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EZCORP Announces 66% Earnings Growth for First Quarter

Jan 20, 2003

EZCORP, Inc. (NASDAQ: EZPW) announced today results for its fiscal first quarter, which ended December 31, 2002.

For the quarter ended December 31, 2002, EZCORP is reporting income before the cumulative effect of a change in accounting principle of $2,285,000 (eighteen cents per share) compared to $1,372,000 (eleven cents per share) for the same period a year ago. These earnings are above the Company's publicly announced estimate of fourteen to seventeen cents for its fiscal first quarter.

Effective October 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 142, which deals with the accounting treatment of goodwill and other intangible assets. With the adoption of this standard, the Company stopped amortization of goodwill and most intangible assets. This will reduce amortization expense by approximately $600,000 and increase equity in income of unconsolidated affiliates by approximately $450,000 on an annual basis. The accounting standard also applies a new test for impairment of goodwill and intangible assets. Application of this impairment test requires the Company to write off most of its goodwill and intangible assets and record a cumulative effect of adopting this change in accounting principle of $8,037,000. After the cumulative effect of adopting the new accounting principle, the Company is reporting a net loss of $5,752,000 (forty-seven cents per share).

Commenting on these results, President and Chief Executive Officer, Joe Rotunda, stated, "I am pleased with our first quarter results. Our objectives this year are to significantly improve earnings, strengthen our balance sheet, and continue our plans of building a company offering a broad array of products and services to the cash and credit constrained consumer. With first quarter earnings greater than all of last year, we are well on our way to fulfilling the first objective. As to the second objective, we have reduced debt year over year 23% to $39.3 million, primarily from operating cash flow. For the quarter, we realized strong revenue growth in both pawn and payroll advance loans. Our merchandise sales are down primarily as a result of a change in our layaway program, but in line with our expectations. With our layaway program change, we expect merchandise sales for fiscal 2003 to be higher than fiscal 2002, but lower in the first fiscal quarter and higher in the second."

Rotunda continued, "We believe we are on track with our first two objectives. Our third objective is well under way with the success of our payroll advance product. In addition, we are testing and exploring other products and services that will meet our customers' needs and enhance our business model."

Management estimates fiscal 2003 earnings (before the cumulative effect of the change in accounting principle) to be between thirty-five and forty cents per share compared to eighteen cents per share for fiscal 2002. For our second fiscal quarter we estimate earnings to be between nine and eleven cents per share compared to nine cents for the fiscal 2002 second quarter."

EZCORP offers consumers convenient, non-recourse loans collateralized by tangible personal property, and short-term non-collateralized loans, often referred to as payday loans. A secondary, but related, business activity is the selling of previously owned merchandise consisting primarily of forfeited collateral. At December 31, 2002, the Company operated 280 stores in eleven states.

This announcement contains certain forward-looking statements regarding the Company's expected performance for future periods including, but not limited to, expected future earnings. Actual results for these periods may materially differ from these statements. Such forward-looking statements involve risks and uncertainties such as changing market conditions in the overall economy and the industry, consumer demand for the Company's services and merchandise, changes in regulatory environment, and other factors periodically discussed in the Company's annual, quarterly and other reports filed with the Securities and Exchange Commission.

You are invited to listen to a conference call discussing these results on January 21, 2003 at 10:00 am Central Standard Time. The conference call can be accessed over the Internet (or replay it at your convenience) at the following address.

  http://www.firstcallevents.com/service/ajwz371579622gf12.html
  For additional information, contact Dan Tonissen at (512) 314-2289.


                                EZCORP, Inc.
       Highlights of Consolidated Statement of Operations (Unaudited)
            (in thousands, except per share data and store count)

                                            Three Months Ended December 31,
                                                   2002              2001

   1 Total revenues                              $53,199           $54,582
   2 Cost of goods sold                           21,320            23,170
   3 Net revenues                                 31,879            31,412
   4 Operating expenses                           25,741            24,803
   5     Operating income before
          depreciation and amortization            6,138             6,609
   6 Depreciation and amortization                 2,267             2,598
   7     Operating income                          3,871             4,011
   8 Interest expense, net                           657             1,742
   9 Equity in net income of
      unconsolidated affiliate                      (302)              (64)
  10 Loss on sale of assets                          ---               155
  11 Income before income taxes                    3,516             2,178
  12 Income tax expense                            1,231               806
  13 Income before cumulative effect of
      a change in accounting principle            $2,285            $1,372
  14 Cumulative effect of adopting a
      new accounting principle, net of tax        (8,037)              ---
  15 Net income (loss)                           $(5,752)           $1,372
  16
  17 Income (loss) per share, assuming
      dilution:
  18   Income before cumulative effect
        of a change in accounting principle        $0.18             $0.11
  19   Cumulative effect of adopting a
        new accounting principle, net
        of tax                                     (0.65)              ---
  20   Net income (loss)                          $(0.47)            $0.11
  21
  22 Weighted average shares - assuming
      dilution                                    12,361            12,128
  23 Store count -- average for period               280               283
  24
  25
  26 Pro forma results, as if the new
      accounting principle were in
      effect for all periods:
  27   Net income (loss) as reported             $(5,752)           $1,372
  28   Add back:  goodwill and pawn
        license amortization, net of tax             ---                95
  29   Add back:  amortization of
        goodwill related to equity
        investee, net of tax                         ---                71
  30   Add back:  cumulative effect of
        adopting a new accounting
        principle, net of tax                      8,037               ---
  31   Adjusted net income                        $2,285            $1,538
  32
  33   Per share amounts -- assuming
        dilution:
  34       Net income (loss) as reported          $(0.47)            $0.11
  35       Add back:  goodwill and pawn
            license amortization, net
            of tax                                   ---              0.01
  36       Add back:  amortization of
            goodwill related to equity
            investee, net of tax                     ---              0.01
  37       Add back:  cumulative effect
            of adopting a new
            accounting principle, net
            of tax                                  0.65               ---
  38       Adjusted net income                     $0.18             $0.13


                                EZCORP, Inc.
            Highlights of Consolidated Balance Sheets (Unaudited)
            (in thousands, except per share data and store count)

                                                     As of December 31,
                                                   2002              2001
   1  Assets:
   2  Current assets:
   3    Cash and cash equivalents                   $553              $359
   4    Pawn loans                                46,714            47,254
   5    Payroll advances                           3,037             1,737
   6    Pawn service charges receivable, net       9,543             9,561
   7    Payroll advance service charges
         receivable, net                             608               360
   8    Inventory, net                            33,686            32,395
   9    Deferred tax asset                         6,418             6,607
   10   Prepaid expenses and other assets          2,486             2,027
   11     Total current assets                   103,045           100,300
   12 Investment in unconsolidated affiliates     14,823            14,097
   13 Property and equipment, net                 30,442            40,882
   14 Deferred tax asset, non-current              1,948               ---
   15 Other assets                                 5,461            16,686
   16     Total assets                          $155,719          $171,965
   17 Liabilities and stockholders' equity:
   18 Current liabilities:
   19  Current maturities of long-term debt        $ ---           $51,097
   20  Accounts payable and other
        accrued expenses                          10,774            11,472
   21  Restructuring reserve                          18               118
   22  Customer layaway deposits                   1,733               579
   23  Federal income taxes payable                  862               ---
   24     Total current liabilities               13,387            63,266
   25 Long-term debt, less current
       maturities                                 39,309               ---
   26 Deferred tax liability                         ---             1,193
   27 Deferred gains and other long-
       term liabilities                            4,114             3,956
   28     Total long-term liabilities             43,423             5,149
   29 Total stockholders' equity                  98,909           103,550
   30     Total liabilities and
           stockholders' equity                 $155,719          $171,965
   31
   32 Loan balance per ending store                 $178              $173
   33 Inventory per ending store                    $120              $114
   34 Book value per share                         $8.13             $8.54
   35 Tangible book value per share                $7.89             $7.36
   36 Store count -- end of period                   280               283
   37 Basic shares outstanding -- end of period   12,167            12,128

SOURCE: EZCORP, Inc.

CONTACT: Dan Tonissen of EZCORP, Inc., +1-512-314-2289

Web site: http://www.firstcallevents.com/service/ajwz371579622gf12.html
http://www.ezcorp.com/

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