Merger and Other Acquisitions (Tables)

9 Months Ended

Sep. 30, 2016

The following table summarizes the consideration transferred in connection with the merger:



	Cash America Merger
Cash America shares outstanding at September 1, 2016 (in thousands)	24,025
Exchange ratio	0.84
Shares of First Cash common stock issued (in thousands)	20,181
Company common stock per share price at September 1, 2016	$	50.32
Fair value of Company common stock issued to Cash America shareholders	$	1,015,507
Cash in lieu of fractional shares paid by the Company	10
Cash America outstanding stock awards settled in cash	50,760
Aggregate merger consideration	$	1,066,277

Schedule of Preliminary Allocations of Purchase Price

The preliminary allocation of the aggregate merger consideration is as follows:



	Cash America Merger
Cash and cash equivalents	$	42,520
Pawn loans	234,761
Pawn loan fees and service charges receivable	26,893
Consumer loans, net	27,549
Inventory	224,948
Income taxes receivable	23,095
Other current assets	27,018
Investment in common stock of Enova International, Inc.	60,785
Property and equipment	119,414
Goodwill ⁽¹⁾	555,096
Intangible assets ⁽²⁾	102,000
Other non-current assets	62,993
Current liabilities ⁽³⁾	(96,080		)
Customer deposits	(21,536		)
Revolving unsecured credit facility ⁽⁴⁾	(232,000		)
Deferred tax liabilities	(13,517		)
Other liabilities	(77,662		)
Aggregate merger consideration	$	1,066,277

⁽¹⁾

The goodwill is attributable to the excess of the aggregate merger 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 Cash America. This goodwill has been assigned to the U.S. pawn operations reporting unit. Approximately $223,000 of the goodwill arising from the Merger is expected to be deductible for U.S. income tax purposes.


⁽²⁾	Intangible assets acquired and the respective useful lives assigned consist of the following:



	Amount		Useful life (in years)
Trade names	$	46,300	Indefinite
Pawn licenses	32,300		Indefinite
Customer relationships	14,700		Five
Non-compete agreements	8,700		Two
	$	102,000

The customer relationships are being amortized using an accelerated amortization method that reflects the future cash flows expected from the returning pawn customers of Cash America. The non-compete agreements are being amortized over a straight-line basis over the life of the non-compete agreements. As the trade names and pawn licenses have indefinite lives, they are not amortized.


⁽³⁾	Includes acquired contingent liabilities of approximately $21,500.


⁽⁴⁾	Represents outstanding borrowings under Cash America’s revolving unsecured credit facility that became due upon completion of the Merger. The Cash America revolving unsecured credit facility was repaid by the Company using proceeds from the 2016 Credit Facility (as described in Note 6) and was terminated upon completion of the Merger.

The preliminary allocations of the purchase prices for the Company’s other acquisitions during the nine months ended September 30, 2016 (the “2016 Acquisitions”) are as follows:



	Latin America Acquisition			U.S. Acquisition			Total
Pawn loans	$	10,586		$	138		$	10,724
Pawn loan fees and service charges receivable	885			6			891
Inventory	3,031			98			3,129
Other current assets	2,039			—			2,039
Property and equipment	6,950			10			6,960
Goodwill ⁽¹⁾	19,666			580			20,246
Intangible assets ⁽²⁾	405			16			421
Other non-current assets	512			—			512
Deferred tax assets	2,392			—			2,392
Current liabilities	(9,942		)	(24		)	(9,966		)
Notes payable	(6,630		)	—			(6,630		)
Purchase price	$	29,894		$	824		$	30,718


⁽¹⁾	Substantially all of the goodwill for the U.S. Acquisition is expected to be deductible for U.S. income tax purposes. However, the goodwill for the Latin America Acquisition is not expected to be deductible for Mexico and El Salvador income tax purposes.


⁽²⁾	Intangible assets primarily consist of customer relationships, which are generally amortized over five years.

Intangible Assets Acquired

Intangible assets acquired and the respective useful lives assigned consist of the following:



	Amount		Useful life (in years)
Trade names	$	46,300	Indefinite
Pawn licenses	32,300		Indefinite
Customer relationships	14,700		Five
Non-compete agreements	8,700		Two
	$	102,000

Unaudited Pro Forma Financial Information

The following unaudited pro forma financial information reflects the consolidated results of operations of the Company as if the Merger and the 2016 Acquisitions had occurred on January 1, 2015:



	Nine Months Ended				Nine Months Ended
	September 30, 2016				September 30, 2015
	As Reported		Pro Forma		As Reported		Pro Forma
Total revenue	$	626,335	$	1,308,967	$	513,178	$	1,304,906
Net income	23,435		80,556		41,300		34,291

Net income per share:
Basic	$	0.77	$	1.66	$	1.46	$	0.71
Diluted	0.77		1.66		1.45		0.71