EZCORP INC 10-Q

ITEM 1. FINANCIAL STATEMENTS EZCORP, Inc. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share amounts) June 30, 2020 June 30, 2019 September 30, 2019 (Unaudited) Assets: Current assets: Cash and cash equivalents $ 311,130 $ 138,922 $ 157,567 Restricted cash 4,000 — 4,875 Pawn loans 113,290 190,299 199,058 Pawn service charges receivable, net 17,432 29,847 31,802 Inventory, net 123,112 175,802 179,355 Notes receivable, net 3,866 16,166 7,182 Prepaid expenses and other current assets 25,754 37,365 25,921 Total current assets 598,584 588,401 605,760 Investments in unconsolidated affiliates 29,483 30,922 34,516 Property and equipment, net 58,098 66,214 67,357 Lease right-of-use asset 204,591 — — Goodwill 257,326 300,700 300,527 Intangible assets, net 65,003 63,646 68,044 Notes receivable, net 1,140 10,912 1,117 Deferred tax asset, net 5,505 3,956 1,998 Other assets 4,572 4,472 4,383 Total assets $ 1,224,302 $ 1,069,223 $ 1,083,702 Liabilities and equity: Current liabilities: Current maturities of long-term debt, net $ 268 $ 215 $ 214 Accounts payable, accrued expenses and other current liabilities 58,358 59,981 77,957 Customer layaway deposits 11,902 12,750 12,915 Lease liability 48,840 — — Total current liabilities 119,368 72,946 91,086 Long-term debt, net 247,618 235,449 238,380 Deferred tax liability, net 2,165 7,522 1,985 Lease liability 167,716 — — Other long-term liabilities 7,523 5,990 7,302 Total liabilities 544,390 321,907 338,753 Commitments and contingencies (Note 11) Stockholders’ equity: Class A Non-voting Common Stock, par value $.01 per share; shares authorized: 100 million; issued and outstanding: 52,097,590 as of June 30, 2020; 52,475,070 as of June 30, 2019; and 52,565,064 as of September 30, 2019 521 524 526 Class B Voting Common Stock, convertible, par value $.01 per share; shares authorized: 3 million; issued and outstanding: 2,970,171 30 30 30 Additional paid-in capital 408,601 404,880 407,628 Retained earnings 341,517 389,808 389,163 Accumulated other comprehensive loss ( 70,757 ) ( 47,926 ) ( 52,398 ) Total equity 679,912 747,316 744,949 Total liabilities and equity $ 1,224,302 $ 1,069,223 $ 1,083,702 See accompanying notes to unaudited interim condensed consolidated financial statements. 1 Table of Contents EZCORP, Inc. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended June 30, Nine Months Ended June 30, 2020 2019 2020 2019 (Unaudited) (in thousands, except per share amounts) Revenues: Merchandise sales $ 136,537 $ 103,902 $ 393,095 $ 346,186 Jewelry scrapping sales 20,303 18,212 41,709 37,873 Pawn service charges 52,460 78,980 217,407 244,298 Other revenues 933 1,371 3,740 4,533 Total revenues 210,233 202,465 655,951 632,890 Merchandise cost of goods sold 91,859 70,271 261,711 225,183 Jewelry scrapping cost of goods sold 16,158 15,765 33,529 32,648 Other cost of revenues 32 576 1,093 1,467 Net revenues 102,184 115,853 359,618 373,592 Operating expenses: Operations 83,838 86,095 262,835 266,737 Administrative 14,688 13,685 46,797 41,814 Impairment of goodwill and intangible assets — — 47,060 — Depreciation and amortization 7,679 7,254 23,174 21,114 Loss on sale or disposal of assets and other 255 24 1,260 3,643 Total operating expenses 106,460 107,058 381,126 333,308 Operating (loss) income ( 4,276 ) 8,795 ( 21,508 ) 40,284 Interest expense 5,379 9,832 16,589 27,212 Interest income ( 628 ) ( 3,172 ) ( 2,412 ) ( 9,637 ) Equity in net (income) loss of unconsolidated affiliates 1,183 ( 1,320 ) 5,896 ( 632 ) Impairment of investment in unconsolidated affiliates — — — 19,725 Other (income) expense 8 ( 4 ) ( 282 ) ( 121 ) (Loss) income from continuing operations before income taxes ( 10,218 ) 3,459 ( 41,299 ) 3,737 Income tax (benefit) expense ( 4,751 ) 98 3,757 1,377 (Loss) income from continuing operations, net of tax ( 5,467 ) 3,361 ( 45,056 ) 2,360 Loss from discontinued operations, net of tax ( 20 ) ( 203 ) ( 67 ) ( 404 ) Net (loss) income ( 5,487 ) 3,158 ( 45,123 ) 1,956 Net loss attributable to noncontrolling interest — — — ( 1,230 ) Net (loss) income attributable to EZCORP, Inc. $ ( 5,487 ) $ 3,158 $ ( 45,123 ) $ 3,186 Basic (loss) earnings per share attributable to EZCORP, Inc. — continuing operations $ ( 0.10 ) $ 0.06 $ ( 0.81 ) $ 0.06 Diluted (loss) earnings per share attributable to EZCORP, Inc. — continuing operations $ ( 0.10 ) $ 0.06 $ ( 0.81 ) $ 0.06 Weighted-average basic shares outstanding 55,068 55,445 55,395 55,306 Weighted-average diluted shares outstanding 55,231 55,487 55,483 55,327 See accompanying notes to unaudited interim condensed consolidated financial statements. 2 Table of Contents EZCORP, Inc. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME Three Months Ended June 30, Nine Months Ended June 30, 2020 2019 2020 2019 (Unaudited) (in thousands) Net (loss) income $ ( 5,487 ) $ 3,158 $ ( 45,123 ) $ 1,956 Other comprehensive (loss) income: Foreign currency translation loss, net of income tax benefit for our investment in unconsolidated affiliate of $561 and $181 for the three and nine months ended June 30, 2020, respectively, and $45 and ($470) for the three and nine months ended June 30, 2019. 5,416 2,024 ( 18,359 ) ( 5,570 ) Comprehensive (loss) income ( 71 ) 5,182 ( 63,482 ) ( 3,614 ) Comprehensive loss attributable to noncontrolling interest — — — ( 1,230 ) Comprehensive (loss) income attributable to EZCORP, Inc. $ ( 71 ) $ 5,182 $ ( 63,482 ) $ ( 2,384 ) See accompanying notes to unaudited interim condensed consolidated financial statements. 3 Table of Contents EZCORP, Inc. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Noncontrolling Interest Total Equity Shares Par Value (Unaudited, except balances as of September 30, 2018) (in thousands) Balances as of September 30, 2018 54,585 $ 546 $ 397,927 $ 386,622 $ ( 42,356 ) $ ( 3,331 ) $ 739,408 Stock compensation — — 2,247 — — — 2,247 Release of restricted stock 860 8 — — — — 8 Taxes paid related to net share settlement of equity awards — — ( 3,288 ) — — — ( 3,288 ) Transfer of subsidiary shares to noncontrolling interest — — 3,195 — — ( 3,195 ) — Foreign currency translation loss — — — — ( 6,383 ) — ( 6,383 ) Net loss — — — ( 3,366 ) — ( 477 ) ( 3,843 ) Balances as of December 31, 2018 55,445 $ 554 $ 400,081 $ 383,256 $ ( 48,739 ) $ ( 7,003 ) $ 728,149 Stock compensation — — 2,424 — — — 2,424 Deconsolidation of subsidiary — — — — — 7,756 7,756 Foreign currency translation loss — — — — ( 1,211 ) — ( 1,211 ) Net income (loss) — — — 3,394 — ( 753 ) 2,641 Balances as of March 31, 2019 55,445 $ 554 $ 402,505 $ 386,650 $ ( 49,950 ) $ — $ 739,759 Stock compensation — — 2,375 — — — 2,375 Foreign currency translation gain — — — — 2,024 — 2,024 Net income — — — 3,158 — — 3,158 Balances as of June 30, 2019 55,445 $ 554 $ 404,880 $ 389,808 $ ( 47,926 ) $ — $ 747,316 4 Table of Contents Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Total Equity Shares Par Value (Unaudited, except balances as of September 30, 2019) (in thousands) Balances as of September 30, 2019 55,535 $ 556 $ 407,628 $ 389,163 $ ( 52,398 ) $ 744,949 Stock compensation — — 1,695 — — 1,695 Release of restricted stock 463 5 — — — 5 Taxes paid related to net share settlement of equity awards — — ( 1,395 ) — — ( 1,395 ) Foreign currency translation gain — — — — 6,071 6,071 Purchase and retirement of treasury stock ( 142 ) ( 2 ) ( 488 ) ( 473 ) — ( 963 ) Net income — — — 1,238 — 1,238 Balances as of December 31, 2019 55,856 $ 559 $ 407,440 $ 389,928 $ ( 46,327 ) $ 751,600 Stock compensation — — 930 — — 930 Release of restricted stock 13 1 — — — 1 Taxes paid related to net share settlement of equity awards — — ( 63 ) — — ( 63 ) Foreign currency translation loss — — — — ( 29,846 ) ( 29,846 ) Purchase and retirement of treasury stock ( 801 ) ( 9 ) ( 2,136 ) ( 2,050 ) — ( 4,195 ) Net loss — — — ( 40,874 ) — ( 40,874 ) Balances as of March 31, 2020 55,068 $ 551 $ 406,171 $ 347,004 $ ( 76,173 ) $ 677,553 Stock compensation — — 2,430 — — 2,430 Foreign currency translation gain — — — — 5,416 5,416 Net loss — — — ( 5,487 ) — ( 5,487 ) Balances as of June 30, 2020 55,068 $ 551 $ 408,601 $ 341,517 $ ( 70,757 ) $ 679,912 See accompanying notes to unaudited interim condensed consolidated financial statements. 5 Table of Contents EZCORP, Inc. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Nine Months Ended June 30, 2020 2019 (Unaudited) (in thousands) Operating activities: Net (loss) income $ ( 45,123 ) $ 1,956 Adjustments to reconcile net (loss) income to net cash flows from operating activities: Depreciation and amortization 23,174 21,114 Amortization of debt discount and deferred financing costs 9,814 16,613 Amortization of lease right-of-use asset 34,265 — Accretion of notes receivable discount and deferred compensation fee ( 688 ) ( 3,788 ) Deferred income taxes ( 3,327 ) 5,003 Impairment of goodwill and intangible assets 47,060 — Impairment of investment in unconsolidated affiliate — 19,725 Other adjustments 2,128 1,875 Reserve on jewelry scrap receivable — 3,646 Stock compensation expense 5,093 7,036 Equity in net loss (gain) from investment in unconsolidated affiliates 5,896 ( 632 ) Changes in operating assets and liabilities, net of business acquisitions: Service charges and fees receivable 14,076 1,301 Inventory 7,990 1,377 Prepaid expenses, other current assets and other assets ( 3,348 ) ( 4,194 ) Accounts payable, accrued expenses and other liabilities ( 40,450 ) ( 1,477 ) Customer layaway deposits ( 709 ) 949 Income taxes 514 ( 5,527 ) Net cash provided by operating activities 56,365 64,977 Investing activities: Loans made ( 442,752 ) ( 542,512 ) Loans repaid 321,718 328,079 Recovery of pawn loan principal through sale of forfeited collateral 248,290 211,979 Additions to property and equipment, net ( 20,867 ) ( 24,568 ) Acquisitions, net of cash acquired — ( 8,116 ) Principal collections on notes receivable 4,000 21,900 Net cash provided by (used in) investing activities 110,389 ( 13,238 ) Financing activities: Taxes paid related to net share settlement of equity awards ( 1,458 ) ( 3,288 ) Payout of deferred consideration ( 350 ) — Proceeds from borrowings, net of issuance costs ( 106 ) 1,064 Payments on borrowings ( 316 ) ( 195,877 ) Repurchase of common stock ( 5,158 ) — Net cash used in financing activities ( 7,388 ) ( 198,101 ) Effect of exchange rate changes on cash and cash equivalents and restricted cash ( 6,678 ) ( 294 ) Net increase (decrease) in cash, cash equivalents and restricted cash 152,688 ( 146,656 ) Cash, cash equivalents and restricted cash at beginning of period 162,442 285,578 Cash, cash equivalents and restricted cash at end of period $ 315,130 $ 138,922 Non-cash investing and financing activities: Pawn loans forfeited and transferred to inventory $ 200,160 $ 221,940 See accompanying notes to unaudited interim condensed consolidated financial statements. 6 Table of Contents EZCORP, Inc. Notes to Interim Condensed Consolidated Financial Statements (Unaudited) June 30, 2020 NOTE 1: ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of Business When used in this report, the terms “we,” “us,” “our,” “EZCORP” and the “Company” mean EZCORP, Inc. and its consolidated subsidiaries, collectively. We are a leading provider of pawn loans in the United States and Latin America. Pawn loans are non-recourse loans collateralized by tangible property. We also sell merchandise, primarily collateral forfeited from pawn lending operations and used merchandise purchased from customers. Additionally, we operate a small number of financial services stores in Canada. Basis of Presentation The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. Our management has included all adjustments it considers necessary for a fair presentation and which are of a normal, recurring nature. All intercompany accounts and transactions have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to current year presentation. The accompanying financial statements should be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended September 30, 2019 . The balance sheet as of September 30, 2019 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. Our business is subject to seasonal variations, and operating results for the three and nine months ended June 30, 2020 and 2019 (the "current quarter" and "current nine-months" and "prior-year quarter" and "prior-year nine-months," respectively) are not necessarily indicative of the results of operations for the full fiscal year. There have been no changes in significant accounting policies as described in our Annual Report on Form 10-K for the year ended September 30, 2019 , other than those described below and in Note 12 . Use of Estimates and Assumptions The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. The Company regularly evaluates estimates and judgments, including those related to revenue recognition, inventories, loan loss allowances, long-lived and intangible assets, share-based compensation, income taxes, contingencies and litigation. The Company bases its estimates on historical experience, observable trends and various other assumptions that it believes to be reasonable under the circumstances. We use this information to make judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. Actual results may differ materially and adversely from the Company's estimates under different assumptions or conditions. Impact of COVID-19 In December 2019, a novel strain of coronavirus “COVID-19” was identified in Wuhan, China. COVID-19 has caused a global health emergency and was declared a worldwide pandemic by the World Health Organization on March 11, 2020. In an effort to slow and contain the spread of COVID-19, local, state and national governments implemented various measures, which have impacted businesses worldwide. The Company began to see the impact of COVID-19 to our operations in mid-March when the closure of non-essential businesses and the implementation of stay-at-home requirements began in our geographic locations. During the third quarter, we were able to keep virtually all of our stores in the U.S. and Mexico open for business and operating under enhanced safety measures and restrictions on occupancy, but store closure orders in our GPMX countries (Guatemala, El Salvador, Honduras and Peru) had a more severe impact on our business. Starting in mid-March and continuing through most of the third quarter, we experienced a significant decline in pawn loan originations and associated loan balances as a result of a change in customer borrowing behaviors due to COVID-19. This 7 Table of Contents reduced activity resulted in net revenue losses during the current quarter, which were partially offset by a strong increase in merchandise sales during the period. The full extent and duration of the COVID-19 impact on the global economy generally, and on our business specifically, is currently unknown and cannot be reasonably estimated. The pandemic will have an adverse effect on our net revenues and earnings in fiscal 2020 and we expect the impact of the pandemic, and the recovery therefrom, will continue to adversely affect net revenues and earnings into fiscal 2021. A prolonged pandemic and recovery may have an adverse effect on our results of operations, financial position and liquidity in future periods. Recently Adopted Accounting Policies In March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform (Topic 848) — Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate. ASU 2020-04 is effective upon issuance through December 31, 2022. This ASU has not had a significant impact on the Company's consolidated financial statements and related disclosures to date. The Company will continue to assess the applicability to any future arrangements. Effective October 1, 2019, the Company adopted ASU 2016-02, Leases (Topic 842), which requires companies to recognize operating and financing lease liabilities and corresponding right-of-use assets on the balance sheet using the optional prospective transition method provided under ASU 2018-11, Leases- (Topic 842): Targeted Improvements. Additionally, the Company elected the package of practical expedients under Accounting Standards Codification ("ASC") 842 as well as the transition guidance elections to not separate lease and non-lease components for leases under ASC 842. Further, the Company has elected an accounting policy to not record right-of-use assets and lease liabilities for leases that have a duration of 12-months or less. See Note 5 for additional discussion. Recently Issued Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326) (ASU 2016-13"). ASU 2016-13 modifies the measurement of expected credit losses of certain financial instruments, requiring entities to estimate an expected lifetime credit loss on financial assets. The ASU amends the impairment model to utilize an expected loss methodology and replaces the incurred loss methodology for financial instruments including trade receivables. The amendment requires entities to consider other factors, such as economic conditions and future economic conditions. A reporting entity should generally apply the amendment on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the amendment is effective. The Company is still assessing the amendments in ASU 2016-13 and does not expect the amendments will have a significant impact on the Company's consolidated financial statements and related disclosures. ASU 2016-13 is effective for the first quarter of fiscal 2021. NOTE 2: GOODWILL AND INTANGIBLE ASSETS We test goodwill and intangible assets with indefinite useful lives for potential impairment annually, or more frequently when there are events or circumstances that indicate it is more likely than not that an impairment exists. During the second quarter of fiscal 2020, we evaluated such events and circumstances and concluded there was an indicator of impairment due to a decline in our market capitalization. We performed a quantitative analysis as of March 31, 2020 utilizing the income approach. The income approach is based on the present value of future cash flows, which are derived from our long-term financial forecasts, and requires significant assumptions, including, among others, a discount rate and terminal value. There is inherent uncertainty associated with these key assumptions including the duration of the economic downturn associated with COVID-19 and the recovery period. As a result of our quantitative analysis, we determined the fair value of each of our reporting units was below its carrying value because of the impact of COVID-19, including a significant decline in pawn loan balances due to changes in typical customer behavior and mandated store closures in our GPMX countries. These factors impacted the forecast of future net revenues and earnings and resulted in lower present value of future cash flows. This led to a goodwill impairment charge of $ 41.3 million in the second quarter of fiscal 2020. In addition, we (a) determined an impairment had occurred in the fair values of acquired trade names of previously acquired entities in our Mexico and GPMX reporting units and recorded a related impairment of $ 2.9 million and $ 1.7 million respectively, and (b) determined the carrying amount of certain long-lived asset groups were not recoverable and recorded a related impairment of $ 1.1 million in the second quarter of 2020. These impairments were recorded under "Impairment of goodwill and intangible assets" in the condensed consolidated statements of operations. We further evaluated events and circumstances as of June 30, 2020 and determined there were no impairment indicators. We will continue to evaluate our goodwill and intangible assets in future quarters, and note that we could be required to record additional impairments based on events and circumstances. 8 Table of Contents The changes in the carrying amount of goodwill by reportable segment for fiscal 2020 were as follows: Nine Months Ended June 30, 2020 U.S. Pawn Latin America Pawn Consolidated (in millions) Balance at September 30, 2019 $ 251.9 $ 46.7 $ 298.6 Impairment charge $ ( 10.0 ) $ ( 31.3 ) $ ( 41.3 ) Balance at June 30, 2020 241.9 15.4 257.3 Cumulative goodwill impairment charges $ 10.0 $ 31.3 $ 41.3 NOTE 3: ACQUISITIONS In June 2019, the Company acquired assets related to seven pawn stores operating under the name "Metro Pawn" in Nevada, entering the Reno market and expanding our presence in the Las Vegas metropolitan area, for an aggregate purchase price of $ 7.0 million in cash, of which $ 3.9 million was recorded as goodwill. In December 2018, we acquired assets related to five pawn stores in Mexico for an aggregate purchase price of $ 0.3 million in cash, of which $ 0.1 million was recorded as goodwill. Substantially all goodwill attributable to the fiscal 2019 acquisitions is deductible for tax purposes. We have concluded that these acquisitions were immaterial to our overall consolidated financial results and, therefore, have omitted information that would otherwise be required. 9 Table of Contents NOTE 4: EARNINGS PER SHARE Components of basic and diluted earnings per share and excluded antidilutive potential common shares are as follows: Three Months Ended June 30, Nine Months Ended June 30, 2020 2019 2020 2019 (in thousands, except per share amounts) Net (loss) income from continuing operations attributable to EZCORP (A) $ ( 5,467 ) $ 3,361 $ ( 45,056 ) $ 3,590 Loss from discontinued operations, net of tax (B) ( 20 ) ( 203 ) ( 67 ) ( 404 ) Net (loss) income attributable to EZCORP (C) $ ( 5,487 ) $ 3,158 $ ( 45,123 ) $ 3,186 Weighted-average outstanding shares of common stock (D) 55,068 55,445 55,395 55,306 Dilutive effect of restricted stock* 163 42 88 21 Weighted-average common stock and common stock equivalents (E) 55,231 55,487 55,483 55,327 Basic (loss) earnings per share attributable to EZCORP: Continuing operations (A / D) $ ( 0.10 ) $ 0.06 $ ( 0.81 ) $ 0.06 Discontinued operations (B / D) — — — — Basic (loss) earnings per share (C / D) $ ( 0.10 ) $ 0.06 $ ( 0.81 ) $ 0.06 Diluted (loss) earnings per share attributable to EZCORP: Continuing operations (A / E) $ ( 0.10 ) $ 0.06 $ ( 0.81 ) $ 0.06 Discontinued operations (B / E) — — — — Diluted (loss) earnings per share (C / E) $ ( 0.10 ) $ 0.06 $ ( 0.81 ) $ 0.06 Potential common shares excluded from the calculation of diluted earnings per share above*: Restricted stock** 3,042 2,891 2,677 2,804 * Includes time-based share-based awards and Convertible Note Warrants. See Note 8 for discussion of the terms and conditions of the potential impact of the 2019 Convertible Notes Warrants, 2024 Convertible Notes and 2025 Convertible Notes. ** Includes antidilutive share-based awards as well as performance-based and market conditioned share-based awards that are contingently issuable, but for which the condition for issuance has not been met as of the end of the reporting period. NOTE 5: LEASES Effective October 1, 2019, the Company adopted ASU 2016-02, Leases (Topic 842). The Company's lease portfolio consists primarily of operating leases for pawn locations and corporate offices. Those leases have initial terms ranging from three to ten years and typically allows for renewals in increments of three to five -years. The Company generally accounts for the initial lease term of our pawn locations as up to ten years , including renewal options. Our primary corporate office is leased through March 2029 with escalating rent payments annually and includes two five -year extension options at the end of the initial lease term. Our pawn location lease agreements generally include rent escalations throughout the initial lease term, with certain future rental payments contingent on increases in the consumer price index, included in variable lease expense. The Company elected to utilize the transition guidance accounting policy elections available, including to not account for lease and non-lease components separately. Lease components generally include rent, taxes and insurance, while non-lease components generally include common area or other maintenance. The Company determines if an arrangement is or contains a lease at inception. The weighted-average remaining lease term for operating leases as of June 30, 2020 was 5.58 years . As our leases generally do not include an implicit rate, we compute our incremental borrowing rate based on information available at the lease commencement date applying the portfolio approach to groups of leases with similar characteristics. The Company used incremental borrowing rates that match the duration of the remaining lease terms of our operating leases on a fully collateralized basis upon adoption to initially measure our lease liability. The weighted average incremental borrowing rate used to measure the lease liability as of June 30, 2020 was 8.25 % . 10 Table of Contents The details of the Company's right-of-use asset and lease liability recognized upon adoption of ASC 842, computed based on the consumer price index and foreign currency exchange rate as applicable then in effect and excluding executory costs on October 1, 2019 are as follows (in thousands): Right-of-use asset $ 246,028 Straight-line rent accrual ( 8,479 ) $ 237,549 Lease liability, current $ 45,272 Lease liability, non-current 200,756 $ 246,028 Lease expense is recognized on a straight-line basis over the lease term with variable lease expense recognized in the period in which the costs are incurred. The components of lease expense included in "Operations" and "Administrative" expense, based on the underlying lease use, in our condensed consolidated statements of operations for the three and nine months ended June 30, 2020 are as follows (in thousands): Three Months Ended June 30, Nine Months Ended June 30, 2020 2020 Operating lease expense $ 15,624 $ 47,603 Variable lease expense 3,025 8,925 $ 18,649 $ 56,528 As of June 30, 2020 , maturities of lease liabilities by fiscal year were as follows (in thousands): Three months ending September 30, 2020 $ 19,161 Fiscal 2021 59,546 Fiscal 2022 50,481 Fiscal 2023 40,609 Fiscal 2024 31,154 Thereafter 70,094 $ 271,045 Less: Portion representing interest ( 54,489 ) $ 216,556 Less: Current portion 48,840 Total long term lease liability $ 167,716 Prior to the adoption of ASC 842, future minimum undiscounted lease payments due under non-cancelable leases as of September 30, 2019 for each subsequent fiscal year were as follows (in thousands): 2020 $ 69,291 2021 60,588 2022 46,720 2023 32,062 2024 19,969 Thereafter 39,256 $ 267,886 We present changes in the lease right-of-use asset and lease liabilities gross in the Company's condensed consolidated statements of cash flows. The supplemental cash flow information relating to our operating leases for the nine months ended 11 Table of Contents June 30, 2020 is as follows (in thousands): Lease right-of-use assets obtained in exchange for operating lease liabilities subsequent to adoption of Topic 842 $ 10,136 NOTE 6: STRATEGIC INVESTMENTS As of June 30, 2020 , the Company owned 214,183,714 shares, or approximately 34.75 % , of Cash Converters International Limited ("Cash Converters International"). The following tables present summary financial information for Cash Converters International’s most recently reported results at December 31, 2019 after translation to U.S. dollars: December 31, 2019 2018 (in thousands) Current assets $ 164,906 $ 172,836 Non-current assets 199,277 151,492 Total assets $ 364,183 $ 324,328 Current liabilities $ 93,958 $ 81,165 Non-current liabilities 60,503 22,109 Shareholders’ equity 209,722 221,054 Total liabilities and shareholders’ equity $ 364,183 $ 324,328 Half-Year Ended December 31, 2019 2018 (in thousands) Gross revenues $ 98,531 $ 99,390 Gross profit 59,250 56,884 Net loss ( 13,280 ) ( 3,791 ) On October 21, 2019, Cash Converters International agreed to settle a class action lawsuit previously filed on behalf of borrowers residing in Queensland, Australia who took out personal loans from Cash Converters International between July 30, 2009 and June 30, 2013. Cash Converters International agreed to pay AUD $ 42.5 million , subject to court approval. The Company recorded a charge, net of tax, of $ 7.1 million for its proportionate share of the settlement in the first quarter of fiscal 2020 related to this event, in addition to the Company's share of earnings from Cash Converters International. See Note 7 for the fair value and carrying value of the Company's investment in Cash Converters International. NOTE 7: FAIR VALUE MEASUREMENTS The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy prioritizes the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined into the following three categories: • Level 1 — Quoted market prices in active markets for identical assets or liabilities. • Level 2 — Other observable market-based inputs or unobservable inputs that are corroborated by market data. • Level 3 — Unobservable inputs that are not corroborated by market data. We have elected not to measure at fair value any eligible items for which fair value measurement is optional. There were no transfers in or out of Level 1, Level 2 or Level 3 for financial assets or liabilities measured at fair value on a recurring basis during the periods presented. 12 Table of Contents The tables below present our financial assets and liabilities that are not measured at fair value on a recurring basis: Carrying Value Estimated Fair Value June 30, 2020 June 30, 2020 Fair Value Measurement Using Level 1 Level 2 Level 3 (in thousands) Financial assets: Notes receivable from Grupo Finmart, net $ 3,866 $ 3,945 $ — $ — $ 3,945 2.89% promissory note receivable due April 2024 1,140 1,140 — — 1,140 Investments in unconsolidated affiliates 29,483 33,602 25,779 — 7,823 Financial liabilities: 2024 Convertible Notes $ 115,681 $ 130,669 $ — $ 130,669 $ — 2025 Convertible Notes 131,378 125,235 — 125,235 — 8.5% unsecured debt due 2024 998 998 — — 998 CASHMAX secured borrowing facility ( 171 ) 295 — — 295 Carrying Value Estimated Fair Value June 30, 2019 June 30, 2019 Fair Value Measurement Using Level 1 Level 2 Level 3 (in thousands) Financial assets: Notes receivable from Grupo Finmart, net $ 18,744 $ 19,517 $ — $ — $ 19,517 Zero-coupon convertible promissory note due January 2021 7,226 7,226 — — 7,226 2.89% promissory note receivable due April 2024 1,108 1,108 — — 1,108 Investments in unconsolidated affiliates 30,922 27,158 24,464 — 2,694 Financial liabilities: 2024 Convertible Notes 109,909 161,719 — 161,719 — 2025 Convertible Notes 124,542 159,873 — 159,873 — 8.5% unsecured debt due 2024 1,148 1,148 — — 1,148 CASHMAX secured borrowing facility 65 804 — — 804 Carrying Value Estimated Fair Value September 30, 2019 September 30, 2019 Fair Value Measurement Using Level 1 Level 2 Level 3 (in thousands) Financial assets: Notes receivable from Grupo Finmart, net $ 7,182 $ 7,582 $ — $ — $ 7,582 2.89% promissory note receivable due April 2024 1,117 1,117 — — 1,117 Investments in unconsolidated affiliates 34,516 28,308 20,252 — 8,056 Financial liabilities: 2024 Convertible Notes $ 111,311 $ 139,969 $ — $ 139,969 $ — 2025 Convertible Notes 126,210 138,345 — 138,345 — 8.5% unsecured debt due 2024 1,092 1,092 — — 1,092 CASHMAX secured borrowing facility ( 19 ) 634 — — 634 13 Table of Contents As a result of the impact of COVID-19, certain of the above fair values as of June 30, 2020 may be highly volatile. We estimate the carrying value of our cash and cash equivalents, pawn loans, pawn service charges receivable, current consumer loans, fees and interest receivable and other debt approximate fair value. We consider our cash and cash equivalents to be measured using Level 1 inputs and our pawn loans, pawn service charges receivable, consumer loans, fees and interest receivable and other debt to be measured using Level 3 inputs. Significant increases or decreases in the underlying assumptions used to value pawn loans, pawn service charges receivable, consumer loans, fees and interest receivable and other debt could significantly increase or decrease these fair value estimates. We measured the fair value of the remaining deferred compensation fee due in September 2020 from the sale of Prestaciones Finmart, S.A.P.I. de C.V., SOFOM, E.N.R. ("Grupo Finmart") to Alpha Holding, S.A. de C.V. (“AlphaCredit”) in September 2016 as of June 30, 2020 under a discounted cash flow approach considering the estimated credit ratings for Grupo Finmart and AlphaCredit, with discount rates of primarily 5 % . Certain of the significant inputs used for the valuation were not observable in the market. Significant increases or decreases in the underlying assumptions used to value the notes receivable could significantly increase or decrease these fair value estimates. We remain obligated to indemnify AlphaCredit for any tax obligations arising from the Grupo Finmart business that are attributable to periods prior to the completion of the sale in September 2016, referred to as “pre-closing taxes.” Those obligations continue until the expiration of the statute of limitations applicable to the pre-closing periods. In August 2019, AlphaCredit notified us of an indemnity claim for certain pre-closing taxes, but the nature, extent and validity of such claim has yet to be determined. In March 2020, AlphaCredit paid $ 4.0 million of the remaining deferred compensation into an escrow account pending resolution of the claim; we recorded that amount under “Restricted cash” in our condensed consolidated balance sheet as of June 30, 2020 . We reviewed the financial statements of Grupo Finmart and AlphaCredit including the calculation of synthetic credit spreads as described above in making our determination that the Parent Loan Notes are collectible on an ongoing basis. The Company uses the equity method of accounting for its 13 % ownership in a previously consolidated variable interest entity ("RDC") over which we no longer have the power to direct the activities that most significantly affect its economic performance. We believe its fair value approximates carrying value although such fair value is highly variable and includes significant unobservable inputs. The Company measured the fair value of the 2024 and 2025 Convertible Notes using quoted price inputs. The notes are not actively traded, and thus the price inputs represent a Level 2 measurement. As the quoted price inputs are highly variable from day to day, the fair value estimates disclosed above could significantly increase or decrease. NOTE 8: DEBT The following tables present the Company's debt instruments outstanding, contractual maturities and interest expense: June 30, 2020 June 30, 2019 September 30, 2019 Gross Amount Debt Discount and Issuance Costs Carrying Amount Gross Amount Debt Discount and Issuance Costs Carrying Amount Gross Amount Debt Discount and Issuance Costs Carrying Amount (in thousands) 2024 Convertible Notes 143,750 ( 28,069 ) 115,681 143,750 ( 33,841 ) 109,909 143,750 ( 32,439 ) 111,311 2025 Convertible Notes 172,500 ( 41,122 ) 131,378 172,500 ( 47,958 ) 124,542 172,500 ( 46,290 ) 126,210 8.5% unsecured debt due 2024* 998 — 998 1,148 — 1,148 1,092 — 1,092 CASHMAX secured borrowing facility* 295 ( 466 ) ( 171 ) 804 ( 739 ) 65 634 ( 653 ) ( 19 ) Total $ 317,543 $ ( 69,657 ) $ 247,886 $ 318,202 $ ( 82,538 ) $ 235,664 $ 317,976 $ ( 79,382 ) $ 238,594 Less current portion 268 — 268 215 — 215 214 — 214 Total long-term debt $ 317,275 $ ( 69,657 ) $ 247,618 $ 317,987 $ ( 82,538 ) $ 235,449 $ 317,762 $ ( 79,382 ) $ 238,380 * Amount translated from Guatemalan quetzals and Canadian dollars as of applicable period end. Certain disclosures omitted due to materiality considerations. 14 Table of Contents Schedule of Contractual Maturities Total Less Than 1 Year 1 - 3 Years 3 - 5 Years More Than 5 Years (in thousands) 2024 Convertible Notes* $ 143,750 $ — $ — $ 143,750 $ — 2025 Convertible Notes* 172,500 — — 172,500 — 8.5% unsecured debt due 2024 998 268 430 300 — CASHMAX secured borrowing facility 295 — 295 — — $ 317,543 $ 268 $ 725 $ 316,550 $ — * Excludes the potential impact of embedded derivatives as discussed below. Three Months Ended June 30, Nine Months Ended June 30, 2020 2019 2020 2019 (in thousands) 2019 Convertible Notes: Contractual interest expense $ — $ 896 $ — $ 3,034 Amortization of debt discount and deferred financing costs — 2,314 — 7,567 Total interest expense $ — $ 3,210 $ — $ 10,601 2024 Convertible Notes: Contractual interest expense $ 1,033 $ 1,033 $ 3,100 $ 3,099 Amortization of debt discount and deferred financing costs 1,484 1,376 4,370 4,051 Total interest expense $ 2,517 $ 2,409 $ 7,470 $ 7,150 2025 Convertible Notes: Contractual interest expense $ 1,024 $ 1,024 $ 3,072 $ 3,072 Amortization of debt discount and deferred financing costs 1,754 1,630 5,168 4,806 Total interest expense $ 2,778 $ 2,654 $ 8,240 $ 7,878 2.375 % Convertible Senior Notes Due 2025 In May 2018, the Company issued $ 172.5 million aggregate principal amount of 2.375 % Convertible Senior Notes Due 2025 (the “2025 Convertible Notes”). The 2025 Convertible Notes were issued pursuant to an indenture dated May 14, 2018 (the "2018 Indenture") by and between the Company and Wells Fargo Bank, National Association, as the original trustee. The 2025 Convertible Notes were issued in a private offering under Rule 144A under the Securities Act of 1933. The 2025 Convertible Notes pay interest semi-annually in arrears at a rate of 2.375 % per annum on May 1 and November 1 of each year, commencing November 1, 2018, and mature on May 1, 2025 (the "2025 Maturity Date"), unless converted, redeemed or repurchased in accordance with the terms prior to such date. The carrying amount of the 2025 Convertible Notes as a separate equity-classified instrument (the “2025 Convertible Notes Embedded Derivative”) included in “Additional paid-in capital” in our condensed consolidated balance sheets as of June 30, 2020 was $ 39.0 million . The effective interest rate for the three and nine months ended June 30, 2020 was approximately 9 % . As of June 30, 2020 , the remaining unamortized debt discount and issuance costs will be amortized through the 2025 Maturity Date assuming no early conversion. The 2025 Convertible Notes are convertible into cash or shares of Class A Non-voting Common Stock ("Class A Common Stock"), or any combination thereof, at the Company's option subject to satisfaction of certain conditions and during the periods described in the 2018 Indenture, based on an initial conversion rate of 62.8931 shares of Class A Common Stock per $1,000 principal amount of 2025 Convertible Notes (equivalent to an initial conversion price of $ 15.90 per share of the Company's Class A Common Stock). The Company accounts for the Class A Common Stock issuable upon conversion under the treasury stock method. To the extent the Company's average share price is over $ 15.90 per share for any fiscal quarter or year-to-date period, the Company is required to recognize incremental dilution of the Company's earnings per share. If, among other triggers described in the 2018 Indenture, the market price of the Company's Class A Common Stock meets the threshold based on at least 20 of the final 30 trading days of the quarter for the 2025 Convertible Notes to become convertible at the option of the holders during the subsequent quarter, the Company may be required to classify the 2025 Convertible Notes as current on the Company's condensed consolidated balance sheets for each quarter in which such triggers are met. The stock 15 Table of Contents trading price condition and other triggers are measured on a quarter-by-quarter basis and were not met as of June 30, 2020 . As of June 30, 2020 , the if-converted value of the 2025 Convertible Notes did not exceed the principal amount. 2.875 % Convertible Senior Notes Due 2024 In July 2017, the Company issued $ 143.75 million aggregate principal amount of 2.875 % Convertible Senior Notes Due 2024 (the “2024 Convertible Notes”). The 2024 Convertible Notes were issued pursuant to an indenture dated July 5, 2017 (the "2017 Indenture") by and between the Company and Wells Fargo Bank, National Association, as the original trustee. The 2024 Convertible Notes were issued in a private offering under Rule 144A under the Securities Act of 1933. The 2024 Convertible Notes pay interest semi-annually in arrears at a rate of 2.875 % per annum on January 1 and July 1 of each year, commencing January 1, 2018, and mature on July 1, 2024 (the "2024 Maturity Date"), unless converted, redeemed or repurchased in accordance with the terms prior to such date. The carrying amount of the 2024 Convertible Notes as a separate equity-classified instrument (the “2024 Convertible Notes Embedded Derivative”) included in “Additional paid-in capital” in our condensed consolidated balance sheets of June 30, 2020 was $ 25.3 million . The effective interest rate for the three and nine months ended June 30, 2020 was approximately 9 % . As of June 30, 2020 , the remaining unamortized debt discount and issuance costs will be amortized through the 2024 Maturity Date assuming no early conversion. The 2024 Convertible Notes are convertible into cash or shares of Class A Common Stock, or any combination thereof, at the Company's option subject to satisfaction of certain conditions and during the periods described in the 2017 Indenture, based on an initial conversion rate of 100 shares of Class A Common Stock per $1,000 principal amount of 2024 Convertible Notes (equivalent to an initial conversion price of $ 10.00 per share of the Company's Class A Common Stock). The Company accounts for the Class A Common Stock issuable upon conversion under the treasury stock method. To the extent the Company's average share price is over $ 10.00 per share for any fiscal quarter, the Company is required to recognize incremental dilution of our earnings per share. If, among other triggers described in the 2017 Indenture, the market price of the Company's Class A Common Stock meets the threshold based on at least 20 of the final 30 trading days of the quarter for the 2024 Convertible Notes to become convertible at the option of the holders during the subsequent quarter, the Company may be required to classify the 2024 Convertible Notes as current on the Company's condensed consolidated balance sheets for each quarter in which such triggers are met. The stock trading price condition and other triggers are measured on a quarter-by-quarter basis and were not met as of June 30, 2020 . As of June 30, 2020 , the if-converted value of the 2024 Convertible Notes did not exceed the principal amount. 2.125 % Cash Convertible Senior Notes Due 2019 In June 2014, the Company issued $ 200 million aggregate principal amount of 2.125 % Cash Convertible Senior Notes Due 2019 (the "2019 Convertible Notes"), with an additional $ 30 million principal amount of 2019 Convertible Notes issued in July 2014. In July 2017, the Company used $ 34.4 million of net proceeds from the 2024 Convertible Notes offering to repurchase and retire $ 35.0 million aggregate principal amount of 2019 Convertible Notes. The 2019 Convertible Notes paid interest semi-annually in arrears at a rate of 2.125 % per annum on June 15 and December 15 of each year. The 2019 Convertible Notes matured on June 15, 2019 (the "2019 Maturity Date") , and the remaining $ 195.0 million aggregate principal amount outstanding plus accrued interest was repaid using cash on hand. 2019 Convertible Notes Warrants In connection with the issuance of the 2019 Convertible Notes, the Company also sold net-share-settled warrants (the “2019 Convertible Notes Warrants”). The 2019 Convertible Notes Warrants allowed for the purchase of up to approximately 14.3 million shares of the Company's Class A Common Stock at a strike price of $ 20.83 per share. The Company accounted for the Class A Common Stock issuable upon exercise under the treasury stock method. The 2019 Convertible Notes Warrants began to expire on a daily basis after we repaid the 2019 Convertible Notes and the last of the unexpired 2019 Convertible Notes Warrants expired in May 2020. As of June 30, 2020, there were no 2019 Convertible Notes Warrants outstanding, and no shares of Class A Common Stock were ever issued pursuant to the 2019 Convertible Notes Warrants. 16 Table of Contents CASHMAX Secured Borrowing Facility In November 2018, the Company entered into a receivable's securitization facility with a third-party lender (the "lender") to provide funding for installment loan originations in our Canadian CASHMAX business. Under the facility, a variable interest entity (the "trust") has the right, subject to various conditions, to borrow up to CAD $ 25 million from the lender (the "third-party loan") and use the proceeds to purchase interests in installment loan receivables generated by CASHMAX. The trust uses collections on the transferred receivables to pay various amounts in accordance with an agreed priority arrangement, including expenses, its obligations under the third-party loan and, to the extent available, amounts owned to CASHMAX with respect to the purchase price of the transferred receivables and CASHMAX's retained interest in the receivables. CASHMAX has no obligation with respect to the third-party loan or the transferred receivables except to (a) service the underlying installment loans on behalf of the trust and (b) pay amounts owed under or repurchase the underlying installment loans in the event of a breach by CASHMAX or in certain other limited circumstances. The facility is nonrecourse to EZCORP (subject to certain limited guaranty obligations), allowed borrowing through November 2019, and fully matures in November 2021. The Company's obligation under the facility as of June 30, 2020 was $ 0.3 million . NOTE 9: COMMON STOCK AND STOCK COMPENSATION Common Stock Repurchase Program In December 2019, the Company's Board of Directors (the "Board") authorized the repurchase of up to $ 60.0 million of our Class A Common Stock over three years . Repurchases under the program were suspended in March 2020 in order to preserve liquidity as a result of uncertainties regarding the COVID-19 pandemic. No share repurchases under the program were made during the third quarter. During the nine months ended June 30, 2020 , the Company repurchased and retired 943,149 shares of our Class A Common Stock for $ 5.2 million , which amount was allocated between "Additional paid-in capital" and "Retained earnings" in the Company's condensed consolidated balance sheets. Stock Compensation As of September 30, 2019, the EZCORP, Inc. 2010 Long-Term Incentive Plan, which has been approved by the Company's Board, permitted grants of options, restricted stock awards and stock appreciation rights covering up to 5,485,649 shares of the Company's Class A Common Stock. During the first quarter of fiscal 2020, the Company granted a total of 222,912 restricted stock awards to nine non-employee directors. These awards vest on September 30, 2020 and are subject only to service conditions. The number of long-term incentive award shares and units granted are generally determined based on the Company share price as of the beginning of the fiscal year, which was $ 6.46 for fiscal 2020 awards. NOTE 10: INCOME TAXES On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law and includes certain income tax provisions relevant to businesses. The Company recognized the effect on the consolidated financial statements in the period the law was enacted in, the period ended March 31, 2020. For the period ended June 30, 2020, the CARES Act has not had a material impact on the Company’s consolidated financial statements. At this time, the Company does not expect the impact of the CARES Act to have a material impact on the Company’s consolidated financial statements for the year ending September 30, 2020. NOTE 11: CONTINGENCIES Currently and from time to time, the Company is involved in various claims, suits, investigations and legal proceedings. While we are unable to determine the ultimate outcome of any current litigation or regulatory actions, we believe their resolution will not have a material adverse effect on our financial condition, results of operations or liquidity. 17 Table of Contents NOTE 12: SEGMENT INFORMATION During the first quarter of fiscal 2020, the Company revised its financial information our chief operating decision maker (our chief executive officer) reviews for operational decision-making purposes and for allocation of capital to include the separate financial results of our Lana business. The Company's historical segment results have been recast to conform to current presentation. The Company currently reports segment information as follows: U.S. Pawn — all pawn activities in the United States; Latin America Pawn — all pawn activities in Mexico and other parts of Latin America; Lana — our differentiated customer-centric engagement platform; and Other International — primarily the Company's equity interest in the net income of Cash Converters International and consumer finance activities in Canada. There are no inter-segment revenues presented below, and the amounts below were determined in accordance with the same accounting principles used in the Company's condensed consolidated financial statements. While we expect the operations of the Lana segment to have a positive impact on pawn loan redemption rates and therefore pawn service charges and yield, the pawn service charges will all be reported in our pawn segments rather than allocated to the Lana segment. Only discrete revenues related to the Lana segment will be reported in the Lana segment results. As a digital offering, Lana has no separate physical store locations. Three Months Ended June 30, 2020 U.S. Pawn Latin America Pawn Lana Other International Total Segments Corporate Items Consolidated (in thousands) Revenues: Merchandise sales $ 116,258 $ 20,279 $ — $ — $ 136,537 $ — $ 136,537 Jewelry scrapping sales 17,129 3,174 — — 20,303 — 20,303 Pawn service charges 41,069 11,391 — — 52,460 — 52,460 Other revenues 40 — 9 884 933 — 933 Total revenues 174,496 34,844 9 884 210,233 — 210,233 Merchandise cost of goods sold 75,838 16,021 — — 91,859 — 91,859 Jewelry scrapping cost of goods sold 12,875 3,283 — — 16,158 — 16,158 Other cost of revenues — 32 — — 32 — 32 Net revenues 85,783 15,508 9 884 102,184 — 102,184 Segment and corporate expenses (income): Operations 66,243 15,041 1,497 1,057 83,838 — 83,838 Administrative — — — — — 14,688 14,688 Depreciation and amortization 2,749 1,647 337 3 4,736 2,943 7,679 Loss (gain) on sale or disposal of assets and other 234 23 — ( 20 ) 237 18 255 Interest expense — — 36 140 176 5,203 5,379 Interest income — ( 404 ) — — ( 404 ) ( 224 ) ( 628 ) Equity in net loss of unconsolidated affiliates — — — 1,183 1,183 — 1,183 Impairment of goodwill and intangible assets — — — — — — — Other (income) expense — ( 61 ) — ( 5 ) ( 66 ) 74 8 Segment contribution (loss) $ 16,557 $ ( 738 ) $ ( 1,861 ) $ ( 1,474 ) $ 12,484 Income (loss) from continuing operations before income taxes $ 12,484 $ ( 22,702 ) $ ( 10,218 ) 18 Table of Contents Three Months Ended June 30, 2019 U.S. Pawn Latin America Pawn Lana Other International Total Segments Corporate Items Consolidated (in thousands) Revenues: Merchandise sales $ 83,904 $ 19,998 $ — $ — $ 103,902 $ — $ 103,902 Jewelry scrapping sales 13,889 4,323 — — 18,212 — 18,212 Pawn service charges 58,635 20,345 — — 78,980 — 78,980 Other revenues 34 67 — 1,270 1,371 — 1,371 Total revenues 156,462 44,733 — 1,270 202,465 — 202,465 Merchandise cost of goods sold 52,855 17,416 — — 70,271 — 70,271 Jewelry scrapping cost of goods sold 11,599 4,166 — — 15,765 — 15,765 Other cost of revenues — — — 576 576 — 576 Net revenues 92,008 23,151 — 694 115,853 — 115,853 Segment and corporate expenses (income): Operations 65,449 18,284 1,368 994 86,095 — 86,095 Administrative — — — — — 13,685 13,685 Depreciation and amortization 2,934 1,626 — 72 4,632 2,622 7,254 (Gain) loss on sale or disposal of assets and other 4 ( 8 ) — 6 2 22 24 Interest expense — 1,491 — 76 1,567 8,265 9,832 Interest income — ( 376 ) — — ( 376 ) ( 2,796 ) ( 3,172 ) Equity in net income of unconsolidated affiliates — — — ( 1,320 ) ( 1,320 ) — ( 1,320 ) Impairment of investment in unconsolidated affiliates — — — — — — — Other expense (income) — 34 — 6 40 ( 44 ) ( 4 ) Segment contribution (loss) $ 23,621 $ 2,100 $ ( 1,368 ) $ 860 $ 25,213 Income from continuing operations before income taxes $ 25,213 $ ( 21,754 ) $ 3,459 19 Table of Contents Nine Months Ended June 30, 2020 U.S. Pawn Latin America Pawn Lana Other International Total Segments Corporate Items Consolidated (in thousands) Revenues: Merchandise sales $ 314,059 $ 79,036 $ — $ — $ 393,095 $ — $ 393,095 Jewelry scrapping sales 32,905 8,804 — — 41,709 — 41,709 Pawn service charges 166,859 50,548 — — 217,407 — 217,407 Other revenues 107 50 13 3,570 3,740 — 3,740 Total revenues 513,930 138,438 13 3,570 655,951 — 655,951 Merchandise cost of goods sold 202,488 59,223 — — 261,711 — 261,711 Jewelry scrapping cost of goods sold 25,430 8,099 — — 33,529 — 33,529 Other cost of revenues — 69 — 1,024 1,093 — 1,093 Net revenues 286,012 71,047 13 2,546 359,618 — 359,618 Segment and corporate expenses (income): Operations 201,921 53,493 3,571 3,850 262,835 — 262,835 Administrative — — — — — 46,797 46,797 Depreciation and amortization 8,325 5,476 726 60 14,587 8,587 23,174 Loss (gain) on sale or disposal of assets and other 234 ( 72 ) — ( 20 ) 142 1,118 1,260 Interest expense — 430 — 464 894 15,695 16,589 Interest income — ( 1,161 ) — — ( 1,161 ) ( 1,251 ) ( 2,412 ) Equity in net loss of unconsolidated affiliates — — — 5,896 5,896 — 5,896 Impairment of goodwill and intangible assets 10,000 35,936 — 1,124 47,060 — 47,060 Other (income) expense — ( 303 ) — 14 ( 289 ) 7 ( 282 ) Segment contribution (loss) $ 65,532 $ ( 22,752 ) $ ( 4,284 ) $ ( 8,842 ) $ 29,654 Income (loss) from continuing operations before income taxes $ 29,654 $ ( 70,953 ) $ ( 41,299 ) 20 Table of Contents Nine Months Ended June 30, 2019 U.S. Pawn Latin America Pawn Lana Other International Total Segments Corporate Items Consolidated (in thousands) Revenues: Merchandise sales $ 275,639 $ 70,547 $ — $ — $ 346,186 $ — $ 346,186 Jewelry scrapping sales 28,357 9,516 — — 37,873 — 37,873 Pawn service charges 184,658 59,640 — — 244,298 — 244,298 Other revenues 125 134 — 4,274 4,533 — 4,533 Total revenues 488,779 139,837 — 4,274 632,890 — 632,890 Merchandise cost of goods sold 172,931 52,252 — — 225,183 — 225,183 Jewelry scrapping cost of goods sold 23,680 8,968 — — 32,648 — 32,648 Other cost of revenues — — — 1,467 1,467 — 1,467 Net revenues 292,168 78,617 — 2,807 373,592 — 373,592 Segment and corporate expenses (income): Operations 200,884 54,703 4,981 6,169 266,737 — 266,737 Administrative — — — — — 41,814 41,814 Depreciation and amortization 8,951 4,543 — 190 13,684 7,430 21,114 Loss on sale or disposal of assets and other 2,856 743 — 22 3,621 22 3,643 Interest expense — 1,570 — 280 1,850 25,362 27,212 Interest income — ( 1,226 ) — — ( 1,226 ) ( 8,411 ) ( 9,637 ) Equity in net loss of unconsolidated affiliates — — — ( 632 ) ( 632 ) — ( 632 ) Impairment of investment in unconsolidated affiliates — — — 19,725 19,725 — 19,725 Other (income) expense — ( 63 ) — 290 227 ( 348 ) ( 121 ) Segment contribution (loss) $ 79,477 $ 18,347 $ ( 4,981 ) $ ( 23,237 ) $ 69,606 Income from continuing operations before income taxes $ 69,606 $ ( 65,869 ) $ 3,737 21 Table of Contents NOTE 13: SUPPLEMENTAL CONSOLIDATED FINANCIAL INFORMATION The following table provides supplemental information on net amounts included in the Company's condensed consolidated balance sheets and condensed consolidated statements of cash flows: June 30, 2020 June 30, 2019 September 30, 2019 (in thousands) Cash and cash equivalents $ 311,130 $ 138,922 $ 157,567 Restricted cash 4,000 — 4,875 Cash and cash equivalents and restricted cash $ 315,130 $ 138,922 $ 162,442 Gross pawn service charges receivable $ 23,674 $ 39,443 $ 41,838 Allowance for uncollectible pawn service charges receivable ( 6,242 ) ( 9,596 ) ( 10,036 ) Pawn service charges receivable, net $ 17,432 $ 29,847 $ 31,802 Gross inventory $ 133,319 $ 184,886 $ 189,092 Inventory reserves ( 10,207 ) ( 9,084 ) ( 9,737 ) Inventory, net $ 123,112 $ 175,802 $ 179,355 Prepaid expenses and other $ 8,980 $ 13,189 $ 4,784 Accounts receivable and other 6,813 20,335 10,889 Income taxes receivable 9,961 3,841 10,248 Prepaid expenses and other current assets $ 25,754 $ 37,365 $ 25,921 Property and equipment, gross $ 265,149 $ 260,216 $ 265,922 Accumulated depreciation ( 207,051 ) ( 194,002 ) ( 198,565 ) Property and equipment, net $ 58,098 $ 66,214 $ 67,357 Accounts payable $ 15,304 $ 18,329 $ 25,946 Accrued expenses and other 43,054 41,652 52,011 Accounts payable, accrued expenses and other current liabilities $ 58,358 $ 59,981 $ 77,957 NOTE 14: SUBSEQUENT EVENTS During July 2020, in conjunction with the ongoing evaluation of our strategic direction, we reviewed a variety of strategic alternatives for our CashMax business and related operations in Canada and concluded that a shutdown of the business was the preferred alternative. We do not expect this shutdown will have a major effect on the Company's operations and financial results as this business represents approximately 1 % of total revenues and less than 1 % of total assets as of June 30, 2020 and does not represent a major geographical area. We expect the shutdown will be completed during the fourth quarter of fiscal 2020 and will result in charges of approximately $ 8.0 - $ 10.0 million , which will be recorded in the results of operations for the fourth quarter.