What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2023-02-06 compared with 2022-02-28 · 297 added, 367 removed, 1181 unchanged (36% of the section changed)

10 unchanged sentences

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.

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, 2022.

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Based on this assessment, management concluded that, as of December 31, 2022, 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, 2022, 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.

Except for integrating AFF into the Company’s internal controls over financial reporting, there have been no changes in the Company’s internal control over financial reporting during the quarter ended December 31, 2022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2022 and 2021, 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, 2022 and the related notes to the consolidated financial statements of the Company and our report dated February 6, 2023 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

19 unchanged sentences

Other Information

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

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

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

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

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

The employment agreements with Messrs.

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

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

$1,258,660 for Mr.

Wessel, $776,620 for Mr.

Stuart, $723,060 for Mr.

Orr and $600,000 for Mr.

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

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

125% in the case of Messrs.

Stuart, Orr and Hambleton).

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

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

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

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

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

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

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

The employment agreements of Messrs.

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

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

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8-K 001-10960 10.1 05/31/2017

10.8 Employment Agreement between Raul Ramos and FirstCash, Inc., dated July 30, 2018 *

10.8 Employment Agreement, dated July 30, 2018, between Raul Ramos and FirstCash, Inc.

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

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8-K 001-10960 10.1 12/19/2019

10.12 Employment Agreement between Daniel R.

Feehan and FirstCash, Inc., dated January 28, 2020 *

10.12 Employment Agreement, dated January 28, 2020, between Daniel R.

Feehan and FirstCash, Inc.

10-K 001-10960 10.16 02/03/2020

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

10.17 Employment Agreement between Rick L.

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

10.18 Employment Agreement between T.

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

10.19 Employment Agreement between R.

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

10.20 Employment Agreement between Howard F.

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

10.17 Employment Agreement, dated February 25, 2022, between Rick L.

Wessel and FirstCash Holdings, Inc.

10-K 001-10960 10.17 02/28/2022

10.18 Employment Agreement, dated February 25, 2022, between T.

Brent Stuart and FirstCash Holdings, Inc.

10-K 001-10960 10.18 02/28/2022

10.19 Employment Agreement, dated February 25, 2022, between R.

Douglas Orr and FirstCash Holdings, Inc.

10-K 001-10960 10.19 02/28/2022

10.20 Employment Agreement, dated February 25, 2022, between Howard F.

Hambleton and FirstCash Holdings, Inc.

10-K 001-10960 10.20 02/28/2022

10.21 Sixth Amendment to Amended and Restated Credit Agreement, dated August 30, 2022, between FirstCash Holdings, Inc., 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 08/31/2022

21.1 Subsidiaries

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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

Incorporated by Reference

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Exhibit Filing Date Filed Herewith

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

101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document X

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Director February 6, 2023

/s/ MARTHEA DAVIS

Marthea Davis

Director February 6, 2023

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Director February 6, 2023

/s/ RANDEL G.

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(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.

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

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

Allowance for loan 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 $84.8 million as of December 31, 2022, 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.

Loan losses on finance receivables were estimated and recognized upon purchase of the receivable, based on expected loan 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 loan 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:

The determination of the allowance for loan 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 loan losses to the extent that forecasted economic conditions change significantly.

We identified the allowance for loan 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 loan 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 obtained an understanding of the relevant controls related to the allowance for loan losses, including the qualitative factors and application of modeled loss rates, and tested such controls for design and operating effectiveness, including controls related to management’s review of the qualitative factors and application of modeled loss rates and approval of the allowance for loan losses calculation.

• 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.

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

• We obtained an understanding of the relevant controls related to the allowance for lease losses, including the adjustments for expected future losses and application of historical losses, and tested such controls for design and operating effectiveness, including controls related to management’s review of the adjustments for expected future losses and application of historical losses and approval of the allowance for lease losses calculation.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Specifically, audit procedures included the following, among others:

• For acquired finance receivables:

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

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

• For acquired leased merchandise:

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

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

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

• For the acquired developed technology intangible asset:

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

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

• For the acquired merchant relationships intangible asset:

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

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

• For earnout liabilities:

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

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

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

s/ RSM US LLP

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Leased merchandise, net 153,302 143,944

Income taxes receivable 5,419 9,634

Prepaid expenses and other current assets 19,788 17,707

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Customer deposits and prepayments 63,125 57,310

Income taxes payable 3,387 1,148

Lease liability, current 92,944 90,570

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Interest income ( 1,313 ) ( 696 ) ( 1,540 )

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

(Gain) loss on foreign exchange

( 585 ) 436 884

Merger and acquisition expenses 3,739 15,449 1,316

Gain on revaluation of contingent acquisition consideration

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

( 109,549 ) ( 17,871 ) —

Other expenses (income), net ( 2,731 ) 949 10,505

Loss on extinguishment of debt — — 11,737

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Net income $ 253,495 $ 124,909 $ 106,579

Other comprehensive income:

Other comprehensive income (loss):

Currency translation adjustment 24,726 ( 12,867 ) ( 21,463 )

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As of 12/31/2021 57,322 $ 573 $ 1,724,956 $ 866,679 $ ( 131,299 ) 8,843 $ ( 652,782 ) $ 1,808,127

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

Shares issued under share-based compensation plan — — ( 1,281 ) — — ( 17 ) 1,281 —

Share-based compensation expense — — 10,853 — — — — 10,853

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

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

— — ( 1,991 ) — — ( 38 ) 2,789 798

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

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

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

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

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

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

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

— — ( 1,991 ) — — ( 38 ) 2,789 798

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

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Gain on revaluation of contingent acquisition consideration

( 109,549 ) ( 17,871 ) —

Impairments and dispositions of certain other assets 1,722 949 10,505

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Net cash flow provided by operating activities

469,305 223,304 222,264

Cash flow from investing activities:

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Net cash flow used in investing activities

( 336,443 ) ( 744,637 ) ( 20,352 )

Cash flow from financing activities:

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Dividends paid ( 59,571 ) ( 47,533 ) ( 44,752 )

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

Net cash flow (used in) provided by financing activities

( 139,273 ) 576,993 ( 186,502 )

Effect of exchange rates on cash 3,695 ( 1,464 ) 3,913

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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.

On December 17, 2021, the Company completed the acquisition of AFF, which is a leading technology-driven retail POS payment solutions platform primarily focused on providing LTO products.

The accompanying audited consolidated results of operations for the year ended December 31, 2022 includes the results of operations for AFF, while the comparable prior-year period includes the results of operations for AFF for the period December 17, 2021 to December 31, 2021, affecting the comparability of 2022 and 2021 amounts.

See Note 3 for additional information about the AFF Acquisition.

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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 retail POS payment solutions segment consists of the operations of AFF in all 50 states in the U.S., the District of Columbia and Puerto Rico.

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.

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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.

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.

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.

The COVID-19 pandemic and government responses thereto had an initial adverse and material impact on pawn loan demand in 2020, which negatively impacted pawn receivables, inventories and revenues.

This initial adverse impact in pawn loan demand was offset in large part by a positive impact in merchandise sales, especially among stay-at-home products, which were enhanced by federal stimulus payments directly to consumers.

Throughout 2021 and 2022, as the contributory impacts of the pandemic normalized, pawn loan demand steadily recovered and pawn receivables, inventories and revenues are now ahead of pre-pandemic levels.

Inflationary pressures on the Company’s customer base helped drive further demand for consumer credit especially among its customer base, which contributed to the recovery in pawn loan demand.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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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.

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.

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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.

Layaway plan and deferred revenue - Customers can purchase merchandise on an interest-free “layaway” plan.

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

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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 contracts can typically be renewed for between six and 24 months.

Leased merchandise is stated at depreciated cost.

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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.

Finance receivables and revenue recognition - The Company purchases and services retail finance receivables, the term of which typically ranges from six and 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.

20 unchanged sentences

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.

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.

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.

17 unchanged sentences

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 performs its goodwill impairment assessment annually 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 historically assessed goodwill for impairment as of December 31 each year.

In 2022, the Company changed the date of its annual goodwill impairment assessment to October 1 to allow for operational expediency.

The Company believes the change in goodwill impairment testing date does not represent a material change to its method of applying an accounting principle in light of its internal controls and requirements to assess goodwill impairment upon certain triggering events.

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

1 unchanged sentence

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

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

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

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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.

The Company did not record any impairment loss for the years ended December 31, 2022 and 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.

25 unchanged sentences

Diluted 5.36 3.04 2.56

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.

Use of estimates - The preparation of financial statements in conformity with GAAP 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):

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 acquisitions, evaluation of goodwill and other intangible assets for impairment and current and deferred tax assets and liabilities.

Reclassification - For the purposes of comparability, certain prior year amounts in the consolidated balance sheets have been reclassified in order to conform to the current period presentation.

Recent accounting pronouncements - 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.

ASU 2020-04 was effective beginning on March 12, 2020, and the Company could elect to apply the amendments prospectively through December 31, 2022.

In December 2022, the Financial Accounting Standards Board issued ASU No 2022-06, “Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848” (“ASU 2022-06”).

ASU 2022-06 defers the sunset date of Topic 848 from December 31, 2022 to December 31, 2024.

As the Company no longer has any LIBOR based contracts (see Note 11), ASU 2020-04 and ASU 2022-06 did not have a material effect on the Company’s current financial position, results of operations or financial statement disclosures.

In March 2022, the Financial Accounting Standards Board issued ASU No 2022-02, “Financial Instruments—Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures” (“ASU 2022-02”).

ASU 2022-02 eliminates the accounting guidance for troubled debt restructurings by creditors while enhancing disclosure requirements for certain loan refinancing and restructurings by creditors made to borrowers experiencing financial difficulty.

In addition, the amendments require disclosure of current period gross write-offs for financing receivables and net investment in leases by year of origination in the vintage disclosures.

ASU 2022-02 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years for entities.

Early adoption is permitted if an entity has adopted the CECL accounting standard.

Except for expanded disclosures to its vintage disclosures, the Company does not expect ASU 2022-02 to have a material effect on the Company’s current financial position, results of operations or financial statements.

NOTE 3 - ACQUISITIONS

2022 Pawn Acquisitions

Consistent with the Company’s strategy to continue its expansion of pawn stores in selected markets, during 2022, the Company acquired 30 pawn stores in the U.S.

in six separate transactions and one store in Guatemala in a separate transaction.

The aggregate purchase price for these acquisitions totaled $ 73.0 million, net of cash acquired and subject to future post-closing adjustments.

The aggregate purchase price was composed of $ 69.6 million in cash paid at closing and remaining short-term amounts payable to the sellers of approximately $ 3.4 million.

During 2022, the Company also paid $ 2.2 million of purchase price amounts payable related to prior-year pawn acquisitions.

The purchase price of each of the 2022 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 2022 (the “2022 Pawn Acquisitions”) is as follows (in thousands):

2022 Pawn Acquisitions

Pawn loans $ 7,291

Accounts receivable, net 426

Inventories 11,523

Property and equipment 300

Intangible assets 310

Current liabilities ( 2,329 )

Aggregate purchase price $ 72,976

(1) Substantially all of the goodwill is expected to be deductible for income tax purposes.

The results of operations for the 2022 Pawn Acquisitions have been consolidated since the respective acquisition dates.

During 2022, revenue from the 2022 Pawn Acquisitions was $ 4.0 million and the net loss from the 2022 Pawn Acquisitions since the acquisition dates (including $ 1.2 million of transaction costs, net of tax) was approximately $ 0.2 million.

Transaction costs associated with the 2022 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.

Unaudited pro forma financial information reflecting the consolidated results of operations of the Company as if the 2022 Pawn Acquisitions had occurred on January 1, 2021 has not been presented as the 2022 Pawn Acquisitions were not significant in relation to the Company’s consolidated financial position or results of operations.

2021 American First Finance Acquisition

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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.

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”), which is payable in cash or Company common stock, at the Company’s discretion.

In particular, the seller parties had the right to receive up to $ 250.0 million of additional consideration if AFF achieved certain adjusted EBITDA targets for the period consisting of the fourth quarter of 2021 through the end of 2022.

AFF did not achieve the threshold adjusted EBITDA target for the period ending December 31, 2022 and, therefore, the $ 250.0 million of additional consideration was not earned by the seller parties.

The seller parties also have the right to receive up to $ 50.0 million of additional consideration if AFF achieves certain adjusted EBITDA targets for the first half of 2023.

seller parties had the right to receive up to $ 75.0 million of additional 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 .

As a result of an increase in the Company’s stock price during October 2022, no such contingent payment to the seller parties is required.

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):

10 unchanged sentences

Aggregate purchase consideration $ 1,118,941

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

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

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

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

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

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

AFF Acquisition

During 2022, the Company made certain measurement period adjustments to the preliminary purchase price allocation, which resulted in a decrease in goodwill of $ 16.9 million.

The adjusted purchase price allocation is reflected in the accompanying consolidated balance sheet as of December 31, 2022.

The following table details the preliminary purchase price allocation as of December 31, 2021, the measurement period adjustments made during the twelve months ended December 31, 2022 and the final purchase price allocation as of December 31, 2022 (in thousands):

December 31, 2022 December 31,

2021 Adjustments 2022

Accounts receivable $ 11,660 $ — $ 11,660

4 unchanged sentences

Operating lease right of use asset 491 — 491

Goodwill 503,106 ( 16,901 ) 486,205

Intangible assets 305,100 — 305,100

3 unchanged sentences

Deferred tax liabilities (1)

( 42,608 ) 18,214 ( 24,394 )

Lease liability, non-current ( 481 ) — ( 481 )

Purchase price $ 1,118,941 $ — $ 1,118,941

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

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

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

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

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

PCD Finance Receivables

Unpaid principal balance of PCD finance receivables $ 41,900

Non-credit discount ( 4,120 )

Amortized cost of PCD finance receivables 37,780

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

Fair value of PCD finance receivables $ 5,744

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

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

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

Non-PCD Finance Receivables

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

Fair value premium 42,061

Fair value of non-PCD finance receivables 219,517

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

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

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

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

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

income tax purposes.

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

AFF Acquisition (In Years)

Merchant relationships $ 194,000 7

Developed technology 99,400 5

Trade name 10,200 2

Relationships with existing lessees 1,500 1

Total intangible assets $ 305,100

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

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

(1) Measurement period adjustment is primarily a result of the seller finalizing the ending tax basis in the assets and liabilities acquired, which carried over to the Company.

2021 Pawn Acquisitions

1 unchanged sentence

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 for these acquisitions totaled $ 79.5 million, net of cash acquired.

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

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.

2021 Unaudited Pro Forma Financial Information

16 unchanged sentences

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

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

• The 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.

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.

NOTE 4 - OPERATING LEASES

2 unchanged sentences

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.

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

Lease components include rent, taxes and insurance costs while non-lease components include common area or other maintenance costs.

12 unchanged sentences

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.

The Company recognized a foreign currency gain of $ 1.3 million, loss of $ 0.6 million and loss of $ 1.2 million during the year ended December 31, 2022, 2021 and 2020, respectively, related to the remeasurement of these U.S.-dollar-denominated operating leases, which is included in (gain) loss 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.

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NOTE 5 - STOCKHOLDERS' EQUITY

On December 16, 2021, FirstCash, Inc.

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

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

Following the reorganization, FirstCash Holdings, Inc.

became the successor issuer to FirstCash, Inc.

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

See Note 3 for additional information about the AFF Acquisition.

During 2022, the Company repurchased a total of 2,204,000 shares of common stock at an aggregate cost of $ 157.9 million and an average cost per share of $ 71.63 , and during 2021, repurchased 688,000 shares of common stock at an aggregate cost of $ 49.6 million and an average cost per share of $ 72.10 .

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 Company intends to continue repurchases under its active share repurchase program, including 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, liquidity needs, credit availability, debt covenant restrictions, general business and economic conditions, regulatory requirements, the market price of the Company’s stock, the Company’s dividend policy and the availability of alternative investment opportunities.

The following table provides purchases made by the Company of shares of its common stock under each share repurchase program in effect during 2022 (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

Plan Announcement Date Plan Completion Date Dollar Amount Authorized Shares Purchased in 2022 Dollar Amount Purchased in 2022 Remaining Dollar Amount Authorized For Future Purchases

January 28, 2021 March 28, 2022 $ 100,000 1,048,000 $ 72,217 $ —

April 28, 2022 Currently active 100,000 1,156,000 85,647 14,353

October 27, 2022 Currently active 100,000 — — 100,000

Total 2,204,000 $ 157,864 $ 114,353

Total cash dividends paid in 2022 and 2021 were $ 59.6 million and $ 47.5 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.

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

NOTE 6 - FAIR VALUE OF FINANCIAL INSTRUMENTS

7 unchanged sentences

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):

The Company’s financial assets and liabilities as of December 31, 2022 and 2021 that are measured at fair value on a recurring basis are as follows (in thousands):

Estimated Fair Value

3 unchanged sentences

Contingent Consideration $ — $ — $ — $ —

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.

2 unchanged sentences

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

Year Ended December 31,

Contingent Consideration at beginning of period $ 109,549 $ —

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

Change in fair value (1)

Balance at December 31, 2021 $ 109,549

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

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

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

( 109,549 ) ( 17,871 )

Contingent Consideration at end of period $ — $ 109,549

(1) The Company recognized a gain of $ 109.5 million and $ 17.9 million during the year ended December 31, 2022 and 2021, respectively, as a result of the change in fair value of the Contingent Consideration (see Note 3), which is included in gain on revaluation of contingent acquisition consideration in the accompanying consolidated statements of income.

As further described in Note 3, $ 325.0 million of the potential $ 375.0 million in Contingent Consideration was not earned leaving the right to receive up to $ 50.0 million of additional consideration if AFF achieves certain adjusted EBITDA targets for the first half of 2023, and is the only remaining portion of Contingent Consideration as of December 31, 2022.

There were no transfers in or out of Level 1, 2 or 3 during the year ended December 31, 2022, 2021 and 2020.

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

9 unchanged sentences

103,494 201,895 — — 201,895

$ 669,233 $ 767,634 $ 117,330 $ — $ 650,304

Financial liabilities:

2 unchanged sentences

$ 1,389,000 $ 1,271,000 $ — $ 1,271,000 $ —

(1) Finance receivables, gross as of December 31, 2022 was $ 196.0 million.

Carrying Value Estimated Fair Value

5 unchanged sentences

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

Finance receivables, net (1)

181,021 233,000 — — 233,000

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

Financial liabilities:

2 unchanged sentences

$ 1,309,000 $ 1,317,000 $ — $ 1,317,000 $ —

(1) Finance receivables, gross as of December 31, 2021 was $ 220.3 million.

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

5 unchanged sentences

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.

In addition, the unsecured credit facilities have a variable interest rate based on SOFR or TIIE and reprice with any changes in SOFR 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):

Finance receivables, net, originated in the retail POS payment solutions segment, consist of the following (in thousands):

As of December 31,

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

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

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

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

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

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

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 during 2021 for PCD loans.

The following is an assessment of the credit quality indicators of the amortized cost of finance receivables as of December 31, 2022 and 2021, by origination year (in thousands):

Origination Year

2022 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 )

As of December 31, 2022

1 to 30 days past due $ 14,186 $ 2,795 $ — $ 16,981

31 to 60 days past due 8,048 1,822 — 9,870

61 to 90 days past due (1)

6,597 1,750 — 8,347

Total past due finance receivables 28,831 6,367 — 35,198

Current finance receivables 132,197 20,932 — 153,129

Finance receivables, amortized cost $ 161,028 $ 27,299 $ — 188,327

(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

As of December 31, 2021

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

10 unchanged sentences

NOTE 8 - LEASED MERCHANDISE, NET

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

Leased merchandise, net, for the retail POS payment solutions segment, consists of the following (in thousands):

As of December 31,

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Leased merchandise, before allowance for lease losses 232,491 149,386

Allowance for lease losses 5,442 —

Less allowance for lease losses ( 79,189 ) ( 5,442 )

Leased merchandise, net $ 153,302 $ 143,944

4 unchanged sentences

Provision for lease losses (1)

139,502 5,442

Charge-offs (2)

1 unchanged sentence

Balance at end of year $ 79,189 $ 5,442

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

(1) During 2021, 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.

7 unchanged sentences

908,254 781,368

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

Less accumulated depreciation ( 369,573 ) ( 318,842 )

Property and equipment, net $ 538,681 $ 462,526

3 unchanged sentences

As of December 31,

Acquisition purchase price amounts payable to sellers (1)

$ 123,475 $ 5,965

Accrued compensation $ 38,595 $ 33,546

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

Trade accounts payable 29,243 23,077

Sales, property, and payroll taxes payable 27,226 32,463

Accrued interest payable 24,276 9,375

Benefits liabilities and withholding payable 2,383 3,084

Acquisition purchase price amounts payable to sellers (1)

1,217 123,475

Income taxes payable 569 3,387

Other accrued liabilities 15,951 15,920

$ 139,460 $ 244,327

(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.

(1) As of December 31, 2021, 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.

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5.625 % senior unsecured notes due 2030 (3)

542,223 541,405

Total senior unsecured notes 1,035,698 1,033,904

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(2) As of December 31, 2022 and 2021, deferred debt issuance costs of $ 6.5 million and $ 7.5 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.

(3) As of December 31, 2022 and 2021, deferred debt issuance costs of $ 7.8 million and $ 8.6 million, respectively, 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, 2022, annual maturities of the outstanding long-term debt for each of the five years after December 31, 2022 are as follows (in thousands):

1 unchanged sentence

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.

During the period from January 1, 2022 through August 30, 2022, 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, which was scheduled to mature on December 19, 2024.

The Credit Facility charged interest, at the Company’s option, of either (1) the prevailing LIBOR (with interest periods of 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 %.

On August 30, 2022, the Credit Facility was amended (the “2022 Amendment”) in order to increase the total lender commitment, extend the term of the Credit Facility, amend certain financial covenants and modify the benchmark interest rate to SOFR.

Under the 2022 Amendment, the total lender commitment was increased from $ 500.0 million to $ 590.0 million and the term of the Credit Facility was extended to August 30, 2027.

In addition, certain financial covenants were amended, as follows:

The financial covenant limiting the domestic leverage ratio was eliminated.

The permitted consolidated leverage ratio (defined as consolidated EBITDA, adjusted for certain customary items as more fully set forth in the Credit Facility (“Adjusted EBITDA”), divided by outstanding consolidated debt), which was previously scheduled to decrease to 3.0 times effective December 31, 2022, will remain at the current level of 3.5 times Adjusted EBITDA through December 31, 2023 when it decreases to 3.25 times Adjusted EBITDA through December 31, 2024.

The consolidated leverage ratio will revert to the previously scheduled ratio of 3.0 times Adjusted EBITDA effective January 1, 2025.

The 2022 Amendment also includes additional limits to certain restricted payments when the consolidated leverage ratio is equal to or greater than 3.0 times Adjusted EBITDA, which are more fully described in the 2022 Amendment.

The Credit Facility now bears interest at the Company’s option of either (i) the prevailing SOFR (with interest periods of 1, 3 or 6 months at the Company’s option) plus a fixed spread of 2.5 % and a fixed SOFR adjustment of 0.1 % or (ii) the prevailing prime or base rate plus a fixed spread of 1.5 %.

As of December 31, 2022, the Company had $ 339.0 million in outstanding borrowings and $ 3.2 million in outstanding letters of credit under the Credit Facility, leaving $ 247.8 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 %.

The agreement has an interest rate 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.

The weighted-average interest rate on amounts outstanding under the Credit Facility at December 31, 2022 was 6.90 % based on 1-month SOFR.

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

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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.

The Company was in compliance with the covenants of the Mexico Credit Facility as

of December 31, 2022.

At December 31, 2022, the Company had no amount outstanding under the Mexico Credit Facility and $ 600.0 million Mexican pesos available for borrowings.

3 unchanged sentences

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 Company used the net 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.

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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 used the net proceeds from the offering to finance the cash consideration and transaction expenses for the AFF Acquisition, including the repayment, in full, of the outstanding debt under AFF’s credit facility at the closing of the AFF Acquisition, payment of fees and expenses related to the offering and reduction of the outstanding balance on the 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.

2 unchanged sentences

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.

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, 2022, the Company’s consolidated total debt ratio was 2.7 to 1.

27 unchanged sentences

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.

During 2022 and 2021, the Company repatriated $ 47.5 million and $ 10.0 million, respectively, 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.

35 unchanged sentences

4,255 2,255 1,965

Benefit from gain on revaluation of contingent acquisition consideration ( 4,580 ) — —

Net incremental income tax expense from foreign earnings (1)

5 unchanged sentences

Effective tax rate 21.7 % 25.0 % 25.8 %

(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.

(1) Includes an $ 8.0 million, $ 6.3 million and $ 2.0 million foreign permanent tax benefit related to an inflation index adjustment allowed under Mexico tax law for the years ended December 31, 2022, 2021 and 2020, respectively.

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

The foreign pawn operating subsidiaries are subject to their respective foreign statutory rates, which differ from the U.S.

federal statutory rate.

6 unchanged sentences

As of December 31, 2022 and 2021, 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, 2022, 2021 and 2020.

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 files federal income tax returns in the U.S., Mexico, Guatemala, Colombia, El Salvador, Jamaica, Puerto Rico and the Netherlands, as well as multiple state and local income tax returns in the U.S.

The Company’s U.S.

2 unchanged sentences

state income tax returns are not subject to examination for the tax years prior to 2019.

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.

With respect to federal tax returns in Mexico, Guatemala, Colombia, El Salvador, Jamaica, Puerto Rico and the Netherlands, the tax years prior to 2017 are closed to examination.

There are no state income taxes in Mexico, Guatemala, Colombia, El Salvador, Jamaica, Puerto Rico or the Netherlands.

NOTE 13 - COMMITMENTS AND CONTINGENCIES

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.

The Company, in the ordinary course of business, is a party to various legal and regulatory proceedings and other general claims.

Although no assurances can be given, in management’s opinion, such outstanding proceedings are not expected to have a material adverse effect on the Company’s financial position, results of operations, or cash flows.

The Company believes it has meritorious defenses to all of the claims described below, and intends to vigorously defend against such claims.

However, legal and regulatory proceedings involve an inherent level of uncertainty and no assurances can be given regarding the ultimate outcome of any such matters or whether an adverse outcome would not have a material adverse impact on the Company’s financial position, results of operations, or cash flows.

At this stage, the Company is unable to determine whether a future loss will be incurred for any of its outstanding legal and regulatory proceedings or estimate a range of loss with respect to such proceeding, if any, and accordingly, no material amounts have been accrued in the Company’s financial statements for legal and regulatory proceedings.

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.

FirstCash Holdings, Inc., et al.

, Civil Action No.

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

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

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

The complaint alleges that the defendants made materially false and/or misleading statements that caused losses to investors, including that the Company failed to disclose in public statements that the Company engaged in widespread and systemic violations of the 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.

On June 8, 2022, the Company and named defendants filed a motion to dismiss, which remains pending.

The Company was named as a nominal defendant and certain of the Company’s current and former directors and officers were named as defendants in a shareholder derivative lawsuit filed on July 19, 2022 in the United States District Court for the Northern District of Texas and styled Treppel Family Trust U/A 08/18/18 Lawrence A.

Treppel and Geri D.

Treppel for the Benefit of Geri D.

Treppel and Larry A.

Treppel, Derivatively on Behalf of FirstCash Holdings, Inc., v.

al , Case 4:22-cv-00623-P (N.D.

The complaint makes similar allegations as the Litigation and alleges a single count for breach of fiduciary duty against the named derivative defendants.

The action does not quantify any alleged damages, but, in addition to attorneys’ fees and costs and certain equitable relief, the derivative plaintiff seeks to recover damages on behalf of the Company for purported financial harm and to have the court order changes in the Company’s corporate governance.

On August 8, 2022, the Court entered an Order staying proceedings in this action pending the disposition of any motion to dismiss filed in the Litigation noted above.

On November 12, 2021, the 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 in connection with pawn transactions.

The CFPB also alleges that these same alleged violations of the MLA constitute breaches of a 2013 CFPB consent order entered into by its predecessor company that, among other things, allegedly required the company and its successors 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.

On March 28, 2022, the CFPB filed a motion to strike certain affirmative defenses of the Company.

The Company responded by filing a motion for partial summary judgment.

On October 24, 2022, the Company filed a motion to dismiss the lawsuit due to the funding structure of the CFPB, which the motion alleges is unconstitutional.

This motion to dismiss follows the recent decision in another case by the Fifth Circuit Court of Appeals whose decisions govern the law applied in the CFPB action against the Company.

The Fifth Circuit found that the CFPB is unconstitutionally structured.

In light of the CFPB's stated intent to seek Supreme Court review of that decision, the parties stipulated to a stay of the action against the Company, which the Court entered on November 4, 2022.

That stay will remain in effect until the Supreme Court decides whether to review the Fifth Circuit's decision and, if it grants review, until that appeal is resolved.

The motion to dismiss remains pending.

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

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.

As of December 31, 2022, the Company had contractual commitments to deliver a total of 5,500 gold ounces during the months of January 2023 and February 2023 at a weighted-average price of $ 1,892 per ounce.

The ounces required to be delivered were on hand as of December 31, 2022.

7 unchanged sentences

Effect of foreign currency translation — 7,849 — 7,849

Other adjustments ( 1,200 ) — ( 16,901 ) ( 18,101 )

Balance, end of year $ 916,048 $ 179,128 $ 486,205 $ 1,581,381

3 unchanged sentences

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

Other adjustments 1,859 ( 50 ) — 1,809

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

35 unchanged sentences

(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.

The Company performed its annual assessment of indefinite-lived intangible assets and determined there was no material impairment as of December 31, 2022 and 2021.

NOTE 15 - EQUITY COMPENSATION PLANS AND SHARE-BASED COMPENSATION

9 unchanged sentences

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 2022 grant include net income, adjusted for certain non-core and/or non-recurring items, AFF EBITDA 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 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.

1 unchanged sentence

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.

The Compensation Committee of the Board 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.

1 unchanged sentence

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 2022, 2021 and 2020 generally vest, subject to continued employment with the Company, over a three or five-year period from the grant date.

36 unchanged sentences

Exercisable at end of year — — — — — —

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 total intrinsic value of options exercised for 2021 and 2020 was $ 0.4 million and $ 1.8 million , respectively.

The intrinsic values are based on the closing price of the Company’s stock on the date of exercise.

18 unchanged sentences

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.

The total Company matching contributions were $ 4.0 million, $ 3.5 million and $ 3.3 million for the years ended December 31, 2022, 2021 and 2020, respectively.

NOTE 17 - SEGMENT AND GEOGRAPHIC INFORMATION

3 unchanged sentences

• 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.

Corporate expenses and income, which include administrative expenses, corporate depreciation and amortization, interest expense, interest income, (gain) loss on foreign exchange, merger and acquisition expenses, gain on revaluation of contingent acquisition consideration, and other expenses (income), net, are presented on a consolidated basis and are not allocated between the U.S.

pawn segment, Latin America pawn segment or retail POS payment solutions segment.

Intersegment transactions relate to the Company offering AFF’s LTO payment solution as a payment option in its U.S.

pawn stores and are eliminated to arrive at consolidated totals.

The following tables present reportable segment information for the years ended December 31, 2022, 2021 and 2020 as well as separately identified segment assets (in thousands):

Year Ended December 31, 2022

Pawn Latin America

Pawn Retail POS

Solutions Corporate Consolidated

Solutions Corporate/

Eliminations Consolidated

Retail merchandise sales $ 818,548 $ 447,523 $ — $ ( 4,935 ) (1)

13 unchanged sentences

Expenses and other income:

Store operating expenses 380,895 179,020 4,917 — 564,832

Operating expenses 407,039 193,254 128,616 — 728,909

Administrative expenses — — — 147,943 147,943

2 unchanged sentences

Interest income — — — ( 1,313 ) ( 1,313 )

Loss on foreign exchange — — — 436 436

Gain on foreign exchange

— — — ( 585 ) ( 585 )

Merger and acquisition expenses — — — 3,739 3,739

Gain on revaluation of contingent acquisition consideration

Impairments and dispositions of certain other assets — — — 949 949

— — — ( 109,549 ) ( 109,549 )

Other expenses (income), net — — — ( 2,731 ) ( 2,731 )

Total expenses and other income 430,244 211,579 131,528 167,602 940,953

1 unchanged sentence

As of December 31, 2022

Pawn Latin America

Pawn Retail POS

Solutions Corporate Consolidated

Solutions Corporate/

Eliminations Consolidated

Pawn loans $ 282,089 $ 108,528 $ — $ — $ 390,617

4 unchanged sentences

Total assets 2,108,157 619,839 1,047,814 129,057 3,904,867

(1) Represents the elimination of intersegment transactions related to the Company offering AFF’s LTO payment solution as a payment option in its U.S.

Year Ended December 31, 2021

Pawn Latin America

Pawn Corporate Consolidated

Pawn Retail POS

Solutions Corporate/

Eliminations Consolidated

Retail merchandise sales $ 742,374 $ 391,875 $ — $ — $ 1,134,249

Pawn loan fees 305,350 170,432 — — 475,782

Leased merchandise income — — 22,720 — 22,720

Interest and fees on finance receivables — — 9,024 — 9,024

2,016 — — 2,016

Wholesale scrap jewelry sales 27,163 30,027 — — 57,190

2 unchanged sentences

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

( 488 ) — — ( 488 )

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 623,105 288,034 — 911,139

Net revenue (loss) 635,962 318,666 ( 35,476 ) — 919,152

Expenses and other income:

Store operating expenses 396,627 165,531 — 562,158

Operating expenses 380,895 179,020 4,917 — 564,832

Administrative expenses — — — 111,259 111,259

3 unchanged sentences

Loss on foreign exchange

— — — 436 436

Merger and acquisition expenses — — — 15,449 15,449

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

Loss on extinguishment of debt

Gain on revaluation of contingent acquisition consideration

— — — ( 17,871 ) ( 17,871 )

Other expenses (income), net — — — 949 949

Total expenses and other income 403,129 196,854 5,039 147,628 752,650

Income (loss) before income taxes $ 232,833 $ 121,812 $ ( 40,515 ) $ ( 147,628 ) $ 166,502

(1) Effective June 30, 2020, the Company’s U.S.

pawn segment ceased offering an unsecured consumer loan product in the U.S.

As of December 31, 2021

Pawn Latin America

Pawn Corporate Consolidated

Pawn Retail POS

Solutions Corporate/

Eliminations 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

2 unchanged sentences

Pawn Latin America

Pawn Corporate Consolidated

Pawn Corporate/

Eliminations Consolidated

Retail merchandise sales $ 720,281 $ 355,237 $ — $ 1,075,518

1 unchanged sentence

Interest and fees on finance receivables (1)

2,016 — — 2,016

Wholesale scrap jewelry sales 45,405 50,828 — 96,233

3 unchanged sentences

Provision for loan losses (1)

( 488 ) — — ( 488 )

Cost of wholesale scrap jewelry sold 39,584 39,962 — 79,546

2 unchanged sentences

Expenses and other income:

Store operating expenses 412,508 183,031 — 595,539

Operating expenses 396,627 165,531 — 562,158

Administrative expenses — — 110,931 110,931

2 unchanged sentences

Interest income — — ( 1,540 ) ( 1,540 )

Gain on foreign exchange — — ( 787 ) ( 787 )

Loss on foreign exchange

Merger and acquisition expenses — — 1,316 1,316

Other expenses (income), net — — 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

2 unchanged sentences

Pawn Latin America

Pawn Corporate Consolidated

Pawn Corporate/

Eliminations Consolidated

Pawn loans $ 220,391 $ 87,840 $ — $ 308,231

Consumer loans, net 751 — — 751

Inventories 136,109 54,243 — 190,352

1 unchanged sentence

Total assets 1,718,975 540,473 112,749 2,372,197

(1) Effective June 30, 2020, the Company’s U.S.

pawn segment ceased offering an unsecured consumer loan product in the U.S.

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):

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, net) by geographic area (in thousands):

Year Ended December 31,

10 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures