productivity and use of technology in our collections department. Following a favorable legislative change, auto title loans were re-introduced in Wisconsin effective July 1, 2011.

The EZMONEY Operations segment began buying and scrapping gold jewelry in the prior year. The segment generated $0.6 million of jewelry scrapping profit in the current year, with a 51% gross margin compared to $0.2 million with a 52% gross margin in the prior year.

In April 2011, we acquired the Cash Converters franchise rights for Canada, which allows us to open new stores and operate our Canadian stores as Cash Converters stores. By September 30, 2011, we had 15 Canadian stores buying and selling second-hand goods, in addition to offering payday loans, under the Cash Converters brand. We also began receiving franchise fees from franchisees, which made up the majority of the increase in the segment’s other revenues. Merchandise sales in the current year-to-date period were nominal. We expect to rebrand most of our remaining Canadian stores as Cash Converters stores during fiscal year 2012.

Operations expense increased to $69.2 million (53% of net revenues) from $63.9 million (53% of net revenues) in the prior year. The increase was mostly from additional labor, rent and other costs at new stores net of closed stores, as operating expenses in our stores opened less than one year, more than offset the decrease due to store closures.

In the current year, the $6.0 million increase in net revenues from signature loans, $4.3 million increase in net revenues from auto title loans, the $0.6 million in scrap sales gross profit and $0.9 million in other revenues were partially offset by $5.4 million greater operations expense, resulting in a $6.4 million net increase in store operating income from the EZMONEY Operations segment. For the current year, EZMONEY Operations contributed 23% of consolidated store operating income compared to 27% in fiscal 2010.

Other Items

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

		Fiscal Years Ended September 30,
		2011				2010
		(Dollars in thousands)
Consolidated store operating income		$	267,886			$	210,815
Administrative expenses			75,270				52,740
Depreciation and amortization			18,344				14,661
(Gain) loss on sale / disposal of assets			309				1,528
Interest income			(37	)			(186	)
Interest expense			1,690				1,385
Equity in net income of unconsolidated affiliates			(16,237	)			(10,750	)
Other			(164	)			(93	)
Consolidated income before income taxes			188,711				151,530
Income tax expense			66,552				54,236
Net income		$	122,159			$	97,294

Administrative expenses in the current year were $75.3 million (14% of net revenues) compared to $52.7 million (12% of net revenues) in the prior year. This increase is primarily due to a pre-tax charge of $10.9 million related to the retirement of our former Chief Executive Officer. This charge included $3.4 million attributable to a cash

payment and $7.5 million attributable to the accelerated vesting of restricted stock. Excluding this charge, administrative expense increased $11.6 million over the prior year and remained unchanged at 12% of net revenues.

Depreciation and amortization expense was $18.3 million in the current year, compared to $14.7 million in the prior year. Depreciation on assets placed in service, primarily related to acquired pawn stores and new stores, was partially offset by assets that were retired or became fully depreciated during the year.

In the current year, we recognized $0.3 million in losses on disposal of assets, as losses related to store closures were partially offset by gains on disposal of other assets. In the prior year we recognized a $1.5 million loss on store closures or consolidations including a charge for 11 store closures following the passage of legislation negative to the payday lending industry in Colorado and Wisconsin.

Our $1.7 million net interest expense in the current year and $1.2 million in the prior year represent primarily interest on borrowed funds, the amortization of deferred financing costs and the commitment fee on our unused available revolving credit facility. At September 30, 2011, we had $17.5 million in outstanding debt under our revolving credit agreement compared to $25.0 million of term debt outstanding at the end of the prior year.

Our equity in the net income of Albemarle & Bond increased $0.5 million, or 7%, in the current year to $7.3 million as a result of Albemarle & Bond’s higher earnings, and a slightly stronger British pound in relation to the U.S. dollar. On November 6, 2009, we acquired 108,218,000 newly issued shares, or approximately 30% of the capital stock of Cash Converters International Limited, a publicly traded company headquartered in Perth, Australia for approximately AUS $54.1 million (approximately U.S. $49.6 million). We acquired 16,200,000 additional shares on May 20, 2010 at a cost of AUS $9.7 million (approximately U.S. $8.2 million), which increased our ownership level to approximately 33%. In the current year our equity in the net income of Cash Converters was $8.9 million compared to $3.9 million in the prior year. As we account for our earnings from Cash Converters on a 3-month lag, the prior year-to-date period included our pro rata share of their results of operations for the 237-day period from our November 6, 2009 initial investment date to the June 30, 2010 end of Cash Converters’ period.

The current year’s income tax expense was $66.6 million (35.3% of pretax income) compared to $54.2 million (35.8% of pretax income) in the prior year. The decrease in the effective tax rates is primarily due to an increase in both domestic employment tax credits and the foreign tax credit on overseas earnings, partially offset by the valuation allowance established for operating losses in our Canada operations during their start-up period.

In fiscal year 2011, our net income increased $24.9 million, or 26%, to $122.2 million in fiscal 2011. Excluding the one-time $10.9 million charge related to the retirement of our former Chief Executive Officer and the related tax benefit, net income increased 33% to $129.3 million from $97.3 million in the prior year.

Fiscal 2010 Compared to Fiscal 2009

The following discussion compares our results of operations for the year ended September 30, 2010 to the year ended September 30, 2009. It should be read with the accompanying consolidated financial statements and related notes.

U.S. Pawn Operations Segment

The following table presents selected financial data for the U.S. Pawn Operations segment:

		Fiscal Years Ended September 30,
		2010				2009
		(Dollars in thousands)
Merchandise sales		$	226,424			$	202,250
Jewelry scrapping sales			163,667				117,013
Pawn service charges			154,505				124,396
Signature loan fees			1,930				2,293
Auto title loan fees			1,659				1,313
Other			442				431
Total revenues			548,627				447,696
Merchandise cost of goods sold			131,825				121,170
Jewelry scrapping cost of goods sold			104,531				75,744
Signature loan bad debt			641				828
Auto title loan bad debt			236				124
Net revenues			311,394				249,830
Operations expense			161,145				140,525
Store operating income		$	150,249			$	109,305
Other data:
Gross margin on merchandise sales			41.8	%			40.1	%
Gross margin on jewelry scrapping sales			36.1	%			35.3	%
Gross margin on total sales			39.4	%			38.3	%
Average pawn loan balance per pawn store at period end		$	292			$	266
Average yield on pawn loan portfolio (a)			156	%			150	%
Pawn loan redemption rate			80.5	%			78.7	%

The U.S. Pawn Operations segment total revenues increased $100.9 million, or 23% from fiscal 2009 to $548.6 million. Same store total revenues increased $57.6 million, or 13%. The overall increase in total revenues comprised a $70.8 million increase in merchandise and jewelry scrapping sales and a $30.1 million increase in pawn service charges. In fiscal 2010, we acquired 16 U.S. pawn stores for $21.8 million, and opened seven new U.S. pawn stores. As part of these acquisitions, we began operations in Illinois, bringing the total number of states in which we had pawn operations to 13 as of September 30, 2010.

Our fiscal 2010 U.S. pawn service charge revenue increased 24%, or $30.1 million, from fiscal 2009 to $154.5 million. Same store pawn service charges increased $19.4 million, or 16%, with new and acquired stores net of closed stores contributing $10.7 million. The same store improvement was due to a higher average same store pawn loan balance coupled with a higher yield. The yield improved primarily due to a higher loan redemption rate as we focused on loan values and better qualifying customers to determine those that prefer to sell their merchandise rather than use it as collateral for a loan. Inventory purchases from customers increased 51% compared to fiscal 2009.

Fiscal 2010 merchandise sales gross profit increased $13.5 million, or 17%, from fiscal 2009 to $94.6 million. This was due to a $17.8 million increase in sales from new and acquired stores net of closed stores, a 1.7 percentage point improvement in gross margin to 41.8%, and a $6.3 million or 3% increase in same store sales.

Gross profit on jewelry scrapping sales increased $17.8 million, or 43%, from fiscal 2009 to $59.1 million on greater volume and a 0.8 percentage point improvement in gross margins to 36.1%. Including a $14.1 million increase from stores acquired late in the first fiscal quarter of 2009, scrapping revenues increased $46.7 million, or 40%, on 9% more volume, while proceeds realized per gram of jewelry scrapped increased 28%. In fiscal 2010 and fiscal 2009 respectively, jewelry scrapping sales include the sale of approximately $3.2 million and $1.2 million of loose diamonds removed from scrapped jewelry. As a result of the greater volume and a higher average cost per gram of jewelry scrapped, scrap cost of goods increased $28.8 million, or 38%.

Operations expense increased to $161.1 million (52% of net revenues) in fiscal 2010 from $140.5 million (56% of net revenues) in fiscal 2009. The dollar increase in expense was primarily due to higher operating costs at new and acquired stores and higher incentive compensation. The improvement as a percent of net revenues is attributable to greater scale at same stores and expense management improvements made at acquired and existing stores.

In fiscal 2010, the $61.5 million greater net revenue from U.S. pawn activities, the $20.6 million higher operations expense and offsetting changes in contributions from signature loans and auto title loans resulted in a $40.9 million overall increase in store operating income from the U.S. Pawn Operations segment. For fiscal 2010 and 2009, the segment comprised 71% of consolidated store operating income.

Empeño Fácil Segment

The following table presents selected financial data for the Empeño Fácil segment after translation to U.S. dollars from its functional currency of the Mexican peso:

		Fiscal Years Ended September 30,
		2010				2009
		(Dollars in thousands)
Merchandise sales		$	14,030			$	8,751
Jewelry scrapping sales			7,389				1,900
Pawn service charges			9,190				5,773
Other			—				—
Total revenues			30,609				16,424
Merchandise cost of goods sold			8,459				5,392
Jewelry scrapping cost of goods sold			6,137				1,277
Net revenues			16,013				9,755
Operations expense			11,658				5,833
Store operating income		$	4,355			$	3,922
Other data:
Gross margin on merchandise sales			39.7	%			38.4	%
Gross margin on jewelry scrapping sales			16.9	%			32.8	%
Gross margin on total sales			31.9	%			37.4	%
Average pawn loan balance per pawn store at period end		$	63			$	58
Average yield on pawn loan portfolio (a)			182	%			168	%
Pawn loan redemption rate			75.2	%			82.3	%