PR Newswire, London, May 4. This press release is transmitted on behalf of EZCORP Inc.
Austin, Texas - EZCORP, Inc. (Nasdaq: EZPW) announced today results for its three and six month periods ended March 31, 2000 and a change in accounting method pertaining to revenue recognition on pawn loans.
The net loss for the second quarter of fiscal 2000 was $1.4 million ($0.12 per share), compared to a pro forma net income of $2.5 million ($0.20 per share) for the same period of 1999, assuming retroactive application of the accounting change discussed below. The net loss of $13.7 million ($1.14 per share) for the six months ended March 31, 2000 is primarily a result of the $13.6 million ($1.13 per share) cumulative effect of this accounting change. Absent the cumulative effect of the accounting change, the net loss for the six months ended March 31, 2000 was $0.1 million ($0.01 per share) compared to pro forma net income of $3.8 million ($0.33 per share) for the six months ended March 31, 1999.
Commenting on these results, Vincent A. Lambiase, Chief Executive Officer, said, "These results reflect sub-par performance in our day-to-day execution of the business, which is exaggerated by the impact of our new stores. In addition, the growing acceptance of payday advances is impacting demand."
"We have a defined strategy to achieve significant improvement over the next few quarters.
"Under our new President, Joe Rotunda, we are focusing intensely on operations, where major shortcomings have been identified.
"This summer, we will introduce a payday advance product in an innovative format.
"Longer term, we are focused on two major opportunities: establishing our operating system as a stand-alone profit center with third party customers; and, exploiting the electronic auction market for used goods to improve customer service and the economics of our business."
During the second quarter of fiscal 2000, the Company changed its method of revenue recognition on pawn loans. The change will be effective October 1, 1999, the first day of the Company's fiscal year. Under the new accounting method, the Company accrues pawn service charges for only those loans that the Company deems collection to be probable based on historical loan redemption patterns. For loans not redeemed, the carrying value of the forfeited collateral is the lower of cost (principal amount of loan) or market. Pawn service charges were previously accrued on all loans, and the carrying value of forfeited collateral was the lower of cost (principal amount of loan plus accrued pawn service charges) or market.
Mr. Lambiase noted, "The change in accounting enhances comparability of the Company's operating results with others in the pawn industry." In addition to its operating results, the Company announced the suspension of its quarterly dividend.
The Company currently operates 336 stores located in Texas (194), Colorado (24), Oklahoma (22), Indiana (21), Florida (18), Georgia (14), Alabama (13), California (8), Tennessee (8), Nevada (4), Louisiana (3), Mississippi (3), North Carolina (3) and Arkansas (1).
