Summary of EZCORP INC - Yahoo! Finance

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The discussion in this section contains forward-looking statements that are based on our current expectations. Actual results could differ materially from those expressed or implied by the forward-looking statements due to a number of risks, uncertainties and other factors identified in Part II, Item 1A, "Risk Factors" of this report.
Three Months Ended March 31, 2009 vs. Three Months Ended March 31, 2008 The following table presents selected, unaudited, consolidated financial data for our three-month periods ended March 31, 2009 and 2008 (the current and prior year quarters):

                                   Three Months Ended March 31,          Percentage
                                     2009                 2008             Change
                                          (in thousands)
     Net revenues:
     Sales                      $       89,013       $       61,330             45.1 %
     Pawn service charges               33,516               21,785             53.8 %
     Signature loan fees                31,594               30,166              4.7 %
     Auto title loan fees                  415                    -              N/A
     Other                               1,728                  344            402.3 %

     Total revenues                    156,266              113,625             37.5 %
     Cost of goods sold                 56,426               36,731             53.6 %
     Signature loan bad debt             5,072                6,632            (23.5 )%
     Auto title loan bad debt               42                    -              N/A

     Net revenues               $       94,726       $       70,262             34.8 %

     Net income                 $       18,320       $       13,016             40.7 %

Six Months Ended March 31, 2009 vs. Six Months Ended March 31, 2008 The following table presents selected, unaudited, consolidated financial data for our six-month periods ended March 31, 2009 and 2008 (the current and prior year-to-date periods):

                                    Six Months Ended March 31,         Percentage
                                       2009               2008           Change
                                          (in thousands)
       Net revenues:
       Sales                      $      153,593       $  116,837             31.5 %
       Pawn service charges               59,897           44,693             34.0 %
       Signature loan fees                67,594           63,694              6.1 %
       Auto title loan fees                  636                -              N/A
       Other                               3,161              707            347.1 %

       Total revenues                    284,881          225,931             26.1 %
       Cost of goods sold                 96,851           70,272             37.8 %
       Signature loan bad debt            14,556           16,302            (10.7 )%
       Auto title loan bad debt               49                -              N/A

       Net revenues               $      173,425       $  139,357             24.4 %

       Net income                 $       33,148       $   25,571             29.6 %

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Consolidated signature loan data (combined payday loan and credit service activities) are as follows:

                                                  Three Months Ended                Six Months Ended
                                                      March 31,                        March 31,
                                                    2009            2008            2009            2008
                                                                (Dollars in thousands)
Fee revenue                                   $   31,594        $ 30,166        $ 67,594        $ 63,694
Bad debt:
Net defaults, including interest on
brokered loans                                     5,764           6,489          15,149          15,524
Insufficient funds fees, net of
collections                                          182             235             475             595
Change in valuation allowance                       (939 )          (123 )        (1,193 )            14
Other related costs                                   65              31             125             169

Net bad debt                                       5,072           6,632          14,556          16,302

Fee revenue less bad debt                     $   26,522        $ 23,534        $ 53,038        $ 47,392


Average signature loan balance
outstanding during period (a)                 $   28,190        $ 28,417        $ 28,902        $ 28,365
Signature loan balance at end of period
(a)                                           $   24,393        $ 25,506        $ 24,393        $ 25,506
Participating stores at end of period                559             535             559             535
Signature loan bad debt, as a percent of
fee revenue                                         16.1 %          22.0 %          21.5 %          25.6 %
Net default rate (a) (b)                             3.8 %           4.2 %           4.6 %           4.8 %

(a) Signature loan balances include payday loans (net of valuation allowance) recorded on our balance sheet and the principal portion of active brokered loans outstanding from unaffiliated lenders, the balance of which is not included on our balance sheet.

(b) Principal defaults net of collections, as a percentage of signature loans made and renewed.

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Overview
We lend or provide credit services to individuals who do not have cash resources or access to credit to meet their short-term cash needs. As of March 31, 2009, we operate a total of 898 locations. We offer pawn loans in our 371 domestic pawn stores (operating as EZPAWN or Value Pawn) and 45 Empeño Fácil Mexico pawn stores. Pawn loans are non-recourse loans collateralized by tangible personal property. At these stores, we also sell merchandise, primarily collateral forfeited from our pawn lending operations, to customers looking for good value. In our 482 EZMONEY stores (six of which are managed by our U.S. Pawn Operations) and 77 of our domestic pawn stores open March 31, 2009, we offer short-term non-collateralized loans, often called payday loans, or fee-based credit services to customers seeking loans (collectively, "signature loans"). In 139 of our EZMONEY stores and 32 of our domestic pawn stores, we offer short-term auto title loans collateralized by the titles to borrowers' automobiles. We manage our business as three segments. The U.S. Pawn Operations segment offers pawn related activities in all 371 domestic pawn stores, and offers signature loans in 77 pawn stores and six EZMONEY stores. The Empeño Fácil segment offers pawn related activities in all 45 Mexico pawn stores. The EZMONEY Operations segment offers signature loans in 476 domestic EZMONEY stores, and accounts for approximately 98% of our consolidated signature loan revenues. The following tables present store data by operating segment: