What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2022-02-28 compared with 2021-02-01 · 702 added, 326 removed, 846 unchanged (55% of the section changed)

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Based on this assessment, management concluded that, as of December 31, 2021, the Company’s internal control over financial reporting is effective based on those criteria.

The Company’s internal control over financial reporting as of December 31, 2020, has been audited by RSM US LLP, the independent registered public accounting firm that audited the Company’s financial statements included in this report, and RSM’s attestation report is included below.

Management has excluded AFF from its assessment of internal control over financial reporting as of December 31, 2021, because it was acquired by the Company in a business combination on December 17, 2021.

The Company is currently in the process of integrating AFF into its assessment of its internal control over financial reporting.

AFF’s total assets and revenue represent approximately 31% and 2%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2021.

The Company’s internal control over financial reporting as of December 31, 2021, has been audited by RSM US LLP, the independent registered public accounting firm that audited the Company’s financial statements included in this report, and RSM US LLP’s attestation report is included below.

Changes in Internal Control Over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting during the quarter ended December 31, 2020 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Except for the AFF Acquisition, there have been no changes in the Company’s internal control over financial reporting during the quarter ended December 31, 2021 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of FirstCash, Inc.

To the Stockholders and the Board of Directors of FirstCash Holdings, Inc.

Opinion on the Internal Control Over Financial Reporting

We have audited FirstCash, Inc.

We have audited FirstCash Holdings, Inc.

and its subsidiaries (the Company) internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

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We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2021 and 2020, the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2021 and the related notes to the consolidated financial statements of the Company and our report dated February 28, 2022 expressed an unqualified opinion.

As described in Management’s Report on Internal Control Over Financial Reporting, management has excluded AFF from its assessment of internal control over financial reporting as of December 31, 2021, because it was acquired by the Company in a business combination on December 17, 2021.

We have also excluded AFF from our audit of internal control over financial reporting.

AFF’s total assets and revenue represent approximately 31% and 2%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2021.

Basis for Opinion

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Other Information

On February 25, 2022, the Company entered into new employment agreements with Rick L.

Wessel, the Company’s Chief Executive Officer, T.

Brent Stuart, the Company’s President and Chief Operating Officer, R.

Douglas Orr, the Company’s Executive Vice President and Chief Financial Officer and Howard F.

Hambleton, the Company’s President of AFF, which were approved by the Compensation Committee (the “Committee”) of the Board of Directors of the Company on February 4, 2022.

The employment agreements with Messrs.

Wessel, Stuart, Orr and Hambleton became effective upon signing and the terms of the employment agreements initially run through December 31, 2024, with automatic one-year extensions thereafter unless either party provides the other party with written notice on non-renewal at least 90 days prior to any such extension.

The employment agreements provide for annual base salaries, to be effective as of January 1, 2022, in the following amounts:

$1,258,660 for Mr.

Wessel, $776,620 for Mr.

Stuart, $723,060 for Mr.

Orr and $600,000 for Mr.

Hambleton, in each case subject to annual review and increases in the discretion of the Committee.

The executives will also be eligible to earn an annual bonus based on satisfaction of performance criteria established by the Committee for each fiscal year during the term of the agreement, with a target bonus opportunity equal to not less than a specified percentage of the executive’s then current base salary (150% in the case of Mr.

125% in the case of Messrs.

Stuart, Orr and Hambleton).

In addition, the executives will be eligible for grants of stock-based awards under the Company’s long-term equity compensation plan, and will be eligible to participate in any of the Company’s incentive, savings, retirement and welfare benefit plans available to other senior officers of the Company.

The employment agreements provide that if an executive’s employment with the Company is terminated during the term by the Company without “cause” or by the executive for “good reason” (as such terms are defined in the employment agreements), the executive would be entitled to a lump sum cash severance payment equal to 50% (or 200%, if such termination occurs within twelve months following a change in control of the Company) of the sum of (i) the executive’s base salary in effect as of the termination, and (ii) the average of the annual bonuses earned by the executive for each of the three fiscal years immediately preceding the year in which the termination occurs.

The executive would also be entitled to continue to participate in the Company’s health and welfare benefit plans at active employee rates for a period of eighteen months (the “COBRA subsidy”).

In addition, if such termination occurs within twelve months following a change in control of the Company, the executive would be entitled to a pro rata annual bonus for the year in which the termination occurs, and accelerated vesting and full payout under of all of his outstanding time-vesting and performance-based equity incentive awards (based on an assumed achievement of all relevant performance goals at “target” level, or based on a higher actual or deemed level of achievement of performance goals, in the sole discretion of the Committee).

Furthermore, if such termination occurs within twelve months following a change in control of the Company, the Company will pay to the executive, in lieu of the COBRA subsidy described above, a lump sum in cash in an amount equal to the full monthly cost of the executive’s health and welfare benefit coverage multiplied by 24.

The employment agreements prohibit the executives from competing with the Company during the employment term and for a period of 36 months following termination of employment.

The executives would also be prohibited from soliciting Company customers and recruiting Company employees during this period.

The employment agreements of Messrs.

Wessel, Stuart, Orr and Hambleton are filed as Exhibits 10.17, 10.18, 10.19 and 10.20, respectively, to this Annual Report on Form 10-K and each is incorporated herein by reference and the foregoing descriptions of these employment agreement are qualified in their entirety by these exhibits.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Directors, Executive Officers and Corporate Governance

The information required by Item 10 to this Annual Report on Form 10-K with respect to the directors, executive officers and compliance with Section 16(a) of the Exchange Act is incorporated herein by reference from the information provided under the headings “Election of Directors,” “Executive Officers” and “Corporate Governance, Board Matters and Director Compensation,” contained in the Company’s Proxy Statement to be filed with the SEC in connection with the solicitation of proxies for the Company’s 2021 Annual Meeting of Stockholders to be held on or about June 3, 2021 (the “2021 Proxy Statement”).

The information required by Item 10 to this Annual Report on Form 10-K with respect to the directors, executive officers and compliance with Section 16(a) of the Exchange Act is incorporated herein by reference from the information provided under the headings “Election of Directors,” “Executive Officers,” “Corporate Governance, Board Matters and Director Compensation” and Delinquent Section 16(a) Reports,” contained in the Company’s Proxy Statement to be filed with the SEC in connection with the solicitation of proxies for the Company’s 2022 Annual Meeting of Stockholders to be held on or about June 9, 2022 (the “2022 Proxy Statement”).

The Company has adopted a Code of Ethics that applies to all of its directors, officers, and employees.

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The Company intends to disclose future amendments to, or waivers from, certain provisions of its Code of Ethics on its website in accordance with applicable Nasdaq and SEC requirements.

Copies of the Company’s Code of Ethics are also available, free of charge, by submitting a written request to FirstCash, Inc., Investor Relations, 1600 West 7th Street, Fort Worth, Texas 76102.

Copies of the Company’s Code of Ethics are also available, free of charge, by submitting a written request to FirstCash Holdings, Inc., Investor Relations, 1600 West 7th Street, Fort Worth, Texas 76102.

Executive Compensation

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(1) Consolidated Financial Statements:

Report of Independent Registered Public Accounting Firm F- 1

Report of Independent Registered Public Accounting Firm (PCAOB ID:

Consolidated Balance Sheets F- 5

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Exhibit Filing Date Filed Herewith

2.1 Business Combination Agreement, dated as of October 27, 2021, by and among FirstCash, Inc., FirstCash Holdings, Inc., Atlantis Merger Sub, Inc., American First Finance, Inc., Doug Rippel and the other seller parties thereto.

8-K 001-10960 2.1 11/01/2021

2.2 First Amendment, dated as of December 6, 2021, to that certain Business Combination Agreement, dated as of October 27, 2021, by and among FirstCash, Inc., FirstCash Holdings, Inc., Atlantis Merger Sub, Inc., American First Finance, Inc., Doug Rippel and the other seller parties thereto.

8-K 001-10960 2.1 12/07/2021

2.3 Agreement and Plan of Merger, dated December 16, 2021, by and among FirstCash, Inc., FirstCash Holdings, Inc.

and Atlantis Merger Sub, Inc.

8-K12B 001-10960 2.1 12/16/2021

3.1 Amended and Restated Certificate of Incorporation

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8-K 001-10960 3.1 09/02/2016

3.3 Amended and Restated Bylaws

8-K 001-10960 3.1 04/24/2019

3.3 Amended and Restated Certificate of Incorporation of FirstCash Holdings, Inc., dated December 16, 2021

8-K12B 001-10960 3.1 12/16/2021

3.4 Amended and Restated Bylaws of FirstCash Holdings, Inc., dated December 16, 2021

8-K12B 001-10960 3.2 12/16/2021

4.1 Common Stock Specimen S-1 33-48436 4.2a 06/05/1992

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8-K 001-10960 4.1 08/26/2020

Incorporated by Reference

Exhibit Description Form File No.

Exhibit Filing Date Filed Herewith

4.4 First Supplemental Indenture, dated November 17, 2021, by and among FirstCash, Inc., the guarantors listed therein and BOKF, N.A.

8-K 001-10960 4.1 12/07/2021

4.5 Indenture, dated as of December 13, 2021, by and among FirstCash, Inc., the guarantors listed therein and BOKF, N.A.

(including the form of Note attached as an exhibit thereto)

8-K 001-10960 4.1 12/13/2021

4.6 Description of Securities

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8-K 0-19133 10.1 07/26/2016

10.6 Employment Agreement between Rick L.

Wessel and First Cash Financial Services, Inc., dated August 26, 2016 *

8-K 0-19133 10.1 08/26/2016

Incorporated by Reference

Exhibit Description Form File No.

Exhibit Filing Date Filed Herewith

10.7 Employment Agreement between T.

Brent Stuart and First Cash Financial Services, Inc., dated August 26, 2016 *

8-K 0-19133 10.2 08/26/2016

10.8 Employment Agreement between R.

Douglas Orr and First Cash Financial Services, Inc., dated August 26, 2016 *

8-K 0-19133 10.3 08/26/2016

10.6 Performance-Based Restricted Stock Unit Award Agreement *

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10-Q 001-10960 10.1 08/01/2018

10.12 Employment agreement between Anna M.

Alvarado and FirstCash, Inc., dated July 30, 2018 *

10-Q 001-10960 10.2 08/01/2018

10.9 Second Amendment to Amended and Restated Credit Agreement, dated October 4, 2018, between FirstCash, Inc., certain subsidiaries of the borrower from time to time party thereto, the lenders party thereto, and Wells Fargo Bank, National Association

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8-K 001-10960 10.1 11/10/2020

Incorporated by Reference

Exhibit Description Form File No.

Exhibit Filing Date Filed Herewith

10.14 Fifth Amendment to Amended and Restated Credit Agreement, dated December 8, 2021, by and among FirstCash, Inc., the guarantors and lenders listed herein and Wells Fargo Bank, National Association.

8-K 001-10960 10.1 12/13/2021

10.15 Assignment and Assumption Agreement, dated December 16, 2021 between FirstCash, Inc.

and FirstCash Holdings, Inc.

8-K12B 001-10960 10.1 12/16/2021

10.16 Registration Rights Agreement, dated as of December 17, 2021, by and among FirstCash Holdings, Inc.

and certain seller parties thereto

8-K 001-10960 10.1 12/17/2021

10.17 Employment Agreement between Rick L.

Wessel and FirstCash Holdings, Inc., dated February 25, 2022 *

10.18 Employment Agreement between T.

Brent Stuart and FirstCash Holdings, Inc., dated February 25, 2022 *

10.19 Employment Agreement between R.

Douglas Orr and FirstCash Holdings, Inc., dated February 25, 2022 *

10.20 Employment Agreement between Howard F.

Hambleton and FirstCash Holdings, Inc., dated February 25, 2022 *

21.1 Subsidiaries

23.1 Consent of Independent Registered Public Accounting Firm, RSM US LLP

31.1 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act provided by Rick L.

31.1 Certification Pursuant to Exchange Act Section 13(a)-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act, provided by Rick L.

Wessel, Chief Executive Officer

31.2 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act provided by R.

31.2 Certification Pursuant to Exchange Act Section 13(a)-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act, provided by R.

Douglas Orr, Chief Financial Officer

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Wessel, Chief Executive Officer

Incorporated by Reference

Exhibit Description Form File No.

Exhibit Filing Date Filed Herewith

32.2 Certification Pursuant to 18 U.S.C.

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101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document X

Incorporated by Reference

Exhibit Description Form File No.

Exhibit Filing Date Filed Herewith

101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document X

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Pursuant to the requirements of Section 13 or 15(d) 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.

February 1, 2021 FIRSTCASH, INC.

February 28, 2022 FIRSTCASH HOLDINGS, INC.

Chief Executive Officer

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Director February 28, 2022

/s/ DOUGLAS R.

Director February 28, 2022

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of FirstCash, Inc.

To the Stockholders and the Board of Directors of FirstCash Holdings, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of FirstCash, Inc.

We have audited the accompanying consolidated balance sheets of FirstCash Holdings, Inc.

and its subsidiaries (the Company) as of December 31, 2021 and 2020, the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2021, and the related notes to the consolidated financial statements (collectively, the “financial statements”).

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Critical Audit Matters

The critical audit matter described below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue Recognition—Accrual of Pawn Loan Fees

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.

Revenue recognition—accrual for earned but uncollected pawn loan fees

As described in Note 2 of the consolidated financial statements, the Company’s revenue recognition policy for pawn loan fees is to accrue pawn loan fee revenue on a constant-yield basis over the life of the pawn loan for all pawn loans of which the Company deems collection to be probable based on historical pawn redemption statistics.

The Company's accrual for earned but uncollected pawn loan fees as of December 31, 2020 was $41,110,000, which is included in fees and service charges receivable in the accompanying consolidated balance sheet.

The determination of the accrual for pawn loan fees is subjective and requires management to make significant judgements related to the probability of collection and the expected effective yield of the pawn loan portfolio at the measurement date.

We identified the accrual for pawn loan fees as a critical audit matter as auditing the probability of collection and the expected yield of the pawn loan portfolio was complex and required a high degree of auditor judgement and subjectivity due to the significant judgements applied by management noted above.

Our audit procedures related to the Company’s accrual of pawn loan fees included the following, among others:

• We obtained an understanding of the relevant controls related to the accrual of pawn loan fees and tested such controls for design and operating effectiveness, including the determination of key assumptions and the completeness and accuracy of data inputs.

• We obtained management’s calculation of the accrual for pawn loan fees and tested the calculation for completeness and accuracy of data used as inputs.

• We evaluated the methodology and assumptions used by management to develop the effective pawn loan yield, including consideration of historical patterns and the probability of collection.

• We independently recalculated certain key inputs used in management’s calculation of the accrual for pawn loan fees.

• We assessed the validity of data used in the calculation of the accrual for pawn loan fees by agreeing, on a sample basis, key data inputs to source documents

The Company's accrual for earned but uncollected pawn loan fees as of December 31, 2021 was $42.9 million, which is included in accounts receivable, net in the accompanying consolidated balance sheets.

The determination of the accrual for earned but uncollected pawn loan fees was subjective and required management to make significant judgements related to the probability of redemption and the expected effective yield of the pawn loan portfolio at the measurement date.

We identified the accrual for earned but uncollected pawn loan fees as a critical audit matter as auditing the probability of redemption and the expected yield of the pawn loan portfolio was complex and required a high degree of auditor judgement and subjectivity due to the significant judgements applied by management noted above.

Our audit procedures related to the Company’s accrual for earned but uncollected pawn loan fees, specifically the assumptions for the probability of redemption and expected effective yield of the pawn loan portfolio, included the following, among others:

• We obtained an understanding of the relevant controls related to the accrual for earned but uncollected pawn loan fees and tested such controls for design and operating effectiveness, including (a) the review and approval of key assumptions and (b) the completeness and accuracy of data inputs.

• We obtained management’s calculation of the accrual for earned but uncollected pawn loan fees and tested the calculation for completeness and accuracy of data used as inputs.

• We evaluated the methodology and assumptions used by management to develop the effective pawn loan yield, including consideration of historical patterns and the probability of redemption.

• We assessed the validity of data used in the calculation of the accrual for earned but uncollected pawn loan fees by agreeing, on a sample basis, key data inputs to source documents.

Allowance for credit losses—finance receivables

As described in Notes 2 and 7 to the consolidated financial statements, the Company established an allowance for credit losses on its finance receivable portfolios of $75.6 million as of December 31, 2021, which was estimated using the Company’s current expected credit loss (CECL) model.

Credit losses on finance receivables were estimated and recognized upon purchase of the receivable, based on expected credit losses for the life of the receivable.

The Company’s CECL model segmented the finance receivable population into monthly pools of receivables and estimated the allowance for credit losses by applying modeled loss rates primarily derived from internal, historical cumulative loss experience from comparable economic cycles, then adjusted by qualitative factors to address recent and forecasted business trends.

Qualitative factors to address recent and forecasted business trends included, but were not limited to, loss trends, delinquency levels, economic conditions, underwriting and collection practices.

The determination of the allowance for credit losses on finance receivables was subjective and required management to make significant judgements related to the selection and application of modeled loss rates and adjustments to address recent and forecasted business trends.

Specifically, incorporating observable and forecasted economic conditions could have a material impact on the measurement of the allowance for credit losses to the extent that forecasted economic conditions change significantly.

We identified the allowance for credit losses on finance receivable portfolios as a critical audit matter as auditing the judgements surrounding the selection of modeled loss rates and adjustments to address recent and forecasted business trends was complex and required a high degree of auditor judgement and subjectivity.

Our audit procedures related to the Company’s allowance for credit losses on finance receivables, specifically the selection and application of modeled loss rates and adjustments to address recent and forecasted business trends, included the following, among others:

• We tested the completeness and accuracy of data inputs into the CECL model, including historical origination balances, loss rates, first payment default rates, and delinquency rates, by tracing to internal source documents.

• We evaluated key assumptions and judgements surrounding the selection of modeled loss rates and adjustments for current conditions and future expectations for reasonableness by comparing to internal and external source data.

Allowance for lease losses—leased merchandise

As described in Notes 2 and 8 to the consolidated financial statements, the Company established an allowance for lease losses on its portfolio of merchandise subject to operating leases of $5.4 million as of December 31, 2021, representing estimated losses from uncollectible rental agreements.

The Company estimated this reserve based on a combination of historical losses and expected future losses that gave consideration to recent and forecasted business trends including, but not limited to, loss trends, delinquency levels, economic conditions, underwriting and collection practices.

The determination of the allowance for lease losses on merchandise subject to operating leases was subjective and required management to make significant judgements related to the selection and application of historical losses and adjustments for expected future losses.

We identified the allowance for lease losses on merchandise subject to operating leases as a critical audit matter as auditing the judgements surrounding the selection and application of historical losses and adjustments for expected future losses was complex and required a high degree of auditor judgement and subjectivity.

Our audit procedures related to the Company’s allowance for lease losses on merchandise subject to operating leases, specifically the selection and application of historical losses and adjustments for expected future losses, included the following, among others:

• We tested the completeness and accuracy of data inputs into the allowance for lease losses model, including historical origination balances, loss rates, first payment default rates, and delinquency rates, by tracing to internal source documents.

• We evaluated key assumptions and judgements surrounding the selection of historical losses and adjustments for expected future losses for reasonableness by comparing to internal and external source data.

Acquisition of American First Finance—valuation of acquired finance receivables, leased merchandise, developed technology and merchant relationships intangible assets, and contingent consideration

As described in Note 3 and 6 to the consolidated financial statements, the Company completed its acquisition of American First Finance on December 17, 2021 with total purchase consideration of $1.1 billion.

In conjunction with the acquisition, acquired finance receivables were recorded at a fair value of $225.3 million;

acquired leased merchandise was recorded at a fair value of $139.6 million;

an intangible asset for developed technology was recorded at a fair value of $99.4 million;

an intangible asset for merchant relationships was recorded at a fair value of $194.0 million;

and contingent consideration in the form of earnout liabilities was recorded at fair value of $127.4 million on the opening balance sheet, along with other acquired assets and liabilities.

To determine the fair value of acquired finance receivables, management first segmented the finance receivable population into pools of receivables with similar risk characteristics and then bifurcated each segment by receivables that have experienced a more-than-insignificant deterioration in credit quality since origination based on delinquency status (i.e., purchase credit deteriorated finance receivables) and non-purchase credit deteriorated finance receivables.

Management then used discounted cash flow analyses that considered factors such as discount rate and estimated losses to determine the fair value.

Management determined estimated losses by applying modeled loss rates primarily derived from internal, historical cumulative loss experience from comparable economic cycles, adjusted by qualitative factors to address recent and forecasted business trends.

Qualitative factors to address recent and forecasted business trends included, but were not limited to, loss trends, delinquency levels, economic conditions, underwriting and collection practices.

To determine the fair value of leased merchandise, management used a model that considered factors including assumptions about replacement cost sourced from third parties that was then adjusted for depreciation over estimated useful lives, as well as economic obsolescence of the leased merchandise.

Management estimated economic obsolescence by applying modeled loss rates primarily derived from historical losses and expected future losses that gave consideration to recent and forecasted business trends including, but not limited to, loss trends, delinquency levels, economic conditions, underwriting and collection practices.

To determine the fair value of the developed technology intangible asset, management utilized a cost method that contained assumptions on the estimated costs to rebuild the developed technology, including developer’s profit margins and economic obsolescence.

To determine the fair value of the merchant relationships intangible asset, management utilized a discounted cash flow model that contained assumptions on projected cash flows from merchants, a discount rate, and an attrition rate.

The earnout liabilities primarily consisted of two separate components that were recorded at fair value on the acquisition date of December 17, 2021 and remeasured at fair value on December 31, 2021.

The first component provides for a defined payment to the seller should certain income-based thresholds be achieved over a defined earnout measurement period.

To determine the fair value of the income-based earnout liability, management utilized a model which simulated scenarios that contained assumptions on projected cash flows and a discount rate.

The second component provides for a defined payment to the seller should certain share price-based thresholds be achieved over a defined measurement period.

To determine the fair value of the share price-based earnout liability, management utilized a model which simulated scenarios that contained assumptions on projected stock price, volatility and a discount rate.

We identified the determination of the fair value of acquired finance receivables, leased merchandise, developed technology and merchant relationships intangible assets and the valuation of earnout liabilities as critical audit matters as auditing those estimates required a high degree of auditor judgment, subjectivity, and effort in performing procedures and included the use of professionals with specialized skill and knowledge.

Our audit procedures related to the determination of the fair value of acquired finance receivables, leased merchandise, developed technology and merchant relationships intangible assets and the valuation of earnout liabilities included the following, among others:

• We obtained an understanding of the relevant controls related to the valuation model applied and tested such controls for design and operating effectiveness, including those controls over (a) validation of data within the model, and (b) the

management review and approval of the computed fair value, including the selection and application of the inputs into the model.

• We utilized internal valuation specialists to assist the audit team in testing the methodologies and techniques for appropriateness, as well as evaluating significant, challenging assumptions in the models and methods to determine fair value of the acquired assets and liabilities as outlined above.

Specifically, audit procedures included the following, among others:

• For acquired finance receivables:

◦ We tested the completeness and accuracy of data inputs into the discounted cash flow and CECL models, including discount rate, historical origination balances, loss rates, first payment default rates, and delinquency rates by segment, by tracing to internal source documents.

◦ We evaluated key assumptions and judgements surrounding the selection of modeled loss rates and adjustments for current conditions and future expectations for reasonableness by comparing to internal and external source data.

• For acquired leased merchandise:

◦ Valuation specialists assisted us in testing the reasonableness of inputs by comparing assumptions related to replacement cost to external sources and recalculating depreciation over estimated useful lives, including reviewing the estimated useful lives applied to the leased merchandise for reasonableness in their application.

◦ We evaluated economic obsolescence by testing the completeness and accuracy of data inputs into the lease losses model, including historical origination balances, loss rates, first payment default rates and delinquency rates, by tracing to internal source documents.

◦ We evaluated the economic obsolescence inputs by assessing key assumptions and judgements surrounding the selection of historical losses and adjustments for expected future losses for reasonableness and comparing to internal and external source data.

• For the acquired developed technology intangible asset:

◦ Together with valuation specialists, we compared assumptions related to costs to rebuild and economic obsolescence to internal sources.

◦ Valuation specialists assisted us in assessing the reasonableness of inputs by comparing assumptions related to developer’s profit margin to external sources.

• For the acquired merchant relationships intangible asset:

◦ Together with valuation specialists, we tested the completeness and accuracy of data inputs into the discounted cash flow model, including assessing the reasonableness of the discount rate by tracing to internal and external source documents and performing calculations to form independent expectations.

◦ Valuation specialists assisted us in evaluating the reasonableness of inputs by comparing assumptions related to the attrition rate to external sources and performing calculations to form independent expectations.

• For earnout liabilities:

◦ Together with valuation specialists, we tested both components of the earnout liability by comparing key terms, including the measurement period and defined income and stock price thresholds, utilized in the valuation models to internal source documents.

◦ Valuation specialists assisted us in evaluating the reasonableness of inputs in the income-based earnout liability fair value calculation by comparing assumptions in the projected cash flows model, including earnings volatility and discount rate assumptions, tracing to internal and external source documents, and performing calculations to form independent expectations.

◦ Valuation specialists assisted us in evaluating the reasonableness of inputs in the stock price-based earnout liability fair value calculation by assessing the reasonableness of projected stock price, including stock price volatility and discount rate assumptions, through tracing to internal and external source documents and performing calculations to form independent expectations.

s/ RSM US LLP

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February 28, 2022

FIRSTCASH, INC.

FIRSTCASH HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

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Cash and cash equivalents $ 120,046 $ 65,850

Fees and service charges receivable 41,110 46,686

Accounts receivable, net 55,356 41,110

Pawn loans 347,973 308,231

Consumer loans, net — 751

Finance receivables, net 181,021 —

Inventories 263,311 190,352

Leased merchandise, net 143,944 —

Income taxes receivable 5,419 9,634

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Other assets 8,531 9,818

Deferred tax assets 4,158 11,711

Deferred tax assets, net 5,614 4,158

Total assets $ 3,836,452 $ 2,372,197

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Accounts payable and accrued liabilities $ 240,940 $ 81,917

Customer deposits 34,719 39,736

Customer deposits and prepayments 57,310 34,719

Income taxes payable 3,387 1,148

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Senior unsecured notes 1,033,904 492,916

Deferred tax liabilities 71,173 61,431

Deferred tax liabilities, net 126,098 71,173

Lease liability, non-current 203,166 194,887

Other liabilities 13,950 —

Total liabilities 2,028,325 1,088,382

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The accompanying notes are an integral part of these consolidated financial statements.

FIRSTCASH, INC.

FIRSTCASH HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF INCOME

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Pawn loan fees 475,782 457,517 564,824

Leased merchandise income 22,720 — —

Interest and fees on finance receivables 9,024 2,016 20,178

Wholesale scrap jewelry sales 57,190 96,233 103,876

Consumer loan and credit services fees 2,016 20,178 56,277

Total revenue 1,698,965 1,631,284 1,864,439

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Cost of retail merchandise sold 663,464 641,087 745,861

Depreciation of leased merchandise 12,826 — —

Provision for lease losses 5,442 — —

Provision for loan losses 48,952 ( 488 ) 4,159

Cost of wholesale scrap jewelry sold 49,129 79,546 96,072

Consumer loan and credit services loss provision ( 488 ) 4,159 17,461

Total cost of revenue 779,813 720,145 846,092

1 unchanged sentence

Expenses and other income:

Store operating expenses 562,158 595,539 563,321

Operating expenses 564,832 562,158 595,539

Administrative expenses 111,259 110,931 122,334

2 unchanged sentences

Interest income ( 696 ) ( 1,540 ) ( 1,055 )

Merger and acquisition expenses 1,316 1,766 7,643

Loss (gain) on foreign exchange 436 884 ( 787 )

Merger and acquisition expenses 15,449 1,316 1,766

Gain on revaluation of contingent acquisition consideration ( 17,871 ) — —

Impairments and dispositions of certain other assets 949 10,505 —

Loss on extinguishment of debt — 11,737 —

Write-offs and impairments of certain lease intangibles and other assets 10,505 — —

Total expenses and other income 752,650 767,440 793,736

6 unchanged sentences

The accompanying notes are an integral part of these consolidated financial statements.

FIRSTCASH, INC.

FIRSTCASH HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

7 unchanged sentences

The accompanying notes are an integral part of these consolidated financial statements.

FIRSTCASH, INC.

FIRSTCASH HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

7 unchanged sentences

As of 12/31/2020 49,276 $ 493 $ 1,221,788 $ 789,303 $ ( 118,432 ) 8,238 $ ( 609,337 ) $ 1,283,815

Shares issued under share-based com-pensation plan, net of 46 shares net-settled

— — ( 10,663 ) — — ( 98 ) 7,337 ( 3,326 )

Exercise of stock options, net of 22 shares net-settled

Shares issued under share-based compensation plan, net of 28 shares net-settled

— — ( 7,090 ) — — ( 73 ) 5,427 ( 1,663 )

Exercise of stock options — — ( 358 ) — — ( 10 ) 738 380

Shares issued upon acquisition of American First Finance 8,046 80 505,466 — — — — 505,546

Share-based compensation expense — — 5,150 — — — — 5,150

6 unchanged sentences

The accompanying notes are an integral part of these consolidated financial statements.

FIRSTCASH, INC.

FIRSTCASH HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

7 unchanged sentences

As of 12/31/2019 49,276 $ 493 $ 1,231,528 $ 727,476 $ ( 96,969 ) 6,947 $ ( 512,493 ) $ 1,350,035

Shares issued under share-based compensation plan — — ( 1,441 ) — — ( 21 ) 1,441 —

Exercise of stock options — — ( 319 ) — — ( 10 ) 719 400

Shares issued under share-based compensation plan, net of 46 shares net-settled

— — ( 10,663 ) — — ( 98 ) 7,337 ( 3,326 )

Exercise of stock options, net of 22 shares net-settled

— — ( 1,991 ) — — ( 38 ) 2,789 798

Share-based compensation expense — — 2,914 — — — — 2,914

6 unchanged sentences

The accompanying notes are an integral part of these consolidated financial statements.

FIRSTCASH, INC.

FIRSTCASH HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

17 unchanged sentences

The accompanying notes are an integral part of these consolidated financial statements.

FIRSTCASH, INC.

FIRSTCASH HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

5 unchanged sentences

Adjustments to reconcile net income to net cash flow provided by operating activities:

Non-cash portion of consumer loan credit loss provision ( 839 ) 2,395 9,405

Depreciation of leased merchandise 12,826 — —

Provision for lease losses 5,442 — —

Provision for loan losses 48,952 ( 839 ) 2,395

Share-based compensation expense 5,150 2,914 8,680

1 unchanged sentence

Amortization of debt issuance costs 1,671 1,649 1,430

Amortization of favorable/(unfavorable) lease intangibles, net — — ( 259 )

Net amortization of premiums, discounts and unearned origination fees on finance receivables 1,132 — —

Gain on revaluation of contingent acquisition consideration ( 17,871 ) — —

Impairments and dispositions of certain other assets 949 10,505 —

Loss on extinguishment of debt — 11,737 —

Non-cash write-offs and impairments of certain lease intangibles and other assets 10,505 — 1,514

Deferred income taxes, net 10,722 14,476 7,008

Changes in operating assets and liabilities, net of business combinations:

Fees and service charges receivable 5,474 110 ( 432 )

Accounts receivable, net ( 2,492 ) 5,474 110

Inventories purchased directly from customers, wholesalers or manufacturers ( 27,006 ) 29,174 5,842

Leased merchandise, net ( 22,563 ) — —

Prepaid expenses and other assets 3,094 1,400 ( 1,049 )

3 unchanged sentences

Cash flow from investing activities:

Loan receivables, net (1)

Pawn loans, net (1)

( 73,340 ) 105,418 21,650

Finance receivables, net ( 5,844 ) 1,590 12,756

Purchases of furniture, fixtures, equipment and improvements ( 42,022 ) ( 37,543 ) ( 44,311 )

Purchases of store real property ( 79,507 ) ( 45,502 ) ( 74,661 )

Portion of AFF Acquisition paid in cash, net of cash acquired ( 462,102 ) — —

Acquisitions of pawn stores, net of cash acquired ( 81,822 ) ( 44,315 ) ( 52,487 )

3 unchanged sentences

Repayments of unsecured credit facilities ( 424,000 ) ( 569,933 ) ( 217,000 )

Issuance of senior unsecured notes due 2028 500,000 — —

Redemption of senior unsecured notes due 2024 ( 300,000 ) — —

Redemption premium and other redemption costs on senior unsecured notes due 2024 ( 8,781 ) — —

Issuance of senior unsecured notes 550,000 500,000 —

Redemption of senior unsecured notes — ( 300,000 ) —

Redemption premium and other redemption costs on senior unsecured notes — ( 8,781 ) —

Debt issuance costs paid ( 10,581 ) ( 7,963 ) ( 1,149 )

2 unchanged sentences

Payment of withholding taxes on net share settlements of restricted stock unit awards and stock options exercised ( 1,663 ) ( 3,668 ) —

FIRSTCASH HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Year Ended December 31,

2021 2020 2019

Dividends paid ( 47,533 ) ( 44,752 ) ( 43,952 )

Net cash flow used in financing activities ( 186,502 ) ( 120,806 ) ( 127,061 )

Net cash flow provided by (used in) financing activities 576,993 ( 186,502 ) ( 120,806 )

Effect of exchange rates on cash ( 1,464 ) 3,913 997

2 unchanged sentences

Cash and cash equivalents at end of the year $ 120,046 $ 65,850 $ 46,527

FIRSTCASH, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Year Ended December 31,

2020 2019 2018

Supplemental disclosure of cash flow information:

4 unchanged sentences

Non-cash transactions in connection with pawn loans settled through forfeitures of collateral transferred to inventories $ 430,306 $ 340,891 $ 500,744

(1) Includes the funding of new loans net of cash repayments and recovery of principal through the sale of inventories acquired from forfeiture of pawn collateral.

Issuance of common stock associated with the AFF Acquisition 505,546 — —

(1) Includes the funding of new pawn loans net of cash repayments and recovery of principal through the sale of inventories acquired from forfeiture of pawn collateral.

The accompanying notes are an integral part of these consolidated financial statements.

FIRSTCASH, INC.

FIRSTCASH HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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Organization and Nature of the Company

FirstCash, Inc., (together with its wholly-owned subsidiaries, the “Company”) is incorporated in the state of Delaware.

The Company is engaged in the operation of pawn stores, which generate retail sales primarily from the merchandise acquired through collateral forfeitures and over-the-counter purchases from customers.

In addition, the stores help customers meet small short-term cash needs by providing non-recourse pawn loans and buying merchandise directly from customers.

As of December 31, 2020, the Company owned and operated 2,748 stores in 24 U.S.

states and the District of Columbia, all 32 states in Mexico and the countries of Guatemala,Colombia and El Salvador.

Effective June 30, 2020, the Company ceased offering domestic payday and installment loans and no longer has any unsecured consumer lending or credit services operations in the U.S.

or Latin America.

Impact of COVID-19

In December 2019, a novel strain of coronavirus (“COVID-19”) surfaced in China and rapidly spread throughout the world.

In March of 2020, the World Health Organization declared the outbreak a pandemic.

During the end of the first quarter of 2020 and the first part of the second quarter of 2020, many countries, states and other local government officials reacted by instituting quarantines, shelter-in-place and other orders mandating non-essential business closures, travel restrictions and other measures in an effort to reduce the spread of COVID-19, in addition to instituting broad-based stimulus, relief and forbearance programs in an effort to mitigate the economic impact of the pandemic.

The broad shutdowns in response to COVID-19 caused significantly reduced levels of personal spending by consumers in the U.S.

and Latin America.

Further impacting consumer liquidity in the U.S.

during the second quarter were federal stimulus payments, forbearance programs and enhanced unemployment benefits.

While there were limited government stimulus programs in Latin America in response to the pandemic, increased cross-border remittance payments from the U.S.

to many Latin American countries further impacted Latin America consumer liquidity during the second quarter.

The additional consumer liquidity resulted in a significant decline in pawn lending activities, including increased redemptions of existing loans and decreased originations of new loans.

Pawn loans as of June 30, 2020 were 39 % lower than the prior year, before beginning to recover.

The recovery in pawn loans continued throughout the third and fourth quarters, although pawn loan balances as of December 31, 2020 were still lower than prior-year balances.

Resulting pawn loan fees were negatively impacted during the second, third and fourth quarters of 2020 as a result of the lower pawn loan balances.

In general, in most jurisdictions where the Company has stores, pawnshops were designated an essential service by federal guidelines and/or local regulations and were allowed to remain open during the broad shutdowns in response to COVID-19.

As a result, retail sales in the U.S.

during the second quarter increased 24 % compared to the prior-year quarter, benefiting from strong demand for stay-at-home products, such as consumer electronics, tools and sporting goods, and were further enhanced by federal stimulus payments made directly to consumers in the U.S.

Although the Company experienced strong demand in Latin America for stay-at-home products, retail sales were negatively impacted by a regulatory prohibition of retail transactions enacted in Mexico during the last three weeks of May and the closure of all stores in Colombia and El Salvador during much of the second quarter due to broad government shutdowns.

As a result of the significant second quarter increase in retail sales in the U.S.

and less forfeited inventory from lower pawn receivable balances, inventory balances were negatively impacted and decreased 32 % at June 30, 2020 compared to the prior year-quarter.

The lower inventory balances and the lack of government stimulus and a more limited economic recovery in Latin America during the second half of 2020 compared to the U.S.

negatively impacted retail sales during the third and fourth quarters but was offset by an increase in retail sales margin, which was primarily a result of continued retail demand for value-priced pre-owned merchandise, increased buying of merchandise directly from customers and lower levels of aged inventory, all of which limited the need for normal discounting.

In addition, the economic global uncertainty resulting from COVID-19 has resulted in increased currency volatility, which caused adverse currency rate fluctuations, especially with respect to the Mexican peso.

The extent to which COVID-19 impacts the Company’s operations, results of operations, liquidity and financial condition will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration and severity of the outbreak, and the actions taken to contain its impact, as well as further actions, such as additional stimulus programs, taken to limit the resulting economic impact, among others.

On December 16, 2021, FirstCash, Inc.

implemented a holding company reorganization, which resulted in FirstCash Holdings, Inc.

owning all of the outstanding capital stock of FirstCash, Inc.

Following the reorganization, FirstCash Holdings, Inc.

became the successor issuer to FirstCash, Inc.

FirstCash Holdings, Inc.

(together with its wholly-owned subsidiaries, the “Company”) is incorporated in the state of Delaware.

On December 17, 2021, the Company completed the acquisition (the “AFF Acquisition”) of American First Finance (“AFF”), which is a leading technology-driven retail point-of-sale (“POS”) payment solutions platform primarily focused on providing lease-to-own (“LTO”) products.

See Note 3 for additional information about the AFF Acquisition.

The Company operates two business lines:

pawn operations and retail POS payment solutions which are organized into three reportable segments.

pawn segment consists of all pawn operations in 26 U.S.

states and the District of Columbia, while the Latin America pawn segment consists of all pawn operations in Mexico, Guatemala, Colombia and El Salvador.

The retail POS payment solutions segment consists of the operations of AFF.

The Company’s primary business line continues to be the operation of retail pawn stores, also known as “pawnshops,” which focus on serving cash and credit-constrained consumers.

Pawn stores help customers meet small short-term cash needs by providing non-recourse pawn loans and buying merchandise directly from customers.

Personal property, such as jewelry, electronics, tools, appliances, sporting goods and musical instruments, is pledged and held as collateral for the pawn loans over the typical 30-day term of the loan.

Pawn stores also generate retail sales primarily from the merchandise acquired through collateral forfeitures and over-the-counter purchases from customers.

The Company’s retail POS payment solutions segment focuses on providing LTO and retail financing payment options across a large network of traditional and e-commerce retail merchant partners in all 50 states in the U.S., the District of Columbia and Puerto Rico.

AFF’s retail merchant partnerships provide consumer goods and services to their shoppers and use AFF’s LTO and retail finance solutions to facilitate payments on such transactions.

Continuing Impact of COVID-19

The COVID-19 pandemic continues to impact numerous aspects of the Company’s business and the continuing long-term impact to its business remains unknown.

The extent to which COVID-19 continues to impact the Company’s operations, results of operations, liquidity and financial condition will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the unknown duration and severity of the COVID-19 pandemic, which may be impacted by variants of concern and the efficacy and adoption rate of the COVID-19 vaccines in the jurisdictions in which the Company operates.

In addition, changes in economic conditions and consumer spending, rising inflation, and the actions taken to limit the economic impact of COVID-19, such as government stimulus and other transfer programs, have and may continue to have a material adverse impact on demand for pawn loans in future periods.

Moreover, safety protocols, staffing constraints and supply chain delays continue to impact operations and traffic counts for many retailers, which include the Company’s pawn stores and many of AFF’s retail merchant partners.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies followed in the preparation of these financial statements:

Principles of consolidation - The accompanying consolidated financial statements include the accounts of FirstCash, Inc.

Principles of consolidation - The accompanying consolidated financial statements include the accounts of FirstCash Holdings, Inc.

and its wholly-owned subsidiaries.

The Company regularly makes acquisitions and the results of operations for the acquired stores have been consolidated since the acquisition dates.

The Company regularly makes acquisitions and the results of the acquired operations have been consolidated since the acquisition dates.

All significant intercompany accounts and transactions have been eliminated.

3 unchanged sentences

If a pawn loan defaults, the Company relies on the sale of the pawned property to recover the principal amount of an unpaid pawn loan, plus a yield on the investment, as the Company’s pawn loans are non-recourse against the customer.

The customer’s creditworthiness does not affect the Company’s financial position or results of operations.

If the pawn loan is not repaid prior to the expiration of the loan term, including any extension or grace period, if applicable, the principal amount loaned becomes the inventory carrying value of the forfeited collateral, which is typically recovered through sales of the forfeited items at prices well above the carrying value.

The Company accrues pawn loan fee revenue on a constant-yield basis over the life of the pawn loan for all pawns for which the Company deems collection to be probable based on historical pawn redemption statistics, which is included in accounts receivable, net in the accompanying consolidated balance sheets.

If the pawn loan is not repaid prior to the expiration of the pawn loan term, including any extension or grace period, if applicable, the principal amount loaned becomes the inventory carrying value of the forfeited collateral, which is typically recovered through sales of the forfeited items at prices well above the carrying value.

The Company has determined no allowance related to credit losses on pawn loans is required as the fair value of the pledged collateral is significantly in excess of the pawn loan amount.

Inventories and merchandise sales revenue recognition - Inventories represent merchandise acquired from forfeited pawn loans and merchandise purchased directly from the general public.

Pawn inventories and revenue recognition - Pawn inventories represent merchandise acquired from forfeited pawn loans and merchandise purchased directly from the general public.

The Company also retails limited quantities of new or refurbished merchandise obtained directly from wholesalers and manufacturers.

Inventories from forfeited pawn loans are recorded at the amount of the pawn principal on the unredeemed goods, exclusive of accrued interest.

Inventories purchased directly from customers, wholesalers and manufacturers are recorded at cost.

The cost of inventories is determined on the specific identification method.

Inventories are stated at the lower of cost or net realizable value and, accordingly, inventory valuation allowances are established if inventory carrying values are in excess of estimated selling prices, net of direct costs of disposal.

Management has evaluated inventories and determined that a valuation allowance is not necessary.

The Company’s pawn merchandise sales are primarily retail sales to the general public in its pawn stores.

Pawn inventories from forfeited pawn loans are recorded at the amount of the pawn principal on the unredeemed goods, exclusive of accrued interest.

Pawn inventories purchased directly from customers, wholesalers and manufacturers are recorded at cost.

The cost of pawn inventories is determined on the specific identification method.

Pawn inventories are stated at the lower of cost or net realizable value and, accordingly, valuation allowances are established if pawn inventory carrying values are in excess of estimated selling prices, net of direct costs of disposal.

Management has evaluated pawn inventories and determined that a valuation allowance is not necessary.

The Company’s merchandise sales are primarily retail sales to the general public in its pawn stores.

The Company records sales revenue at the time of the sale.

2 unchanged sentences

The Company records revenue from these wholesale scrap jewelry transactions when a price has been agreed upon and the Company ships the commodity to the buyer.

Layaway plan and deferred revenue - The Company does not provide direct financing to customers for the purchase of its merchandise, but does permit its customers to purchase merchandise on an interest-free “layaway” plan.

Should the customer fail to make a required payment pursuant to a layaway plan, the item is returned to inventory and all or a portion of previous payments are typically forfeited to the Company.

Layaway plan and deferred revenue - The Company does not currently provide direct financing to customers for the purchase of merchandise in its pawn stores, but does permit its customers to purchase pawn merchandise on an interest-free “layaway” plan.

Should the customer fail to make a required payment pursuant to a layaway plan, the item is returned to pawn inventory and all or a portion of previous payments are typically forfeited to the Company.

Deposits and interim payments from customers on layaway sales are recorded as deferred revenue and subsequently recorded as retail merchandise sales revenue when the merchandise is delivered to the customer upon receipt of final payment or when previous payments are forfeited to the Company.

Layaway payments from customers are included in customer deposits in the accompanying consolidated balance sheets.

Foreign currency transactions - The Company has operations in Mexico, Guatemala and Colombia where the functional currency is the Mexican peso, Guatemalan quetzal and Colombian peso.

Layaway payments from customers are included in customer deposits and prepayments in the accompanying consolidated balance sheets.

Leased merchandise and revenue recognition - The Company provides merchandise, consisting primarily of furniture and mattresses, appliances, jewelry, electronics and automotive products, to customers of its merchant partners for lease under certain terms agreed to by the customer.

The customer has the right to acquire the title either through an early buyout option or through payment of all required lease payments.

The Company maintains ownership of the leased merchandise until all payment obligations are satisfied under the lease agreement.

The customer has the right to cancel the lease at any time by returning the merchandise and making all scheduled payments due through the minimum lease holding period, which is typically 60 days.

Leased merchandise contracts can typically be renewed for between six to 24 months.

Leased merchandise is stated at depreciated cost.

The Company depreciates leased merchandise over the life of the lease, and assumes no salvage value.

Depreciation is accelerated upon an early buyout.

All of the Company’s leased merchandise represents on-lease merchandise and all leases are operating leases.

Lease income is recognized over the lease term and is recorded net of any sales taxes collected.

Charges for late fees and insufficient fund fees are recognized as income when collected.

Initial direct costs related to the Companyʼs lease agreements are added to the basis of the leased property and recognized over the lease term in proportion to the recognition of lease income.

The Company typically charges the customer a non-refundable processing fee at lease inception and may also receive a discount from or pay a premium to certain merchant partners for leases originated at their locations, which are deferred and amortized using the straight-line method as adjustments to lease income over the contractual life of the related leased merchandise.

Unamortized fees, discounts and premiums are recognized in full upon early buyout or charge-off.

The Company accrues for lease income earned but not yet collected as accrued rent receivable, which is included in accounts receivable, net in the accompanying consolidated balance sheets.

Alternatively, lease payments received in excess of the amount earned are recognized as deferred revenue, which is included in customer deposits and prepayments in the accompanying consolidated balance sheets.

Customer payments are first applied to applicable sales tax and scheduled lease payments, then applied to any uncollected fees, such as late fees and insufficient fund fees.

The Company collects sales taxes on behalf of the customer and remits all applicable sales taxes collected to the respective jurisdiction.

Provision for lease losses - The Company records a provision for lease losses on an allowance method, which estimates the leased merchandise losses incurred but not yet identified by management as of the end of the accounting period.

The allowance for lease losses is based primarily upon historical loss experience with consideration given to recent and forecasted business trends including, but not limited to, loss trends, delinquency levels, economic conditions, underwriting and collection practices.

The Company charges off leased merchandise when a lease is 90 days or more contractually past due.

If an account is deemed to be uncollectible prior to this date, the Company will charge off the leased merchandise at the point in time it is deemed uncollectible.

Finance receivables and revenue recognition - The Company purchases and services retail finance receivables, the term of which typically ranges from six to 24 months, directly from its merchant partners or from its bank partner.

The Company has a partnership with a Utah state-chartered bank that requires the Company to purchase the rights to the cash flows associated with finance receivables marketed to retail consumers on the bank’s behalf.

The bank establishes the underwriting criteria for the finance receivables originated by the bank.

Interest income is recognized using the interest method over the life of the finance receivable for all loans for which the Company deems collection to be probable based on historical loan redemption statistics and stops accruing interest upon charge-off.

Accrued interest, net of an allowance for uncollectible interest income is included in accounts receivable, net in the accompanying consolidated balance sheets and as of December 31, 2021 and 2020 was $ 12.4 million and $ 0.0 million , respectively.

Charges for late fees and insufficient fund fees are recognized as income when collected.

The Company receives an origination fee on newly purchased bank loans and may receive a discount from or pay a premium to certain merchant partners for finance receivables purchased from them, which are deferred and amortized using the interest method as adjustments to yield over the contractual life of the related finance receivable.

Unamortized origination fees, discounts and premiums are recognized in full upon early payoff or charge-off.

The Company offers customers an early payoff discount on most of its finance receivables whereby the customer has between 90 and 105 days to pay the full principal balance without incurring any interest charge.

If the borrower does not pay the full principal balance prior to the expiration of the early payoff discount period, interest charges are applied retroactively to the inception date of the loan.

The Company accrues interest income during the early payoff discount period but records a reserve for loans expected to pay the full principal balance prior to the expiration of the early payoff discount period based on historical payment patterns.

Provision for loan losses - Expected lifetime losses on finance receivables are recognized upon loan purchase, which requires the Company to make its best estimate of probable lifetime losses at the time of purchase.

The Company segments its finance receivable portfolio into pools of receivables with similar risk characteristics which include loan product and monthly origination vintage and evaluates each pool for impairment.

The Company calculates the allowance for loan losses based on historical loss information and incorporates observable and forecasted economic conditions over a reasonable and supportable forecast period covering the full contractual life of finance receivables.

Incorporating observable and forecasted economic conditions could have a material impact on the measurement of the allowance to the extent that forecasted economic conditions change significantly.

The Company may also consider other qualitative factors to address recent and forecasted business trends in estimating the allowance, as necessary, including, but not limited to, loss trends, delinquency levels, economic conditions, underwriting and collection practices.

The allowance for loan losses is maintained at a level considered appropriate to cover expected lifetime losses on the finance receivable portfolio, and the appropriateness of the allowance is evaluated at each period end.

The Company charges off finance receivables when a receivable is 90 days or more contractually past due.

If an account is deemed to be uncollectible prior to this date, the Company will charge off the finance receivable at the point in time it is deemed uncollectible.

Foreign currency transactions - The Company has pawn operations in Latin America where in Mexico, Guatemala and Colombia the functional currency is the Mexican peso, Guatemalan quetzal and Colombian peso.

Accordingly, the assets and liabilities of these subsidiaries are translated into U.S.

2 unchanged sentences

Prior to translation, U.S.

dollar-denominated transactions of the foreign subsidiaries are remeasured into their functional currency using current rates of

exchange for monetary assets and liabilities and historical rates of exchange for non-monetary assets and liabilities.

dollar-denominated transactions of the foreign subsidiaries are remeasured into their functional currency using current rates of exchange for monetary assets and liabilities and historical rates of exchange for non-monetary assets and liabilities.

Gains and losses from remeasurement of dollar-denominated monetary assets and liabilities in Mexico, Guatemala and Colombia are included in (gain) loss on foreign exchange in the consolidated statements of income.

Deferred taxes are not currently recorded on cumulative foreign currency translation adjustments, as the Company indefinitely reinvests earnings of its foreign subsidiaries.

The Company also has operations in El Salvador where the reporting and functional currency is the U.S.

The Company also has pawn operations in El Salvador where the reporting and functional currency is the U.S.

The average value of the Mexican peso to the U.S.

1 unchanged sentence

The average value of the Guatemalan quetzal to the U.S.

dollar exchange rate for 2020 was 7.7 to 1 , compared to 7.7 to 1 in 2019 and 7.5 to 1 in 2018.

dollar exchange rate for 2021, 2020 and 2019 was 7.7 to 1 .

The average value of the Colombian peso to the U.S.

dollar exchange rate for 2021 was 3,742 to 1 compared to 3,693 to 1 in 2020 and 3,280 to 1 in 2019.

Store operating expenses - Costs incurred in operating the Company’s stores have been classified as store operating expenses.

Operating expenses include salary and benefit expense of store-level employees, occupancy costs, bank charges, security, insurance, utilities, supplies and other costs incurred by the stores.

Operating expenses - Costs incurred in operating the Company’s pawn stores have been classified as operating expenses, which include salary and benefit expense of pawn store-level employees, occupancy costs, bank charges, security, insurance, utilities, supplies and other costs incurred by the pawn stores.

Additionally, costs incurred in operating AFF have been classified as operating expenses, which include salary and benefit expense of certain operations focused departments, merchant partner incentives, bank and other payment processing charges, credit reporting costs, information technology costs, advertising costs and other operational costs incurred.

Property and equipment - Property and equipment are recorded at cost.

Depreciation is recorded on the straight-line method generally based on estimated useful lives of 30 to 40 years for buildings and three to five years for furniture, fixtures and equipment.

The costs of improvements on leased stores are capitalized as leasehold improvements and are depreciated using the straight-line method over the applicable lease period, or useful life, if shorter.

The costs of improvements on leased pawn stores are capitalized as leasehold improvements and are depreciated using the straight-line method over the applicable lease period, or useful life, if shorter.

Maintenance and repairs are charged to expense as incurred and renewals and betterments are charged to the appropriate property and equipment accounts.

Upon sale or retirement of depreciable assets, the cost and related accumulated depreciation is removed from the accounts, and the resulting gain or loss is included in the results of operations in the period the assets are sold or retired.

Business combinations - Business combination accounting requires the Company to determine the fair value of all assets acquired, including identifiable intangible assets, liabilities assumed and contingent consideration issued in a business combination.

The total consideration of the acquisition is allocated to the assets and liabilities in amounts equal to the estimated fair value of each asset and liability as of the acquisition date, and any remaining acquisition consideration is classified as goodwill.

This allocation process requires extensive use of estimates and assumptions.

When appropriate, the Company utilizes independent valuation experts to advise and assist in determining the fair value of the assets acquired and liabilities assumed in connection with a business acquisition, in determining appropriate amortization methods and periods for identified intangible assets and in determining the fair value of contingent consideration, which is reviewed at each subsequent reporting period with changes in the fair value of the contingent consideration recognized in the consolidated statements of income.

Goodwill and other indefinite-lived intangible assets - Goodwill represents the excess of the purchase price over the fair value of the net assets acquired in each business combination.

1 unchanged sentence

The Company’s reporting units, which are tested for impairment, are U.S.

operations and Latin America operations.

pawn, Latin America pawn and retail POS payment solutions.

The Company assesses goodwill for impairment at a reporting unit level by first assessing a range of qualitative factors, including, but not limited to, macroeconomic conditions, industry conditions, the competitive environment, changes in the market for the Company’s products and services, regulatory and political developments, entity specific factors, such as strategy and changes in key personnel, and overall financial performance.

If, after completing this assessment, it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying value, the Company proceeds to the impairment testing methodology.

The Company’s other material indefinite-lived intangible assets consist of trade names and pawn licenses.

The Company performs its indefinite-lived intangible asset impairment assessment annually as of December 31, and between annual assessments if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.

The Company’s other material indefinite-lived intangible assets consist of certain trade names and pawn licenses.

Merger and acquisition expenses - The Company incurs incremental costs directly associated with merger and acquisition activity, including, but not limited to, professional fees, legal expenses, severance, retention and other employee-related costs, contract breakage costs and costs related to consolidation of technology systems and corporate facilities.

3 unchanged sentences

Generally, the amount of the impairment loss is measured as the difference between the net book value of the asset and the estimated fair value of the related asset.

During 2020, the Company recorded a $ 1.9 million impairment of other assets and a $ 1.5 million impairment of property and equipment, and during 2018, the Company recorded a $ 1.5 million impairment of property and equipment.

During 2020, the Company recorded a $ 1.9 million impairment of other assets and a $ 1.5 million impairment of property and equipment.

The Company did not record any impairment loss for the year ended December 31, 2021.

6 unchanged sentences

Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases.

Advertising - The Company expenses the costs of advertising the first time the advertising takes place.

Advertising - The Company expenses the costs of advertising when incurred.

Advertising expense for the years ended December 31, 2021, 2020 and 2019, was $ 1.0 million, $ 1.1 million, and $ 1.2 million, respectively.

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Such estimates and assumptions are subject to a number of risks and uncertainties, which may cause actual results to differ materially from the Company’s estimates.

The extent to which COVID-19 impacts the Company’s operations, results of operations, liquidity and financial condition, including estimates and assumptions used by the Company in the calculation and

evaluation of the accrual for earned but uncollected pawn loan fees, impairment of goodwill and other intangible assets and current and deferred tax assets and liabilities, will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration and severity of the outbreak, and the actions taken to contain its impact, as well as actions taken to limit the resulting economic impact, among others.

The Company’s future assessment of the magnitude and duration of the COVID-19 pandemic, as well as other factors, could result in material impacts to the Company’s financial statements in future reporting periods.

Reclassification - Certain amounts in the Notes to Consolidated Financial Statements for the years ended December 31, 2019 and 2018 have been reclassified in order to conform to the 2020 presentation.

Recent accounting pronouncements - In June 2016, the Financial Accounting Standards Board issued ASU No.

2016-13, “Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”).

ASU 2016-13 amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables.

In November 2018, the Financial Accounting Standards Board issued ASU No.

2018-19, “Codification Improvements to Topic 326, Financial Instruments - Credit Losses” (“ASU 2018-19”), which clarifies that receivables arising from operating leases are accounted for using lease guidance and not as financial instruments.

In April 2019, the Financial Accounting Standards Board issued ASU No.

2019-04, “Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments” (“ASU 2019-04”), which clarifies the treatment of certain credit losses.

In May 2019, the Financial Accounting Standards Board issued ASU No.

2019-05, “Financial Instruments - Credit Losses (Topic 326):

Targeted Transition Relief” (“ASU 2019-05”), which provides an option to irrevocably elect to measure certain individual financial assets at fair value instead of amortized cost.

In November 2019, the Financial Accounting Standards Board issued ASU No.

2019-11, “Codification Improvements to Topic 326, Financial Instruments - Credit Losses” (“ASU 2019-11”), which provides guidance around how to report expected recoveries.

In February 2020, the Financial Accounting Standards Board issued ASU No.

2020-02, “Financial Instruments - Credit Losses (Topic 326) (“ASU 2020-02”) which provides updated guidance on how an entity should measure credit losses on financial instruments and delayed the effective date of the original pronouncement for smaller reporting companies.

ASU 2016-13, ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2019-11 and ASU 2020-02 (collectively, “ASC 326”) are effective for public entities for fiscal years beginning after December 15, 2019, with early adoption permitted.

The adoption of ASC 326 did not have a material effect on the Company’s current financial position, results of operations or financial statement disclosures.

In January 2017, the Financial Accounting Standards Board issued ASU No.

2017-04, “Intangibles - Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”), which eliminates step two from the goodwill impairment test and, instead, requires an entity to perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount.

An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary.

The guidance is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019 and should be adopted on a prospective basis.

The adoption of ASU 2017-04 did not have a material effect on the Company’s current financial position, results of operations or financial statement disclosures.

In August 2018, the Financial Accounting Standards Board issued ASU No.

2018-13, “Fair Value Measurement (Topic 820):

Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”).

ASU 2018-13 modifies the disclosure requirements on fair value measurements.

ASU 2018-13 is effective for public entities for fiscal years beginning after December 15, 2019, with early adoption permitted for any removed or modified disclosures.

The adoption of ASU 2018-13 did not have a material effect on the Company’s current financial position, results of operations or financial statement disclosures.

In December 2019, the Financial Accounting Standards Board issued ASU No 2019-12, “Income Taxes (Topic 740):

Significant estimates include the accrual for earned but uncollected pawn fees, allowances for lease and loan losses and related lease and loan loss provisions, valuation of acquired assets, assumed liabilities and contingent consideration of the AFF Acquisition, evaluation of goodwill and other intangible assets for impairment and current and deferred tax assets and liabilities.

Reclassification - Certain amounts in the consolidated statements of income and consolidated statements of cash flows for the years ended December 31, 2020 and 2019 have been reclassified in order to conform to the 2021 presentation.

Recent accounting pronouncements - In December 2019, the Financial Accounting Standards Board issued ASU No 2019-12, “Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes” (“ASU 2019-12”).

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ASU 2019-12 is effective for public entities for fiscal years beginning after December 15, 2020, with early adoption permitted.

The Company does not expect ASU 2019-12 to have a material effect on the Company’s current financial position, results of operations or financial statement disclosures.

In March 2020, the Financial Accounting Standards Board issued ASU 2020-03, “Codification Improvements to Financial Instruments” (“ASU 2020-03”).

ASU 2020-03 improves and clarifies various financial instruments topics.

ASU 2020-03 includes seven different issues that describe the areas of improvement and the related amendments to GAAP, intended to make the standards easier to understand and apply by eliminating inconsistencies and providing clarifications.

The Company adopted ASU 2020-03 upon issuance, which did not have a material effect on the Company’s current financial position, results of operations or financial statement disclosures.

The adoption of ASU 2019-12 did not have a material effect on the Company’s current financial position, results of operations or financial statement disclosures.

In March 2020, the Financial Accounting Standards Board issued ASU No 2020-04, “Reference Rate Reform (Topic 848):

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The Company does not expect ASU 2020-04 to have a material effect on the Company’s current financial position, results of operations or financial statement disclosures.

In October 2020, the Financial Accounting Standards Board issued ASU No 2020-10, “Codification Improvements” (“ASU 2020-10”).

ASU 2020-10 updates various codification topics by clarifying or improving disclosure requirements.

ASU 2020-10 is effective for public entities for fiscal years beginning after December 15, 2020, with early adoption permitted.

In August 2021, the Financial Accounting Standards Board issued ASU No 2021-06, “Presentation of Financial Statements (Topic 205), Financial Services—Depository and Lending (Topic 942), and Financial Services—Investment Companies (Topic 946):

Amendments to SEC Paragraphs Pursuant to SEC Final Rule Releases No.

33-10786, Amendments to Financial Disclosures About Acquired and Disposed Businesses, and No.33-10835, Update of Statistical Disclosures for Bank and Savings and Loan Registrants” (“ASU 2021-06”).

ASU 2021-06 amends certain SEC disclosure guidance that is included in the accounting standards codification to reflect the SEC’s recent issuance of rules intended to modernize and streamline disclosure requirements.

The Company adopted ASU 2021-06 upon issuance, which did not have a material effect on the Company’s current financial position, results of operations or financial statement disclosures.

NOTE 3 - ACQUISITIONS

2020 Acquisitions

Consistent with the Company’s strategy to continue its expansion of pawn stores in selected markets, during 2020, the Company acquired 40 pawn stores in Mexico in two separate transactions and 22 pawn stores in the U.S.

in two separate transactions.

American First Finance Acquisition

On December 17, 2021, the Company completed the AFF Acquisition.

Under the terms and conditions set forth in the business combination agreement dated October 27, 2021, as amended, the Company acquired all of the equity interests of AFF in exchange for 8,046,252 shares of the Company’s common stock and cash consideration.

Immediately following the AFF Acquisition, the Company’s shareholders owned approximately 83 % of the common stock of the Company and the seller parties owned approximately 17 %.

In addition to the closing purchase price, the seller parties have the right to receive up to an additional $ 375.0 million of contingent consideration (the “Contingent Consideration”).

In particular, the seller parties have the right to receive up to $ 250.0 million of additional consideration if AFF achieves certain adjusted EBITDA targets for the period consisting of the fourth quarter of 2021 through the end of 2022 and up to $ 50.0 million if AFF achieves certain adjusted EBITDA targets for the first half of 2023.

In addition, the seller parties have the right to receive up to an additional $ 75.0 million of consideration in the event that the highest average stock price of the Company for any 10-day period from December 6, 2021 through February 28, 2023 is less than $ 86.25 .

The Contingent Consideration is payable in cash or Company common stock, at the Company’s discretion.

The following table summarizes the consideration transferred in connection with the AFF Acquisition, net of cash acquired (in thousands except share and per share amounts):

AFF Acquisition

Shares of FirstCash Holdings, Inc.

common stock issued 8,046,252

Closing common stock price per share at December 16, 2021 $ 62.83

Stock consideration $ 505,546

Cash consideration paid to AFF shareholders at closing 253,087

Cash consideration paid to extinguish AFF pre-existing debt 257,278

Present value of deferred consideration payable to AFF shareholders on December 31, 2022 23,873

Estimated fair value of Contingent Consideration (see Note 6)

Less cash acquired ( 48,263 )

Aggregate purchase consideration $ 1,118,941

The Company has performed a valuation analysis of identifiable assets acquired and liabilities assumed and allocated the aggregate purchase consideration based on the fair values of those identifiable assets and liabilities.

The estimate of the fair values of identifiable assets acquired and liabilities assumed are determined by applying various valuation techniques, including discounted cash flow analyses, Monte Carlo simulations and the replacement cost method, which include various inputs and assumptions such as discount rates, projected cash flows and profit margins, attrition rates, economic obsolescence, expected charge-off rates and depreciation, some of which may not be observable in the market.

The purchase price allocation is subject to change as the Company finalizes the analysis of the fair value at the date of the AFF Acquisition.

The final determination of the fair value of assets acquired and liabilities assumed will be completed within the twelve-month measurement period from the date of the AFF Acquisition, as required by applicable accounting guidance.

Due to the significance of the AFF Acquisition, the Company may use all of this measurement period to adequately analyze and assess the fair values of assets acquired and liabilities assumed.

The allocation of the aggregate purchase consideration, net of cash acquired and subject to future measurement period adjustments, is as follows (in thousands):

AFF Acquisition

Accounts receivable $ 11,660

Finance receivables (1)

Leased merchandise 139,649

Prepaid expenses and other current assets 4,474

Property and equipment 11,670

Operating lease right of use asset 491

Intangible assets (3)

Accounts payable and accrued liabilities ( 28,357 )

Customer deposits and prepayments ( 11,014 )

Lease liability, current ( 10 )

Deferred tax liabilities ( 42,608 )

Lease liability, non-current ( 481 )

Purchase price $ 1,118,941

(1) Finance receivables acquired in a business combination that have experienced more-than-insignificant deterioration in credit quality since origination are considered purchased credit deteriorated (“PCD”).

The Company evaluated the acquired finance receivables for deterioration in credit quality primarily based on delinquency status.

At the acquisition date, an estimate of expected lifetime credit losses for PCD finance receivables is added to the acquisition date fair value to establish the initial amortized cost basis of the PCD finance receivables.

As the initial allowance for credit losses is added to the fair value, there is no provision for loan losses recognized upon acquisition of a PCD loan.

A reconciliation of the difference between the fair value of the PCD finance receivables and the unpaid principal balance as of the date of the acquisition is as follows (in thousands):

PCD Finance Receivables

Unpaid principal balance of PCD finance receivables $ 41,900

Non-credit discount ( 4,120 )

Amortized cost of PCD finance receivables 37,780

Less allowance for loan losses recognized for PCD finance receivables 32,036

Fair value of PCD finance receivables $ 5,744

For acquired finance receivables not deemed PCD at acquisition (“non-PCD”), the differences between the initial fair value and the unpaid principal balance are recognized as interest income on a level-yield basis over the lives of the related loans.

At the acquisition date, an initial allowance for expected lifetime credit losses is estimated and recorded as provision for loan losses.

A reconciliation of the difference between the fair value of the non-PCD finance receivables and the unpaid principal balance as of the date of the acquisition is as follows (in thousands):

Non-PCD Finance Receivables

Unpaid principal balance of non-PCD finance receivables $ 177,456

Fair value premium 42,061

Fair value of non-PCD finance receivables 219,517

Less allowance for loan losses recognized for non-PCD finance receivables 44,250

Carrying value of non-PCD finance receivables $ 175,267

(2) The goodwill is attributable to the excess of the aggregate purchase consideration over the fair value of the net tangible and intangible assets acquired and liabilities assumed and is considered to represent the synergies and economies of scale expected from combining the operations of the Company and AFF.

This goodwill has been assigned to the retail POS payment solutions reporting unit.

Excluding any potential earnout payments, approximately $ 212.3 million of the goodwill arising from the AFF Acquisition is expected to be deductible for U.S.

income tax purposes.

(3) Intangible assets acquired and the respective useful lives assigned consist of the following (in thousands, except useful life):

AFF Acquisition (In Years)

Merchant relationships $ 194,000 7

Developed technology 99,400 5

Trade name 10,200 2

Relationships with existing lessees 1,500 1

Total intangible assets $ 305,100

The merchant relationships are being amortized using an accelerated amortization method that reflects the future cash flows expected from existing merchant relationships.

Annual estimated amortization expense of the merchant relationships over each of the next five years is approximately $ 30.6 million, $ 31.5 million, $ 29.8 million, $ 28.2 million and $ 26.2 million.

2021 Pawn Acquisitions

During 2021, the Company acquired 46 pawn stores in the U.S.

in three separate transactions and acquired a pawn license that will be used to open a new pawn store in the state of Nevada.

The aggregate purchase price for these acquisitions totaled $ 79.5 million, net of cash acquired and subject to future post-closing adjustments.

The aggregate purchase price was composed of $ 41.4 million in cash paid during 2020 and remaining short-term amounts payable to the sellers of approximately $ 2.2 million.

The aggregate purchase price was composed of $ 76.0 million in cash paid at closing and remaining short-term amounts payable to the sellers of approximately $ 3.5 million.

During 2021, the Company also paid $ 5.8 million of purchase price amounts payable related to prior-year acquisitions.

The purchase price of each of the 2020 acquisitions was allocated to assets acquired and liabilities assumed based upon the estimated fair market values at the date of acquisition.

The purchase price of each of the 2021 pawn acquisitions was allocated to assets acquired and liabilities assumed based upon the estimated fair market values at the date of acquisition.

The excess purchase price over the estimated fair market value of the net assets acquired has been recorded as goodwill.

The goodwill arising from these acquisitions consists largely of the synergies and economies of scale expected from combining the operations of the Company and the pawn stores acquired.

These acquisitions were not material individually or in the aggregate to the Company’s consolidated financial statements.

The goodwill arising from these pawn store acquisitions consists largely of the synergies and economies of scale expected from combining the operations of the Company and the pawn stores acquired.

These pawn acquisitions were not material individually or in the aggregate to the Company’s consolidated financial statements.

The estimated fair value of the assets acquired and liabilities assumed are preliminary, as the Company is gathering information to finalize the valuation of these assets and liabilities.

The preliminary allocation of the aggregate purchase prices for these individually immaterial acquisitions during 2020 is as follows (in thousands):

The preliminary allocation of the aggregate purchase price for these individually immaterial pawn store acquisitions during 2021 (the “2021 Pawn Acquisitions”) is as follows (in thousands):

2021 Pawn Acquisitions

Pawn loans $ 7,920

Pawn loan fees receivable 644

Accounts receivable, net 470

Inventories 8,822

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Aggregate purchase price $ 79,537

(1) Goodwill associated with the U.S.

operations segment and the Latin America operations segment was $ 29.0 million and $ 4.5 million, respectively.

Substantially all of the goodwill is expected to be deductible for respective U.S.

and Mexico income tax purposes.

The results of operations for the acquired stores have been consolidated since the respective acquisition dates.

During 2020, revenue from the acquired stores was $ 7.5 million and the earnings from the combined acquisitions since the acquisition dates (including $ 1.0 million of transaction and integration costs, net of tax) was approximately $ 0.3 million.

Historical pre-acquisition financial statements of the two separate Mexico acquisitions were created in local country GAAP and the Company did not obtain pre-acquisition financial statements prepared in accordance with U.S.

As a result, and due to the insignificance of the acquisitions, it is impractical for the Company to adequately present supplemental pro forma information.

2019 Acquisitions

During 2019, the Company acquired 163 pawn stores in Mexico in 13 separate transactions and 27 pawn stores in the U.S.

in nine separate transactions.

(1) Substantially all of the goodwill is expected to be deductible for U.S.

income tax purposes.

Unaudited Pro Forma Financial Information

The results of operations for the AFF Acquisition and the 2021 Pawn Acquisitions have been consolidated since the respective acquisition dates.

During 2021, revenue from AFF and the 2021 Pawn Acquisitions was $ 56.0 million and the net loss from AFF and the 2021 Pawn Acquisitions since the acquisition dates (including $ 11.9 million of transaction costs, net of tax) was approximately $ 41.0 million.

Transaction costs associated with the AFF Acquisition and the 2021 Pawn Acquisitions were expensed as incurred and are presented in the consolidated statements of income as merger and acquisition expenses.

These expenses include investment banking, legal, accounting and other related third-party costs, including preparation for regulatory filings.

The following unaudited pro forma financial information reflects the consolidated results of operations of the Company as if the AFF Acquisition and the 2021 Pawn Acquisitions had occurred on January 1, 2020, after giving effect to certain adjustments (in thousands, except per share amounts):

Year Ended Year Ended

December 31, 2021 December 31, 2020

As Reported Pro Forma As Reported Pro Forma

Total revenue $ 1,698,965 $ 2,305,860 $ 1,631,284 $ 2,024,055

Net income 124,909 156,257 106,579 60,059

Net income per share:

Basic $ 3.05 $ 3.21 $ 2.57 $ 1.21

Diluted 3.04 3.20 2.56 1.21

The unaudited pro forma results have been adjusted with respect to certain aspects of the AFF Acquisition and 2021 Pawn Acquisitions primarily to reflect:

• depreciation and amortization expense that would have been recognized assuming fair value adjustments to the tangible and intangible assets acquired and liabilities assumed;

• an increase in total indebtedness primarily incurred to finance certain cash payments and transaction costs related to the AFF Acquisition and 2021 Pawn Acquisitions, partially offset by the elimination of AFF’s pre-existing debt that was repaid at closing;

• the inclusion in the year ended December 31, 2020 of $ 15.4 million in acquisition expenses incurred by the Company (excluded from the year ended December 31, 2021);

• the exclusion of $ 44.3 million of loan loss provision expense in the year ended December 31, 2021 resulting from the establishment of the initial allowance for expected lifetime credit losses for non-PCD finance receivables acquired in the AFF Acquisition (see Note 7).

The pro forma financial information has been prepared for informational purposes only and does not include any anticipated synergies or other potential benefits of the AFF Acquisition and 2021 Pawn Acquisitions.

It also does not give effect to certain future charges that the Company expects to incur in connection with the AFF Acquisition and 2021 Pawn Acquisitions, including, but not limited to, additional professional fees, legal expenses, severance, retention and other employee-related costs, contract breakage costs and costs related to consolidation of technology systems.

The pro forma information is based on the Company’s preliminary valuation analysis of identifiable assets acquired and liabilities assumed and therefore subject to change.

Pro forma results do not purport to be indicative of what would have resulted had the acquisitions occurred on the date indicated or what may result in the future.

2020 Pawn Acquisitions

During 2020, the Company acquired 40 pawn stores in Mexico in two separate transactions and 22 pawn stores in the U.S.

in two separate transactions.

The aggregate purchase price for these acquisitions totaled $ 43.6 million, net of cash acquired.

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NOTE 4 - OPERATING LEASES

The Company leases the majority of its pawnshop locations under operating leases and determines if an arrangement is or contains a lease at inception.

Refer to Note 2 to the consolidated financial statements for further information about the Company’s revenue generating activities as a lessor.

All of the Company’s lease agreements are considered operating leases.

The Company leases the majority of its pawnshop locations and certain administrative offices under operating leases and determines if an arrangement is or contains a lease at inception.

Many leases include both lease and non-lease components, which the Company accounts for separately.

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The Company regularly evaluates renewal and termination options to determine if the Company is reasonably certain to exercise the option, and excludes these options from the lease term included in the recognition of the operating lease right of use asset and lease liability until such certainty exists.

The weighted-average remaining lease term for operating leases as of December 31, 2020 and 2019 was 4.0 years and 3.9 years, respectively.

The weighted-average remaining lease term for operating leases as of December 31, 2021, 2020 and 2019 was 4.1 years, 4.0 years and 3.9 years, respectively.

The operating lease right of use asset and lease liability is recognized based on the present value of the future minimum lease payments over the lease term at the commencement date.

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The remeasurement results in the recognition of foreign currency exchange gains or losses each reporting period, which can produce a certain level of earnings volatility.

The Company recognized a foreign currency loss of $ 1.2 million and gain of $ 0.9 million during the year ended December 31, 2020 and 2019, respectively, related to the remeasurement of these U.S.

The Company recognized a foreign currency loss of $ 0.6 million, loss of $ 1.2 million and gain of $ 0.9 million during the year ended December 31, 2021, 2020 and 2019, respectively, related to the remeasurement of these U.S.

dollar denominated operating leases, which is included in loss (gain) on foreign exchange in the accompanying consolidated statements of income.

Lease expense is recognized on a straight-line basis over the lease term, with variable lease expense recognized in the period such payments are incurred.

The following table details the components of lease expense included in store operating expenses in the consolidated statements of income during the year ended December 31, 2020 and 2019 (in thousands):

The following table details the components of lease expense included in operating expenses in the consolidated statements of income during the year ended December 31, 2021, 2020 and 2019 (in thousands):

Year Ended December 31,

2021 2020 2019

Operating lease expense $ 125,439 $ 121,649 $ 124,082

Variable lease expense (1)

16,021 14,444 7,775

Total operating lease expense $ 141,460 $ 136,093 $ 131,857

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Year Ended December 31,

2021 2020 2019

Cash paid for amounts included in the measurement of operating lease liabilities $ 114,463 $ 110,965 $ 116,448

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NOTE 5 - STOCKHOLDERS' EQUITY

On December 16, 2021, FirstCash, Inc.

implemented a holding company reorganization, which resulted in FirstCash Holdings, Inc.

owning all of the outstanding capital stock of FirstCash, Inc.

Following the reorganization, FirstCash Holdings, Inc.

became the successor issuer to FirstCash, Inc.

On December 17, 2021, the Company issued 8,046,252 shares of its common stock to former owners of AFF as consideration for the AFF Acquisition.

See Note 3 for additional information about the AFF Acquisition.

During 2021, the Company repurchased a total of 688,000 shares of common stock at an aggregate cost of $ 49.6 million and an average cost per share of $ 72.10 , and during 2020, repurchased 1,427,000 shares of common stock at an aggregate cost of $ 107.0 million and an average cost per share of $ 74.96 .

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Plan Authorization Date Plan Completion Date Dollar Amount Authorized Shares Purchased in 2021 Dollar Amount Purchased in 2021 Remaining Dollar Amount Authorized For Future Purchases

October 24, 2018 January 30, 2020 $ 100,000 344,000 $ 28,797 $ —

January 28, 2020 May 4, 2021 $ 100,000 318,000 $ 21,827 $ —

January 27, 2021 Currently active 100,000 370,000 27,783 72,217

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Total cash dividends paid in 2021 and 2020 were $ 47.5 million and $ 44.8 million, respectively.

The declaration and payment of cash dividends in the future (quarterly or otherwise) will be made by the Board of Directors, from time to time, subject to the Company’s financial condition, results of operations, business requirements, compliance with legal requirements and debt covenant restrictions.

The amount, declaration and payment of cash dividends in the future (quarterly or otherwise) will be made by the Board of Directors, from time to time, subject to the Company’s financial condition, results of operations, business requirements, compliance with legal requirements and debt covenant restrictions.

NOTE 6 - FAIR VALUE OF FINANCIAL INSTRUMENTS

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Recurring Fair Value Measurements

As of December 31, 2020 and 2019, the Company did not have any financial assets or liabilities that are measured at fair value on a recurring basis.

The Company’s financial assets and liabilities as of December 31, 2021 that are measured at fair value on a recurring basis are as follows (in thousands):

Estimated Fair Value

December 31, Fair Value Measurements Using

2021 Level 1 Level 2 Level 3

Financial liabilities:

Contingent Consideration (1)

$ 109,549 $ — $ — $ 109,549

(1) The current portion of $ 95.6 million is included in accounts payable and accrued liabilities and the non-current portion of $ 14.0 million is included in other liabilities in the accompanying consolidated balance sheets.

As further discussed in Note 3, the Company estimated the preliminary fair value of the Contingent Consideration to be $127.4 million, as of the AFF Acquisition date.

The Company revalues the Contingent Consideration to fair value at the end of each reporting period.

The estimate of the fair value of Contingent Consideration is determined by applying a Monte Carlo simulation, which includes inputs not observable in the market, such as the risk-free rate, risk-adjusted discount rate, the volatility of the underlying financial metrics and projected financial forecast of AFF over the earn-out period, and therefore represents a Level 3 measurement.

Significant increases or decreases in these inputs could result in a significantly lower or higher fair value measurement of the Contingent Consideration.

The changes in financial assets and liabilities that are measured and recorded at fair value on a recurring basis using Level 3 fair value measurements for the year ended December 31, 2021 is as follows (in thousands):

Contingent Consideration

Contingent Consideration issued December 17, 2021 (see Note 3)

Change in fair value (1)

Balance at December 31, 2021 $ 109,549

(1) The Company recognized a $ 17.9 million gain during 2021 as a result of the change in fair value of the stock price component of Contingent Consideration (see Note 3), which is included in gain on revaluation of contingent acquisition consideration in the accompanying consolidated statements of income.

The change in fair value was a result of the increase in the Company’s stock price from $ 62.83 on December 16, 2021 to $ 74.81 on December 31, 2021.

There were no transfers in or out of Level 1, 2 or 3 during the year ended December 31, 2021 and 2020, and the Company did not have any financial assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2020.

Fair Value Measurements on a Non-Recurring Basis

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During 2020, the Company recorded a $ 1.9 million impairment of other assets and a $ 1.5 million impairment of property and equipment.

Financial Assets and Liabilities Not Measured at Fair Value

Financial Assets and Liabilities Not Measured at Fair Value, But for Which Fair Value is Disclosed

The Company’s financial assets and liabilities as of December 31, 2021 and 2020 that are not measured at fair value in the consolidated balance sheets are as follows (in thousands):

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Cash and cash equivalents $ 120,046 $ 120,046 $ 120,046 $ — $ —

Fees and service charges receivable 41,110 41,110 — — 41,110

Accounts receivable, net 55,356 55,356 — — 55,356

Pawn loans 347,973 347,973 — — 347,973

Finance receivables, net 181,021 233,000 — — 233,000

$ 704,396 $ 756,375 $ 120,046 $ — $ 636,329

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Cash and cash equivalents $ 65,850 $ 65,850 $ 65,850 $ — $ —

Fees and service charges receivable 46,686 46,686 — — 46,686

Accounts receivable, net 41,110 41,110 — — 41,110

Pawn loans 308,231 308,231 — — 308,231

Consumer loans, net 751 751 — — 751

$ 415,191 $ 415,191 $ 65,850 $ — $ 349,341

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As cash and cash equivalents have maturities of less than three months, the carrying value of cash and cash equivalents approximates fair value.

Due to their short-term maturities, the carrying value of pawn loans and fees and service charges receivable approximate fair value.

Consumer loans, net are carried net of the allowance for estimated loan losses, which is calculated by applying historical loss rates combined with recent default trends to the gross consumer loan balance.

Therefore, the carrying value approximates the fair value.

Due to their short-term maturities, the carrying value of pawn loans and accounts receivable, net approximate fair value.

Finance receivables are measured at amortized cost, net of an allowance for loan losses on the consolidated balance sheets.

In estimating fair value for finance receivables, the Company utilized a discounted cash flow methodology.

The Company used various unobservable inputs reflecting its own assumptions, such as contractual future principal and interest cash flows, future charge-off rates and discount rates (which consider current interest rates and are adjusted for credit risk, among other factors).

The carrying value of the unsecured credit facilities approximate fair value as of December 31, 2021 and 2020.

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The fair value of the senior unsecured notes is estimated based on quoted prices in markets that are not active.

NOTE 7 - FINANCE RECEIVABLES, NET

Finance receivables, net consist of the following (in thousands):

As of December 31,

Finance receivables, gross $ 220,329 $ —

Fair value premium on non-PCD finance receivables (1)

Non-credit discount on PCD finance receivables (2)

Merchant partner discounts and premiums, net ( 104 ) —

Unearned origination fees ( 360 ) —

Finance receivables, amortized cost 256,595 —

Less allowance for loan losses 75,574 —

Finance receivables, net $ 181,021 $ —

(1) Represents the difference between the initial fair value and the unpaid principal balance as of the date of the AFF Acquisition, which is recognized as interest income on an effective yield basis over the lives of the related non-PCD finance receivables.

(2) Represents the difference between the unpaid principal balance and the amortized cost basis as of the date of the AFF Acquisition, which is recognized through interest income on an effective yield basis over the life of the related PCD finance receivables.

Changes in the allowance for loan losses are as follows (in thousands):

As of December 31,

Balance at beginning of year $ — $ 34

Provision for loan losses (1)

48,952 ( 488 )

Initial allowance recognized for PCD loans (2)

Charge-offs ( 5,545 ) ( 114 )

Recoveries 131 568

Balance at end of year $ 75,574 $ —

(1) For the year ended December 31, 2021, includes $ 44.3 million as a result of the establishment of the initial allowance for expected lifetime credit losses for non-PCD finance receivables acquired in the AFF Acquisition, which is recorded as provision for loan losses in the consolidated statements of income.

(2) Represents the establishment of the initial allowance for expected lifetime credit losses for PCD finance receivables acquired in the AFF Acquisition, which is added to the acquisition date fair value to establish the initial amortized cost basis of the PCD loans.

As this initial allowance for loan losses is added to the acquisition date fair value, there is no provision for loan losses recognized in the consolidated statements of income.

The following is an assessment of the credit quality indicators of the amortized cost of finance receivables as of December 31, 2021, by origination year:

2021 2020 Total

FICO score category (1) :

No FICO score identified or obtained $ 57,536 $ 2,537 $ 60,073

599 or less 69,703 11,701 81,404

Between 600 and 699 59,121 9,389 68,510

700 or greater 8,637 1,241 9,878

Finance receivables before fair value adjustments $ 194,997 $ 24,868 219,865

Fair value premium on non-PCD finance receivables 40,251

Non-credit discount on PCD finance receivables ( 3,521 )

Finance receivables, amortized cost $ 256,595

(1) FICO score as determined at the time of loan origination.

The following is an aging of the amortized cost of finance receivables as of December 31, 2021, by origination year:

2021 2020 Total

1 to 30 days past due $ 16,077 $ 2,260 $ 18,337

31 to 60 days past due 10,024 1,648 11,672

61 to 90 days past due (1)

7,898 1,478 9,376

Total past due finance receivables before fair value adjustments 33,999 5,386 39,385

Current finance receivables before fair value adjustments 160,998 19,482 180,480

Finance receivables before fair value adjustments $ 194,997 $ 24,868 219,865

Fair value premium on non-PCD finance receivables 40,251

Non-credit discount on PCD finance receivables ( 3,521 )

Finance receivables, amortized cost $ 256,595

(1) The Company charges off finance receivables when a receivable is 90 days or more contractually past due.

NOTE 8 - LEASED MERCHANDISE, NET

Leased merchandise, net consists of the following (in thousands):

As of December 31,

Leased merchandise (1)

$ 156,280 $ —

Processing fees ( 440 ) —

Merchant partner discounts and premiums, net 310 —

Accumulated depreciation ( 6,764 ) —

Leased merchandise, before allowance for lease losses 149,386 —

Allowance for lease losses 5,442 —

Leased merchandise, net $ 143,944 $ —

(1) Acquired leased merchandise in the AFF Acquisition was recorded at fair value.

Changes in the allowance for lease losses are as follows (in thousands):

As of December 31,

Balance at beginning of year $ — $ —

Provision for lease losses (1)

Charge-offs (2)

Recoveries — —

Balance at end of year $ 5,442 $ —

(1) Represents the provision for lease losses on leases originated from December 17, 2021 through December 31, 2021.

(2) Acquired leased merchandise in the AFF Acquisition was recorded at fair value.

As a result, leased merchandise charged-off between December 17, 2021 and December 31, 2021 was allocated no fair value.

NOTE 9 - PROPERTY AND EQUIPMENT

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accumulated depreciation ( 318,842 ) ( 285,283 )

$ 373,667 $ 336,167

Property and equipment, net $ 462,526 $ 373,667

Depreciation expense for the years ended December 31, 2021, 2020 and 2019 was $ 42.5 million, $ 39.8 million and $ 39.1 million, respectively.

2 unchanged sentences

As of December 31,

Sales, property, and payroll taxes payable $ 24,984 $ 15,237

Acquisition purchase price amounts payable to sellers (1)

$ 123,475 $ 5,965

Accrued compensation 33,546 21,874

Accrued interest payable 8,121 1,459

Sales, property, and payroll taxes payable 32,463 24,984

Trade accounts payable 23,077 7,187

Acquisition purchase price amounts payable to sellers 5,965 6,374

Accrued interest payable 9,375 8,121

Benefits liabilities and withholding payable 3,084 2,852

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$ 240,940 $ 81,917

(1) Includes the present value of the deferred consideration payable to AFF shareholders on December 31, 2022 of $ 23.9 million and the short-term portion of the estimated fair value of Contingent Consideration of $ 95.6 million.

See Note 3 and Note 6.

NOTE 11 - LONG-TERM DEBT

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$ 259,000 $ 123,000

Senior unsecured notes:

4.625 % senior unsecured notes due 2028 (2)

4.625 % senior notes due 2028 (3)

492,499 492,916

5.625 % senior unsecured notes due 2030 (3)

Total senior unsecured notes 1,033,904 492,916

Total long-term debt $ 1,292,904 $ 615,916

(1) Debt issuance costs related to the Company’s revolving unsecured credit facilities are included in other assets in the accompanying consolidated balance sheets.

(2) As of December 31, 2019, deferred debt issuance costs of $ 3.4 million are included as a direct deduction from the carrying amount of the senior unsecured notes in the accompanying consolidated balance sheets.

(3) As of December 31, 2020, deferred debt issuance costs of $ 7.1 million are included as a direct deduction from the carrying amount of the senior unsecured notes in the accompanying consolidated balance sheets.

(2) As of December 31, 2021 and 2020, deferred debt issuance costs of $ 7.5 million and $ 7.1 million, respectively, are included as a direct deduction from the carrying amount of the senior unsecured notes due 2028 in the accompanying consolidated balance sheets.

(3) As of December 31, 2021, deferred debt issuance costs of $ 8.6 million are included as a direct deduction from the carrying amount of the senior unsecured notes due 2030 in the accompanying consolidated balance sheets.

As of December 31, 2021, annual maturities of the outstanding long-term debt for each of the five years after December 31, 2021 are as follows (in thousands):

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The Credit Facility matures on December 19, 2024.

On November 9, 2020, the Credit Facility was amended (the “2020 Amendment”).

Under the 2020 Amendment, the annual commitment fee on the average daily unused portion of the Credit Facility was reduced from 50 basis points to 32.5 basis points.

In addition, certain financial covenants were amended temporarily, as described below, due to the expected short-term impact of COVID-19 on the Company’s earnings.

The permitted domestic leverage ratio and consolidated leverage ratio were temporarily increased under the 2020 Amendment.

The domestic leverage ratio will remain at the current level of 4.5 times domestic EBITDA, adjusted for certain customary items as more fully set forth in the Credit Facility (“Adjusted Domestic EBITDA”), through December 31, 2020, then increases to 4.75 times Adjusted Domestic EBITDA through June 30, 2021 and then decreases to 4.5 times Adjusted Domestic EBITDA through December 31, 2021.

The consolidated leverage ratio was increased from 2.75 to 3.25 times consolidated EBITDA, adjusted for certain customary items as more fully set forth in the Credit Facility (“Adjusted EBITDA”), through December 31, 2020 and then increases to 3.5 times Adjusted EBITDA through June 30, 2021 and then it decreases to 3.25 times Adjusted EBITDA through December 31, 2021.

On December 8, 2021, the Credit Facility was amended (the “2021 Amendment”) in order to, among other things, permit the AFF Acquisition and amend the domestic and total leverage ratio covenants temporarily as a result of the AFF Acquisition.

The domestic leverage ratio increased from 4.5 times to 5.0 times domestic EBITDA, adjusted for certain customary items as more fully set forth in the Credit Facility (“Adjusted Domestic EBITDA”), through December 31, 2021 and then decreases to 4.5 times Adjusted Domestic EBITDA through December 31, 2022.

The consolidated leverage ratio was increased from 3.3 to 4.0 times consolidated EBITDA, adjusted for certain customary items as more fully set forth in the Credit Facility (“Adjusted EBITDA”), through December 31, 2021 and then decreases to 3.5 times Adjusted EBITDA through December 31, 2022.

The temporary changes to the leverage ratios as provided in the 2021 Amendment will revert to the previously scheduled ratios of 4.0 times Adjusted Domestic EBITDA and 3.0 times Adjusted EBITDA effective January 1, 2023.

The 2020 Amendment also includes additional limits to certain restricted payments when the domestic leverage ratio is equal to or greater than 4.0 times Adjusted Domestic EBITDA or when the consolidated leverage ratio is equal to or greater than 3.25 times Adjusted EBITDA, which are more fully described in the 2020 Amendment.

As of December 31, 2021, the Company had $ 259.0 million in outstanding borrowings and $ 3.2 million in outstanding letters of credit under the Credit Facility, leaving $ 237.8 million available for future borrowings, subject to certain financial covenants.

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The Company was in compliance with the covenants of the Credit Facility as of December 31, 2021.

During 2020, the Company made net payments of $ 212.0 million pursuant to the Credit Facility.

During 2021, the Company received net proceeds of $ 136.0 million from borrowings pursuant to the Credit Facility.

Revolving Unsecured Uncommitted Credit Facility

During March 2020, the Company’s primary subsidiary in Mexico, First Cash S.A.

de C.V., entered into an unsecured and uncommitted line of credit guaranteed by FirstCash, Inc.

As of December 31, 2021, the Company’s primary subsidiary in Mexico, First Cash S.A.

de C.V., maintained an unsecured and uncommitted line of credit guaranteed by FirstCash, Inc.

with a bank in Mexico (the “Mexico Credit Facility”) in the amount of $ 600.0 million Mexican pesos.

The Mexico Credit Facility bears interest at TIIE plus a fixed spread of 2.5 % and matures on March 9, 2023.

The Mexico Credit Facility bears interest at the TIIE plus a fixed spread of 2.5 % and matures on March 9, 2023.

Under the terms of the Mexico Credit Facility, the Company is required to maintain certain financial ratios and comply with certain financial covenants.

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Senior Unsecured Notes Due 2028

On August 26, 2020, the Company completed an offering of $ 500.0 million of 4.625 % senior unsecured notes due on September 1, 2028 (the “Notes”), all of which are currently outstanding.

On August 26, 2020, the Company issued $ 500.0 million of 4.625 % senior unsecured notes due on September 1, 2028 (the “2028 Notes”), all of which are currently outstanding.

Interest on the 2028 Notes is payable semi-annually in arrears on March 1 and September 1, commencing on March 1, 2021.

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The Company used the proceeds from the offering to redeem its outstanding $ 300.0 million, 5.375 % senior notes due 2024 (the “2024 Notes”), to repay a portion of the Credit Facility and to pay for related fees and expenses associated with the offering and the redemption of the 2024 Notes.

The Company capitalized approximately $ 7.3 million in debt issuance costs, which consisted primarily of the initial purchaser’s discount and fees and legal and other professional expenses.

The debt issuance costs are being amortized over the life of the Notes as a component of interest expense and are carried as a direct deduction from the carrying amount of the Notes in the accompanying consolidated balance sheets.

The 2028 Notes are fully and unconditionally guaranteed on a senior unsecured basis jointly and severally by all of the Company's existing and future domestic subsidiaries that guarantee its Credit Facility.

The Notes will permit the Company to make restricted payments, such as purchasing shares of its stock and paying cash dividends, in an unlimited amount if, after giving pro forma effect to the incurrence of any indebtedness to make such payment, the Company's consolidated total debt ratio (“Net Debt Ratio”) is less than 2.75 to 1.

The Net Debt Ratio is defined generally in the indenture governing the Notes (the “Indenture”) as the ratio of (1) the total consolidated debt of the Company minus cash and cash equivalents of the Company to (2) the Company’s consolidated trailing twelve months EBITDA, as adjusted to exclude certain non-recurring expenses and giving pro forma effect to operations acquired during the measurement period.

The Company may redeem some or all of the Notes at any time on or after September 1, 2023, at the redemption prices set forth in the Indenture, plus accrued and unpaid interest, if any.

In addition, prior to September 1, 2023, the Company may redeem some or all of the Notes at a price equal to 100 % of the principal amount thereof, plus accrued and unpaid interest, if any, plus a “make-whole” premium set forth in the Indenture.

The Company may redeem up to 40 % of the Notes on or prior to September 1, 2023 with the proceeds of certain equity offerings at the redemption prices set forth in the Indenture.

The 2028 Notes will permit the Company to make restricted payments, such as purchasing shares of its stock and paying cash dividends, in an unlimited amount if, after giving pro forma effect to the incurrence of any indebtedness to make such payment, the Company's consolidated total debt ratio is less than 2.75 to 1.

The consolidated total debt ratio is defined generally in the indenture governing the 2028 Notes (the “2028 Notes Indenture”) as the ratio of (1) the total consolidated debt of the Company minus cash and cash equivalents of the Company to (2) the Company’s consolidated trailing twelve months EBITDA, as adjusted to exclude certain non-recurring expenses and giving pro forma effect to operations acquired during the measurement period.

As of December 31, 2021, the Company’s consolidated total debt ratio was 3.1 to 1.

While the 2028 Notes generally limit the Company’s ability to make restricted payments if the consolidated total debt ratio is greater than 2.75 to 1, restricted payments are allowable within certain permitted baskets, which currently provides the Company with continued flexibility to make restricted payments when the Company’s consolidated total debt ratio is greater than 2.75 to 1.

The Company may redeem some or all of the 2028 Notes at any time on or after September 1, 2023, at the redemption prices set forth in the 2028 Notes Indenture, plus accrued and unpaid interest, if any.

In addition, prior to September 1, 2023, the Company may redeem some or all of the 2028 Notes at a price equal to 100 % of the principal amount thereof, plus accrued and unpaid interest, if any, plus a “make-whole” premium set forth in the 2028 Notes Indenture.

The Company may redeem up to 40 % of the 2028 Notes on or prior to September 1, 2023 with the proceeds of certain equity offerings at the redemption prices set forth in the 2028 Notes Indenture.

If the Company sells certain assets or consummates certain change in control transactions, the Company will be required to make an offer to repurchase the 2028 Notes.

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As a result, the Company recognized a loss on extinguishment of debt of $ 11.7 million, which includes the redemption premium paid over the outstanding $ 300.0 million principal amount of the 2024 Notes and other redemption costs of $ 8.8 million and the write-off of unamortized debt issuance costs of $ 2.9 million.

Senior Unsecured Notes Due 2030

On December 13, 2021, the Company issued $ 550.0 million of 5.625 % senior unsecured notes due on January 1, 2030 (the “2030 Notes”), all of which are currently outstanding.

Interest on the 2030 Notes is payable semi-annually in arrears on January 1 and July 1, commencing on July 1, 2022.

The 2030 Notes were sold in a private placement in reliance on Rule 144A and Regulation S under the Securities Act.

The Company used the proceeds from the offering to finance the cash consideration of the AFF Acquisition, repay in full the outstanding debt under AFF’s credit facility, to pay fees, costs and expenses incurred in connection with the AFF Acquisition and the offering of the 2030 Notes and the remainder to repay a portion of the borrowings under the Company’s Credit Facility.

The Company capitalized approximately $ 8.6 million in debt issuance costs, which consisted primarily of the initial purchaser’s discount and fees and legal and other professional expenses.

The debt issuance costs are being amortized over the life of the 2030 Notes as a component of interest expense and are carried as a direct deduction from the carrying amount of the 2030 Notes in the accompanying consolidated balance sheets.

The 2030 Notes are fully and unconditionally guaranteed on a senior unsecured basis jointly and severally by all of the Company's existing and future domestic subsidiaries that guarantee its Credit Facility.

The 2030 Notes will permit the Company to make restricted payments, such as purchasing shares of its stock and paying cash dividends, in an unlimited amount if, after giving pro forma effect to the incurrence of any indebtedness to make such payment, the Company's consolidated total debt ratio is less than 3.0 to 1.

The consolidated total debt ratio is defined generally in the indenture governing the 2030 Notes (the “2030 Notes Indenture”) as the ratio of (1) the total consolidated debt of the Company minus cash and cash equivalents of the Company to (2) the Company’s consolidated trailing twelve months EBITDA, as adjusted to exclude certain non-recurring expenses and giving pro forma effect to operations acquired during the measurement period.

As of December 31, 2021, the Company’s consolidated total debt ratio was 3.1 to 1.

While the 2030 Notes generally limit the Company’s ability to make restricted payments if the consolidated total debt ratio is greater than 3.0 to 1, restricted payments are allowable within certain permitted baskets, which currently provides the Company with continued flexibility to make restricted payments when the Company’s consolidated total debt ratio is greater than 3.0 to 1.

The Company may redeem some or all of the 2030 Notes at any time on or after January 1, 2025, at the redemption prices set forth in the 2030 Notes Indenture, plus accrued and unpaid interest, if any.

In addition, prior to January 1, 2025, the Company may redeem some or all of the 2030 Notes at a price equal to 100 % of the principal amount thereof, plus accrued and unpaid interest, if any, plus a “make-whole” premium set forth in the 2030 Notes Indenture.

The Company may redeem up to 40 % of the 2030 Notes on or prior to January 1, 2025 with the proceeds of certain equity offerings at the redemption prices set forth in the 2030 Notes Indenture.

If the Company sells certain assets or consummates certain change in control transactions, the Company will be required to make an offer to repurchase the 2030 Notes.

NOTE 12 - INCOME TAXES

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Deferred tax assets:

Property and equipment $ 9,905 $ 10,407

Property and equipment in foreign jurisdictions $ 11,452 $ 9,905

Finance receivables 7,421 —

Accrued fees on forfeited pawn loans 6,645 5,246

6 unchanged sentences

Intangible assets 126,283 81,749

Leased merchandise and property and equipment in domestic jurisdictions 24,035 3,759

Net operating lease asset 3,726 4,188

Property and equipment 3,759 —

Other 2,052 3,691

22 unchanged sentences

Global intangible low-taxed income tax — ( 1,863 ) 1,100

( 1,863 ) 1,100 763

Net tax benefit resulting from the enactment of the Tax Act — — ( 1,494 )

Other taxes and adjustments, net 239 59 885

2 unchanged sentences

(1) Includes a $ 6.3 million, $ 2.0 million and $ 2.3 million foreign permanent tax benefit related to an inflation index adjustment allowed under Mexico tax law for the years ended December 31, 2021, 2020 and 2019, respectively.

(2) The global intangible low-taxed income tax (“GILTI tax”) provisions for foreign operations in the U.S.

federal tax code became effective in 2018, and based on preliminary IRS guidance, the Company recognized $ 1.1 million and $ 0.8 million of income tax expense in 2019 and 2018, respectively, as a result of the GILTI tax.

In July 2020, the Internal Revenue Service finalized regulations for the GILTI tax.

The finalized regulations effectively eliminated the impact of the incremental GILTI tax to the Company and permitted retroactive application.

As a result, the Company recognized a $ 1.9 million income tax benefit in 2020 related to the reversal of the 2019 and 2018 GILTI tax expense.

The Company’s foreign operating subsidiaries are owned by a wholly-owned subsidiary located in the Netherlands.

1 unchanged sentence

federal statutory rate.

The statutory tax rates in Mexico, Guatemala, Colombia and El Salvador are approximately 30 %, 25 %, 32 % and 30 %, respectively.

The statutory tax rates in Mexico, Guatemala, Colombia and El Salvador are 30 %, 25 %, 31 % and 30 %, respectively.

The statutory tax rate in the Netherlands is 0 % on eligible dividends received from its foreign subsidiaries.

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federal returns are not subject to examination for tax years prior to 2017.

The Company’s U.S.

state income tax returns are not subject to examination for the tax years prior to 2017 with the exception of six states, which are not subject to examination for tax years prior to 2016.

The majority of the Company’s U.S.

state income tax returns are not subject to examination for the tax years prior to 2018.

With respect to federal tax returns in Mexico, Guatemala, Colombia, El Salvador and the Netherlands, the tax years prior to 2016 are closed to examination.

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In management’s opinion, any potential adverse result should not have a material adverse effect on the Company’s financial position, results of operations, or cash flows.

On January 14, 2022, plaintiff Genesee County Employees’ Retirement System filed a putative shareholder securities class action lawsuit (the “Litigation”) in the United States District Court for the Northern District of Texas against the Company and certain of its current officers styled Genesee County Employees’ Retirement System v.

FirstCash Holdings, Inc., et al., Civil Action No.

4:22-CV-00033-P (N.D.

The complaint alleges that the defendants made materially false and/or misleading statements that caused losses to investors.

The complaint further alleges that the defendants failed to disclose in public statements that the Company engaged in widespread and systemic violations of the Military Lending Act (“MLA”).

The Litigation does not quantify any alleged damages, but, in addition to attorneys’ fees and costs, it seeks to recover damages on behalf of the plaintiff and other persons who purchased or otherwise acquired Company stock during the putative class period from February 1, 2018 through November 12, 2021 at allegedly inflated prices and purportedly suffered financial harm as a result.

The Company disputes these allegations and intends to defend the Litigation vigorously.

At this stage, the Company is unable to determine whether a future loss will be incurred due to this Litigation, or estimate a range of loss, if any, and accordingly, no amounts have been accrued in the Company’s financial statements.

On November 12, 2021, the Consumer Financial Protection Bureau (“CFPB”) initiated a civil action in the United States District Court for the Northern District of Texas against FirstCash, Inc.

and Cash America West, Inc., two of the Company’s subsidiaries, alleging violations of the MLA.

The CFPB also alleges that the Company violated a 2013 CFPB order against its predecessor company that, among other things, required the company to cease and desist from further MLA violations.

The CFPB is seeking an injunction, redress for affected borrowers and a civil monetary penalty.

While the Company intends to vigorously defend itself against the allegations in the case, the Company cannot predict or determine the timing or final outcome of this matter, or the effect that any adverse determinations the lawsuit may have on it.

On November 7, 2018, plaintiffs Maria Andrade and Shaun Caulkins filed a class action complaint (the “Andrade Compliant”) in the United States District Court for the Northern District of California against AFF.

In the Andrade Complaint, the plaintiffs allege that AFF partnered with California merchants to deceive California customers into taking out usurious loans made from AFF, an unlicensed lender.

Based on these allegations, the plaintiffs assert claims on behalf of themselves and a class of all California residents who purchased consumer goods or services from AFF’s partner retail businesses.

Plaintiffs seek, among other things, a declaration that AFF’s security agreements are void and uncollectible, restitution of all amounts collected from class members, actual damages, statutory damages, and attorneys’ fees.

Plaintiff Caulkins’ claims were dismissed in October 2020 and co-defendants were dismissed from the complaint in August 2021.

The class certification motion hearing is set for June 13, 2022.

At this time, the Company cannot predict or determine the timing or final outcome of the Andrade Complaint or the effect that any adverse determinations the lawsuit may have on it.

On October 20, 2021, plaintiff Larry Facio filed a class action complaint in the United States District Court for the Northern District of California against AFF.

In his compliant, the plaintiff alleges that AFF partnered with California merchants to deceive California customers into taking out usurious loans made from AFF, an unlicensed lender.

The complaint mirrors that of the previously filed Andrade Complaint, in which Facio would be an eligible class member if a class becomes certified.

The case has been stayed pending resolution of the Andrade Complaint.

Accordingly, the Company cannot predict or determine the timing or final outcome of this matter or the effect that any adverse determinations the lawsuit may have on it.

Gold Forward Sales Contracts

As of December 31, 2020, the Company had contractual commitments to deliver a total of 24,500 gold ounces between the months of January and December 2021 at a weighted-average price of $ 1,840 per ounce.

The ounces required to be delivered over this time period are within historical scrap gold volumes.

As of December 31, 2021, the Company had contractual commitments to deliver a total of 7,500 gold ounces during the month of January 2022 at a weighted-average price of $ 1,807 per ounce.

The ounces required to be delivered were on hand as of December 31, 2021.

NOTE 14 - GOODWILL AND OTHER INTANGIBLE ASSETS

1 unchanged sentence

December 31, 2021 U.S.

operations segment Latin America operations segment Total

Segment Latin America

Pawn Segment Retail POS Payment Solutions Segment Total

Balance, beginning of year $ 802,148 $ 175,233 $ — $ 977,381

1 unchanged sentence

Effect of foreign currency translation — ( 3,954 ) — ( 3,954 )

Other adjustments 1,859 ( 50 ) 1,809

Balance, end of year $ 861,793 $ 171,279 $ 503,106 $ 1,536,178

11 unchanged sentences

Amount Accumulated Amortization Net

Merchant relationships $ 194,000 $ ( 962 ) $ 193,038 $ — $ — $ —

Developed technology 99,400 ( 828 ) 98,572 — — —

Customer relationships 26,111 ( 25,174 ) 937 25,782 ( 23,918 ) 1,864

Customer relationships are generally amortized using an accelerated amortization method that reflects the future cash flows expected from the returning pawn customers.

AFF trade name 10,200 ( 213 ) 9,987 — — —

Lessee relationships 1,500 ( 48 ) 1,452 — — —

$ 331,211 $ ( 27,225 ) $ 303,986 $ 25,782 $ ( 23,918 ) $ 1,864

Merchant relationships and customer relationships are generally amortized using an accelerated amortization method that reflects the future cash flows expected from the existing AFF merchants and returning pawn customers.

The following table details the remaining weighted-average amortization periods for the definite-lived intangible assets included in the table above:

Weighted-Average

Period (Years)

As of December 31, 2021

Merchant relationships 3.3

Developed technology 2.5

Customer relationships 1.6

Trade name 1.0

Lessee relationships 0.7

Total definite-lived intangible assets 3.0

Amortization expense for definite-lived intangible assets was $ 3.4 million, $ 2.3 million and $ 2.9 million for the years ended December 31, 2021, 2020 and 2019, respectively.

The remaining weighted-average amortization period for customer relationships is 0.9 years.

Estimated future amortization expense is as follows (in thousands):

2022 $ 57,074

Thereafter 46,718

Indefinite-Lived Intangible Assets

6 unchanged sentences

$ 84,198 $ 81,787

(1) Costs to renew licenses with indefinite lives are expensed as incurred and recorded in store operating expenses in the consolidated statements of income.

(1) Costs to renew licenses with indefinite lives are expensed as incurred and recorded in operating expenses in the consolidated statements of income.

The Company performed its annual assessment of indefinite-lived intangible assets and determined there was no impairment as of December 31, 2021 and 2020.

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The amount attributable to award grants is amortized to expense over the vesting periods.

The 2021 performance-based awards vest three years from the date of the grant.

The performance period for these awards is a three-year cumulative period beginning in January of the respective grant year.

The performance goals for the 2021 grant include net income, adjusted for certain non-core and/or non-recurring items, store additions and the Company’s total shareholder return relative to a peer group over the three-year cumulative period.

The Company’s level of achievement of the performance goals at the end of each performance period will result in awards being earned between 0 % and 150 % of the target share award.

The 2020 performance-based awards were originally granted in January 2020, prior to the impacts of COVID-19 as described in Note 1, which caused the cumulative three-year performance targets to be deemed unattainable.

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The Company’s achievement level of the performance goals at the end of each respective performance period will result in awards being earned between 0 % and 150 % of the target share award.

The 2019 and 2018 performance-based awards vest three years from the date of the grant.

The 2019 performance-based awards vest three years from the date of the grant.

The performance period for these awards is a three-year cumulative period beginning in January of the respective grant year.

The performance goals for the 2019 grant include net income, adjusted for certain non-core and/or non-recurring items, growth in constant currency pawn revenue (retail merchandise sales, pawn loan fees and wholesale scrap jewelry sales) and new (“de novo”) store openings over the three-year cumulative period.

The performance goals for the 2018 grant include net income, adjusted for certain non-core and/or non-recurring items, and total store additions over the three-year cumulative period.

The Company’s level of achievement of the performance goals at the end of each performance period will result in awards being earned between 0 % and 150 % of the target share award.

The time-based awards granted in 2020, 2019 and 2018 vest in equal annual installments, subject to continued employment with the Company, over a five year period from the grant date.

The time-based awards granted in 2021, 2020 and 2019 generally vest, subject to continued employment with the Company, over a three or five-year period from the grant date.

The following table summarizes the restricted stock unit award activity for the years ended December 31, 2021, 2020 and 2019 (shares in thousands):

12 unchanged sentences

( 18 ) 72.56 ( 114 ) 84.93 — —

Time-based canceled ( 15 ) 72.49 — — — —

Outstanding at end of year 383 $ 71.93 373 $ 77.40 357 $ 69.13

2 unchanged sentences

Performance-based grants for 2020 include 114 shares which were subsequently cancelled in 2020 as described in footnote (2) below.

(2) Represents cancellation of performance-based awards granted in January of 2020 that were subsequently replaced with a new performance-based award granted in December 2020.

(2) Performance-based canceled for 2020 represents cancellation of performance-based awards granted in January of 2020 that were subsequently replaced with a new performance-based award granted in December 2020.

The grant date fair value of the December 2020 replacement performance-based awards was $ 72.37 per share.

15 unchanged sentences

Exercisable at end of year — — — — 40 39.00

At December 31, 2020, there was one remaining unvested option to purchase 10,000 shares of the Company’s common stock at an exercise price equal to $ 38 per share, which expires in November 2021.

The intrinsic value for the stock option outstanding was $ 0.3 million, none of which was exercisable at the end of the year.

The intrinsic value reflects the total pre-tax intrinsic value (the difference between the Company’s closing stock price on the last trading day of the period and the exercise price of the options, multiplied by the number of in-the-money options) that would have been received by the option holder had they exercised their options on December 31, 2020.

The total intrinsic value of options exercised for 2021, 2020 and 2019 was $ 0.4 million, $ 1.8 million and $ 0.6 million, respectively.

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As of December 31, 2021, the total compensation cost related to non-vested restricted stock unit awards not yet recognized was $ 10.4 million (based on maximum possible award vesting) and is expected to be recognized over the weighted-average period of 1.4 years.

As of December 31, 2020, there was no remaining compensation cost related to non-vested stock options not yet recognized.

NOTE 16 - BENEFIT PLANS

2 unchanged sentences

The employee and Company contributions are paid to a corporate trustee and invested in various funds based on participant direction.

Company contributions made to participants’

accounts become fully vested upon completion of five years of service.

Company contributions made to participants’ accounts become fully vested upon completion of five years of service.

The total Company matching contributions to the Plan were $ 3.5 million, $ 3.3 million and $ 3.1 million for the years ended December 31, 2021, 2020 and 2019, respectively.

AFF has a 401(k) savings plan (the “AFF Plan”) which is available to all AFF employees who have been employed with AFF for two months or longer.

Under the AFF Plan, a participant may contribute up to 90 % of earnings, with the Company matching the first 6 % of contributions at a rate of 50 %.

The employee and Company contributions are paid to a corporate trustee and invested in various funds based on participant direction.

Company contributions made to participants’ accounts become fully vested upon completion of five years of service.

The total Company matching contributions to the AFF Plan from December 17, 2021 through December 31, 2021 were less than $ 0.1 million.

NOTE 17 - SEGMENT AND GEOGRAPHIC INFORMATION

Segment Information

The Company organizes its operations into two reportable segments as follows:

• Latin America operations - includes operations in Mexico, Guatemala, Colombia and El Salvador

and Latin America, but presented on a consolidated basis and are not allocated between the U.S.

operations segment and Latin America operations segment.

The Company organizes its operations into three reportable segments as follows:

• Latin America pawn

• Retail POS payment solutions (AFF)

Corporate expenses and income, which include administrative expenses, corporate depreciation and amortization, interest expense, interest income, merger and acquisition expenses and loss (gain) on foreign exchange, write-offs of certain lease intangibles and impairments of certain other assets, are presented on a consolidated basis and are not allocated between the U.S.

pawn segment, Latin America pawn segment and retail POS payment solutions segment.

The following tables present reportable segment information for the years ended December 31, 2021, 2020 and 2019 as well as separately identified segment assets (in thousands):

Year Ended December 31, 2021

Operations Latin America

Operations Corporate Consolidated

Pawn Latin America

Pawn Retail POS

Solutions Corporate Consolidated

Retail merchandise sales $ 742,374 $ 391,875 $ — $ — $ 1,134,249

Pawn loan fees 305,350 170,432 — — 475,782

Leased merchandise income — — 22,720 — 22,720

Interest and fees on finance receivables — — 9,024 — 9,024

Wholesale scrap jewelry sales 27,163 30,027 — — 57,190

Consumer loan and credit services fees (1)

2,016 — — 2,016

Total revenue 1,074,887 592,334 31,744 — 1,698,965

1 unchanged sentence

Cost of retail merchandise sold 416,039 247,425 — — 663,464

Depreciation of leased merchandise — — 12,826 — 12,826

Provision for lease losses — — 5,442 — 5,442

Provision for loan losses — — 48,952 — 48,952

Cost of wholesale scrap jewelry sold 22,886 26,243 — — 49,129

Consumer loan and credit services loss provision (1)

( 488 ) — — ( 488 )

Total cost of revenue 438,925 273,668 67,220 — 779,813

Net revenue 623,105 288,034 — 911,139

Net revenue (loss) 635,962 318,666 ( 35,476 ) — 919,152

Expenses and other income:

4 unchanged sentences

Interest income — — — ( 696 ) ( 696 )

Merger and acquisition expenses — — 1,316 1,316

Loss on foreign exchange — — — 436 436

Loss on extinguishment of debt — — 11,737 11,737

Write-offs and impairments of certain lease intangibles and other assets — — 10,505 10,505

Merger and acquisition expenses — — — 15,449 15,449

Gain on revaluation of contingent acquisition consideration — — — ( 17,871 ) ( 17,871 )

Impairments and dispositions of certain other assets — — — 949 949

Total expenses and other income 403,129 196,854 5,039 147,628 752,650

Income (loss) before income taxes $ 232,833 $ 121,812 $ ( 40,515 ) $ ( 147,628 ) $ 166,502

(1) Effective June 30, 2020, the Company no longer offers an unsecured consumer loan product in the U.S.

As of December 31, 2021

Operations Latin America

Operations Corporate Consolidated

Pawn Latin America

Pawn Retail POS

Solutions Corporate Consolidated

Pawn loans $ 256,311 $ 91,662 $ — $ — $ 347,973

Finance receivables, net — — 181,021 — 181,021

Inventories 197,486 65,825 — — 263,311

Leased merchandise, net — — 143,944 — 143,944

Goodwill 861,793 171,279 503,106 — 1,536,178

1 unchanged sentence

Year Ended December 31, 2020

Operations Latin America

Operations Corporate Consolidated

Pawn Latin America

Pawn Corporate Consolidated

Retail merchandise sales $ 720,281 $ 355,237 $ — $ 1,075,518

Pawn loan fees 310,437 147,080 — 457,517

Interest and fees on finance receivables (1)

2,016 — — 2,016

Wholesale scrap jewelry sales 45,405 50,828 — 96,233

Consumer loan and credit services fees 20,178 — — 20,178

Total revenue 1,078,139 553,145 — 1,631,284

1 unchanged sentence

Cost of retail merchandise sold 415,938 225,149 — 641,087

Provision for loan losses (1)

( 488 ) — — ( 488 )

Cost of wholesale scrap jewelry sold 39,584 39,962 — 79,546

Consumer loan and credit services loss provision 4,159 — — 4,159

Total cost of revenue 455,034 265,111 — 720,145

6 unchanged sentences

Interest income — — ( 1,540 ) ( 1,540 )

Loss on foreign exchange — — 884 884

Merger and acquisition expenses — — 1,316 1,316

Gain on foreign exchange — — ( 787 ) ( 787 )

Impairments and dispositions of certain other assets — — 10,505 10,505

Loss on extinguishment of debt

— — 11,737 11,737

Total expenses and other income 418,370 181,347 167,723 767,440

Income (loss) before income taxes $ 204,735 $ 106,687 $ ( 167,723 ) $ 143,699

(1) Effective June 30, 2020, the Company’s U.S.

pawn segment ceased offering an unsecured consumer loan product in the U.S.

As of December 31, 2020

Operations Latin America

Operations Corporate Consolidated

Pawn Latin America

Pawn Corporate Consolidated

Pawn loans $ 220,391 $ 87,840 $ — $ 308,231

Consumer loans, net 751 — — 751

Inventories 136,109 54,243 — 190,352

2 unchanged sentences

Year Ended December 31, 2019

Operations Latin America

Operations Corporate Consolidated

Pawn Latin America

Pawn Corporate Consolidated

Retail merchandise sales $ 722,127 $ 453,434 $ — $ 1,175,561

Pawn loan fees 379,395 185,429 — 564,824

Interest and fees on finance receivables 20,178 — — 20,178

Wholesale scrap jewelry sales 71,813 32,063 — 103,876

Consumer loan and credit services fees 55,417 860 — 56,277

Total revenue 1,193,513 670,926 — 1,864,439

1 unchanged sentence

Cost of retail merchandise sold 447,911 297,950 — 745,861

Provision for loan losses 4,159 — — 4,159

Cost of wholesale scrap jewelry sold 65,941 30,131 — 96,072

Consumer loan and credit services loss provision 17,223 238 — 17,461

Total cost of revenue 518,011 328,081 — 846,092

6 unchanged sentences

Interest income — — ( 1,055 ) ( 1,055 )

Gain on foreign exchange — — ( 787 ) ( 787 )

Merger and acquisition expenses — — 1,766 1,766

Loss on foreign exchange — — 762 762

Total expenses and other income 433,368 197,657 162,711 793,736

1 unchanged sentence

As of December 31, 2019

Operations Latin America

Operations Corporate Consolidated

Pawn Latin America

Pawn Corporate Consolidated

Pawn loans $ 268,793 $ 100,734 $ — $ 369,527

16 unchanged sentences

$ 471,057 $ 383,485 $ 347,673

NOTE 16 - QUARTERLY FINANCIAL DATA (UNAUDITED)

Summarized quarterly financial data for the years ended December 31, 2020 and 2019 are set forth in the table below (in thousands, except per share amounts).

The Company’s operations are subject to seasonal fluctuations.

The Company computed the quarterly diluted earnings per share amounts as if each quarter was a discrete period based on that quarter’s weighted-average shares outstanding.

As a result, the sum of the diluted earnings per share by quarter will not necessarily total the annual diluted earnings per share.

Quarter Ended

March 31 June 30 September 30 December 31

Total revenue $ 466,490 $ 412,746 $ 359,890 $ 392,158

Total cost of revenue 207,181 189,645 157,152 166,167

Net revenue 259,309 223,101 202,738 225,991

Total expenses and other income 213,592 185,912 185,052 182,884

Net income 32,918 25,873 15,062 32,726

Diluted earnings per share 0.78 0.62 0.36 0.79

Diluted weighted-average shares 42,007 41,531 41,536 41,331

Total revenue $ 467,604 $ 446,014 $ 452,459 $ 498,362

Total cost of revenue 211,805 201,709 201,480 231,098

Net revenue 255,799 244,305 250,979 267,264

Total expenses and other income 196,956 199,019 202,015 195,746

Net income 42,655 33,048 34,761 54,154

Diluted earnings per share 0.98 0.76 0.81 1.27

Diluted weighted-average shares 43,658 43,256 43,167 42,760

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures