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57
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K/A
AMENDMENT #1
(Mark One)
[x]
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended September 30, 1995
OR
[ ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE
REQUIRED]
For the transition period from ______________ to
_____________
Commission File Number 0-19424
_______________________________
EZCORP, INC.
(Exact name of registrant as specified in its charter)
Delaware 74-2540145
(State or other jurisdiction of (IRS Employer
incorporation or organization) 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:
None
Securities Registered Pursuant to Section 12(g) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
Class A Non-voting Common Stock The Nasdaq Stock Market
$.01 par value per share
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90
days. Yes X No__
Indicate by check mark if disclosures of delinquent
filers pursuant to Item 405 of Regulation S-K 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. [ ]
The only class of voting securities of the registrant
issued and outstanding is the Class B Voting Common Stock,
par value $.01 per share, 100% of which is owned by two
record holders which are affiliates of the registrant.
There is no trading market for the Class B Voting Common
Stock.
As of December 5, 1995, 6,967,867 shares of the
registrant's Class A Non-Voting Common Stock, par value $.01
per share and 5,019,176 shares of the registrant's Class B
Voting Common Stock, par value $.01 per share were
outstanding.
REGISTRANT IS FILING THIS AMENDED ITEM 7 FOR THE PURPOSE OF
EXPANDING UPON THE DISCUSSION OF GROSS PROFIT AND
INVENTORIES.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The following management discussion and analysis should
be read in conjunction with, and is qualified in its
entirety by reference to, the financial statements of the
Company and the notes thereto included elsewhere in this
Form 10-K. This discussion and analysis of operations
compares the three fiscal years ended September 30, 1993,
1994 and 1995 (designated as "Fiscal 1993," "Fiscal 1994,"
and "Fiscal 1995," respectively).
Summary Financial Data
Fiscal Years EndedSeptember 30,
1993 1994 1995
--------------------------------
(Dollars in thousands, except as indicated)
Net Revenues:
Sales $62,881 $97,963 $101,416
Pawn service charges 44,834 63,169 74,254
--------------------------
Total revenues 107,715 161,132 175,670
Cost of sales 47,269 81,446 99,423
--------------------------
Net revenues 60,446 79,686 76,247
Other Data:
Gross margin 24.8% 16.9% 2.0%
Average annual inventory
turnover 1.7x 1.6x 1.9x
Average inventory per
location at year end $206 $270 $159
Average loan balance per
location at year end $150 $161 $152
Average pawn loan at
year end (whole dollars) $67 $73 $66
Average yield on loan
portfolio 212% 197% 204%
Redemption rate 73% 74% 76%
Expenses and income as a percentage
of total revenue (%):
Store operating 37.6 36.1 42.4
Administrative 7.8 7.9 8.8
Depreciation and amortization 2.5 2.8 4.2
Interest (0.3) 0.9 1.7
Income (loss) before
income taxes 8.5 1.7 (13.7)
Net income (loss) 5.6 1.1 (9.0)
Stores in operation:
Beginning of year 127 186 234
Acquired 34 6 -
New openings 28 42 33
Sold, combined, or closed (1) (3) - (6)
------------------------
End of year 186 234 261
Average number of locations
during the year 157 210 248
___________________
(1) Excludes 26 stores to be sold, combined, or closed in
the first two quarters of fiscal 1996.
Results of Operations
Sales
Fiscal 1995 Compared to Fiscal 1994 Sales increased 3%
to $101.4 million in Fiscal 1995 compared to $98.0 million
in Fiscal 1994. This increase was primarily the result of
33 additional stores in Fiscal 1995 offset by same store
sales declines of 9% in stores open more than twelve months.
In Fiscal 1994, the Company sold a substantial amount of new
jewelry, and Federal legislation (the "Brady Bill")
increased demand for hand guns. These two activities
created a higher level of sales in Fiscal 1994 when compared
to Fiscal 1995.
During Fiscal 1995, the Company changed its strategy
regarding the purchase of new and used wholesale
merchandise. Management believes that sales of this
merchandise came at the expense of sales of forfeited
collateral and contributed to an increase in forfeited
collateral inventory. The Company has substantially reduced
the purchase of new and used wholesale merchandise.
In Fiscal 1995, the Company modified its definition of
same store sales to exclude partial period sales for stores
that opened during the prior year periods. Same store sales
in Fiscal 1994 included $6.8 million of scrap jewelry sales.
Utilizing the revised definition of same store sales and
excluding scrap jewelry sales, the Fiscal 1994 same store
sales increase would have been 28% rather than the 47%
increase reported in the September 30, 1994 Form 10-K.
Fiscal 1994 Compared to Fiscal 1993 Sales increased
56% to $98.0 million in Fiscal 1994 compared to $62.9
million in Fiscal 1993. This increase was the result of 48
additional stores in Fiscal 1994, and same-store sales
growth of 28%. The same-store sales growth was primarily a
result of having more merchandise available for sale because
of increases in forfeitures incident to increases in loan
volume, new jewelry sales, and increased demand for hand
guns prior to the enactment of the Brady Bill.
Gross Profits
Fiscal 1995 Compared to Fiscal 1994 Gross profits as a
percentage of sales decreased 15 percentage points to 2.0%
in Fiscal 1995 from 17% in Fiscal 1994. The 15 percentage
point decrease is made up largely of lower margins on sales
(5 percentage point decrease), a higher loss on the sale of
scrap jewelry (approximately a 7 percentage point impact)
which includes a $6.8 million loss related to a fourth
quarter jewelry liquidation, and an increase in inventory
valuation reserves (3 percentage point decrease).
The lower margins on sales resulted from the
discounting of aged merchandise, lower levels of sales of
higher margin wholesale merchandise and merchandise
purchased from the general public, and other factors (e.g.,
sales mix shift to higher cost merchandise, competitive
pricing pressure and consumer demand for previously owned
merchandise). The Company anticipates continuing the
discounting of aged merchandise, based on management's
evaluation of inventory composition and target sales levels.
The Company can neither predict the magnitude nor the
direction of the effect of other factors that influence
gross profit levels.
The Company's ability to achieve a certain margin level
is based on, among other factors, the composition, quality
and age of its inventory. At September 30, 1995, the
inventory consisted of approximately 63% jewelry (e.g.,
ladies' and men's rings, chains, bracelets, etc.) and 37%
general merchandise (e.g., televisions, VCRs, tools,
sporting goods, musical instruments, firearms, etc.).
Approximately 22% of the jewelry inventory and 14% of the
general merchandise inventory were more than twelve months
old based on the Company's acquisition date (date of
forfeiture for collateral or date of purchase). As a result
of a higher average selling price, consumer preference and
seasonal demand, consistent with other retailers, jewelry is
a slower moving merchandise category than our general
merchandise.
In the fourth quarter, the Company identified and
commenced the liquidation of approximately $27 million of
jewelry inventory which had accumulated primarily as a
result of a $20 million new jewelry program undertaken in
prior periods and past lending practices (which have been
modified). This jewelry excess was identified based on
recent sales trends for various jewelry styles, inventory on
hand by jewelry style, and jewelry price points. While the
Company believes that this inventory could have been sold in
the normal course, Management believes that the capital
deployed in this excess jewelry inventory would be better
utilized to reduce debt and to invest in other opportunities
offering a better return than could be realized by the
eventual sale of this inventory over a longer period of
time. In the final quarter of Fiscal 1995, the Company
sold, on a wholesale basis, or scrapped jewelry with a cost
basis of approximately $15.7 million for $8.9 million and
realized a loss of $6.8 million. Further, the Company
increased its inventory valuation reserve by approximately
$8.7 million, including approximately $6.1 million relating
to the remaining $11.3 million of jewelry inventory to be
liquidated. Management anticipates that the $11.3 million
of remaining jewelry will be disposed of during the first
two quarters of fiscal 1996.
Fiscal 1994 Compared to Fiscal 1993 Gross profits as a
percentage of sales decreased 8 percentage points to 17% in
Fiscal 1994 from 25% in Fiscal 1993. The 8 percentage point
decrease is primarily due to the sale of $4.0 million of
inventory at cost for $2.3 million during a Company-wide
clearance sale in the fourth quarter of Fiscal 1994 (2
percentage point decrease) and an increase in inventory
valuation reserves of $3.7 million which includes a $2.7
million increase in the fourth quarter (4 percentage point
decrease).
Pawn Service Charges
Fiscal 1995 Compared to Fiscal 1994 Pawn service
charges increased 17% from $63.2 million in Fiscal 1994 to
$74.2 million in Fiscal 1995. The increase was primarily
due to increased outstanding loan balances resulting from
new stores.
The average annual yield on the average aggregate loan
balance increased from 197% in Fiscal 1994 to 204% in Fiscal
1995 largely as a result of a managed shift in the loan
portfolio to higher yielding loans. This shift is reflected
in the decrease in the Company's average pawn loan amount
from $73 in Fiscal 1994 to $66 in Fiscal 1995. The
Company's average loan redemption rate increased to 76% in
Fiscal 1995 versus 74% in Fiscal 1994. Management believes
this increase is attributable to the introduction of a loan
extension program in certain markets and modified loan
underwriting standards.
Fiscal 1994 Compared to Fiscal 1993 Pawn service
charges increased 41% from $44.8 million in Fiscal 1993 to
$63.2 million in Fiscal 1994. The increase was primarily
due to increased outstanding loan balances resulting from
new stores.
The average annual yield on the average aggregate loan
balance decreased from 212% in Fiscal 1993 to 197% in Fiscal
1994. The yield was lower in Fiscal 1994 primarily due to
more loan activity in the lower rate categories. The
Company's average pawn loan amount in Fiscal 1994 was $73,
compared to $67 in Fiscal 1993. The decrease in the yield
for the Fiscal 1994 period was further impacted by a $1.9
million reduction of pawn service charges, a year-end
charge taken as a result of a refinement in the estimate of
accrued pawn service charges. Excluding the $1.9 million
charge, the yield for Fiscal 1994 would have been 203%. The
Company's average loan redemption rate was 74% in Fiscal
1994 versus 73% in Fiscal 1993.
Store Operating Expenses
Fiscal 1995 Compared to Fiscal 1994 Operating expenses
as a percentage of total revenues increased to 42.4% for
Fiscal 1995 from 36.1% in Fiscal 1994. As a result of the
Company's store portfolio review program, management decided
to consolidate 17 of its stores into other operating units
and to close 15 stores. These actions required a store
closing and consolidation provision of approximately $7.7
million (approximately 4 percentage points) in the fourth
quarter. The Company will continue to review its store
portfolio on an ongoing basis. Operating expenses as a
percentage of total revenues increased approximately two
percentage points due to an 8% decrease in average revenues
per average store in operation.
Fiscal 1994 Compared to Fiscal 1993 Operating expenses
as a percentage of total revenues decreased to 36.1% for
Fiscal 1994 from 37.6% in Fiscal 1993. The decrease was
primarily the result of a 50% increase in total revenues
during Fiscal 1994 as compared to Fiscal 1993. This
decrease was partially offset by approximately $0.8 million
in charges relating to litigation and a wage and hour
investigation (see Item 3, Legal Proceedings).
Administrative Expenses
Fiscal 1995 Compared to Fiscal 1994 Corporate
administrative expenses as a percentage of total revenues
decreased to 8.8% for Fiscal 1995 from 7.9% in Fiscal 1994.
The increase was primarily due to a $1.5 million fourth
quarter charge for the writedown of certain fixed and
intangible assets to realizable value.
Fiscal 1994 Compared to Fiscal 1993 Corporate
administrative expenses as a percentage of total revenues
increased to 7.9% for Fiscal 1994 compared to 7.8% in Fiscal
1993. The decline in corporate administrative expenses as a
percent of total revenues due to an increase in total
revenues of 50% was offset by approximately $1.3 million in
charges relating to organization changes associated with the
Company's new management team.
Depreciation and Amortization Expense
Fiscal 1995 Compared to Fiscal 1994 Depreciation and
amortization expense as a percentage of total revenues
increased to 4.2% in Fiscal 1995 from 2.8% in Fiscal 1994.
The increase was primarily due to 33 new stores added since
September 30, 1994 and a change in the useful life of
leasehold improvements.
Fiscal 1994 Compared to Fiscal 1993 Depreciation and
amortization expenses as a percentage of total revenues
increased to 2.8% in Fiscal 1994 from 2.5% in Fiscal 1993.
The increase was primarily due to 42 new stores added since
September 1993.
Interest Expense
Interest expense increased in Fiscal 1995 over Fiscal
1994 and in Fiscal 1994 over Fiscal 1993, primarily due to
increased borrowings under the Company's bank line of
credit.
Income Taxes
As a result of the Company's Fiscal 1995 net operating
loss, the Company has a tax receivable of $4.2 million, a
current deferred asset of $2.4 million, and a non-current
deferred tax asset of $2.1 million. Based on historical
taxable income, as well as the prospect of future reversals
of existing taxable temporary differences, management has
determined that it is more likely than not that the deferred
tax asset would be realized.
Liquidity and Capital Resources
During Fiscal 1995, the Company invested $10.8 million
consisting primarily of leasehold improvements and equipment
for existing stores and 33 newly established stores. The
Company funded its 1995 growth through excess cash available
at September 30, 1994, working capital from operations, and
bank borrowings.
On August 3, 1995, the Company amended its November 29,
1994 $75 million unsecured revolving line of credit. Under
the amended agreement, the line of credit was reduced to $50
million, of which $41.5 million was outstanding on September
30, 1995. Terms of the amended agreement require, among
other things, that the Company meet certain financial
covenants and provide the bank group a first security
interest in certain assets of the Company. Borrowings under
the line bear interest at the bank's Eurodollar rate plus
1.0% to 1.5% and the credit line matures January 1997.
Based on the August 3, 1995 amendment, the Company has an
excess borrowing capacity of approximately $5.7 million as
of September 30, 1995.
At the end of 1995, the Company's current ratio was 8.7
to 1 and long-term debt (including current maturities)
represented approximately 28% of the Company's total
capitalization. The Company anticipates that funds from
working capital and bank lines of credit should be adequate
to fund expansion during fiscal 1996.
The profitability and liquidity of the Company are
affected by the amount of loans outstanding, which is in
turn affected in part by the Company's loan decisions. The
Company is generally able to influence the frequency of
forfeiture of collateral by increasing or decreasing the
amount loaned in relation to the resale value of the pledged
property, as opposed to adjusting the borrower's cost of
funds (i.e., the rate of pawn service charge). Tighter
credit decisions generally result in smaller loans in
relation to the estimated resale value of the pledged
property and can thereby result in a decrease in the
Company's average aggregate loan balances and a decrease in
pawn service charges. Additionally, small loans in relation
to the pledged property's estimated resale value may tend to
increase loan redemptions and improve the Company's
liquidity. Conversely, an increase in average loan
balances, by providing larger loans in relation to the
estimated resale value of the pledged property, can result
in an increase in the Company's pawn service charges.
Increases in average loan balances can also result in an
increase in loan forfeitures, which increases the quantity
of goods on hand, and unless the Company is able to increase
inventory turns, reduces the Company's liquidity. In each
of the Company's last three fiscal years, at least 73% of
the amounts loaned by the Company were paid in full with
accrued service charges or were renewed or extended through
the payment of accrued service charges. In addition to
these factors, the Company's liquidity is affected by
merchandise sales and the pace of store expansions.
In Fiscal 1993 and Fiscal 1994, the average annual
inventory turnover was relatively unchanged at 1.7 and 1.6
times, respectively. In Fiscal 1995, the average annual
inventory turnover increased to 1.9 times. The increase of
the Company's inventory turn rate in Fiscal 1995 was due
primarily to the fourth quarter jewelry liquidation (as
noted in the gross profit section above) and the Company's
discounting of aged merchandise throughout the year.
The Company has no material commitments for additional
capital expenditures.
Seasonality
Historically, pawn service charges are highest in the
fourth fiscal quarter (July, August, and September) due to
higher loan demand during the summer months, and sales are
highest in the first quarter (October, November, and
December) due to the holiday season.
Inflation
The Company does not believe that inflation has a
material adverse effect on its financial condition or
results of operations. The primary impact of inflation on
the operations of the Company is reflected in increased
operating costs. While increases in operating costs would
adversely effect the Company's operations, the consumer
lending laws of Texas - which comprised 60% of the Company's
total pawnshops and approximately 67% of the Company's total
pawn loan balance as of September 30, 1995 - allow indexing
of maximum loan amounts to the Consumer Price Index ("CPI").
Assuming an upward trend in the CPI, these provisions will
allow the Company to make larger loans at existing pawn
service charge rates, which could offset the effect of
inflationary increases in operating costs.
Store Activity and Future Expansion
The Company has expanded from 127 stores at the
beginning of Fiscal 1993 to 261 stores at the end of Fiscal
1995. In Fiscal 1995, the Company established 33 stores and
closed or consolidated 6 stores. In fiscal 1996, the
Company plans to add approximately 10 to 15 new stores and
close or consolidate the remaining 26 stores identified for
closure as a result of its store portfolio review program
completed in September 1995. During fiscal 1996, the
Company plans to emphasize new store establishments as it
did in Fiscal 1995.
EZCORP will continue to build clusters of stores in
major markets in order to obtain operating and
administrative efficiencies. In fiscal 1996, expansion will
be primarily in existing Texas markets and the other ten
states where the Company currently operates stores.
However, the Company will carefully consider markets in
other states with favorable regulatory, demographic, and
competitive characteristics.
REGISTRANT IS FILING THIS AMENDED ITEM 8 FOR THE PURPOSE OF
CLARIFYING NOTE N AS IT PERTAINS TO CHARGES TAKEN IN THE
QUARTER ENDED SEPTEMBER 30, 1994.
Item 8. Financial Statements and Supplementary Data
Index to Financial Statements
Page
Report of Independent Auditors 22
Consolidated Financial Statements:
Consolidated Balance Sheets as of
September 30, 1995 and 1994 23
Consolidated Statements of Operations for
each of the Three Years in the Period
Ended September 30, 1995 24
Consolidated Statements of Cash Flows for
each of the Three Years in the Period
Ended September 30, 1995 25
Consolidated Statements of Stockholders'
Equity for each of the Three Years in the
Period Ended September 30, 1995 26
Notes to Consolidated Financial Statements 27
Report of Independent Auditors
Board of Directors
EZCORP, Inc.
We have audited the accompanying consolidated balance sheets
of EZCORP, Inc. and its subsidiaries as of September 30,
1995 and 1994, and the related consolidated statements of
operations, stockholders' equity, and cash flows for each of
the three years in the period ended September 30, 1995.
These financial statements are the responsibility of the
Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the consolidated financial statements
referred to above represent fairly, in all material
respects, the consolidated financial position of EZCORP,
Inc. and its subsidiaries at September 30, 1995 and 1994,
and the consolidated results of their operations and their
cash flows for each of the three years in the period ended
September 30, 1995, in conformity with generally accepted
accounting principles.
ERNST & YOUNG LLP
Austin, Texas
December 5, 1995
Consolidated Balance Sheets
September 30,
1994 1995
--------------------
(Dollars in thousands)
Assets:
Current Assets:
Cash and cash equivalents $ 6,267 $ 4,593
Pawn loans 37,777 39,782
Service charge receivable 9,381 11,452
Inventory, net 63,070 41,575
Deferred tax asset - 2,422
Federal income tax recoverable - 4,236
Prepaid expenses and other assets2,308 3,181
------------------
Total current assets 118,803 107,241
Property and equipment, net 33,883 36,596
Other assets:
Excess purchase price over net
assets acquired 17,150 13,574
Non compete agreements 2,944 517
Deferred tax asset - 2,110
Notes receivable related parties - 3,000
Other assets 1,209 1,550
------------------
Total assets $173,989 $164,588
==================
Liabilities and Stockholders' Equity:
Current liabilities:
Current maturities of long-term
debt $ 314 $ 171
Accounts payable and other
accrued expenses 6,340 10,026
Customer layaway deposits 2,012 2,100
Federal income taxes payable 3,307 -
Deferred income taxes 139 -
Total current liabilities 12,112 12,297
------------------
Long-term debt, less current
maturities 36,791 42,916
Stockholders' equity:
Preferred Stock, par value $.01
a share Authorized 5,000,000
shares; none issued and outstanding - -
Class A Non-voting Common Stock,
par value $.01 a share-Authorized
40,000,000 shares; issued and outstanding
6,960,955 in 1994 and 6,967,867 in 1995 70 70
Class B Voting Common Stock, convertible,
par value $.01 a share-Authorized
5,137,163 shares; issued and outstanding
5,019,176 shares in 1994 and 1995 50 50
Additional paid-in capital 114,165 114,236
Retained earnings (deficit) 11,640 (4,209)
------------------
125,925 110,147
Treasury stock
(9,032 shares in 1994 and 1995) (35) (35)
Receivables from stockholders (804) (737)
------------------
Total stockholders' equity 125,086 109,375
Commitments and contingencies
Total liabilities and stockholders'
equity $173,989 $164,588
==================
See notes to consolidated financial statements.
Consolidated Statements of Operations
Years Ended September 30,
1993 1994 1995
-----------------------------
(Dollars in thousands, except
as indicated)
Revenues:
Sales $62,881 $ 97,963 $101,416
Pawn service charges 44,834 63,169 74,254
----------------------------
107,715 161,132 175,670
----------------------------
Costs and expenses:
Cost of goods sold 47,269 81,446 99,423
General and administrative 48,918 70,849 89,823
Depreciation and amortization2,703 4,471 7,352
Interest expense (income),net(378) 1,512 3,059
Total cost of sales and
expenses 98,512 158,278 199,657
Income (loss) before
income taxes 9,203 2,854 (23,987)
Income tax expense (benefit) 3,095 1,065 (8,138)
----------------------------
Net income (loss) $ 6,108 $ 1,789 $(15,849)
============================
Income (loss) per share, primary and
fully diluted: $ 0.56 $ 0.15 $ (1.32)
============================
Weighted average shares (in thousands):
Primary and fully diluted 10,981 11,975 11,977
See notes to consolidated financial statements.
Consolidated Statements of Cash Flows
Years Ended September 30,
1993 1994 1995
------------------------------
(Dollars in thousands)
Operating Activities:
Net income (loss) $ 6,108 $ 1,789 $(15,849)
Adjustments to reconcile
net income (loss) to net
cash provided by operating
activities:
Depreciation and
amortization 2,703 4,471 7,425
Deferred income taxes 2,308 (3,804) (139)
Restructuring expenses - - 7,664
Changes in operating assets and liabilities:
Increase in service
charge receivable (2,085) (1,037) (2,071)
(Increase) decrease in
inventory (17,258) (22,523) 21,495
(Increase) decrease in
notes and accounts
receivable from related
parties (6) 64 (153)
Increase in prepaid expenses and
other assets (2,490) (1,537) (473)
Increase in accounts payable
and accrued expenses 1,446 2,372 2,243
Increase in customer layaway
deposits 511 267 88
Increase (decrease) in federal
income taxes payable - 3,307 (3,307)
Increase in deferred tax asset - - (4,532)
Increase (decrease) in income
taxes recoverable (712) 712 (4,236)
----------------------------
Net cash provided by (used in)
operating activities (9,475) (15,919) 8,155
Investing Activities:
Pawn loans forfeited and
transferred to
inventory 32,852 45,562 52,297
Pawn loans made (126,925) (187,090)(192,239)
Pawn loans repaid 88,075 132,177 137,937
-----------------------------
(5,998) (9,351) (2,005)
Additions to property,
plant and equipment (10,906) (15,107) (10,813)
Issuance of notes
receivable to related
parties - - (3,000)
Acquisition of businesses (13,168) (1,455) -
-----------------------------
Net cash used in investing
activities (30,072) (25,913) (15,818)
Financing Activities:
Proceeds from bank
borrowings 12,894 41,674 15,500
Payments on bank
borrowings (11,546) (8,263) (9,518)
Issuance of common stock 48,539 - -
Collections of stockholder
notes receivable 38 37 7
Increase in stockholder
notes receivable - (729) -
Sale of treasury stock - 8 -
Purchase of treasury stock (13) - -
-----------------------------
Net cash provided by
financing activities 49,912 32,727 5,989
Increase (decrease) in cash
and equivalents 10,365 (9,105) (1,674)
Cash and equivalents at
beginning of period 5,007 15,372 6,267
-----------------------------
Cash and equivalents at
end of period $ 15,372 $ 6,267 $ 4,593
=============================
Cash paid during the periods for:
Interest $ 500 $ 1,226 $ 2,974
Income taxes $ 1,575 $ 850 $ 4,076
Noncash investing and financing activities:
Issuance of common stock
to 401 (k) plan $ 26 $ 46 $ 71
See notes to consolidated financial statements.
Consolidated Statements of Stockholders' Equity
Add'l
PreferredCommonPaid inRetainedTreasuryDue from
Stock StockCapitalEarningsStockStockholdersTotal
--------------------------------------------------
(Shares and dollars in thousands)
Balances at September 30, 1992
- - 9,675 $97 $65,578 $3,743 $ - $(180) $69,238
Issuance of common stock - - 2,300 23 48,515 - - - 48,538
Purchase of treasury stock (43) (43)
Issuance of common stock to
401 (k) plan - - 2 - 26 - - - 26
Reductions on stockholder
notes - - - - - - - 68 68
Net income - - - - 6,108 - - 6,108
--------------------------------------------------
Balances at September 30, 1993
- -11,977 120 114,119 9,851 (43) (112) 123,935
Issuance of common stock to
401 (k) plan - - 4 46 46
Increase in stockholder's
notes - - (729) (729)
Sale of treasury stock - - - - - 8 - 8
Reductions on stockholder
notes - - - - - - 37 37
Net income - - - - 1,789 - - 1,789
--------------------------------------------------
Balances at September 30, 1994
- -11,981 120 114,165 11,640 (35) (804) 125,086
Issuance of common stock to
401(k) plan - - 6 71 - - 71
Reductions on stockholder
notes - - - - - - 67 67
Net income (loss) - - - -(15,849) - -(15,849)
--------------------------------------------------
Balances at September 30, 1995
- -11,987 $120$114,236$(4,209)$(35)$(737)$109,375
==================================================
See notes to consolidated financial statements.
Notes to Consolidated Financial Statements
Note A - Summary of Accounting Policies
The following is a summary of significant accounting
policies of the Company.
Consolidation: The consolidated financial statements
include the accounts of the Company and its wholly owned
subsidiaries. All significant intercompany accounts and
transactions have been eliminated in consolidation.
Pawn Loans and Income Recognition: Pawn loans ("loans") are
generally made on the pledge of tangible personal property
for one month with an automatic sixty-day grace period (the
"loan term"). Pawn service charges on loans are recorded
based on the interest method. If the loan is not repaid,
the forfeited collateral (inventory) is valued at the lower
of cost (principal plus accrued interest) or the fair value
of the property.
Cash and Cash Equivalents: For purposes of this statement,
the Company considers investments with maturities of ninety
days or less when purchased to be cash equivalents.
Inventory: Inventory is stated at the lower of cost
(specific identification) or market (net realizable value).
Inventory consists of merchandise acquired from forfeited
loans, merchandise purchased from customers, merchandise
acquired from the acquisition of other pawnshops, and new
merchandise purchased from vendors. The Company provides an
allowance for shrinkage and valuation based on management's
evaluation of the age, condition, and salability of the
merchandise. The valuation allowance, excluding shrinkage
reserves, deducted from the carrying value of inventory
amounted to $4,957,448 and $14,043,981 at September 30, 1994
and 1995, respectively.
Customer Layaway Deposits: Customer layaway deposits are
recorded as deferred revenue until the entire related sales
price has been collected.
Property and Equipment: Property and equipment are stated
at cost. Through September 30, 1994, provisions for
depreciation have been computed on a straight-line basis
using estimated useful lives of 30 years for buildings and 5
to 15 years for equipment and leasehold improvements.
Effective October 1, 1994, the Company revised its estimate
of the useful life of its leasehold improvements from 15
years to 10 years. As a result, amortization expense
increased by approximately $1,200,000, or $.10, per share.
For federal income tax purposes, cost is recovered using
accelerated methods.
Intangible Assets: Intangible assets consist primarily of
excess purchase price over net assets acquired in
acquisitions. Excess cost over fair value of net assets
acquired (or goodwill) is amortized on a straight-line basis
over 20 to 40 years (the expected period of benefit). The
carrying value of goodwill is reviewed at the individual
store level to determine if the facts and circumstances
suggest that it may be impaired. If this review indicates
that goodwill will not be recoverable, as determined based
on the undiscounted cash flows of the entity over the
remaining amortization period, the Company's carrying value
of the goodwill is reduced by the estimated shortfall of
cash flows. Accumulated amortization of intangibles was
$3,623,081 and $4,115,933 at September 30, 1994 and 1995,
respectively.
Earnings Per Common Share: Earnings per share calculations
assume exercise of all outstanding stock options and
warrants with appropriate adjustment to weighted average
shares outstanding using the treasury stock method of
calculation.
Advertising: Advertising costs are expensed as incurred.
Income Taxes: The Company files a consolidated return with
its wholly owned subsidiaries. Deferred taxes are recorded
based on the liability method and result primarily from
differences in the timing of the recognition of certain
revenue and expense items for federal income tax purposes
and financial reporting purposes.
Reclassifications: Certain prior year amounts have been
reclassified to conform with the current year presentation,
including presenting $6,800,000 scrap sales proceeds in cost
of sales rather than revenues.. These classifications had
no effect on results of operations or retained earnings as
previously reported. For purposes of the statement of cash
flows, the Company has reclassified pawn loans forfeited and
transferred to inventory from operating activities to
investing activities.
Note B - Acquisitions
The Company purchased the assets of 34 and 6 pawnshops
during the years ended September 30, 1993 and 1994,
respectively. The acquisitions have been accounted for as
purchases, and the assets and operations of the acquired
stores have been included in the accompanying consolidated
financial statements subsequent to the dates of acquisition.
The excess of the total acquisition costs over the fair
values of net assets acquired for these acquisitions were as
follows:
Years Ended September 30,
1993 1994 1995
----------------------------
(Dollars in thousands)
Acquisition cost $13,168 $1,455 $0
Excess over fair value of
net assets acquired 6,662 202 0
The unaudited pro forma results of the Company and the 1993
acquisitions as if they had occurred at the beginning of
1993 were revenues of $114,500,000, net income of
$6,500,000, and net income per share of $.59. Pro forma
results have not been presented for 1994 since they would
approximate actual results.
Note C - Property and Equipment
Major classifications of property and equipment were as
follows:
September 30,
1994 1995
-----------------------
(Dollars in thousands)
Land $ 1,446 $ 1,453
Buildings and improvements 22,150 26,868
Furniture and equipment 16,118 18,933
--------------------
Total 39,714 47,254
Less - accumulated depreciation (5,831) (10,658)
--------------------
$ 33,883 $ 36,596
====================
Note D - Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses consisted of the
following:
September 30,
1994 1995
----------------------
(Dollars in thousands)
Trade accounts payable $ 742 $ 2,267
Accrued payroll and related
expenses 1,183 1,494
Accrued interest payable 38 313
Other accrued expenses 4,377 5,952
----------------
$6,340 $10,026
================
Note E - Long-Term Debt
Long-term debt consisted of:
September 30,
1994 1995
----------------------
(Dollars in thousands)
Notes payable to individuals, with interest at 10% to
13%, payable in monthy installments of $16,470
including interest, maturing through June 2005 -
certain inventory, land, and buildings pledged as
collateral $ 988 $ 753
Note payable to bank with interest at 9%, payable in
monthly installments of $9,052 including interest,
from June 1, 1993 until May 1, 1996; thereafter, the
terms change annually until maturity in April 2000;
collateralized by certain land and buildings
854 822
Note payable to bank under $1,144,000 line of credit
agreement dated March 1994. Note was paid in full
December 1994. 144 -
Note payable to bank under $2 million line of credit
agreement dated December 1991. Note was paid in full
December 1994. 1,810 -
Note payable to bank under $50 million line of credit
agreement amended as of August 1995; interest payable
monthly at the bank's Eurodollar rate plus a percentage
ranging from 1.00% to 1.50%, depending on certain financial
covenants; principal due January 1997.
33,250 41,500
Junior subordinated note payable to stockholder of acquired
company, with interest at 10% payable in monthly
installments of $4,206 including interest, maturing in December 1995.
59 12
--------------------
37,105 43,087
Less current maturities 314 171
--------------------
$36,791 $42,916
====================
The Company has a $50,000,000 secured revolving line of
credit with a bank of which $41,500,000 was outstanding as
of September 30, 1995. Borrowings under the line accrue
interest, payable monthly, at the bank's Eurodollar rate
plus a percentage ranging from 1.00% to 1.50%, depending on
certain financial covenants. Fees under the line of credit
include an annual $25,000 agent fee, a commitment fee equal
to .25% of the unused amount of the commitment, and a
facility fee equal to .20% of the total commitment. Terms
of the loan require, among other things, that the Company
meet certain financial covenants. In addition, payment of
dividends and the incurrence of additional debt is
restricted.
Terms of the Company's other notes may also require, among
other things, that the Company meet certain financial
covenants.
Interest expense in the consolidated statements of
operations is shown net of interest income on investments in
the amount of $877,576, $25,500 and $211,821 for the years
ended September 30, 1993, 1994, and 1995, respectively.
Aggregate annual principal payment requirements on long-term
debt obligations for each of the following five years ending
September 30 are as follows: 1996-$171,249; 1997-
$41,678,025; 1998-$170,530; 1999-$167,623; 2000-$691,138.
Note F - Preferred Stock
During 1991, the Company authorized 5,000,000 shares of
preferred stock. No shares have yet been issued. The
powers, preferences, rights, qualifications, limitations,
and restrictions of this stock may be designated by the
Board at its discretion.
Note G - Common Stock and Warrants
The capital stock of the Company consists of two classes of
common stock designated as Class A and Class B. The rights,
preferences, and privileges of the Class A and Class B
Common Stock are similar except that each share of Class B
Common Stock has one vote and each share of Class A Common
Stock has no voting privileges. All Class A Common Stock is
publicly held. Holders of Class B Voting Common Stock may,
individually or as a class, convert some or all of their
shares into Class A Non-voting Common Stock. Class A Common
Stock becomes voting common stock upon the conversion of all
Class B Common Stock to Class A Common Stock. The Company is
required to reserve such number of authorized but unissued
shares of Class A Non-voting Common Stock as would be
issuable upon conversion of all outstanding shares of Class
B Voting Common Stock.
At September 30, 1995, warrants to purchase 27,655 shares of
Class B Voting Common Stock at $6.17 per share were
outstanding. The warrants are exercisable through July 25,
2009.
The Company has an Incentive Stock Option Plan (the "Plan")
under which options to purchase Class A Non-voting Common
Stock may be granted to employees. Options granted under the
Plan are generally granted at exercise prices equal to the
fair market value on the date of grant. In October 1994, the
Board of Directors increased the number of shares available
under the Plan to 1,800,000 and amended the Plan to provide
accelerated vesting upon a change in control of the Company.
As of September 30, 1995, the Company had 1,093,438 options
outstanding (options granted less options canceled due to
employee termination) at exercise prices ranging from $8.75
to $27.00. Of these options, 176,040 are vested and none
have been exercised. A summary of Plan activity for each of
the three fiscal years ended September 30, 1993, 1994, and
1995 follows:
Net Options Option Price Options Options
Granted (1) Range Vested(2) Exercised
----------- ------------ --------- ---------
1993 55,050 $21.75 - $27.00 22,020 -
1994 770,100(3)$13.00 - $14.50 154,020 -
1995 268,288 $ 8.75 - $12.50 - -
--------- ------- ------
1,093,438 176,040 -
========= ======= ======
(1) Options granted less options canceled due to
termination of employee.
(2) Options vest over five years, 20% at the end of each
year following the date of grant.
(3) Includes 250,000 options granted to the Chief Executive
Officer and 125,000 options granted to the Chairman of
the Board (see Item 11. "Executive Compensation").
Shares of reserved common stock at September 30, 1995, were
as follows:
Class A Class B
---------- ---------
Stock option plan 1,800,000 -
Stock warrants - 27,665
Profit sharing plan 50,000 -
Conversion of Class B
Voting Stock 5,019,176 -
-------------------
6,869,176 27,665
===================
Note H - Income Taxes
The income tax provision consisted of:
Years Ended September 30,
1993 1994 1995
---------------------------
(Dollars in thousands)
Current
Federal $ 915 $ 5,100 $(3,660)
State (6) - -
Deferred 2,186 (4,035) (4,478)
---------------------------
$ 3,095 $ 1,065 $(8,138)
===========================
A reconciliation of income taxes calculated at the statutory
rate and the provision for income taxes were as follows:
Years Ended September 30,
1993 1994 1995
-----------------------------
(Dollars in thousands)
Income taxes at the federal
statutory rate $3,129 $ 971 $ (8,295)
Net effect on state taxes (4) - _
Effect of nondeductible
amortization of intangible
assets 27 27 27
Other (57) 67 130
-------------------------------
$3,095 $1,065 $ (8,138)
===============================
Income before income taxes on the statements of income
differs from taxable income due to the following, which are
accounted for differently for financial statement purposes
than for federal income tax purposes and result in deferred
tax expense (benefit):
Years Ended September 30,
1993 1994 1995
--------------------------------
(Dollars in thousands)
Inventory basis $ 2,222 $(4,286) $ (964)
Provision for store closings
and related charges - - (3,615)
Other (36) 251 101
--------------------------------
$ 2,186 $(4,035) $(4,478)
================================
Significant components of the Company's deferred tax
liabilities and assets as of September 30, 1994 and 1995 are
as follows:
Amount
(Dollars in thousands)
9/30/94 9/30/95
--------------------------
Deferred tax liabilities:
Book over tax inventory basis $1,244 $1,245
Prepaid expenses 344 227
--------------------
Total deferred tax liabilities 1,588 1,472
Deferred tax assets: --------------------
Book over tax depreciation (604) 676
Inventory reserve 1,658 2,698
Amortization of non-competes (200) 1,417
Accrued liabilities 661 922
Other, net (66) 291
--------------------
Total deferred tax assets 1,449 6,004
Net deferred tax asset
(liability) $(139) $4,532
====================
Note I - Related Party Transactions
Pursuant to the terms of a financial advisory services
agreement, an affiliate of the general partner of the
majority stockholder provides management consulting and
investment banking services to the Company for a specified
monthly retainer, which was $25,000 as of September 30,
1994. Effective October 1, 1994, this retainer was increased
to $33,333 per month. These services include ongoing
consultation with respect to offerings by the Company of its
securities, including, but not limited to, the form, timing,
and structure of such offerings. In addition to the
retainer, the affiliate earns fees from the Company for
other business and financial consulting services. Management
fees and expense reimbursements of $352,672, $421,594, and
$557,210 were paid to the affiliate in the years ended
September 30, 1993, 1994, and 1995, respectively.
The Company purchased an airplane from the former Chairman
of the Board for $113,000 in May 1994. At September 30,
1995, the Company's former Chairman of the Board owes the
Company $24,432 plus accrued interest of $3,623. This amount
may be increased subject to the resolution of a dispute
between the Company and the former Chairman of the Board as
to the crediting of a past payment on the debt. Interest
accrues at an annual rate of ten percent. From July 1994 to
August 1994, the Company loaned the President and Chief
Executive Officer $729,113 to purchase 50,000 shares of
Class A Non-voting Common Stock. Interest accrues annually
at a rate equal to the prime rate plus one half of one
percent. Interest is payable annually on December 31 of each
year until June 30, 1999. As of September 30, 1995, the
amount owed is $729,113 plus accrued interest of $51,194.
In October 1994, the Board of Directors approved agreements
which provide incentive compensation to the Chairman and the
Chief Executive Officer based on growth in the share price
of the Company's publicly traded common stock. Each
executive was advanced $1.5 million evidenced by a recourse
promissory note, due in 2004 and bearing interest at the
minimum rate allowable for federal income tax purposes
(4.15% for 1995). Specified percentages of loan principal
will be forgiven each time the closing price of the
Company's Class A Common Stock exceeds specified Stock Price
Targets for at least ten consecutive trading days. The Stock
Price Targets range from $22.50 to $62.50 per share and
provide for complete forgiveness of principal if the share
price exceeds $32.50 per share within five years or $62.50
per share within ten years. The Program provides that Stock
Price Targets will be adjusted proportionately for certain
capital transactions and that the death or disability of the
executive, or certain changes in control, will result in
forgiveness of the then remaining principal and interest.
Accrued interest is forgiven based upon continued employment
of the executive and the Company is required to reimburse
each executive for the income tax consequences of this
Program. Through September 30, 1995, no Stock Price Targets
have been attained; charges to operations consist of
interest forgiveness and related income tax costs and
totaled $227,136.
Also see Note J. - Leases.
Note J - Leases
The Company leases various facilities and certain equipment
under operating leases. Certain buildings are leased from
the former Chairman of the Board of the Company, in the
ordinary course of business. Future minimum rentals due
under noncancelable leases including stores to be closed are
as follows for each of the years ending September 30:
Related Parties Other Total
---------------------------------
(Dollars in thousands)
1996 $ 286 $ 9,123 $ 9,409
1997 282 8,227 8,509
1998 219 6,956 7,175
1999 139 5,338 5,477
2000 - 3,592 3,592
Thereafter - 7,150 7,150
-----------------------------
$ 926 $ 40,386 $41,312
=============================
Rent expense for the years was as follows:
Related Parties Total
-----------------------
(Dollars in thousands)
1993 $ 260 $5,037
1994 269 7,352
1995 276 9,603
In connection with the closing of 32 stores in the fourth
quarter of 1995, the Company recorded a provision for lease
terminations of $1.2 million.
Note K - Employment Agreement
The Company entered into a 20-year employment agreement with
the former Chairman of the Board for a minimum base salary
of $300,000 per year which was to expire in 2009. The
Company has the right to require the former Chairman to pay
a specified amount of approximately $2.7 million in
liquidated damages to the Company upon certain events by the
former Chairman including early termination of employment
and breach of the Employment Agreement. The Company
terminated this contract on July 28, 1995 and made demand
for payment of such amount. The Company and the former
Chairman have not reached an agreement on the resolution of
this issue. See Item 11. "Employment Agreements" for
discussion.
Note L - Profit Sharing Plan
Effective October 1, 1991, the Company's Board of Directors
established a 401(k) Plan whereby eligible employees of the
Company may contribute a maximum of 20% of their
compensation within allowable limits. The Company will
match 25% of each employee's contribution, up to 6% of their
compensation, in the form of the Company's Class A Non-
voting Common Stock. Contribution expense related to the
plan for 1993, 1994, and 1995 was approximately $60,000,
$71,000 and $66,000, respectively.
Note M - Contingencies
The Company is subject to various claims and litigation in
the normal course of business. In the opinion of
management, the ultimate resolution of such matters will not
have a material adverse impact on the consolidated financial
statements.
Note N - Quarterly Information (Unaudited)
Year Ended September 30, 1995
First Quarter Second Quarter Third Quarter Fourth Quarter
----------------------------------------------------------
(Dollars in thousands, except per share amounts)
Total revenues
$48,125 $41,864 $42,285 $43,396
Net income (loss) 841 (19) (777) (15,894)
Net income (loss) per share
Primary and fully diluted
$ 0.07 $ (0.00) $ (0.06) $ (1.33)
The Company recorded the following pre-tax charges in the
quarter ended September 30, 1995, which decreased income
before taxes for the year ended September 30, 1995 by $25.5
million:
Amount
---------
(Dollars in thousands)
Inventory valuation $ 8,740
Scrap jewelry liquidation 6,633
Provision for store closings 7,664
Other charges 2,469
-------
$25,506
=======
During the fourth quarter ended September 30, 1995, the
Company identified and commenced the liquidation of
approximately $27 million in jewelry inventory which had
accumulated primarily as a result of a $20 million new
jewelry program undertaken in prior periods and as a result
of past lending practices. The Company sold or scrapped
$15.7 million of this jewelry and realized $8.9 million of
cash in the fourth quarter. Management anticipates that the
$11.3 million of remaining jewelry will be disposed of
during the first two quarters of fiscal 1996. Largely as a
result of the scrapping activity, the Company increased its
valuation reserve by $8.7 million, which includes $6.1
million relating to the remaining $11.3 million of jewelry
to be liquidated.
Also during the fourth quarter, management made the decision
to close or consolidate 32 of the Company's underperforming
stores. This action resulted in a $7.7 million provision
which has been included in general and administrative
expense. The provision includes $2.3 million for the write-
down of various fixed assets to realizable value, $3.9
million for the write-down of various intangible assets,
$1.2 million for future rent obligations, and $0.3 million
for various other expenses. As of September 30, 1995, the 32
stores identified for closing and consolidation had
aggregate pawn loans outstanding of $1.9 million. During
Fiscal 1995, these stores incurred an operating loss of $0.4
million on total revenues of $13.4 million.
Year Ended September 30, 1994
First Quarter Second Quarter Third Quarter Fourth Quarter
---------------------------------------------------------
(Dollars in thousands, except per share amounts)
Total revenues $42,875 $39,718 $37,828 $40,711
Net income (loss)
2,404 2,040 2,165 (4,820)
Net income (loss) per share
Primary and fully diluted
$ 0.20 $ 0.17 $ 0.18 $(0.40)
The Company recorded the following pre-tax charges in the
quarter ended September 30, 1994, which decreased income
before taxes for the year ended September 30, 1994 by $9.3
million:
Amount
------
(Dollars in thousands)
Inventory valuation $ 4,900
Pawn service charge difference 1,900
Organization changes 1,300
Pending litigation and wage and hour investigation 800
Other charges 400
-------
$ 9,300
=======
A $4.9 million pre-tax charge was made for inventory
valuation, consisting of $2.2 million in markdowns on
merchandise sold through a company-wide clearance sale in
September 1994 and a $2.7 million increase in the inventory
valuation reserve.
Effective September 30, 1994, the Company implemented a
newly-developed computer software program to calculate
accrued pawn service charges on a loan-by-loan basis.
Previously, this accrual was based on a store-by-store
calculation using pawn service charge collections, loan
principal payments and other information available to
management. The difference in these two methods amounted to
a $1.9 million reduction in accrued pawn service charges.
While it is impracticable to assign this amount to specific
prior periods, through the use of assumptions concerning
loan yield, management believes the $1.4 million of the
difference is attributable to fiscal 1994 consisting of $0.4
million, $0.3 million and $0.7 million in the first, second
and third fiscal quarters, respectively.
Senior management changes and additions made in 1994
resulted in a pre-tax charge of $1.3 million, consisting
primarily of recruiting, relocation, and severance expenses.
The Company also charged $0.8 million for pending litigation
and a wage and hour investigation and wrote-off $0.2 million
of previously capitalized software development and computer
installation costs.
REGISTRANT IS FILING THIS AMENDED SCHEDULE VIII TO BREAK OUT
THE NET CHANGE IN THE ALLOWANCE FOR VALUATION OF INVENTORY
INTO ADDITIONS CHARGED TO EXPENSE AND DEDUCTIONS.
EZCORP, INC. AND SUBSIDIARIES
Schedule VIII - Allowance for Valuation of Inventory
(Dollars in thousands)
Balance at Additions Balance at
Beginning Charged to Charged to End of
Description of Period Expense Other Accts. Deductions Period
--------- ------- ------------ ---------- ------
Allowance for valuation of inventory:
Year ended September 30, 1993
$1,245 $ 807 - $ 797 $1,255
----- ----- ----- ---- -----
Year ended September 30, 1994
$1,255 $4,513 - $ 811 $4,957
----- ----- ----- ---- -----
Year ended September 30, 1995
$4,957 $12,356 - $3,264 $14,044
----- ------ ----- ----- ------
The Company does not determine its inventory valuation
allowance by specific inventory items; therefore, the
amount charged to expense and the deductions are based on
estimates of the beginning inventory sold during the period
and the portion of the beginning inventory valuation
allowance attributable to the items sold.
Exhibit 23.1
CONSENT OF ERNST & YOUNG LLP
We consent to the use of our report dated December 5, 1995
included in the Annual Report on Form 10-K of EZCORP, Inc.
for the year ended September 30, 1995, with respect to the
consolidated financial statements and schedule, as amended,
included in this Form 10-K/A.
ERNST & YOUNG LLP
Austin, Texas
August 21, 1996
SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly
authorized.
EZCORP, INC.
(Registrant)
Date: August 21, 1996 By: /s/ DAN N. TONISSEN
(Signature)
Dan N. Tonissen
Senior Vice President and
Chief Financial Officer