<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
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)
(512) 314-3400
--------------
(Registrant's telephone number, including area code)
NA
--
(Former name, former address and former fiscal year,
if changed since last report)
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 |_|
APPLICABLE ONLY TO CORPORATE ISSUERS:
The only class of voting securities of the registrant issued and
outstanding is the Class B Voting Common Stock, par value $.01 per share, 100%
of which is owned by two record holders. There is no trading market for the
Class B Voting Common Stock.
As of March 31, 1997, 10,515,530 shares of the registrant's Class A
Non-Voting Common Stock, par value $.01 per share and 1,480,301 shares of the
registrant's Class B Voting Common Stock, par value $.01 per share were
outstanding.
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<PAGE>
EZCORP, INC.
INDEX TO FORM 10-Q
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets -
March 31, 1997 and September 30, 1996.......................... 1
Condensed Consolidated Statements of Operations -
Three and Six Months Ended March 31, 1997 and 1996............. 2
Condensed Consolidated Statements of Cash Flows -
Six Months Ended March 31, 1997 and 1996....................... 3
Notes to Interim Condensed Consolidated Financial Statements... 4
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations............... 6
PART II. OTHER INFORMATION.................................................. 10
SIGNATURE................................................................... 12
<PAGE>
PART I
Item 1. Financial Statements (Unaudited)
EZCORP, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
March 31, September 30,
1997 1996
--------- ---------
<S> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents $ 3,321 $ 1,419
Pawn loans receivable 33,488 34,636
Service charge receivable 9,939 10,262
Inventories (net) 30,760 35,834
Other 4,808 5,138
--------- ---------
Total current assets 82,316 87,289
Property and equipment, net 33,644 34,266
Other assets:
Excess purchase price over net assets acquired 12,862 13,099
Other 5,409 5,712
--------- ---------
Total assets $ 134,231 $ 140,366
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Current maturities of long-term debt $ 8 $ 172
Accounts payable and accrued expenses 6,762 8,183
Other 2,624 2,776
--------- ---------
Total current liabilities 9,394 11,131
Long-term debt less current maturities 8,138 16,244
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; 10,524,563 shares issued
and 10,515,530 shares outstanding at March 31, 1997 (9,728,904
issued and 9,719,871 outstanding at September 30, 1996) 105 97
Class B Voting Common stock, par value $.01 a share -
Authorized 2,274,969 shares; 1,480,301 shares issued and
outstanding at March 31, 1997 (2,270,863 shares issued and
outstanding at September 30, 1996) 15 23
Additional paid-in capital 114,338 114,301
Retained earnings 3,005 (666)
--------- ---------
117,463 113,755
Other (764) (764)
--------- ---------
Total stockholders' equity 116,699 112,991
--------- ---------
Total liabilities and stockholders' equity $ 134,231 $ 140,366
========= =========
</TABLE>
See Notes to Interim Condensed Consolidated Financial Statements (unaudited).
1
<PAGE>
EZCORP, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations (Unaudited)
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
---------------------------- ----------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues:
Sales $ 28,108 $ 28,721 $ 55,209 $ 60,837
Pawn service charges 18,188 16,797 36,929 36,112
----------- ----------- ----------- -----------
Total revenues 46,296 45,518 92,138 96,949
Cost of goods sold 23,018 24,837 45,531 52,830
----------- ----------- ----------- -----------
Net revenues 23,278 20,681 46,607 44,119
Operating expenses:
Operations 15,433 15,214 30,446 31,769
Administrative 2,990 2,732 6,184 5,673
Depreciation and amortization 1,828 1,851 3,716 3,745
----------- ----------- ----------- -----------
Total operating expenses 20,251 19,797 40,346 41,187
----------- ----------- ----------- -----------
Operating income 3,027 884 6,261 2,932
Interest expense 232 521 522 1,283
----------- ----------- ----------- -----------
Income before income taxes 2,795 363 5,739 1,649
Income tax expense 1,026 145 2,067 607
----------- ----------- ----------- -----------
Net income $ 1,769 $ 218 $ 3,672 $ 1,042
=========== =========== =========== ===========
Earnings per share $ 0.15 $ 0.02 $ 0.31 $ 0.09
=========== =========== =========== ===========
Weighted average shares outstanding 11,995,831 11,990,723 11,994,262 11,985,721
=========== =========== =========== ===========
</TABLE>
See Notes to Interim Condensed Consolidated Financial Statements (unaudited).
2
<PAGE>
EZCORP, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
Six Months Ended
March 31,
-----------------------
1997 1996
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 3,672 $ 1,042
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 3,716 3,745
Deferred income taxes (103) --
Changes in operating assets and liabilities:
Decrease in service charge receivable 323 2,781
Decrease in inventories 5,074 5,447
Decrease in accounts payable and accrued expenses (1,360) (1,477)
Increase in customer layaway deposits 27
Decrease in income taxes payable (180) --
Decrease in income taxes recoverable -- 4,236
Other 525 656
-------- --------
Net cash provided by operating activities 11,694 16,430
INVESTING ACTIVITIES:
Pawn loans forfeited and transferred to inventories 23,349 28,722
Pawn loans made (71,502) (74,630)
Pawn loans repaid 49,301 56,797
-------- --------
Net decrease in loans 1,148 10,889
Additions to property, plant, and equipment (2,669) (2,184)
Sale of assets -- 761
-------- --------
Net cash provided/(used) in investing activities (1,521) 9,466
FINANCING ACTIVITIES:
Proceeds from bank borrowings 3,000 1,000
Payments on borrowings (11,271) (21,589)
-------- --------
Net cash used by financing activities (8,271) (20,589)
-------- --------
Increase in cash and cash equivalents 1,902 5,307
Cash and cash equivalents at beginning of period 1,419 4,593
-------- --------
Cash and cash equivalents at end of period $ 3,321 $ 9,900
======== ========
</TABLE>
See Notes to Interim Condensed Consolidated Financial Statements (unaudited).
3
<PAGE>
EZCORP, Inc. and Subsidiaries
Notes to Interim Condensed Consolidated Financial Statements (Unaudited)
March 31, 1997
Note A - Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring entries) considered necessary for a fair presentation have
been included. The accompanying financial statements should be read with the
Notes to Consolidated Financial Statements included in the Company's Annual
Report on Form 10-K for the year ended September 30, 1996.
The Company's business is subject to seasonal variations, and operating
results for the three- and six-month periods ended March 31, 1997 are not
necessarily indicative of the results of operations for the full fiscal year.
Note B - Accounting Principles and Practices
The provision for federal income taxes has been calculated based on the
Company's estimate of its effective tax rate for the full fiscal year.
The Company provides inventory reserves for shrinkage and cost in excess of
market value. The Company estimates these reserves using analysis of sales
trends, inventory aging, sales margins and shrinkage on inventory. As of March
31, 1997, inventory reserves were $6.9 million.
During fiscal 1995, the Company established a $7.7 million provision for
the closing and consolidation of thirty-two (32) of its stores and for the
write-down of included tangible and intangible assets. As of March 31, 1997, all
of these stores have been closed. The March 31, 1997 accrued liability for store
closings is $0.2 million, principally for estimated rent obligations.
In October 1995, the Financial Accounting Standards Board issued Statement
No. 123, "Accounting for Stock Based Compensation" which prescribes accounting
and reporting standards for all stock-based compensation plans. The Company has
determined it will continue to account for its stock based compensation plans in
accordance with Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees." The Company will not expense the fair value of stock
based compensation, but will provide proforma footnote disclosures in the annual
report of what net income would have been had the Company adopted the new fair
value method for recognition purposes.
Note C - Earnings Per Share
Earnings per share calculations assume exercise of all outstanding stock
options and warrants using the treasury stock method of calculation. The per
share calculation excludes these common equivalent shares as their effect is
anti-dilutive.
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, "Earnings per Share" which is required to be adopted on December 31,
1997. At that time, the Company will be required to change the method currently
used to compute earnings per share and to restate all prior periods. Under the
new requirements for calculating primary earnings per share, the dilutive effect
of stock options will be excluded. The impact of Statement 128 will not affect
the current calculation of primary
4
<PAGE>
EZCORP, Inc. and Subsidiaries
Notes to Interim Condensed Consolidated Financial Statements (Unaudited)
March 31, 1997
Note C - Earnings Per Share (continued)
and fully diluted earnings per share for the quarters and six months ended March
31, 1997 and 1996, respectively, as the common equivalent shares for these stock
options are anti-dilutive.
Note D - Litigation
The Company is involved in litigation relating to claims that arise from
time to time from normal business operations. Currently, the Company is a
defendant in several lawsuits. Some of these lawsuits involve claims for
substantial amounts. While the ultimate outcome of these lawsuits involving the
Company cannot be ascertained, after consultation with counsel, it is
management's opinion that the resolution of these suits will not have a material
adverse effect on the Company's financial condition or results of operations;
however, there can be no assurance as to the ultimate outcome of these matters.
On July 28, 1995, the Company terminated the Employment Agreement of
Courtland L. Logue, Jr., the Company's former Chairman and Chief Executive
Officer, and an owner of approximately 19% of the Company's outstanding voting
securities (Class B Voting Common Stock). Since Mr. Logue's termination, the
Company has had ongoing discussions with him concerning certain equipment leases
and other matters of dispute between Mr. Logue and the Company, as well as the
application of provisions to Mr. Logue's Employment Agreement and Stock Purchase
Agreement with the Company. On March 8, 1996, the Company filed a lawsuit styled
EZCORP, Inc. v. Courtland L. Logue, Jr. in the 201st District Court of Travis
County, Texas to declare Mr. Logue's employment contract terminated and, as a
result, to permit the Company to recover approximately $2.7 million in damages
pursuant to the terms of Mr. Logue's Stock Purchase Agreement. Mr. Logue filed
counter-claims to recover monetary damages relating to the Employment Agreement
and certain equipment leases and notes entered into between Mr. Logue and the
Company. The Company has been advised that the trial court intends to rule that
the Company may not recover from Mr. Logue, under the terms of the performance
right provision, as that provision, according to the trial court, represents an
unenforceable penalty and not, as the Company believes, an enforceable
liquidated damage provision. However, the Company has asserted other claims
against Mr. Logue for the recovery of significant monetary damages. The case is
in the discovery phase, with a trial expected later in 1997.
Note E - Subsequent Event
On May 9, 1997 the Company amended its November 29, 1994 revolving line of
credit. The amended revolving line of credit matures January 30, 2000. Terms of
the amended agreement require, among other things, that the Company meet certain
financial covenants. The previous requirement to provide the bank group a first
lien security interest in certain assets of the Company has been removed.
Borrowings under the line bear interest at the bank's Eurodollar rate plus 0.75%
to 1.5%. The amount which the Company can borrow is based on a percentage of its
inventory levels and outstanding pawn loan balance, up to $50 million.
5
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Second Quarter Ended March 31, 1997 vs. Second Quarter Ended March 31, 1996
The discussion in this section of this report contains forward-looking
statements that involve risks and uncertainties. The Company's actual results
could differ materially from those discussed herein. Factors that could cause or
contribute to such differences include, but are not limited to, those discussed
in this section and those discussed elsewhere in this report.
The following table sets forth selected, unaudited, consolidated financial
data with respect to the Company for the three months ended March 31, 1997 and
1996.
<TABLE>
<CAPTION>
Three Months Ended
March 31,(a) % or
-------------------------- Point
1997 1996 Change(b)
-------------------------- ---------
<S> <C> <C> <C>
Net Revenues:
Sales $ 28,108 $ 28,721 (2.1%)
Pawn service charges 18,188 16,797 8.3%
--------- ---------
Total revenues 46,296 45,518 1.7%
Cost goods sold 23,018 24,837 (7.3%)
--------- ---------
Net revenues $ 23,278 $ 20,681 12.6%
========= =========
Other Data:
Gross profit as a percent of sales 18.1% 13.5% 4.6 pts.
Average annual inventory turnover 2.8x 2.5x 0.3x
Average inventory balance per location as of the
end of the quarter $ 125 $ 151 (17.2%)
Average loan balance per location as of the end
of the quarter $ 136 $ 120 13.3%
Average yield on loan portfolio 212% 212% 0.0 pts.
Redemption rate 80% 78% 2.0 pts.
Expenses as a Percent of Total Revenues:
Operating 33.3% 33.4% (0.1) pt.
Administrative 6.5 6.0 0.5 pt.
Depreciation and amortization 3.9 4.1 (0.2) pt.
Interest, net 0.5 1.1 (0.6) pt.
Locations in Operation:
Beginning of period 248 238
Acquired 0 --
Established 1 2
Sold, combined or closed (2) --
--------- ---------
End of period 247 240
========= =========
Average locations in operation during the period(c) 247.5 239.0
========= =========
</TABLE>
- ------------------------------
(a) Figures in thousands, except percentages, inventory turnover and store
count.
(b) In comparing the period differences between dollar amounts or store counts,
a percentage change is used. In comparing the period differences between
two percentages, a percentage point (pt.) change is used.
(c) Average locations in operation during the period is calculated based on the
average of the stores operating at the beginning and end of such period.
6
<PAGE>
Six Months Ended March 31, 1997 vs. Six Months Ended March 31, 1996
The discussion in this section of this report contains forward-looking
statements that involve risks and uncertainties. The Company's actual results
could differ materially from those discussed herein. Factors that could cause or
contribute to such differences include, but are not limited to, those discussed
in this section and those discussed elsewhere in this report.
The following table sets forth selected, unaudited, consolidated financial
data with respect to the Company for the six months ended March 31, 1997 and
1996.
<TABLE>
<CAPTION>
Six Months Ended
March 31,(a) % or
-------------------------- Point
1997 1996 Change(b)
-------------------------- ---------
<S> <C> <C> <C>
Net Revenues:
Sales $ 55,209 $ 60,837 (9.3%)
Pawn service charges 36,929 36,112 2.3%
--------- ---------
Total revenues 92,138 96,949 (5.0%)
Cost of goods sold 45,531 52,830 (13.8%)
--------- ---------
Net revenues $ 46,607 $ 44,119 5.6%
========= =========
Other Data:
Gross profit as a percent of sales 17.5% 13.2% 4.3 pts.
Average annual inventory turnover 2.6x 2.5x 0.1x
Average inventory balance per location as of the
end of the quarter $ 125 $ 151 (17.2%)
Average loan balance per location as of the end
of the quarter $ 136 $ 120 13.3%
Average yield on loan portfolio 214% 209% 5.0 pts.
Redemption rate 79% 77% 2.0 pts.
Expenses as a Percent of Total Revenues:
Operating 33.0% 32.8% 0.2 pt.
Administrative 6.7 5.9 0.8 pt.
Depreciation and amortization 4.0 3.9 0.1 pt.
Interest, net 0.6 1.3 (0.7) pt.
Locations in Operation:
Beginning of period 246 261
Acquired 0 --
Established 3 4
Sold, combined or closed (2) (25)
--------- ---------
End of period 247 240
========= =========
Average locations in operation during the period(c) 246.5 250.5
========= =========
</TABLE>
- ------------------------------
(a) Figures in thousands, except percentages, inventory turnover and store
count.
(b) In comparing the period differences between dollar amounts or store counts,
a percentage change is used. In comparing the period differences between
two percentages, a percentage point (pt.) change is used.
(c) Average locations in operation during the period is calculated based on the
average of the stores operating at the beginning and end of such period.
7
<PAGE>
Results of Operations
The following discussion compares results for the three- and six-month
periods ended March 31, 1997 ("Fiscal 1997 Periods") to the three- and six-month
periods ended March 31, 1996 ("Fiscal 1996 Periods"). The discussion should be
read in conjunction with the accompanying financial statements and related
notes.
During the three-month Fiscal 1997 Period, the Company opened one (1) newly
established store and closed two stores. During the twelve (12) months ended
March 31, 1997, the Company opened ten (10) newly established stores and closed
three (3) stores. The two stores closed during the three-month Fiscal 1997
Period were the result of the Company's ongoing review of its store portfolio.
At March 31, 1997, the Company operated 247 stores in twelve (12) states.
The Company's primary activity is the making of small, non-recourse loans
secured by tangible personal property. The income earned on this activity is
pawn service charge revenue. For the three month period ended March 31, 1997,
pawn service charge revenue increased $1.4 million to $18.2 million. This
resulted from an increase in same store pawn service charge revenue ($1.3
million) and the pawn service charge revenue from new stores not open the full
three-month period ($0.1 million). At March 31, 1997, same store pawn loan
balances were 15% above March 31, 1996 while the annualized yield on the average
pawn loan balance remained unchanged at 212%.
For the six-month period, pawn service charge revenue increased $0.8
million to $36.9 million. The increase was due to an increase in annualized
yield earned on the loan balance from 209% to 214%. Pawn service charge revenue
of ten (10) stores that opened during the preceding twelve (12) months ($0.3
million) was offset by the stores that closed ($0.3 million).
A secondary, but related, activity of the Company is the sale of
merchandise, primarily collateral forfeited from its lending activity. For the
three-month Fiscal 1997 Period, merchandise sales decreased approximately $0.6
million from the Fiscal 1996 Period to approximately $28.1 million. A decline in
same store merchandise sales ($0.1 million), merchandise sales of the closed
stores ($0.1 million), and a decrease in scrap and wholesale jewelry sales ($1.1
million) were partially offset by new store sales ($0.7 million). Same store
sales for the three-month Fiscal 1997 Period declined one percent from the
Fiscal 1996 Period primarily as a result of a 17% reduction in inventory levels
per store (approximately $125,000 at the end of the Fiscal 1997 Period as
compared to $151,000 at the end of the Fiscal 1996 Period).
For the six-month Fiscal 1997 Period, merchandise sales decreased
approximately $5.6 million from the Fiscal 1996 Period to approximately $55.2
million. A decline in same store merchandise sales ($2.8 million), merchandise
sales of the closed stores ($0.6 million), and the decrease in scrap and
wholesale jewelry sales ($3.8 million) were partially offset by new store sales
($1.6 million). Same store sales for the six-month Fiscal 1997 Period declined
five percent from the Fiscal 1996 Period largely due to the decline in per store
inventory levels referred to above.
For the three- and six-month Fiscal 1997 Periods, respectively, gross
profits as a percentage of merchandise sales increased 4.6 and 4.3 percentage
points, to 18.1% and 17.5%, from the Fiscal 1996 Periods. This increase results
from an improvement in margins on merchandise sales (2.3 and 1.8 percentage
points), a reduction in inventory shrinkage when measured as a percentage of
merchandise sales (1.1 percentage points for both the three- and six-month
periods) and improved gross profit on wholesale and scrap jewelry sales (1.2 and
1.4 percentage points).
The Company's gross margin level (gross profit as a percentage of
merchandise sales) results from, among other factors, the composition, quality
and age of its inventory. At March 31, 1997, and 1996, respectively, the
Company's inventories consisted of approximately 65 and 63 percent jewelry (e.g.
ladies' and men's rings, chains, bracelets, etc.) and 35 and 37 percent general
merchandise (e.g., televisions, VCRs, tools, sporting goods, musical
instruments, firearms, etc.). At March 31, 1997 and 1996, respectively, 80% and
77% of the jewelry was less than twelve months old based on the Company's
8
<PAGE>
date of acquisition (date of forfeiture for collateral or date of purchase) as
was approximately 90% and 86% of the general merchandise inventory for both
periods.
For the three-month Fiscal 1997 Period, operating expenses as a percentage
of total revenues decreased 0.1 percentage point to 33.3% from the Fiscal 1996
Period. For the six-month Fiscal 1997 Period, operating expenses as a percentage
of total revenues increased 0.2 percentage point to 33.0%. Administrative
expenses increased 0.5 and 0.8 percentage point in the Fiscal 1997 Periods to
6.5% and 6.7%, primarily as a result of a higher level of administrative expense
relative to the change in total revenues.
Depreciation and amortization expense decreased 0.2 percentage point in the
three-month Fiscal 1997 Period primarily as a result of the 1.7% increase in
total revenues. Depreciation and amortization for the six-month Fiscal 1997
Period increased 0.1 percentage point primarily as a result of the higher level
of depreciation on the ten (10) newly established stores added since March 31,
1996. Interest expense was down 0.6 and 0.7 percentage point in the Fiscal 1997
Periods compared to the prior year period largely as a result of decreased
borrowings under the Company's bank line of credit.
Liquidity and Capital Resources
Net cash provided by operating activities for the Fiscal 1997 Period was
$11.7 million as compared to $16.4 million provided in the Fiscal 1996 Period. A
portion of the Fiscal 1996 operating cash flow is the result of income tax
refunds from the carryback of the Company's Fiscal 1995 net operating loss and
the lower level of taxes payable resulting from the carryforward of this net
operating loss. Net cash used by investing activities was $1.5 million for the
Fiscal 1997 Period compared to $9.5 million provided in the Fiscal 1996 Period.
The change is due to a smaller decrease in pawn loan balances in the Fiscal 1997
Period compared to the Fiscal 1996 Period and higher levels of capital
expenditures for the Fiscal 1997 Period.
In the Fiscal 1997 Period, the Company invested approximately $2.7 million,
including investments in leasehold improvements and equipment for existing
stores and three (3) newly established stores. The Company funded these
expenditures largely from cash flow provided by operating activities. The
Company plans to open approximately 10 to 15 stores and remodel 5 to 10 stores
in the 1997 fiscal year. The Company anticipates that cash flow from operations
and funds available under its existing bank line of credit should be adequate to
fund these capital expenditures and expected pawn loan growth during the coming
year.
The Company's current revolving line of credit agreement was amended on May
9, 1997 and matures January 30, 2000. That agreement requires, among other
things, that the Company meet certain financial covenants. Borrowings under the
line bear interest at the bank's Eurodollar rate plus 0.75% to 1.5%. The amount
which the Company can borrow is based on a percentage of its inventory levels
and outstanding pawn loan balance, up to $50.0 million. At March 31, 1997, the
Company had approximately $8.0 million outstanding on the credit facility and
additional borrowing capacity of approximately $29.0 million.
Seasonality
Historically, pawn service charge revenues are highest in the fourth fiscal
quarter (July, August and September) due to higher loan demand during the summer
months and merchandise sales are highest in the first fiscal quarter (October,
November and December) due to the holiday season.
9
<PAGE>
PART II
Item 1. Legal Proceedings
On July 28, 1995, the Company terminated the Employment Agreement of
Courtland L. Logue, Jr., the Company's former Chairman and Chief Executive
Officer, and an owner of approximately 19% of the Company's outstanding voting
securities (Class B Voting Common Stock). Since Mr. Logue's termination, the
Company has had ongoing discussions with him concerning certain equipment leases
and other matters of dispute between Mr. Logue and the Company, as well as the
application of provisions to Mr. Logue's Employment Agreement and Stock Purchase
Agreement with the Company. On March 8, 1996, the Company filed a lawsuit styled
EZCORP, Inc. v. Courtland L. Logue, Jr. in the 201st District Court of Travis
County, Texas to declare Mr. Logue's employment contract terminated and, as a
result, to permit the Company to recover approximately $2.7 million in damages
pursuant to the terms of Mr. Logue's Stock Purchase Agreement. Mr. Logue filed
counter-claims to recover monetary damages relating to the Employment Agreement
and certain equipment leases and notes entered into between Mr. Logue and the
Company. The Company has been advised that the trial court intends to rule that
the Company may not recover from Mr. Logue, under the terms of the performance
right provision, as that provision, according to the trial court, represents an
unenforceable penalty and not, as the Company believes, an enforceable
liquidated damage provision. However, the Company has asserted other claims
against Mr. Logue for the recovery of significant monetary damages. The case is
in the discovery phase, with a trial expected later in 1997.
Item 2. Changes in Securities
Not Applicable
Item 3. Defaults Upon Senior Securities
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
On March 5, 1997, the majority shareholder of the Class B Voting Common
Stock approved Ernst & Young LLP to serve as the Company's auditors for the
ensuing year and elected the following persons as directors of the Company:
Sterling B. Brinkley Mark C. Pickup
Vincent A. Lambiase Richard D. Sage
Dan N. Tonissen John E. Cay, III
J. Jefferson Dean
The Company's Class B Voting Common Stock was the only class entitled to
vote on these matters. The majority shareholder of the Company holds 1,194,884
shares of the 1,480,301 shares of outstanding Class B Voting Common Stock.
Item 5. Other Information
Not Applicable
10
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits Incorporated by
Number Description Reference to
------ ----------- ------------
Exhibit 10.75 Fourth Amendment to Amended and Filed herewith
Restated Loan Agreement Between the
Company and Wells Fargo Bank (formerly
First Interstate Bank of Texas, N.A.), as
Agent, RE: Revolving Credit Loan
Exhibit 11.1 Statement Regarding Computation Filed herewith
of Per Share Earnings
(b) Reports on Form 8-K
The Company has not filed any reports on Form 8-K for the quarter ended
March 31, 1997.
11
<PAGE>
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: May 15, 1997 By: /s/ DAN N. TONISSEN
------------------------------------
(Signature)
Dan N. Tonissen
Senior Vice President and
Chief Financial Officer
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Exhibit 10.75
FOURTH AMENDMENT TO AMENDED AND RESTATED
LOAN AGREEMENT
THIS FOURTH AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT (the
"Amendment"), entered into as of May 9, 1997 among EZCORP, INC., a Delaware
corporation ("Borrower"), each of the Banks, and WELLS FARGO BANK (TEXAS),
NATIONAL ASSOCIATION, a national banking association (formerly known as First
Interstate Bank of Texas, N.A.), as Agent for itself and the other Banks (in
such capacity, together with its successors in such capacity the "Agent") and as
the Issuing Bank.
RECITALS:
A. Borrower, Agent, Banks and Issuing Bank have previously entered into
that certain Amended and Restated Loan Agreement dated as of November 29, 1994
as amended by (i) that certain First Amendment to Amended and Restated Loan
Agreement effective as of February 15, 1995, (ii) that certain Second Amendment
to Amended and Restated Loan Agreement and Waiver dated as of August 3, 1995
(the "Second Amendment"), and (iii) that certain Third Amendment to Amended and
Restated Loan Agreement effective as of June 24, 1996 (as amended, the
"Agreement").
B. Borrower, Agent, Banks and Issuing Bank now desire to amend the
Agreement to revise a pricing provision, extend the Revolving Credit Loan
Termination Date, amend the Borrowing Base provisions, release the collateral
and revise certain financial and other covenants as hereinafter more
specifically provided.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto agree as follows:
ARTICLE I.
Definitions
I.1 Definitions. All capitalized terms not otherwise defined herein, shall
have the same meanings as in the Agreement, as amended hereby.
ARTICLE II.
Amendments
II.1 Definitions. Effective as of the date hereof:
(a)The definitions of "Borrowing Base," "Eligible Accounts," "Eligible
Inventory," "Fixed Charge Coverage," "Non-Operating Subsidiary," "Operating
Subsidiary," and "Subsidiary Security Agreement" appearing in Section 1.1
of the Agreement are hereby deleted.
(b)The definitions of "Applicable Rate," "EBITDA Coverage,"
"Guarantor," and "Revolving Credit Loan Termination Date" appearing in
Section 1.1 of the Agreement are hereby amended and restated in their
entirety to read as follows:
'Applicable Rate' means: (a) during the period that an Advance is a
Prime Rate Advance, the Prime Rate; and (b) during the period that a
Revolving Credit Loan is a Eurodollar Advance, the Adjusted Eurodollar
Rate, plus the Eurodollar Margin.
'EBITDA Coverage' means, for each Fiscal Quarter, the quotient
determined by dividing (i) net income before federal income taxes,
depreciation, amortization and interest expense and Rental (herein
defined) of the Borrower and its consolidated subsidiaries for such
Fiscal
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Quarter and the prior three (3) Fiscal Quarters by (ii) the sum of the
contractual principal payments of any Long Term Debt due during such
Fiscal Quarter and the prior three (3) Fiscal Quarters plus interest
expense, Rental, Maintenance Capital Expenditures (herein defined) and
dividends of the Borrower and its consolidated Subsidiaries for such
Fiscal Quarter and the prior three (3) Fiscal Quarters. As used herein
the term "Rental" means the amounts paid by the Borrower and each
Subsidiary to lease facilities for business operations. As used
herein, the phrase "Maintenance Capital Expenditures" means total
capital expenditures less capital expenditures due to (i)
acquisitions, (ii) new stores, (iii) store relocations, and (iv)
information systems up to a cumulative amount of Three Million Five
Hundred Thousand Dollars ($3,500,000.00) from and after May 9, 1997.
'Guarantor' means each and every wholly-owned Subsidiary of Borrower
whether now in existence or hereafter created which include but are
not limited to the following: Texas EZPAWN Management, Inc., a
Delaware corporation, Texas EZPAWN L.P., a Texas limited partnership
("TELP"), and EZPAWN Holdings, Inc. (formerly EZPAWN Texas, Inc.),
EZPAWN Oklahoma, Inc., d/b/a EZPAWN Okie, Inc., EZPAWN Arkansas, Inc.,
EZPAWN Colorado, Inc., EZPAWN Alabama, Inc., dba EZPW Alabama, Inc.,
EZPAWN Tennessee, Inc., EZPAWN Georgia, Inc., and EZPAWN Indiana,
Inc., EZPAWN Florida, Inc., d/b/a EZPW Florida, Inc., EZPAWN Kansas,
Inc., EZPAWN Kentucky, Inc., EZPAWN Missouri, Inc., EZPAWN Nevada,
Inc., EZPAWN North Carolina, Inc., EZPAWN South Carolina, Inc., EZPAWN
Louisiana, Inc., EZ Car Sales, Inc., and EZPAWN Construction, Inc.,
all of which are Delaware corporations.
'Revolving Credit Loan Termination Date' means 10:00 A.M. Austin,
Texas time on January 30, 2000, or such earlier date and time on which
the Commitments terminate as provided in this Agreement."
(c)The following definitions are hereby added to Section 1.1 of the
Agreement in the proper alphabetical order:
'Borrowing Cap' means, at any particular time, an amount equal to the
lesser of (i) the Commitments or (ii) the sum of sixty-five percent (65%)
of Pawn Receivables and Service Charge Receivables, plus thirty-five
percent (35%) of Inventory, in each case as shown on the most recent
quarterly financial statements delivered pursuant to Section 8.1(b) of this
Agreement.
'Eurodollar Margin' shall have the meaning set forth in Section 2.9A."
II.2 Commitments. Effective as of the date hereof, clause (A) of Section
2.1 of the Agreement is hereby amended to read as follows:
"(A) the Commitments"
II.3 Swing Loans. Effective as of the date hereof, clause (i) of the first
sentence of Section 2.7(a) of the Agreement is hereby amended to read as
follows:
"(i) which when added to the then outstanding Revolving Credit Loan
Advances plus the outstanding Letter of Credit Liabilities plus the
outstanding Swing Loan Advances would exceed the Commitments,"
II.4 Fees. Effective as of the date hereof:
(a) Section 2.9 of the Agreement is hereby amended and restated in its
entirety as follows:
"2.9 Fees. (a) The Borrower agrees to pay to the Agent for the account
of the Banks as hereinafter provided, a Facility Fee (herein so
called) in an amount equal to five
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<PAGE>
one-hundredths of one percent (0.05%) of the total Commitments per
annum based on a 360 day year payable in arrears on each Quarterly
Payment Date and on the Revolving Credit Loan Termination Date. The
Agent shall pay the Facility Fee to the Banks on a pro rata basis. (b)
On or prior to each September 30 during the term hereof, the Borrower
agrees to pay to the Agent for the account of the Agent an annual
agent fee in an amount to be agreed to by the Borrower and the Agent
pursuant to a side letter agreement. (c) The Borrower agrees to pay to
the Agent for the account of the Banks a Commitment Fee (herein so
called) on the average daily unused amount of such Bank's Commitment
for the period from and including the date of this Agreement to and
including the Revolving Credit Loan Termination Date, at the rate
specified in Section 2.9A below, based on a 360 day year and the
actual number of days elapsed. The accrued Commitment Fee shall be
payable in arrears on each Quarterly Payment Date and on the Revolving
Credit Loan Termination Date."
(b) The following Section 2.9A is hereby added after Section 2.9 of
the Agreement:
"2.9A Determination of Eurodollar Margin and Commitment Fee. The
Eurodollar Margin and the Commitment Fee shall be defined and
determined as follows:
'Commitment Fee' shall mean (i) during the period from May 9,
1997 and ending on but not including the first Adjustment Date
(as defined below), thirty-five hundredths of one percent (0.35%)
per annum; and (ii) during each period, from and including one
Adjustment Date to but excluding the next Adjustment Date (herein
a "Calculation Period"), the percent per annum set forth in the
table below in this Section 2.9A under the heading "Commitment
Fee" opposite the Adjustment Conditions calculated for the
completed four (4) Fiscal Quarters which immediately preceded the
beginning of the applicable Calculation Period.
'Eurodollar Margin' shall mean (i) during the period commencing
May 9, 1997 and ending on but not including the first Adjustment
Date, one and one-quarter percent (1.25%) per annum, and (ii)
during each Calculation Period, the percent per annum set forth
in the table below in this Section 2.9A under the heading
"Eurodollar Margin" opposite the Adjustment Conditions calculated
for the completed four (4) Fiscal Quarters which immediately
preceded the beginning of the applicable Calculation Period.
================================================================================
Adjustment Conditions Commitment Fee Eurodollar Margin
- --------------------------------------------------------------------------------
Level 1:
EBITDA Coverage < 1.5:1 0.35% 1.50%
- --------------------------------------------------------------------------------
Level 2:
EBITDA Coverage >= 1.5:1 but <
2.5:1 0.35% 1.25%
- --------------------------------------------------------------------------------
Level 3:
EBITDA Coverage >= 2.5:1 and
pre-tax income for year ended
9/30/97 is >= $8,000,000 0.25% 1.00%
- --------------------------------------------------------------------------------
Level 4:
EBITDA Coverage >= 2.5:1 and
pre-tax income for year ended
9/30/98 is >= $12,000,000 and
================================================================================
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- --------------------------------------------------------------------------------
Leverage Ratio < .6:1 0.25% 0.75%
================================================================================
Unless the Level 3 or Level 4 adjustment conditions have
previously been satisfied, upon delivery of the Quarterly
Certificate pursuant to Section 8.1(c) in connection with the
financial statements required to be delivered pursuant to Section
8.1(b) at the end of each Fiscal Quarter commencing with such
Quarterly Certificate delivered at the end of the Fiscal Quarter
ending on June 30, 1997, the Commitment Fee and the Eurodollar
Margin shall automatically be adjusted as set forth in the table
above with respect to the Level 1 and Level 2 adjustment
conditions, such automatic adjustment to take effect as of the
first Business Day after the receipt by the Agent of the related
Quarterly Certificate (each such Business Day when the Commitment
Fee or Eurodollar Margin is adjusted pursuant to this sentence or
below, herein an "Adjustment Date"). If the Borrower fails to
deliver such Quarterly Certificate which so sets forth the EBITDA
Coverage within the period of time required by Section 8.1(c):
(i) the Commitment Fee shall automatically be adjusted to
thirty-five hundredths of one percent (0.35%) and (ii) the
Eurodollar Margin shall automatically be adjusted to one and
one-half percent (1.50%), such automatic adjustments to take
effect as of the first Business Day after the last day on which
the Borrower was required to deliver the applicable Quarterly
Certificate in accordance with Section 8.1(c) and to remain in
effect until subsequently adjusted in accordance herewith upon
the delivery of a Quarterly Certificate.
Notwithstanding the foregoing, no adjustment shall be made for
satisfaction of Level 3 adjustment conditions prior to receipt of
the audited financials as required by Section 8.1(a) for the
fiscal year ending September 30, 1997, and no adjustment for
satisfaction of Level 4 adjustment conditions shall be made prior
to receipt of the audited financials as required by Section
8.1(a) for the fiscal year ending September 30, 1998.
Upon delivery of the September 30, 1997 and September 30, 1998
audited financials pursuant to Section 8.1(a), the Commitment Fee
and the Eurodollar Margin shall automatically be adjusted as set
forth in the table above if the Level 3 or Level 4 adjustment
conditions, as applicable, are satisfied, such automatic
adjustment to take effect as of (a) the first day of the next
calendar month after receipt by the Agent of the related audited
financials with respect to Base Rate Advances and (b) the first
day of the next Interest Period after receipt by the Agent of the
related audited financials with respect to Eurodollar Advances."
II.5 Letters of Credit. Effective as of the date hereof:
(a)Clause (ii)(A) of the first sentence of Section 3.1(a) of the
Agreement is hereby amended to read as follows:
"(A) the Commitments,"
(b)The reference to "January 2, 1997" in the second sentence of
Section 3.1(a) of the Agreement is hereby changed to "January 2, 2000."
II.6 Mandatory Prepayments. Effective as of the date hereof, Section 4.3 of
the Agreement is hereby deleted in its entirety.
II.7 Reporting Requirements. Effective as of the date hereof:
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(a) Section 8.1(b) of the Agreement is hereby amended and restated in
its entirety to read as follows:
"(b) Quarterly Financial Statements. As soon as available and in
any event within forty-five (45) days after the end of each
Fiscal Quarter of the Borrower a copy of an unaudited financial
report of the Borrower and the Subsidiaries as of the end of such
Fiscal Quarter and for the portion of the fiscal year then ended,
containing, on a consolidated and, if requested by the Agent,
consolidating basis, balance sheets and statements of income,
retained earnings, and Cash Flow in each case setting forth in
comparative form the figures for the corresponding period of the
preceding fiscal year, all in reasonable detail certified by the
chief financial officer of the Borrower to have been prepared in
accordance with GAAP and to fairly and accurately present
(subject to year-end audit adjustments) the financial condition
and results of operations of the Borrower and the Subsidiaries,
on a consolidated and, if requested by the Agent, consolidating
basis, at the date and for the periods indicated therein;"
(b) Section 8.1(j) of the Agreement is hereby deleted.
II.8 Subsidiary Guaranties and Waivers. Effective as of the date hereof,
Section 8.12 of the Agreement is hereby amended and restated in its entirety to
read as follows:
"Section 8.12 Subsidiary Guaranties. As soon as possible and in any
event within thirty (30) days after the creation or acquisition of a new
Subsidiary, Borrower will deliver or cause to be delivered to Agent (a) a
Guaranty executed by such new Subsidiary, and (b)(i) a certificate of such
new Subsidiary's secretary regarding incumbency and authorizing corporate
resolutions and (ii) certificates of good standing and authority issued by
the Governmental Authority in such states where the new Subsidiary is doing
business."
II.9 Non-Operating Subsidiaries.Effective as of the date hereof, Section
8.13 of the Agreement is hereby deleted in its entirety.
II.10 Debt. Effective as of the date hereof, the reference to "Two Million
Five Hundred Thousand Dollars ($2,500,000)" in Section 9.1(c) of the Agreement
is hereby amended to read "Five Million Dollars ($5,000,000)."
II.11 Restricted Payments. Effective as of the date hereof, Section 9.4 of
the Agreement is hereby amended and restated in its entirety to read as follows:
"Section 9.4 Restricted Payments. The Borrower will not declare or pay
any dividends or make any other payment or distribution (whether in cash,
property, or obligations) on account of its capital stock, or redeem,
purchase, retire, or otherwise acquire any of its capital stock, or permit
any of its Subsidiaries to purchase or otherwise acquire any capital stock
of the Borrower or another Subsidiary, or set apart any money for a sinking
or other analogous fund for any dividend or other distribution on its
capital stock; provided that (a) the Borrower may pay dividends on its
capital stock up to an aggregate amount of twenty-five percent (25%) of the
Borrower's net income during each fiscal year and (b) the Borrower may
redeem shares of its capital stock in an aggregate amount not to exceed
thirty million dollars ($30,000,000)."
II.12 Investments. Effective as of the date hereof, Section 9.5(h) of the
Agreement is hereby amended and restated in its entirety to read as follows:
"(h) any loans or investments not covered in the previous sections of
this Section 9.5 not to exceed the aggregate principal amount of
$10,000,000."
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II.13 Disposition of Assets. Section 9.8(c) of the Agreement is hereby
amended to read as follows:
"(c) Dispositions in addition to those described in (a) and (b) above,
for which the Borrower and the Subsidiaries have received fair
consideration."
II.14 Accounting. Effective as of the date hereof, Section 9.11 of the
Agreement is hereby amended and restated in its entirety to read as follows:
"Section 9.11 Accounting. The Borrower will not, and will not permit
any of its Subsidiaries to, change its fiscal year or make any change in
accounting treatment or reporting practices, except as permitted by GAAP
and disclosed to the Agent."
II.15 Consolidated Tangible Net Worth. Effective as of the date hereof,
Section 10.1 of the Agreement is hereby amended and restated in its entirety to
read as follows:
"Section 10.1Consolidated Tangible Net Worth. Beginning with the
Fiscal Quarter ending December 31, 1996, the Borrower will maintain
Consolidated Tangible Net Worth in an amount not less than Ninety-Six
Million Dollars ($96,000,000) plus (b) an amount equal to seventy-five
percent (75%) of Consolidated Net Income (not less than zero (0) dollars
[$0.00]) for all periods subsequent to the Fiscal Quarter ending December
31, 1996, minus (c) an amount equal to the Borrower's treasury stock (not
to exceed Thirty Million Dollars [$30,000,000]), plus (d) an amount equal
to one hundred percent (100%) of the cash proceeds of all equity offerings
(net of underwriting discounts and commissions and other reasonable costs
associated therewith) of the Borrower subsequent to the date of the Second
Amendment to this Agreement."
II.16 Leverage Ratio. Effective as of the date hereof, Section 10.2 of the
Agreement is hereby amended and restated in its entirety to read as follows:
"Section 10.2 Leverage Ratio. Borrower will maintain a Leverage Ratio
of not greater than .75 to 1.0."
II.17 Fixed Charge Coverage. Effective as of the date hereof, Section 10.3
of the Agreement is hereby deleted.
II.18 Inventory Turnover. Effective as of the date hereof, Section 10.4 of
the Agreement is hereby amended and restated in its entirety to read as follows:
"Section 10.4 Inventory Turnover. Borrower will maintain an Inventory
Turnover of not less than 1.75."
II.19 Consolidated Net Income. Effective as of the date hereof, Section
10.6 of the Agreement is hereby amended and restated in its entirety to read as
follows:
"Section 10.6 Consolidated Net Income. Beginning with the Fiscal
Quarter ending March 31, 1997, the Borrower will not permit its
Consolidated Net Income for any Fiscal Quarter calculated on a rolling four
quarter basis, to be less than zero (0) dollars ($0.00)."
II.20 Ratio of Pawn Receivables to Inventory. Effective as of the date
hereof, Section 10.8 of the Agreement is hereby amended and restated in its
entirety to read as follows:
"Section 10.8Pawn Receivables/Inventory. Borrower, on a consolidated
basis, will maintain for each rolling four quarter period a ratio of Pawn
Receivables to Inventory of at least .65."
II.21 Borrowing Cap. Effective as of the date hereof, the following Section
10.9 is hereby added to the Agreement:
18
<PAGE>
"Section 10.9 Borrowing Cap. Beginning with the Fiscal Quarter ending
March 31, 1997, the Borrower shall not permit the then outstanding
Revolving Credit Loan Advances plus Swing Loan Advances plus Letter of
Credit Liabilities to exceed the Borrowing Cap at the end of each Fiscal
Quarter."
II.22 Schedule 7. Effective as of the date hereof, Schedule 7 of the
Agreement is hereby deleted.
II.23 References to First Interstate. Effective as of the date hereof, all
references to "First Interstate Bank of Texas, N.A." appearing in the Agreement
are hereby changed to "Wells Fargo Bank (Texas), National Association."
II.24 Release of Liens. Effective as of the date hereof, the Liens
previously granted by the Borrower and each Subsidiary in favor of Agent, for
the benefit of the Banks pursuant to the Second Amendment, are hereby released.
Agent agrees that it will promptly execute Uniform Commercial Code termination
statements with respect to each Uniform Commercial Code financing statement
currently on file against the Borrower and its Subsidiaries in connection
therewith.
ARTICLE III.
Conditions Precedent
III.1 Condition. The effectiveness of this Amendment is subject to the
satisfaction of the following conditions precedent:
(a) Agent shall have received all of the following, each dated (unless
otherwise indicated) the date of this Amendment, in form and substance
satisfactory to the Agent:
(i) This Amendment executed by all parties hereto.
(ii) Resolutions of the Board of Directors of Borrower certified
by its secretary or assistant secretary which authorizes the
execution, delivery and performance by Borrower of this Amendment
and the other Loan Documents executed in connection herewith.
(iii) A certificate of incumbency certified by the secretary or
the assistant secretary of Borrower certifying the names of the
officers thereof authorized to sign this Amendment and the other
Loan Documents together with specimen signatures of such
officers.
(iv) Resolutions of the Board of Directors of each of the
Guarantors certified by its secretary or assistant secretary
which authorize the execution, delivery and performance by each
of the Guarantors of this Amendment and the other Loan Documents
executed in connection herewith.
(v) A certificate of incumbency certified by the secretary or the
assistant secretary of each Guarantor certifying the names of the
officers thereof authorized to sign this Amendment and the other
Loan Documents together with specimen signatures of such
officers.
(b) No Default. No Default shall have occurred and be continuing.
(c) Representations and Warranties. All of the representations and
warranties contained in Article VII of the Agreement, as amended hereby and
in the other Loan Documents shall be true and correct on and as of the date
of this Amendment with the same force and effect as if such representations
and warranties had been made on and as of such date, except to the extent
such representations and warranties speak to a specific date.
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ARTICLE IV.
Ratifications, Representations and Warranties
IV.1 Ratifications. The terms and provisions set forth in this Amendment
shall modify and supersede all inconsistent terms and provisions set forth in
the Agreement and except as expressly modified and superseded by this Amendment,
the terms and provisions of the Agreement and the other Loan Documents are
ratified and confirmed and shall continue in full force and effect. Borrower,
Banks, Issuing Bank and Agent agree that the Agreement as amended hereby and the
other Loan Documents shall continue to be legal, valid, binding and enforceable
in accordance with their respective terms.
IV.2 Representations and Warranties. Borrower hereby represents and
warrants to Banks, Agent and Issuing Bank that (i) the execution, delivery and
performance of this Amendment and any and all other Loan Documents executed
and/or delivered in connection herewith have been authorized by all requisite
corporate action on the part of Borrower and will not violate the articles of
incorporation or bylaws of Borrower, (ii) the representations and warranties
contained in the Agreement, as amended hereby, and any other Loan Document are
true and correct on and as of the date hereof as though made on and as of the
date hereof, except to the extent such representations and warranties speak to a
specific date, (iii) no Event of Default has occurred and is continuing and no
event or condition has occurred that with the giving of notice or lapse of time
or both would be an Event of Default, (iv) Borrower is in full compliance with
all covenants and agreements contained in the Agreement as amended hereby, (v)
the Borrower has no Subsidiaries other than those listed on Schedule 3 attached
hereto and such Schedule 3: sets forth the jurisdiction of incorporation of each
corporate Subsidiary, the jurisdiction of formation of TELP, and the percentage
of the Borrower's ownership of the outstanding voting stock of each corporate
Subsidiary and the partnership interest of Borrower in TELP. All of the
outstanding capital stock of each corporate Subsidiary has been validly issued,
is fully paid and is nonassessable.
ARTICLE V.
Miscellaneous
V.1 Survival of Representations and Warranties. All representations and
warranties made in this Amendment or any other Loan Document including any Loan
Document furnished in connection with this Amendment shall survive the execution
and delivery of this Amendment and the other Loan Documents, and no
investigation by Banks, Agent or Issuing Bank or any closing shall affect the
representations and warranties or the right of Banks or Agent or Issuing Bank to
rely upon them.
V.2 Reference to Agreement. Each of the Loan Documents, including the
Agreement and any and all other agreements, documents, or instruments now or
hereafter executed and delivered pursuant to the terms hereof or pursuant to the
terms of the Agreement as amended hereby, are hereby amended so that any
reference in such Loan Documents to the Agreement shall mean a reference to the
Agreement as amended hereby.
V.3 Severability. Any provision of this Amendment held by a court of
competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
V.4 Applicable Law. This Amendment and all other Loan Documents executed
pursuant hereto shall be deemed to have been made and to be performable in
Austin, Travis County, Texas and shall be governed by and construed in
accordance with the laws of the State of Texas.
V.5 Successors and Assigns. This Amendment is binding upon and shall inure
to the benefit of Banks, Agent, Issuing Bank and Borrower and their respective
successors and assigns, except Borrower may not assign or transfer any of its
rights or obligations hereunder without the prior written consent of Banks.
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<PAGE>
V.6 Counterparts. This Amendment may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an original,
but all of which when taken together shall constitute one and the same
instrument.
V.7 ENTIRE AGREEMENT. THIS AMENDMENT AND ALL OTHER INSTRUMENTS, DOCUMENTS
AND AGREEMENTS EXECUTED AND DELIVERED IN CONNECTION WITH THIS AMENDMENT EMBODY
THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE ANY AND ALL
PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER
WRITTEN OR ORAL, RELATING TO THIS AMENDMENT, AND MAY NOT BE CONTRADICTED OR
VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR
DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE
PARTIES HERETO.
Executed as of the date first written above.
BORROWER:
EZCORP, INC.
By: ___________________________________
Name:______________________________
Title:_____________________________
Address for Notices:
1901 Capital Parkway
Austin, TX 78746
Fax No.: (512) 314-3404
Telephone No.: (512) 314-3400
Attention:Dan Tonissen
Chief Financial Officer
AGENT:
WELLS FARGO BANK (TEXAS), NATIONAL
ASSOCIATION
By: ___________________________________
Name: Keith Smith
Title: Vice President
Address for Notices:
100 Congress Avenue, Suite 150
Austin, TX 78701
Fax No.: (512) 469-3311
Telephone No.: (512) 794-2200
Attention: Keith Smith
21
<PAGE>
ISSUING BANK:
WELLS FARGO BANK (TEXAS), NATIONAL
ASSOCIATION
By: ___________________________________
Name: Keith Smith
Title: Vice President
Address for Notices:
100 Congress Avenue, Suite 150
Austin, TX 78701
Fax No.: (512) 469-3311
Telephone No.: (512) 794-2200
Attention: Keith Smith
BANKS:
WELLS FARGO BANK (TEXAS), NATIONAL
ASSOCIATION
By: ___________________________________
Name: Keith Smith
Title: Vice President
Address for Notices:
100 Congress Avenue, Suite 150
Austin, TX 78701
Fax No.: (512) 469-3311
Telephone No.: (512) 794-2200
Attention: Keith Smith
Lending Office for Prime Rate Advances
and Eurodollar Advances
100 Congress Ave.
Austin, TX 78701
22
<PAGE>
GUARANTY FEDERAL BANK, F.S.B.
By: ___________________________________
Name:______________________________
Title:_____________________________
Address for Notices:
301 Congress, Suite 1075
Austin, TX 78701
Attention: Chris Harkrider
Fax No.: (512) 320-1041
Telephone No.: (512) 320-1205
Lending Office for Prime Rate Advances
and Eurodollar Advances
8333 Douglas Avenue
Dallas, TX 75255
THE SUMITOMO BANK, LTD.,
CHICAGO BRANCH
By: ___________________________________
Name:______________________________
Title:_____________________________
By: ___________________________________
Name:______________________________
Title:_____________________________
Address for Notices:
Two Houston Center
909 Fannin, Suite 3750
Houston, TX 77010-1086
Attention: Manager
Fax No.: (713) 759-1419
Telephone No.: (713) 759-0770
Lending Office for Prime Rate Advances
and Eurodollar Advances
233 South Wacker Drive
Chicago, Illinois 60606-6448
Attention: Vice President and
Manager-Operations
23
<PAGE>
Guarantors hereby consent and agree to this Amendment and agree that
each Guaranty shall remain in full force and effect and shall continue to (i)
guarantee the Obligations and (ii) be the legal, valid and binding obligation of
Guarantors enforceable against Guarantors in accordance with their respective
terms.
GUARANTORS:
EZPAWN Alabama, Inc.
EZPAWN Arkansas, Inc.
EZPAWN Colorado, Inc.
EZPAWN Florida, Inc.
EZPAWN Georgia, Inc.
EZPAWN Holdings, Inc.
EZPAWN Indiana, Inc.
EZPAWN Louisiana, Inc.
EZPAWN Oklahoma, Inc.
EZPAWN Tennessee, Inc.
Texas EZPAWN Management, Inc.
EZ Car Sales, Inc.
EZPAWN Construction, Inc.
EZPAWN Kansas, Inc.
EZPAWN Kentucky, Inc.
EZPAWN Missouri, Inc.
EZPAWN Nevada, Inc.
EZPAWN North Carolina, Inc.
EZPAWN South Carolina, Inc.
By: ___________________________________
Name:______________________________
Title:_____________________________
Texas EZPAWN L.P.
By: Texas EZPAWN Management, Inc.,
its sole general partner
By: ___________________________________
Name:______________________________
Title:_____________________________
24
<PAGE>
SCHEDULE 3
List of Subsidiaries
All of the following subsidiaries are incorporated in Delaware and are 100%
owned by EZCORP, Inc. except EZ Car Sales, Inc. which is incorporated in
Delaware, and 100% owned by EZPawn Tennessee, Inc.:
Jurisdiction Where Subsidiary
Subsidiaries Conducts Business
------------ -----------------
EZPAWN Alabama, Inc., d/b/a EZPW Alabama, Inc. Alabama
EZPAWN Arkansas, Inc. Arkansas
EZPAWN Colorado, Inc. Colorado
EZPAWN Florida, Inc., d/b/a EZPW Florida, Inc. Florida
EZPAWN Georgia Georgia
EZPAWN Holdings, Inc. Mississippi
EZPAWN Indiana Indiana
EZPAWN Louisiana, Inc. Louisiana
EZPAWN Oklahoma, Inc., d/b/a EZPAWN Okie, Inc. Oklahoma
EZPAWN Tennessee, Inc. Tennessee
Texas EZPAWN Management, Inc. Texas
EZ Car Sales, Inc.
EZPAWN Construction, Inc.
EZPAWN Kansas, Inc.
EZPAWN Kentucky, Inc.
EZPAWN Missouri, Inc.
EZPAWN Nevada, Inc.
EZPAWN North Carolina, Inc. North Carolina
EZPAWN South Carolina, Inc.
The following limited partnership is organized under the laws of the State of
Texas. Texas EZPAWN Management, Inc. is its sole general partner and 1% owner.
EZPAWN Holdings, Inc. is its sole limited partner and 99% owner. Both partners
are wholly-owned subsidiaries of EZCORP, Inc.
Jurisdiction Where Entity
Operating Entity Conducts Business
- ---------------- -----------------
Texas EZPAWN L.P. Texas
25
<PAGE>
Exhibit 11.1
Statement Regarding Computation of Per Share
Earnings (Dollars and shares in thousands,
except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
----------------- -----------------
1997 1996 1997 1996
---- ---- ---- ----
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Primary and fully diluted
Weighted average number of common
shares outstanding during the period 11,996 11,991 11,994 11,986
Net effect of dilutive stock options -
based on the treasury stock method
using overall market price 0 0 0 0
------- ------- ------- -------
Total shares 11,996 11,991 11,994 11,986
======= ======= ======= =======
Net income $ 1,769 $ 218 $ 3,672 $ 1,042
======= ======= ======= =======
Earnings per share(a) $ 0.15 $ 0.02 $ 0.31 $ 0.09
======= ======= ======= =======
</TABLE>
(a) Earnings per share calculations assume exercise of all outstanding stock
options and warrants using the treasury stock method of calculation. The
per share calculation excludes these common equivalent shares as their
effect is anti-dilutive.
26
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 3,321
<SECURITIES> 0
<RECEIVABLES> 43,427
<ALLOWANCES> 0
<INVENTORY> 30,760
<CURRENT-ASSETS> 82,316
<PP&E> 53,141
<DEPRECIATION> 19,497
<TOTAL-ASSETS> 134,231
<CURRENT-LIABILITIES> 9,394
<BONDS> 0
0
0
<COMMON> 120
<OTHER-SE> 116,579
<TOTAL-LIABILITY-AND-EQUITY> 134,231
<SALES> 55,209
<TOTAL-REVENUES> 92,138
<CGS> 45,531
<TOTAL-COSTS> 85,877
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 522
<INCOME-PRETAX> 5,739
<INCOME-TAX> 2,067
<INCOME-CONTINUING> 3,672
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,672
<EPS-PRIMARY> 0.31
<EPS-DILUTED> 0.31
</TABLE>
