FirstCash Holdings, Inc. 10-K

Item 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures The Company’s management, under the supervision and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) under the Exchange Act) as of December 31, 2021 (the “Evaluation Date”). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures were effective. Limitations on Effectiveness of Controls and Procedures The Company’s management, including its Chief Executive Officer and Chief Financial Officer, does not expect the Company’s disclosure controls and procedures or internal controls will prevent all possible error and fraud. The Company’s disclosure controls and procedures are, however, designed to provide reasonable assurance of achieving their objectives, and the Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are effective at that reasonable assurance level. Management’s Report on Internal Control Over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting and for the assessment of the effectiveness of the Company’s internal control over financial reporting. Internal control over financial reporting (as defined in Rules 13a-15(f) and 15d(f) under the Exchange Act) is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with GAAP. Internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of assets, (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, (3) provide reasonable assurance that receipts and expenditures are being made only in accordance with appropriate authorization of management and the board of directors, and (4) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of assets that could have a material effect on the financial statements. All internal control systems, no matter how well designed, have inherent limitations, therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Under the supervision and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, management has assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2021. To make this assessment, management used the criteria for effective internal control over financial reporting described in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. 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. 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 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. 69 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of FirstCash Holdings, Inc. Opinion on the Internal Control Over Financial Reporting 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. In our opinion, the Company maintained, in all material respects, effective 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. 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 The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ RSM US LLP Dallas, Texas February 28, 2022 70 Table of Contents Item 9B. 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. Wessel; 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. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections None. 71 Table of Contents PART III Item 10. 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,” “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. This Code of Ethics is publicly available on the Company’s website at www.firstcash.com . 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 Holdings, Inc., Investor Relations, 1600 West 7th Street, Fort Worth, Texas 76102. Item 11. Executive Compensation The information required by Item 11 to this Annual Report on Form 10-K is incorporated herein by reference from the information provided under the headings “Executive Compensation” and “Compensation Committee Interlocks and Insider Participation” of the 2022 Proxy Statement. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information required by Item 12 to this Annual Report on Form 10-K is incorporated herein by reference from the information provided under the heading “Equity Compensation Plan Information” and “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” of the 2022 Proxy Statement. Item 13. Certain Relationships and Related Transactions, and Director Independence The information required by Item 13 to this Annual Report on Form 10-K is incorporated herein by reference from the information provided under the headings “Certain Relationships and Related Person Transactions” and “Corporate Governance, Board Matters and Director Compensation” of the 2022 Proxy Statement. Item 14. Principal Accountant Fees and Services The information required by Item 14 to this Annual Report on Form 10-K is incorporated herein by reference from the information provided under the heading “Ratification of Independent Registered Public Accounting Firm” of the 2022 Proxy Statement. 72 Table of Contents PART IV Item 15. Exhibits and Financial Statement Schedules (a) The following documents are filed as part of this report: (1) Consolidated Financial Statements: Page Report of Independent Registered Public Accounting Firm (PCAOB ID: 49 ) F- 1 Consolidated Balance Sheets F- 5 Consolidated Statements of Income F- 6 Consolidated Statements of Comprehensive Income F- 7 Consolidated Statements of Changes in Stockholders’ Equity F- 8 Consolidated Statements of Cash Flows F- 11 Notes to Consolidated Financial Statements F- 13 (2) All schedules are omitted because they are not applicable or the required information is shown in the financial statements or the notes thereto. (3) Exhibits: Incorporated by Reference Exhibit No. Exhibit Description Form File No. 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 DEF 14A 0-19133 B 04/29/2004 3.2 Amendment to Amended and Restated Certificate of Incorporation 8-K 001-10960 3.1 09/02/2016 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 4.2 Indenture, dated as of May 30, 2017, by and among FirstCash, Inc., the guarantors listed therein and BOKF, NA (including the form of Note attached as an exhibit thereto) 8-K 001-10960 4.1 05/31/2017 4.3 Indenture, dated as of August 26, 2020, by and among FirstCash, Inc., the guarantors listed therein and BOKF, NA (including the form of Note attached as an exhibit thereto). 8-K 001-10960 4.1 08/26/2020 73 Table of Contents Incorporated by Reference Exhibit No. 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 X 10.1 First Cash Financial Services, Inc. 2004 Long-Term Incentive Plan * DEF 14A 0-19133 C 04/29/2004 10.2 First Cash Financial Services, Inc. 2011 Long-Term Incentive Plan * DEF 14A 0-19133 A 04/28/2011 10.3 Amendment to the FirstCash, Inc. 2011 Long-Term Incentive Plan * S-8 333-214452 99.2 11/04/2016 10.4 First Cash 401(k) Profit Sharing Plan, as amended effective as of October 1, 2010 (executed on August 5, 2010) S-8 333-106881 4(g) 05/31/2012 10.5 Amended and Restated Credit Agreement, dated July 25, 2016, between First Cash Financial Services, Inc., Certain Subsidiaries of the Borrower From Time to Time Party Thereto, the Lenders Party Thereto, and Wells Fargo Bank, National Association 8-K 0-19133 10.1 07/26/2016 10.6 Performance-Based Restricted Stock Unit Award Agreement * 10-Q 001-10960 10.1 05/05/2017 10.7 First Amendment to Amended and Restated Credit Agreement and Waiver, dated May 30, 2017, between FirstCash, Inc., certain subsidiaries of the borrower from time to time party thereto, the lenders party thereto, and Wells Fargo Bank, National Association 8-K 001-10960 10.1 05/31/2017 10.8 Employment Agreement between Raul Ramos and FirstCash, Inc., dated July 30, 2018 * 10-Q 001-10960 10.1 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 8-K 001-10960 10.1 10/04/2018 10.10 FirstCash, Inc. 2019 Long-Term Incentive Plan * DEF 14A 001-10960 B 04/26/2019 10.11 Third Amendment to Amended and Restated Credit Agreement, dated December 19, 2019, between FirstCash, Inc., certain subsidiaries of the borrower from time to time party thereto, the lenders party thereto, and Wells Fargo Bank, National Association 8-K 001-10960 10.1 12/19/2019 10.12 Employment Agreement between Daniel R. Feehan and FirstCash, Inc., dated January 28, 2020 * 10-K 001-10960 10.16 02/03/2020 10.13 Fourth Amendment to Amended and Restated Credit Agreement, dated November 9, 2020, between FirstCash, Inc., certain subsidiaries of the borrower from time to time party thereto, the lenders party thereto, and Wells Fargo Bank, National Association. 8-K 001-10960 10.1 11/10/2020 74 Table of Contents Incorporated by Reference Exhibit No. 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 * X 10.18 Employment Agreement between T. Brent Stuart and FirstCash Holdings, Inc., dated February 25, 2022 * X 10.19 Employment Agreement between R. Douglas Orr and FirstCash Holdings, Inc., dated February 25, 2022 * X 10.20 Employment Agreement between Howard F. Hambleton and FirstCash Holdings, Inc., dated February 25, 2022 * X 21.1 Subsidiaries X 23.1 Consent of Independent Registered Public Accounting Firm, RSM US LLP X 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 X 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 X 32.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, provided by Rick L. Wessel, Chief Executive Officer X 32.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, provided by R. Douglas Orr, Chief Financial Officer X 101.INS Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document X 101.SCH Inline XBRL Taxonomy Extension Schema Document X 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document X 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document X 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document X 75 Table of Contents Incorporated by Reference Exhibit No. Exhibit Description Form File No. Exhibit Filing Date Filed Herewith 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document X 104 Cover Page Interactive Data File (embedded within the Inline XBRL document contained in Exhibit 101) X * Indicates management contract or compensatory plan, contract or arrangement. Item 16. Form 10-K Summary None. 76 Table of Contents SIGNATURES 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. Dated: February 28, 2022 FIRSTCASH HOLDINGS, INC. (Registrant) /s/ RICK L. WESSEL Rick L. Wessel Chief Executive Officer (On behalf of the Registrant) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Capacity Date /s/ RICK L. WESSEL Rick L. Wessel Vice-Chairman of the Board and Chief Executive Officer (Principal Executive Officer) February 28, 2022 /s/ R. DOUGLAS ORR R. Douglas Orr Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) February 28, 2022 /s/ DANIEL R. FEEHAN Daniel R. Feehan Chairman of the Board February 28, 2022 /s/ DANIEL E. BERCE Daniel E. Berce Director February 28, 2022 /s/ MIKEL D. FAULKNER Mikel D. Faulkner Director February 28, 2022 /s/ PAULA K. GARRETT Paula K. Garrett Director February 28, 2022 /s/ JAMES H. GRAVES James H. Graves Director February 28, 2022 /s/ RANDEL G. OWEN Randel G. Owen Director February 28, 2022 /s/ DOUGLAS R. RIPPEL Douglas R. Rippel Director February 28, 2022 77 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 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 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”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s 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, and our report dated February 28, 2022 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters 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, 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. F-1 Table of Contents 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: F-2 Table of Contents • 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 F-3 Table of Contents 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 We have served as the Company’s auditor since 2016. Dallas, Texas February 28, 2022 F-4 Table of Contents FIRSTCASH HOLDINGS, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except per share amounts) December 31, 2021 2020 ASSETS Cash and cash equivalents $ 120,046 $ 65,850 Accounts receivable, net 55,356 41,110 Pawn loans 347,973 308,231 Finance receivables, net 181,021 — Inventories 263,311 190,352 Leased merchandise, net 143,944 — Income taxes receivable 5,419 9,634 Prepaid expenses and other current assets 12,288 9,388 Total current assets 1,129,358 624,565 Property and equipment, net 462,526 373,667 Operating lease right of use asset 306,061 298,957 Goodwill 1,536,178 977,381 Intangible assets, net 388,184 83,651 Other assets 8,531 9,818 Deferred tax assets, net 5,614 4,158 Total assets $ 3,836,452 $ 2,372,197 LIABILITIES AND STOCKHOLDERS’ EQUITY Accounts payable and accrued liabilities $ 240,940 $ 81,917 Customer deposits and prepayments 57,310 34,719 Income taxes payable 3,387 1,148 Lease liability, current 90,570 88,622 Total current liabilities 392,207 206,406 Revolving unsecured credit facilities 259,000 123,000 Senior unsecured notes 1,033,904 492,916 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 Commitments and contingencies (Note 13) Stockholders’ equity: Common stock; $ 0.01 par value; 90,000 shares authorized; 57,322 and 49,276 shares issued, respectively; 48,479 and 41,038 shares outstanding, respectively 573 493 Additional paid-in capital 1,724,956 1,221,788 Retained earnings 866,679 789,303 Accumulated other comprehensive loss ( 131,299 ) ( 118,432 ) Common stock held in treasury, 8,843 and 8,238 shares at cost, respectively ( 652,782 ) ( 609,337 ) Total stockholders’ equity 1,808,127 1,283,815 Total liabilities and stockholders’ equity $ 3,836,452 $ 2,372,197 The accompanying notes are an integral part of these consolidated financial statements. F-5 Table of Contents FIRSTCASH HOLDINGS, INC. CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share amounts) Year Ended December 31, 2021 2020 2019 Revenue: Retail merchandise sales $ 1,134,249 $ 1,075,518 $ 1,175,561 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 Total revenue 1,698,965 1,631,284 1,864,439 Cost of revenue: 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 Total cost of revenue 779,813 720,145 846,092 Net revenue 919,152 911,139 1,018,347 Expenses and other income: Operating expenses 564,832 562,158 595,539 Administrative expenses 111,259 110,931 122,334 Depreciation and amortization 45,906 42,105 41,904 Interest expense 32,386 29,344 34,035 Interest income ( 696 ) ( 1,540 ) ( 1,055 ) 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 — Total expenses and other income 752,650 767,440 793,736 Income before income taxes 166,502 143,699 224,611 Provision for income taxes 41,593 37,120 59,993 Net income $ 124,909 $ 106,579 $ 164,618 Earnings per share: Basic $ 3.05 $ 2.57 $ 3.83 Diluted 3.04 2.56 3.81 The accompanying notes are an integral part of these consolidated financial statements. F-6 Table of Contents FIRSTCASH HOLDINGS, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in thousands) Year Ended December 31, 2021 2020 2019 Net income $ 124,909 $ 106,579 $ 164,618 Other comprehensive income: Currency translation adjustment ( 12,867 ) ( 21,463 ) 16,148 Comprehensive income $ 112,042 $ 85,116 $ 180,766 The accompanying notes are an integral part of these consolidated financial statements. F-7 Table of Contents FIRSTCASH HOLDINGS, INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (in thousands, except per share amounts) Common Stock Additional Paid-In Capital Retained Earnings Accum- ulated Other Compre- hensive Loss Common Stock Held in Treasury Total Stock- holders’ Equity Shares Amount Shares Amount 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 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 Net income — — — 124,909 — — — 124,909 Cash dividends ($ 1.17 per share) — — — ( 47,533 ) — — — ( 47,533 ) Currency translation adjustment — — — — ( 12,867 ) — — ( 12,867 ) Purchases of treasury stock — — — — — 688 ( 49,610 ) ( 49,610 ) As of 12/31/2021 57,322 $ 573 $ 1,724,956 $ 866,679 $ ( 131,299 ) 8,843 $ ( 652,782 ) $ 1,808,127 The accompanying notes are an integral part of these consolidated financial statements. F-8 Table of Contents FIRSTCASH HOLDINGS, INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY CONTINUED (in thousands, except per share amounts) Common Stock Additional Paid-In Capital Retained Earnings Accum- ulated Other Compre- hensive Loss Common Stock Held in Treasury Total Stock- holders’ Equity Shares Amount Shares Amount 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, 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 Net income — — — 106,579 — — — 106,579 Cash dividends ($ 1.08 per share) — — — ( 44,752 ) — — — ( 44,752 ) Currency translation adjustment — — — — ( 21,463 ) — — ( 21,463 ) Purchases of treasury stock — — — — — 1,427 ( 106,970 ) ( 106,970 ) As of 12/31/2020 49,276 $ 493 $ 1,221,788 $ 789,303 $ ( 118,432 ) 8,238 $ ( 609,337 ) $ 1,283,815 The accompanying notes are an integral part of these consolidated financial statements. F-9 Table of Contents FIRSTCASH HOLDINGS, INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY CONTINUED (in thousands, except per share amounts) Common Stock Additional Paid-In Capital Retained Earnings Accum- ulated Other Compre- hensive Loss Common Stock Held in Treasury Total Stock- holders’ Equity Shares Amount Shares Amount As of 12/31/2018 49,276 $ 493 $ 1,224,608 $ 606,810 $ ( 113,117 ) 5,673 $ ( 400,690 ) $ 1,318,104 Shares issued under share-based compensation plan — — ( 1,441 ) — — ( 21 ) 1,441 — Exercise of stock options — — ( 319 ) — — ( 10 ) 719 400 Share-based compensation expense — — 8,680 — — — — 8,680 Net income — — — 164,618 — — — 164,618 Cash dividends ($ 1.02 per share) — — — ( 43,952 ) — — — ( 43,952 ) Currency translation adjustment — — — — 16,148 — — 16,148 Purchases of treasury stock — — — — — 1,305 ( 113,963 ) ( 113,963 ) As of 12/31/2019 49,276 $ 493 $ 1,231,528 $ 727,476 $ ( 96,969 ) 6,947 $ ( 512,493 ) $ 1,350,035 The accompanying notes are an integral part of these consolidated financial statements. F-10 Table of Contents FIRSTCASH HOLDINGS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Year Ended December 31, 2021 2020 2019 Cash flow from operating activities: Net income $ 124,909 $ 106,579 $ 164,618 Adjustments to reconcile net income to net cash flow provided by operating activities: 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 Depreciation and amortization expense 45,906 42,105 41,904 Amortization of debt issuance costs 1,671 1,649 1,430 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 — Deferred income taxes, net 10,722 14,476 7,008 Changes in operating assets and liabilities, net of business combinations: 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 ) Accounts payable, accrued liabilities and other liabilities 26,180 8,621 ( 3,383 ) Income taxes 6,303 ( 11,531 ) 4,041 Net cash flow provided by operating activities 223,304 222,264 231,596 Cash flow from investing activities: 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 ) Net cash flow used in investing activities ( 744,637 ) ( 20,352 ) ( 137,053 ) Cash flow from financing activities: Borrowings from unsecured credit facilities 560,000 354,425 257,000 Repayments of unsecured credit facilities ( 424,000 ) ( 569,933 ) ( 217,000 ) 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 ) Purchases of treasury stock ( 49,610 ) ( 106,970 ) ( 116,105 ) Proceeds from exercise of stock options 380 1,140 400 Payment of withholding taxes on net share settlements of restricted stock unit awards and stock options exercised ( 1,663 ) ( 3,668 ) — F-11 Table of Contents FIRSTCASH HOLDINGS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS CONTINUED (in thousands) Year Ended December 31, 2021 2020 2019 Dividends paid ( 47,533 ) ( 44,752 ) ( 43,952 ) 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 Change in cash and cash equivalents 54,196 19,323 ( 25,266 ) Cash and cash equivalents at beginning of the year 65,850 46,527 71,793 Cash and cash equivalents at end of the year $ 120,046 $ 65,850 $ 46,527 Supplemental disclosure of cash flow information: Cash paid during the period for: Interest $ 29,461 $ 21,033 $ 32,680 Income taxes 24,563 34,186 48,867 Supplemental disclosure of non-cash investing and financing activity: Non-cash transactions in connection with pawn loans settled through forfeitures of collateral transferred to inventories $ 430,306 $ 340,891 $ 500,744 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. F-12 Table of Contents FIRSTCASH HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - GENERAL Organization and Nature of the Company 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. The U.S. 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 Holdings, Inc. and its wholly-owned subsidiaries. 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. Cash and cash equivalents - The Company considers any highly liquid investments with an original maturity of three months or less at the date of acquisition to be cash equivalents. As of December 31, 2021, the amount of cash associated with indefinitely reinvested foreign earnings was $ 57.5 million, which is primarily held in Mexican pesos. F-13 Table of Contents Pawn loans and revenue recognition - Pawn loans are secured by the customer’s pledge of tangible personal property, which the Company holds during the term of the loan. 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 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. 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. 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. The Company presents merchandise sales net of any sales or value-added taxes collected. Some jewelry inventory is melted and processed at third-party facilities and the precious metal and diamond content is sold at either prevailing market commodity prices or a previously agreed upon price with a commodity buyer. 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 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 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. F-14 Table of Contents 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. F-15 Table of Contents 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. dollars at the exchange rate in effect at each balance sheet date, and the resulting adjustments are accumulated in other comprehensive income (loss) as a separate component of stockholders’ equity. Revenues and expenses are translated at the average exchange rates occurring during the respective period. 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. 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 pawn operations in El Salvador where the reporting and functional currency is the U.S. dollar. The average value of the Mexican peso to the U.S. dollar exchange rate for 2021 was 20.3 to 1 compared to 21.5 to 1 in 2020 and 19.3 to 1 in 2019. The average value of the Guatemalan quetzal to the U.S. 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. 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 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. See Note 3. 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. The Company performs its goodwill 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 reporting units, which are tested for impairment, are U.S. 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. See Note 14. F-16 Table of Contents The Company’s other material indefinite-lived intangible assets consist of certain 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 an indefinite-lived intangible asset below its carrying amount. See Note 14. 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. The Company presents merger and acquisition expenses separately in the consolidated statements of income to identify these incremental activities apart from the expenses incurred to operate the business. Long-lived assets - Property and equipment, intangible assets subject to amortization and non-current assets are reviewed for impairment whenever events or changes in circumstances indicate that the net book value of the asset may not be recoverable. An impairment loss is recognized if the sum of the expected future cash flows (undiscounted and before interest) from the use of the asset is less than the net book value of the asset. 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. The Company did not record any impairment loss for the year ended December 31, 2021. Fair value of financial instruments - The fair value of financial instruments is determined by reference to various market data and other valuation techniques, as appropriate. Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels. All fair value measurements related to acquisitions are level 3, non-recurring measurements, based on unobservable inputs. Unless otherwise disclosed, the fair values of financial instruments approximate their recorded values, due primarily to their short-term nature. See Note 6. Income taxes - The Company uses the asset and liability method of computing deferred income taxes on all material temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. See Note 12. 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. Share-based compensation - All share-based payments to employees and directors are recognized in the financial statements based on the grant date or if applicable, the subsequent modification date fair value. The Company recognizes compensation cost net of estimated forfeitures and recognizes the compensation cost for only those awards expected to vest on a straight-line basis over the requisite service period of the award, which is generally the vesting term. The Company records share-based compensation cost as an administrative expense. See Note 15. Forward sales commitments - The Company periodically uses forward sale agreements with a major gold bullion bank to sell a portion of the expected amount of scrap gold, which is typically jewelry that is broken or of low retail value, produced in the normal course of business from its liquidation of such merchandise. These commitments qualify for an exemption from derivative accounting as normal sales, based on historical terms, conditions and quantities, and are therefore not recorded on the Company's balance sheet. Earnings per share - Basic earnings per share is computed by dividing net income by the weighted-average number of shares outstanding during the year. Diluted earnings per share is calculated by giving effect to the potential dilution that could occur if securities or other contracts to issue common shares were exercised and converted into common shares during the year. F-17 Table of Contents The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share amounts): Year Ended December 31, 2021 2020 2019 Numerator: Net income $ 124,909 $ 106,579 $ 164,618 Denominator: Weighted-average common shares for calculating basic earnings per share 40,975 41,502 43,020 Effect of dilutive securities: Stock options and restricted stock unit awards 49 98 188 Weighted-average common shares for calculating diluted earnings per share 41,024 41,600 43,208 Earnings per share: Basic $ 3.05 $ 2.57 $ 3.83 Diluted 3.04 2.56 3.81 Use of estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and related revenue and expenses, and the disclosure of gain and loss contingencies at the date of the financial statements. 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. 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”). ASU 2019-12 removes certain exceptions to the general principles in Topic 740 in Generally Accepted Accounting Principles. ASU 2019-12 is effective for public entities for fiscal years beginning after December 15, 2020, with early adoption permitted. 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): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”). ASU 2020-04 provides temporary optional expedients and exceptions to the GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. ASU 2020-04 is effective beginning on March 12, 2020, and the Company may elect to apply the amendments prospectively through December 31, 2022. 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 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. F-18 Table of Contents NOTE 3 - ACQUISITIONS 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) 127,420 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. F-19 Table of Contents 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) 225,261 Leased merchandise 139,649 Prepaid expenses and other current assets 4,474 Property and equipment 11,670 Operating lease right of use asset 491 Goodwill (2) 503,106 Intangible assets (3) 305,100 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. See Note 7. 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. See Note 7. 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 F-20 Table of Contents (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): 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 $ 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 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 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 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 Accounts receivable, net 470 Inventories 8,822 Other current assets 294 Property and equipment 1,174 Goodwill (1) 59,645 Intangible assets 2,835 Other non-current assets 36 Current liabilities ( 1,659 ) Aggregate purchase price $ 79,537 (1) Substantially all of the goodwill is expected to be deductible for U.S. income tax purposes. F-21 Table of Contents 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); and • 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. 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. F-22 Table of Contents NOTE 4 - OPERATING LEASES Lessor 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. Lessee 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. Lease components include rent, taxes and insurance costs while non-lease components include common area or other maintenance costs. Operating leases are included in operating lease right of use assets, lease liability, current and lease liability, non-current in the consolidated balance sheets. The Company does not have any finance leases. Leased facilities are generally leased for a term of three to five years with one or more options to renew for an additional three to five years , typically at the Company’s sole discretion. In addition, the majority of these leases can be terminated early upon an adverse change in law which negatively affects the store’s profitability. 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, 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. The Company’s leases do not provide an implicit rate and therefore, it uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments. The Company utilizes a portfolio approach for determining the incremental borrowing rate to apply to groups of leases with similar characteristics. The weighted-average discount rate used to measure the lease liability as of December 31, 2021, 2020 and 2019 was 6.2 %, 7.0 % and 7.8 %, respectively. The Company has certain operating leases in Mexico which are denominated in U.S. dollars. The liability related to these leases is considered a monetary liability, and requires remeasurement each reporting period into the functional currency (Mexican pesos) using reporting date exchange rates. 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 $ 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 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 (1) Variable lease costs consist primarily of taxes, insurance and common area or other maintenance costs paid based on actual costs incurred by the lessor and can therefore vary over the lease term. F-23 Table of Contents The following table details the maturity of lease liabilities for all operating leases as of December 31, 2021 (in thousands): 2022 $ 106,197 2023 85,967 2024 62,418 2025 36,743 2026 18,060 Thereafter 23,514 Total $ 332,899 Less amount of lease payments representing interest ( 39,163 ) Total present value of lease payments $ 293,736 The following table details supplemental cash flow information related to operating leases for the year ended December 31, 2021, 2020 and 2019 (in thousands): 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 Leased assets obtained in exchange for new operating lease liabilities 110,531 104,576 71,117 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 . The Company intends to continue repurchases under its active share repurchase program through open market transactions under trading plans in accordance with Rule 10b5-1 and Rule 10b-18 under the Exchange Act of 1934, as amended, subject to a variety of factors, including, but not limited to, the level of cash balances, credit availability, debt covenant restrictions, general business conditions, regulatory requirements, the market price of the Company’s stock, dividend policy, the availability of alternative investment opportunities, including acquisitions, and the impact of COVID-19. The following table provides purchases made by the Company of shares of its common stock under each share repurchase program in effect during 2021 (dollars in thousands): 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 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 Total 688,000 $ 49,610 $ 72,217 Total cash dividends paid in 2021 and 2020 were $ 47.5 million and $ 44.8 million, respectively. 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. F-24 Table of Contents NOTE 6 - FAIR VALUE OF FINANCIAL INSTRUMENTS The fair value of financial instruments is determined by reference to various market data and other valuation techniques, as appropriate. Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The Company's assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels. The three fair value levels are (from highest to lowest): Level 1: Quoted market prices in active markets for identical assets or liabilities. Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data. Level 3: Unobservable inputs that are not corroborated by market data. Recurring Fair Value Measurements 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) $ 127,420 Change in fair value (1) ( 17,871 ) 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. F-25 Table of Contents Fair Value Measurements on a Non-Recurring Basis The Company measures non-financial assets and liabilities, such as property and equipment and intangible assets, at fair value on a non-recurring basis, or when events or circumstances indicate that the carrying amount of the assets may be impaired. 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, 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): Carrying Value Estimated Fair Value December 31, December 31, Fair Value Measurements Using 2021 2021 Level 1 Level 2 Level 3 Financial assets: Cash and cash equivalents $ 120,046 $ 120,046 $ 120,046 $ — $ — 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 Financial liabilities: Revolving unsecured credit facilities $ 259,000 $ 259,000 $ — $ 259,000 $ — Senior unsecured notes (outstanding principal) 1,050,000 1,058,000 — 1,058,000 — $ 1,309,000 $ 1,317,000 $ — $ 1,317,000 $ — Carrying Value Estimated Fair Value December 31, December 31, Fair Value Measurements Using 2020 2020 Level 1 Level 2 Level 3 Financial assets: Cash and cash equivalents $ 65,850 $ 65,850 $ 65,850 $ — $ — Accounts receivable, net 41,110 41,110 — — 41,110 Pawn loans 308,231 308,231 — — 308,231 $ 415,191 $ 415,191 $ 65,850 $ — $ 349,341 Financial liabilities: Revolving unsecured credit facility $ 123,000 $ 123,000 $ — $ 123,000 $ — Senior unsecured notes (outstanding principal) 500,000 516,000 — 516,000 — $ 623,000 $ 639,000 $ — $ 639,000 $ — 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 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). F-26 Table of Contents The carrying value of the unsecured credit facilities approximate fair value as of December 31, 2021 and 2020. The fair value of the unsecured credit facilities is estimated based on market values for debt issuances with similar characteristics or rates currently available for debt with similar terms. In addition, the unsecured credit facilities have a variable interest rate based on a fixed spread over LIBOR or the Mexican Central Bank’s interbank equilibrium rate (“TIIE”) and reprice with any changes in LIBOR or TIIE. 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, 2021 2020 Finance receivables, gross $ 220,329 $ — Fair value premium on non-PCD finance receivables (1) 40,251 — Non-credit discount on PCD finance receivables (2) ( 3,521 ) — 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. See Note 3. (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. See Note 3 . Changes in the allowance for loan losses are as follows (in thousands): As of December 31, 2021 2020 Balance at beginning of year $ — $ 34 Provision for loan losses (1) 48,952 ( 488 ) Initial allowance recognized for PCD loans (2) 32,036 — 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. See Note 3. (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. See Note 3. F-27 Table of Contents 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 Delinquency: 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, 2021 2020 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. See Note 3. F-28 Table of Contents Changes in the allowance for lease losses are as follows (in thousands): As of December 31, 2021 2020 Balance at beginning of year $ — $ — Provision for lease losses (1) 5,442 — 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. See Note 3 . NOTE 9 - PROPERTY AND EQUIPMENT Property and equipment consists of the following (in thousands): As of December 31, 2021 2020 Land $ 114,150 $ 83,458 Buildings 199,100 150,132 Furniture, fixtures, equipment and improvements 468,118 425,360 781,368 658,950 Less: accumulated depreciation ( 318,842 ) ( 285,283 ) 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. NOTE 10 - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Accounts payable and accrued liabilities consist of the following (in thousands): As of December 31, 2021 2020 Acquisition purchase price amounts payable to sellers (1) $ 123,475 $ 5,965 Accrued compensation 33,546 21,874 Sales, property, and payroll taxes payable 32,463 24,984 Trade accounts payable 23,077 7,187 Accrued interest payable 9,375 8,121 Benefits liabilities and withholding payable 3,084 2,852 Other accrued liabilities 15,920 10,934 $ 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. F-29 Table of Contents NOTE 11 - LONG-TERM DEBT The following table details the Company’s long-term debt at the respective principal amounts, net of unamortized debt issuance costs on the senior unsecured notes (in thousands): As of December 31, 2021 2020 Revolving unsecured credit facility, maturing 2024 (1) $ 259,000 $ 123,000 Senior unsecured notes: 4.625 % senior unsecured notes due 2028 (2) 492,499 492,916 5.625 % senior unsecured notes due 2030 (3) 541,405 — 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, 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): 2022 $ — 2023 — 2024 259,000 2025 — 2026 — Thereafter 1,050,000 $ 1,309,000 Revolving Unsecured Credit Facility As of December 31, 2021, the Company maintained an unsecured line of credit with a group of U.S. based commercial lenders (the “Credit Facility”) in the amount of $ 500.0 million. The Credit Facility matures on December 19, 2024. 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. F-30 Table of Contents 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. The Credit Facility is unsecured and bears interest, at the Company’s option, of either (1) the prevailing LIBOR (with interest periods of 1 week or 1, 2, 3 or 6 months at the Company’s option) plus a fixed spread of 2.5 % or (2) the prevailing prime or base rate plus a fixed spread of 1.5 %. The agreement has a LIBOR floor of 0 %. Additionally, the Company is required to pay an annual commitment fee of 0.325 % on the average daily unused portion of the Credit Facility commitment. The weighted-average interest rate on amounts outstanding under the Credit Facility at December 31, 2021 was 2.63 % based on 1 week LIBOR. Under the terms of the Credit Facility, the Company is required to maintain certain financial ratios and comply with certain financial covenants. The Credit Facility also contains customary restrictions on the Company’s ability to incur additional debt, grant liens, make investments, consummate acquisitions and similar negative covenants with customary carve-outs and baskets. The Company was in compliance with the covenants of the Credit Facility as of December 31, 2021. During 2021, the Company received net proceeds of $ 136.0 million from borrowings pursuant to the Credit Facility. Revolving Unsecured Uncommitted Credit Facility 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 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. The Company was in compliance with the covenants of the Mexico Credit Facility as of December 31, 2021. At December 31, 2021, the Company had no amount outstanding under the Mexico Credit Facility and $ 600.0 million Mexican pesos available for borrowings. Senior Unsecured Notes Due 2028 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. The 2028 Notes were sold in a private placement in reliance on Rule 144A and Regulation S under the Securities Act of 1933, as amended (the “Securities Act”). 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 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 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. Redemption of 2024 Notes During 2020, the Company redeemed all outstanding 2024 Notes. 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. F-31 Table of Contents 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. F-32 Table of Contents NOTE 12 - INCOME TAXES Components of the provision for income taxes and the income to which it relates for the years ended December 31, 2021, 2020 and 2019 consist of the following (in thousands): Year Ended December 31, 2021 2020 2019 Income before income taxes (1) : Domestic $ 110,535 $ 98,111 $ 145,570 Foreign 55,967 45,588 79,041 Income before income taxes $ 166,502 $ 143,699 $ 224,611 Current income taxes: U.S. Federal $ 14,031 $ 14,951 $ 26,624 Foreign 15,242 9,909 21,904 U.S. state and local 2,045 2,158 2,553 Current provision for income taxes 31,318 27,018 51,081 Deferred provision (benefit) for income taxes: U.S. Federal 11,008 4,485 7,498 Foreign ( 1,542 ) 5,287 863 U.S. state and local 809 330 551 Total deferred provision for income taxes 10,275 10,102 8,912 Provision for income taxes $ 41,593 $ 37,120 $ 59,993 (1) Includes the allocation of certain administrative expenses and intercompany payments, such as royalties and interest, between domestic and foreign subsidiaries. At December 31, 2021, the cumulative amount of undistributed earnings of foreign subsidiaries was $ 248.8 million. The Tax Cuts and Jobs Act imposed a mandatory transition tax on accumulated foreign earnings and generally eliminated U.S. federal income taxes on dividends from foreign subsidiaries with the exception of foreign withholding taxes and other foreign local tax. During 2021, the Company repatriated $ 10.0 million from certain foreign subsidiaries, which was not subject to withholding or federal income tax. It is the Company’s intent to indefinitely reinvest the remaining undistributed earnings and future earnings of these subsidiaries outside the U.S. and, therefore, deferred taxes are not currently recorded on cumulative foreign currency translation adjustments. F-33 Table of Contents The principal deferred tax assets and liabilities consist of the following (in thousands): As of December 31, 2021 2020 Deferred tax assets: Property and equipment in foreign jurisdictions $ 11,452 $ 9,905 Finance receivables 7,421 — Accrued fees on forfeited pawn loans 6,645 5,246 Deferred cost of goods sold deduction 1,989 3,622 Accrued compensation, payroll taxes and employee benefits 4,294 4,235 U.S. state and certain foreign net operating losses 6,429 5,942 Other 3,811 3,364 Total deferred tax assets 42,041 32,314 Deferred tax liabilities: 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 Other 2,052 3,691 Total deferred tax liabilities 156,096 93,387 Net deferred tax liabilities before valuation allowance ( 114,055 ) ( 61,073 ) Valuation allowance ( 6,429 ) ( 5,942 ) Net deferred tax liabilities $ ( 120,484 ) $ ( 67,015 ) Reported as: Deferred tax assets $ 5,614 $ 4,158 Deferred tax liabilities ( 126,098 ) ( 71,173 ) Net deferred tax liabilities $ ( 120,484 ) $ ( 67,015 ) The Company has a valuation allowance of $ 6.4 million and $ 5.9 million as of December 31, 2021 and 2020, respectively, related to the deferred tax assets associated with its U.S. state and certain foreign net operating losses. The Company has evaluated the nature and timing of its other deferred tax assets and concluded that no additional valuation allowance is necessary. F-34 Table of Contents The following is a reconciliation of income taxes calculated at the U.S. federal statutory rate to the provision for income taxes (dollars in thousands): Year Ended December 31, 2021 2020 2019 U.S. federal statutory rate 21 % 21 % 21 % Tax at the U.S. federal statutory rate $ 35,149 $ 30,177 $ 47,168 U.S. state income tax, net of federal tax benefit of $ 599 , $ 522 and $ 652 , respectively 2,255 1,965 2,452 Net incremental income tax expense from foreign earnings (1) 2,007 5,732 6,314 Non-deductible compensation expense 1,943 1,050 2,074 Global intangible low-taxed income tax — ( 1,863 ) 1,100 Other taxes and adjustments, net 239 59 885 Provision for income taxes $ 41,593 $ 37,120 $ 59,993 Effective tax rate 25.0 % 25.8 % 26.7 % (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. The Company’s foreign operating subsidiaries are owned by a wholly-owned subsidiary located in the Netherlands. The foreign operating subsidiaries are subject to their respective foreign statutory rates, which differ from the U.S. federal statutory rate. 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. The Company reviews the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. The Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. Interest and penalties related to income tax liabilities that could arise would be classified as interest expense in the Company’s consolidated statements of income. As of December 31, 2021 and 2020, the Company had no unrecognized tax benefits and, therefore, the Company did no t have a liability for accrued interest and penalties and no such interest or penalties were incurred for the years ended December 31, 2021, 2020 and 2019. The Company files federal income tax returns in the U.S., Mexico, Guatemala, Colombia, El Salvador and the Netherlands, as well as multiple state and local income tax returns in the U.S. The Company’s U.S. federal returns are not subject to examination for tax years prior to 2017. 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. There are no state income taxes in Mexico, Guatemala, Colombia, El Salvador or the Netherlands. F-35 Table of Contents NOTE 13 - COMMITMENTS AND CONTINGENCIES Litigation The Company, in the ordinary course of business, is a defendant (actual or threatened) in certain lawsuits, arbitration proceedings and other general claims. 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. Tex.). 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, 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. F-36 Table of Contents NOTE 14 - GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill Changes in the carrying value of goodwill by segment were as follows (in thousands): December 31, 2021 U.S. Pawn Segment Latin America Pawn Segment Retail POS Payment Solutions Segment Total Balance, beginning of year $ 802,148 $ 175,233 $ — $ 977,381 Acquisitions (see Note 3) 59,645 — 503,106 562,751 Effect of foreign currency translation — ( 3,954 ) — ( 3,954 ) Balance, end of year $ 861,793 $ 171,279 $ 503,106 $ 1,536,178 December 31, 2020 Balance, beginning of year $ 771,311 $ 177,332 $ — $ 948,643 Acquisitions (see Note 3) 28,978 4,456 — 33,434 Effect of foreign currency translation — ( 6,505 ) — ( 6,505 ) Other adjustments 1,859 ( 50 ) — 1,809 Balance, end of year $ 802,148 $ 175,233 $ — $ 977,381 The Company performed its annual assessment of goodwill and determined there was no impairment as of December 31, 2021 and 2020. Definite-Lived Intangible Assets The following table summarizes the components of gross and net definite-lived intangible assets subject to amortization (in thousands): As of December 31, 2021 2020 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount 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 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. F-37 Table of Contents The following table details the remaining weighted-average amortization periods for the definite-lived intangible assets included in the table above: Weighted-Average Remaining Amortization 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. Estimated future amortization expense is as follows (in thousands): 2022 $ 57,074 2023 56,914 2024 49,842 2025 48,188 2026 45,250 Thereafter 46,718 $ 303,986 Indefinite-Lived Intangible Assets Indefinite-lived intangible assets as of December 31, 2021 and 2020 consist of the following (in thousands): As of December 31, 2021 2020 Trade names $ 46,300 $ 46,300 Pawn licenses (1) 36,648 34,237 Other indefinite-lived intangibles 1,250 1,250 $ 84,198 $ 81,787 (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. F-38 Table of Contents NOTE 15 - EQUITY COMPENSATION PLANS AND SHARE-BASED COMPENSATION The Company has previously adopted equity and share-based compensation plans to attract and retain executive officers, directors and key employees. Under these plans, the Company may grant qualified and non-qualified stock options, stock appreciation rights, restricted stock and restricted stock unit awards to executive officers, directors and other key employees. At December 31, 2021, 3,205,000 shares were reserved for future grants to all employees and directors under the plans. Restricted Stock Unit Awards The Company has granted time-based and performance-based restricted stock units under the Company’s equity and share-based incentive compensation plans. The restricted stock units are settled in shares of common stock upon vesting and the Company typically issues treasury shares to satisfy vested restricted stock unit awards. The grant date fair value of restricted stock units is based on the Company’s closing stock price on the day of the grant (or subsequent award modification date, if applicable), and the grant date fair value of performance-based awards is based on the maximum amount of the award expected to be achieved. 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. The Compensation Committee of the Board of Directors canceled the original 2020 grant and replaced it with a new grant of performance-based awards in December 2020 with a reduced target award. Two-thirds of the replacement grant vests on December 31, 2022 based on a two-year cumulative performance period beginning on January 1, 2021 with performance measures tied to adjusted net income and store addition targets. The remaining one-third of the replacement grant vests on December 31, 2023 based on the Company’s total shareholder return relative to a peer group over the three-year performance period from January 1, 2021 to December 31, 2023. 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 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 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 2021, 2020 and 2019 generally vest, subject to continued employment with the Company, over a three or five-year period from the grant date. F-39 Table of Contents The following table summarizes the restricted stock unit award activity for the years ended December 31, 2021, 2020 and 2019 (shares in thousands): 2021 2020 2019 Weighted- Weighted- Weighted- Average Average Average Underlying Fair Value Underlying Fair Value Underlying Fair Value Shares of Grant Shares of Grant Shares of Grant Outstanding at beginning of year 373 $ 77.40 357 $ 69.13 254 $ 59.53 Performance-based grants (1) 105 58.68 238 78.40 109 86.86 Time-based grants 48 58.68 21 84.93 19 86.86 Performance-based vested ( 91 ) 72.70 ( 117 ) 48.25 ( 10 ) 45.93 Time-based vested ( 19 ) 67.86 ( 12 ) 76.84 ( 15 ) 73.78 Performance-based canceled (2) ( 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 (1) Represents the maximum possible award. The Company’s level of achievement of the respective performance goals will result in actual vesting of between zero shares and the maximum share award. Performance-based grants for 2020 include 114 shares which were subsequently cancelled in 2020 as described in footnote (2) below. (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. Restricted stock unit awards vesting in 2021, 2020 and 2019 had an aggregate intrinsic value of $ 6.6 million, $ 9.4 million and $ 2.1 million, respectively, based on the closing price of the Company’s stock on the date of vesting. The outstanding award units had an aggregate intrinsic value of $ 28.7 million at December 31, 2021. Stock Options The Company has no t issued common stock options since 2011. Previous option awards have been granted to purchase the Company’s common stock at an exercise price equal to or greater than the fair market value at the date of grant and generally had a maximum duration of ten years . The Company typically issues treasury shares to satisfy stock option exercises. The following table summarizes stock option activity for the years ended December 31, 2021, 2020 and 2019 (shares in thousands): 2021 2020 2019 Weighted- Weighted- Weighted- Average Average Average Underlying Exercise Underlying Exercise Underlying Exercise Shares Price Shares Price Shares Price Outstanding at beginning of year 10 $ 38.00 70 $ 38.86 80 $ 39.00 Exercised ( 10 ) 38.00 ( 60 ) 39.00 ( 10 ) 40.00 Outstanding at end of year — — 10 38.00 70 38.86 Exercisable at end of year — — — — 40 39.00 The total intrinsic value of options exercised for 2021, 2020 and 2019 was $ 0.4 million, $ 1.8 million and $ 0.6 million, respectively. The intrinsic values are based on the closing price of the Company’s stock on the date of exercise. F-40 Table of Contents Share-Based Compensation Expense The Company’s net income includes the following compensation costs related to share-based compensation arrangements (in thousands): Year Ended December 31, 2021 2020 2019 Gross compensation costs: Restricted stock unit awards $ 5,150 $ 2,899 $ 8,637 Stock options — 15 43 Total gross compensation costs 5,150 2,914 8,680 Income tax benefits: Restricted stock unit awards ( 205 ) ( 901 ) ( 302 ) Exercise of stock options — ( 94 ) ( 114 ) Total income tax benefits ( 205 ) ( 995 ) ( 416 ) Net compensation expense $ 4,945 $ 1,919 $ 8,264 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. NOTE 16 - BENEFIT PLANS The Company’s 401(k) savings plan (the “Plan”) is available to all full-time, U.S.-based employees who have been employed with the Company for six months or longer. Under the Plan, a participant may contribute up to 100 % of earnings, with the Company matching the first 5 % 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 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 three reportable segments as follows: • U.S. pawn • 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. F-41 Table of Contents 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 U.S. Pawn Latin America Pawn Retail POS Payment Solutions Corporate Consolidated Revenue: 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 Total revenue 1,074,887 592,334 31,744 — 1,698,965 Cost of revenue: 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 Total cost of revenue 438,925 273,668 67,220 — 779,813 Net revenue (loss) 635,962 318,666 ( 35,476 ) — 919,152 Expenses and other income: Store operating expenses 380,895 179,020 4,917 — 564,832 Administrative expenses — — — 111,259 111,259 Depreciation and amortization 22,234 17,834 122 5,716 45,906 Interest expense — — — 32,386 32,386 Interest income — — — ( 696 ) ( 696 ) Loss on foreign exchange — — — 436 436 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 As of December 31, 2021 U.S. Pawn Latin America Pawn Retail POS Payment 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 Total assets 1,944,487 562,661 1,178,729 150,575 3,836,452 F-42 Table of Contents Year Ended December 31, 2020 U.S. Pawn Latin America Pawn Corporate Consolidated Revenue: 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 Total revenue 1,078,139 553,145 — 1,631,284 Cost of revenue: 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 Total cost of revenue 455,034 265,111 — 720,145 Net revenue 623,105 288,034 — 911,139 Expenses and other income: Store operating expenses 396,627 165,531 — 562,158 Administrative expenses — — 110,931 110,931 Depreciation and amortization 21,743 15,816 4,546 42,105 Interest expense — — 29,344 29,344 Interest income — — ( 1,540 ) ( 1,540 ) Loss on foreign exchange — — 884 884 Merger and acquisition expenses — — 1,316 1,316 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 U.S. Pawn Latin America Pawn Corporate Consolidated Pawn loans $ 220,391 $ 87,840 $ — $ 308,231 Inventories 136,109 54,243 — 190,352 Goodwill 802,148 175,233 — 977,381 Total assets 1,718,975 540,473 112,749 2,372,197 F-43 Table of Contents Year Ended December 31, 2019 U.S. Pawn Latin America Pawn Corporate Consolidated Revenue: 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 Total revenue 1,193,513 670,926 — 1,864,439 Cost of revenue: 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 Total cost of revenue 518,011 328,081 — 846,092 Net revenue 675,502 342,845 — 1,018,347 Expenses and other income: Store operating expenses 412,508 183,031 — 595,539 Administrative expenses — — 122,334 122,334 Depreciation and amortization 20,860 14,626 6,418 41,904 Interest expense — — 34,035 34,035 Interest income — — ( 1,055 ) ( 1,055 ) Gain on foreign exchange — — ( 787 ) ( 787 ) Merger and acquisition expenses — — 1,766 1,766 Total expenses and other income 433,368 197,657 162,711 793,736 Income (loss) before income taxes $ 242,134 $ 145,188 $ ( 162,711 ) $ 224,611 As of December 31, 2019 U.S. Pawn Latin America Pawn Corporate Consolidated Pawn loans $ 268,793 $ 100,734 $ — $ 369,527 Consumer loans, net 751 — — 751 Inventories 181,320 83,936 — 265,256 Goodwill 771,311 177,332 — 948,643 Total assets 1,767,504 574,059 97,877 2,439,440 F-44 Table of Contents Geographic Information The following table shows revenue and long-lived assets (all non-current assets except operating lease right of use asset, goodwill, intangibles, net and deferred tax assets) by geographic area (in thousands): Year Ended December 31, 2021 2020 2019 Revenue: U.S. $ 1,106,631 $ 1,078,139 $ 1,193,513 Mexico 562,493 530,462 641,505 Other Latin America 29,841 22,683 29,421 $ 1,698,965 $ 1,631,284 $ 1,864,439 Long-lived assets: U.S. $ 373,218 $ 286,079 $ 254,395 Mexico 84,648 82,438 80,385 Other Latin America 13,191 14,968 12,893 $ 471,057 $ 383,485 $ 347,673 F-45