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Merger and Other Acquisitions | 12 Months Ended
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Dec. 31, 2016
Business Combinations [Abstract] |
Merger and Other Acquisitions | MERGER AND OTHER ACQUISITIONS Cash America Merger On September 1, 2016, the Company completed its previously announced merger of equals business combination with Cash America as contemplated by the Agreement and Plan of Merger, dated as of April 28, 2016 (the “Merger Agreement”), by and among the Company, Cash America and Frontier Merger Sub LLC, a wholly owned subsidiary of the Company (“Merger Sub”). Pursuant to the Merger Agreement, Cash America merged with and into Merger Sub, with Merger Sub continuing as the surviving entity in the Merger and a wholly owned subsidiary of the Company. In conjunction with the closing of the Merger, the Company changed its name to FirstCash, Inc. and transferred the listing of its common stock from the NASDAQ Global Select Market to the New York Stock Exchange under the ticker symbol “FCFS.” The headquarters of the combined company was moved to the former Cash America headquarters in Fort Worth, Texas. The Merger creates the largest combined retail pawn store operator in Latin America and the U.S., with over 2,000 locations across four countries. The combined company provides significant scale and a unified platform for leadership in the pawn industry while keeping the strong local presence and established brands from both companies. Under the terms of the Merger Agreement, each former share of Cash America common stock issued and outstanding immediately prior to September 1, 2016 was converted to 0.84 shares of the Company’s common stock with fractional shares paid in cash. As a result, the Company issued approximately 20,181,000 shares of its common stock to former holders of Cash America common stock. Immediately following the Merger, the Company’s shareholders owned approximately 58% of the common stock of the Company, and the former Cash America shareholders owned approximately 42%. Additionally, Cash America employee and director based restricted stock awards outstanding immediately prior to the Merger were fully-vested and paid out in cash in conjunction with the closing of the Merger. The Company was determined to be the accounting acquirer in the Merger. 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 |
The Company has performed a valuation analysis of identifiable assets acquired and liabilities assumed and allocated the aggregate merger consideration based on the fair values of those identifiable assets and liabilities. The purchase price allocation is subject to change as the Company finalizes the analysis of the fair value at the date of the Merger. 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 Merger as required by applicable accounting guidance. Due to the significance of the Merger, 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 merger consideration, subject to future measurement period adjustments, is as follows:
| Cash America Merger
Cash and cash equivalents | $ | 42,520 |
Pawn loans | 234,761 |
Fees and service charges receivable | 26,893 |
Consumer loans | 27,549 |
Inventories | 224,644 |
Income taxes receivable | 23,095 |
Other current assets | 28,324 |
Investment in common stock of Enova (1) | 60,785 |
Property and equipment | 118,381 |
Goodwill (2) | 522,064 |
Intangible assets (3) | 103,250 |
Other assets | 62,994 |
Current liabilities | (95,268 | )
Customer deposits | (21,536 | )
Revolving unsecured credit facility (4) | (232,000 | )
Deferred tax liabilities | (28,002 | )
Other liabilities | (32,177 | )
Aggregate merger consideration | $ | 1,066,277 |
(1) | Represents Cash America’s investment in the common stock of Enova International, Inc. (“Enova”), a publicly traded company focused on providing online consumer lending products. Prior to December 31, 2016, all of the Enova shares acquired were sold in open market transactions at an average price of $10.40 per share, which resulted in a net gain on sale of $1,299 and generated net proceeds of $62,084.
(2) | 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. operations reporting unit. Approximately $223,000 of the goodwill arising from the Merger 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:
|  | Amount |  | Useful life (in years)
Trade names |  | $ | 46,300 |  |  | Indefinite
Pawn licenses |  | 32,300 |  |  | Indefinite
Customer relationships |  | 14,700 |  |  | Five
Executive non-compete agreements |  | 8,700 |  |  | Two
Franchise agreements related to check cashing operation |  | 1,250 |  |  | Indefinite
|  | $ | 103,250 |  |  |
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, pawn licenses and franchise agreements have indefinite lives, they are not amortized.
(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 11) and was terminated upon completion of the Merger.
Transaction costs associated with the Merger are being expensed as incurred and are presented in the consolidated statements of income as merger and other acquisition expenses. These expenses include investment banking, legal, accounting, and other related third party costs associated with the Merger, including preparation for regulatory filings and shareholder approvals. See Note 4 for further information about merger and other acquisition expenses. 2016 Other Acquisitions The Company completed other acquisitions during fiscal 2016, as described below, consistent with its strategy to continue its expansion of pawn stores in selected markets. The purchase price of each acquisition was allocated to assets and liabilities acquired based upon their estimated fair market values at the date of acquisition. The excess purchase price over the estimated fair market value of the net assets acquired has been recorded as goodwill. The goodwill arising from these acquisitions consists largely of the synergies and economies of scale expected from combining the operations of the Company and the pawn stores acquired. The Company acquired the stock of Maxi Prenda, S.A. de C.V., the operating entity owning the pawn loans, inventories, layaways and other operating assets and liabilities of 166 pawn stores located in Mexico on January 6, 2016 and the assets of 13 pawn stores located in El Salvador on February 2, 2016 in related transactions (collectively the “Latin America Acquisition”). The combined purchase price for the all-cash transaction was $30,123, net of cash acquired before certain post-closing adjustments. Subsequent to the acquisition, $229 of post closing adjustments were identified, resulting in a combined purchase price of $29,894, net of cash acquired and is subject to further post-closing adjustments. The purchase was composed of $27,357 in cash paid during fiscal 2016 and remaining payables to the sellers of approximately $2,537. In addition, the Company assumed approximately $6,630 in peso-denominated debt from these acquisitions which was repaid in full by the Company in January 2016. The assets, liabilities and results of operations of the locations are included in the Company’s consolidated results as of the acquisition dates. The goodwill resulting from the Latin America Acquisition has been assigned to the Latin America operations reporting unit. During fiscal 2016, three pawn stores located in the U.S. were acquired by the Company (“U.S. Acquisitions”) for an all-cash aggregate purchase price of $1,951, net of cash acquired and remaining payables to the sellers of approximately $17. During fiscal 2016, the Company also paid $575 of deferred purchase price amounts payable related to prior-year acquisitions. The goodwill resulting from the U.S. Acquisitions has been assigned to the U.S. operations reporting unit. The allocations of the purchase prices for the Company’s other acquisitions during 2016 (the “2016 Acquisitions”) are as follows:
| U.S. Acquisitions |  | Latin America Acquisition |  | Total
Pawn loans | $ | 385 |  |  | $ | 10,586 |  |  | $ | 10,971 |
Fees and service charges receivable | 18 |  |  | 885 |  |  | 903 |
Inventory | 359 |  |  | 3,014 |  |  | 3,373 |
Other current assets | — |  |  | 1,795 |  |  | 1,795 |
Property and equipment | 10 |  |  | 6,821 |  |  | 6,831 |
Goodwill (1) | 1,239 |  |  | 20,413 |  |  | 21,652 |
Intangible assets (2) | 36 |  |  | 405 |  |  | 441 |
Other assets | — |  |  | 512 |  |  | 512 |
Deferred tax assets | — |  |  | 2,392 |  |  | 2,392 |
Current liabilities | (96 | ) |  | (10,299 | ) |  | (10,395 | )
Notes payable | — |  |  | (6,630 | ) |  | (6,630 | )
Purchase price | $ | 1,951 |  |  | $ | 29,894 |  |  | $ | 31,845 |
(1) | Substantially all of the goodwill for the U.S. Acquisitions 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.
During fiscal 2016, revenue from the Merger and the 2016 Acquisitions since the respective closing dates was $384,123. During fiscal 2016, the net earnings from the Merger and the 2016 Acquisitions since the acquisition dates (excluding acquisition and integration costs) was $21,165. Combined transaction and integration costs related to the Merger and the 2016 Acquisitions were $36,670, which are further described in Note 4. 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:
|  | Year Ended |  | Year Ended
|  | December 31, 2016 |  | December 31, 2015
|  | As Reported |  | Pro Forma |  | As Reported |  | Pro Forma
Total revenue |  | $ | 1,088,377 |  |  | $ | 1,771,835 |  |  | $ | 704,602 |  |  | $ | 1,792,523 |
Net income |  | 60,127 |  |  | 118,333 |  |  | 60,710 |  |  | 61,479 |
Net income per share: |  |  |  |  |  |  |  |
Basic |  | $ | 1.72 |  |  | $ | 2.44 |  |  | $ | 2.16 |  |  | $ | 1.27 |
Diluted |  | 1.72 |  |  | 2.44 |  |  | 2.14 |  |  | 1.27 |
Pro forma adjustments are included only to the extent they are directly attributable to the Merger and 2016 Acquisitions. The unaudited pro forma results have been adjusted with respect to certain aspects of the Merger and 2016 Acquisitions primarily to reflect:
• | depreciation and amortization expense that would have been recognized assuming fair value adjustments to the existing tangible and intangible assets acquired and liabilities assumed;
• | interest expense based on a lower combined weighted-average interest rate on borrowings (see Note 11 - Long-Term Debt) partially offset by an increase in total indebtedness primarily incurred to finance certain cash payments and transaction costs related to the Merger;
• | the elimination of losses on extinguishment of debt recognized in Cash America’s historical financial statements as the related debt was terminated upon completion of the Merger; and
• | the inclusion in the pro forma fiscal 2015 of $68,817 in merger and other acquisition expenses incurred by both the acquirees and acquirer (excluded from the pro forma fiscal 2016 amounts).
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 Merger or 2016 Acquisitions. It also does not give effect to certain future charges that the Company expects to incur in connection with the Merger and 2016 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 and corporate facilities. 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. 2015 Acquisitions The Company completed other acquisitions during fiscal 2015 as described below consistent with its strategy to continue its expansion of pawn stores in selected markets. The purchase price of each acquisition was allocated to assets and liabilities acquired based upon their fair market values at the date of acquisition. The excess purchase price over the fair market value of the net assets acquired has been recorded as goodwill. The goodwill arising from these acquisitions consist largely of the synergies and economies of scale expected from combining the operations of the Company and the pawn stores acquired. On December 31, 2015, the Company acquired the stock of Maxi Prenda Guatemala, S.A., the operating entity owning the pawn loans, inventory, layaways and other operating assets and liabilities of 32 full-service pawn stores located in Guatemala. The purchase price for the all-cash transaction was $10,445, net of cash acquired and subject to certain post-closing adjustments. This was the first step in a multi-stage acquisition which was completed in February 2016 and is further described above. The goodwill resulting from this acquisition has been assigned to the Latin America operations reporting unit. During fiscal 2015, 33 pawn stores located in six U.S. states were acquired by the Company in seven separate asset purchase transactions for an aggregate purchase price of $35,592, net of cash acquired, and was composed of $35,017 in cash paid during fiscal 2015 and payables to the sellers of $575. During fiscal 2015, the Company also paid $1,425 of purchase price amounts payable related to prior-year acquisitions. The goodwill resulting from these acquisitions has been assigned to the U.S. operations reporting unit.

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References No definition available. + Details
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