First Cash Financial Services Inc. Annual Report 2017

Plain-text annual report

Table of Contents UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549FORM 10-K[ X ]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2017OR[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from __________ to ___________Commission file number 001-10960FIRSTCASH, INC.(Exact name of registrant as specified in its charter)Delaware75-2237318(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)1600 West 7th Street, Fort Worth, Texas76102(Address of principal executive offices)(Zip Code)(817) 335-1100(Registrant’s telephone number, including area code)Securities registered pursuant to Section 12(b) of the Act:Title of Each ClassName of Each Exchange on Which RegisteredCommon Stock, par value $.01 per shareNYSESecurities registered pursuant to Section 12(g) of the Act:NoneIndicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.xYes o NoIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.oYes x NoIndicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. xYes o No Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required tobe submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405) during the preceding 12 months (or for such shorter period that the registrantwas required to submit and post such files). xYes o NoTable of Contents Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein, and will not becontained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or anyamendment to this Form 10-K. xIndicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company or anemerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company”in Rule 12b-2 of the Exchange Act.x Large accelerated filero Accelerated filero Non-accelerated filer (Do not check if a smaller reporting company)o Smaller reporting company o Emerging growth companyIf an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new orrevised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. oIndicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). oYes x NoAs of June 30, 2017, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately $2,406,000,000based on the closing price as reported on the New York Stock Exchange. As of February 12, 2018, there were 46,554,838 shares of common stock outstanding.DOCUMENTS INCORPORATED BY REFERENCEPortions of the registrant’s definitive Proxy Statement relating to its 2018 Annual Meeting of Stockholders to be held on or about May 29, 2018, isincorporated by reference in Part III, Items 10, 11, 12, 13 and 14 of this Annual Report on Form 10-K.Table of Contents FIRSTCASH, INC.FORM 10-KFor the Year Ended December 31, 2017TABLE OF CONTENTSPART I Item 1.Business1Item 1A.Risk Factors17Item 1B.Unresolved Staff Comments31Item 2.Properties31Item 3.Legal Proceedings32Item 4.Mine Safety Disclosures32 PART II Item 5.Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities32Item 6.Selected Financial Data34Item 7.Management's Discussion and Analysis of Financial Condition and Results of Operations36Item 7A.Quantitative and Qualitative Disclosures About Market Risk66Item 8.Financial Statements and Supplementary Data68Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure68Item 9A.Controls and Procedures68Item 9B.Other Information70 PART III Item 10.Directors, Executive Officers and Corporate Governance70Item 11.Executive Compensation70Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters70Item 13.Certain Relationships and Related Transactions, and Director Independence70Item 14.Principal Accountant Fees and Services70 PART IV Item 15.Exhibits and Financial Statement Schedules71Item 16.Form 10-K Summary73 SIGNATURES74Table of Contents FORWARD-LOOKING INFORMATIONThis annual report contains forward-looking statements about the business, financial condition and prospects of FirstCash, Inc. and its wholly ownedsubsidiaries (together, the “Company”). Forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995, can beidentified by the use of forward-looking terminology such as “believes,” “projects,” “expects,” “may,” “estimates,” “should,” “plans,” “targets,” “intends,”“could,” “would,” “anticipates,” “potential,” “confident,” “optimistic” or the negative thereof, or other variations thereon, or comparable terminology, or bydiscussions of strategy, objectives, estimates, guidance, expectations and future plans. Forward-looking statements can also be identified by the fact thesestatements do not relate strictly to historical or current matters. Rather, forward-looking statements relate to anticipated or expected events, activities, trendsor results. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties.These forward-looking statements are made to provide the public with management’s current assessment of the Company’s business. Although the Companybelieves the expectations reflected in forward-looking statements are reasonable, there can be no assurances such expectations will prove to be accurate.Security holders are cautioned such forward-looking statements involve risks and uncertainties. Certain factors may cause results to differ materially fromthose anticipated by the forward-looking statements made in this annual report. Such factors may include, without limitation, the risks, uncertainties andregulatory developments discussed and described in (i) this annual report, including the risks described in Part I, Item IA, “Risk Factors” hereof, and (ii) theother reports filed with the SEC. Many of these risks and uncertainties are beyond the ability of the Company to control, nor can the Company predict, inmany cases, all of the risks and uncertainties that could cause its actual results to differ materially from those indicated by the forward-looking statements.The forward-looking statements contained in this annual report speak only as of the date of this annual report, and the Company expressly disclaims anyobligation or undertaking to report any updates or revisions to any such statement to reflect any change in the Company’s expectations or any change inevents, conditions or circumstances on which any such statement is based, except as required by law.Table of Contents PART IItem 1. BusinessGeneralThe Company is a leading operator of retail-based pawn stores in the U.S. and Latin America. As of December 31, 2017, the Company had 2,111 locations,consisting of 1,112 stores in 26 U.S. states (including the District of Columbia), 953 stores in all 32 states in Mexico, 33 stores in Guatemala and 13 stores inEl Salvador. On September 1, 2016, the Company completed its merger with Cash America International, Inc. (“Cash America”), whereby Cash America merged with andinto a wholly owned subsidiary of the Company (the “Merger”). The accompanying audited consolidated results of operations for the year ended December31, 2017 includes the results of operations for Cash America, while the comparable prior-year period includes the results of operations for Cash America forthe period September 2, 2016 to December 31, 2016, affecting comparability of fiscal 2017 and 2016 amounts. See Note 3 of Notes to Consolidated FinancialStatements for additional information about the Merger.The Company’s primary business is the operation of large format, full-service pawn stores which make small pawn loans secured by personal property such asconsumer electronics, jewelry, power tools, household appliances, sporting goods and musical instruments. These pawn stores generate significant retail salesfrom the merchandise acquired through collateral forfeitures and over-the-counter purchases from customers. In addition, some of the Company’s pawn storesoffer small unsecured consumer loans or credit services products. The Company’s strategy is to focus on growing its large format, full-service pawn operationsin the U.S. and Latin America through new store openings and strategic acquisition opportunities as they arise.In addition to its pawn stores, the Company operates a small number of stand-alone consumer finance stores in the U.S. and Mexico. These stores provideconsumer financial services products including credit services, consumer loans and check cashing. The Company also offers check cashing services throughfranchised check cashing centers, for which the Company receives franchise fees. Beginning in fiscal 2018, the Company no longer offers fee-based checkcashing services in its non-franchise stores. The Company considers the credit services and consumer loan products to be non-core, non-growth revenuestreams, which the Company has deemphasized in recent years and represented approximately 4% of the Company’s total revenues for both of the yearsended December 31, 2017 and 2016.Revenue for the year ended December 31, 2017 was primarily generated from the Company’s pawn operations with 27% of total revenues derived from LatinAmerica and 73% from the U.S. For additional historical information on the composition of revenues from the U.S. and Latin America, see “Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations.”The Company organizes its operations into two reportable segments: the U.S. operations segment and the Latin America operations segment. The U.S.operations segment consists of all pawn and consumer loan operations in the U.S. and the Latin America operations segment consists of all pawn andconsumer loan operations in Latin America, which currently includes operations in Mexico, Guatemala and El Salvador. The Company intends to open itsfirst stores in Colombia in 2018, which will be included in the Latin America operations segment.The Company was formed as a Texas corporation in July 1988. In April 1991, the Company reincorporated as a Delaware corporation. The Company’sprincipal executive offices are located at 1600 West 7th Street, Fort Worth, Texas 76102, and its telephone number is (817) 335-1100.Pawn IndustryPawn stores are neighborhood-based retail stores that buy and sell consumer items such as consumer electronics, jewelry, power tools, appliances, sportinggoods and musical instruments. Pawn stores also provide a quick and convenient source of small consumer loans to unbanked, under-banked and credit-challenged customers. These consumers are typically not effectively or efficiently served by traditional lenders such as banks, credit unions, credit cardproviders or other small loan providers. The Company’s pawn stores directly compete in both the specialty retail and consumer finance industries.1Table of Contents United StatesThe pawn industry in the U.S. is well established, with the highest concentration of pawn stores located in the Southeast, Midwest and Southwest regions ofthe country. The operation of pawn stores is governed primarily by state laws and accordingly, states that maintain regulations most conducive to profitablepawn operations have historically seen the greatest concentration of pawn stores. Management believes the U.S. pawn industry, although mature, remainshighly fragmented. The two major publicly traded companies in the pawn industry, which includes the Company, currently operate approximately 1,600 ofthe estimated 12,000 to 14,000 pawn stores in the U.S. The Company believes the majority of pawnshops in the U.S. are owned by individuals operating fiveor fewer locations.Mexico and Other Latin American MarketsMost of the Company’s pawn stores in Latin America are larger format, full-service stores, similar to the U.S. stores, which lend on a wide array of collateraland have a retail sales floor. The majority of pawn stores in Latin America are much smaller than a typical U.S. pawn store, have limited retail space and oftenoffer only pawn loans collateralized by gold jewelry or small consumer electronics. Accordingly, competition in Latin America for the Company’s largeformat, full-service pawn stores is limited. A large percentage of the population in Mexico and other countries in Latin America are unbanked or under-banked and have limited access to consumer credit. The Company believes that there is significant opportunity for future expansion in Mexico and otherLatin American countries due to the large potential consumer base and limited competition from other large format, full-service pawn store operators.Business StrategyThe Company’s business plan is to expand its operations by opening new (“de novo”) retail pawn locations, by acquiring existing pawnshops in strategicmarkets and attempting to increase revenue and operating profits in its existing stores. In pursuing its business strategy, the Company seeks to establishclusters of several stores in specific geographic areas in order to achieve certain economies of scale relative to management and supervision, pricing andpurchasing, information and accounting systems and marketing.The Company has opened or acquired over 1,400 pawn stores in the last five fiscal years, including 815 stores as a result of the Merger. Net store additionshave grown at a compound annual store growth rate of 21% over this period. The Company intends to open additional stores in locations where managementbelieves appropriate demand and other favorable conditions exist. The following table details stores opened and acquired over the five year period endedDecember 31, 2017: Year Ended December 31, 2017 2016 2015 2014 2013U.S. stores: Merged Cash America locations— 815 — — —New locations opened2 — — 8 9Locations acquired1 3 33 25 34Total additions3 818 33 33 43 Latin America stores: New locations opened45 41 38 31 60Locations acquired5 179 32 47 8Total additions50 220 70 78 68 Total: Merged Cash America locations— 815 — — —New locations opened47 41 38 39 69Locations acquired6 182 65 72 42Total additions53 1,038 103 111 111For additional information on store count activity, see “—Locations and Operations” below.2Table of Contents New Store OpeningsThe Company plans to continue opening new pawn stores, primarily in Latin America, and to a much lesser extent in the U.S. The Company typically opensnew stores in under-developed markets, especially where customer demographics are favorable and competition is limited or restricted. After a suitablelocation has been identified and a lease and the appropriate licenses are obtained, a new store can typically be open for business within six to twelve weeks.The investment required to open a new location includes store operating cash, inventory, funds for pawn and consumer loans, leasehold improvements, storefixtures, security systems, computer equipment and other start-up costs.AcquisitionsBecause of the fragmented nature of the pawn industry, the Company believes attractive acquisition opportunities will continue to arise from time to time inboth Latin America and the U.S. Before making an acquisition, management assesses the demographic characteristics of the surrounding area, considers thenumber, proximity and size of competing stores, and researches state and local regulatory standards. Specific pawn store acquisition criteria include anevaluation of the volume of merchandise sales and pawn transactions, outstanding customer pawn loan balances, historical pawn yields, retail margins andredemption rates, the condition and quantity of inventory on hand, and location, condition and lease terms of the facility.Enhance Productivity of Existing and Newly Opened StoresThe primary factors affecting the profitability of the Company’s existing store base are the volume and gross profit of merchandise sales, the volume of andyield on customer loans and store expenses. To encourage customer traffic, which management believes is a key determinant of a store’s success, theCompany has taken several steps to distinguish its stores and to make customers feel more comfortable. In addition to a clean and secure physical storefacility, the stores’ exteriors typically display attractive and distinctive signage similar to those used by contemporary specialty retailers.The Company has employee-training programs that promote customer service, productivity and professionalism. The Company utilizes a proprietarycomputer information system that provides fully-integrated functionality to support point-of-sale retail operations, real-time merchandise valuations, loan-to-value calculations, inventory management, customer recordkeeping, loan management, compliance and control systems and employee compensation. Eachstore is connected on a real-time basis to a secure data center that houses the centralized databases and operating systems. The information systems providemanagement with the ability to continuously monitor store transactions and operating results. The Company completed the process of converting all CashAmerica stores to the Company’s proprietary computer information system during 2017.The Company maintains a well-trained internal audit staff that conducts regular store visits to test compliance of financial and operational controls.Management believes the current operating and financial controls and systems are adequate for the Company’s existing store base and can accommodatereasonably foreseeable growth in the near term.Services Offered by the CompanyPawn Merchandise SalesThe Company’s pawn merchandise sales are primarily retail sales to the general public from its pawn stores. The items the Company sells generally consist ofpre-owned consumer electronics, jewelry, power tools, household appliances, sporting goods and musical instruments. The Company also melts certainquantities of scrap jewelry and sells the gold, silver and diamonds in commodity markets. Total merchandise sales accounted for approximately 67% of theCompany’s revenue during fiscal 2017.The Company acquires pawn merchandise inventory primarily through forfeited pawn collateral and, to a lesser extent, through purchases of used goodsdirectly from the general public. Merchandise acquired by the Company through forfeited pawn collateral is carried in inventory at the amount of the relatedpawn loan, exclusive of any accrued service fees. The Company also acquires limited quantities of new or refurbished general merchandise inventoriesdirectly from wholesalers and manufacturers.The Company does not provide direct financing to customers for the purchase of its merchandise, but does permit its customers to purchase merchandise onan interest-free “layaway” plan. Should the customer fail to make a required payment pursuant to a layaway plan, the item is returned to inventory andprevious payments are typically forfeited to the Company. Interim payments from customers on layaway sales are recorded as deferred revenue andsubsequently recorded as retail merchandise sales revenue when the final payment is received or when previous payments are forfeited to the Company.3Table of Contents Retail sales are seasonally highest in the fourth quarter associated with holiday shopping and, to a lesser extent, in the first quarter associated with tax refundsin the U.S.Pawn Lending ActivitiesThe Company’s pawn stores make small, short-term, secured loans to its customers in order to help them meet short-term cash needs. All pawn loans arecollateralized by personal property such as consumer electronics, jewelry, power tools, household appliances, sporting goods and musical instruments. Pawnloans are non-recourse loans and the pledged goods provide the only security to the Company for the repayment of the loan. The Company does notinvestigate the creditworthiness of the borrower, primarily relying instead on the marketability and sales value of pledged goods as a basis for its creditdecision. Pawn loans are non-recourse loans and a customer does not have a legal obligation to repay a pawn loan. There is no collections process and thedecision to not repay the loan will not affect the customer’s credit score.At the time a pawn loan transaction is entered into, an agreement or contract, commonly referred to as a “pawn ticket,” is delivered to the borrower forsignature that sets forth, among other items, the name and address of the pawnshop, the borrower’s name, the borrower’s identification number from his/herdriver’s license or other government issued identification, date, identification and description of the pledged goods, including applicable serial numbers,amount financed, pawn service fee, maturity date, total amount that must be paid to redeem the pledged goods on the maturity date and the annualpercentage rate.Pledged property is held through the term of the loan, unless the loan is paid earlier or renewed. The typical pawn loan term is generally 30 days plus anadditional grace period of 14 to 90 days depending on geographical markets and local regulations. Pawn loans may be either paid in full with accrued pawnloan fees and service charges or, where permitted by law, may be renewed or extended by the customer’s payment of accrued pawn loan fees and servicecharges. If a pawn loan is not repaid prior to the expiration of the grace period, the pawn collateral is forfeited to the Company and transferred to inventory ata value equal to the principal amount of the loan, exclusive of accrued service fees. The Company does not record pawn loan losses or charge-offs becausethe amount advanced becomes the carrying cost of the forfeited collateral that is to be recovered through the merchandise sales function described above.The pawn loan fees are typically calculated as a percentage of the pawn loan amount based on the size and duration of the transaction and generally rangefrom 4% to 25% per month, as permitted by applicable law. As required by applicable law, the amounts of these charges are disclosed to the customer on thepawn ticket. Pawn loan fees accounted for approximately 29% of the Company’s revenue during fiscal 2017.The amount the Company is willing to finance for a pawn loan is primarily based on a percentage of the estimated retail value of the collateral. There are nominimum or maximum pawn to fair market value restrictions in connection with the Company’s lending activities. In order to estimate the value of thecollateral, the Company utilizes its integrated proprietary computer information system to recall recent selling prices of similar merchandise in its own stores.The basis for the Company’s determination of the retail value also includes such sources as precious metals spot markets, catalogs, blue books, online auctionsites and retailer advertisements. These sources, together with the employees’ experience in selling similar items of merchandise in particular stores, influencethe determination of the estimated retail value of such items. The Company does not utilize a standard or mandated percentage of estimated retail value indetermining the amount to be financed. Rather, the employee has the authority to set the percentage for a particular item and to determine the ratio of pawnamount to estimated sale value with the expectation that, if the item is forfeited to the pawnshop, its subsequent sale should yield a gross profit marginconsistent with the Company’s historical experience. The recovery of the principal and realization of gross profit on sales of inventory is dependent on theCompany’s initial assessment of the property’s estimated retail value. Improper assessment of the retail value of the collateral in the lending function canresult in reduced marketability of the property resulting in a reduced gross profit margin.The Company typically experiences seasonal growth in its pawn loan balances in the third and fourth quarters of the year following lower balances in the firsttwo quarters of the year due to the heavy repayment of pawn loans associated with statutory bonuses received by customers in the fourth quarter in Mexicoand with tax refund proceeds typically received by customers in the first quarter in the U.S.4Table of Contents Credit Services and Consumer Loan ActivitiesAs of December 31, 2017, the Company operated 44 stand-alone consumer loan locations in the U.S. and 28 stand-alone consumer loan locations in Mexico.In addition, 313 pawn locations in the U.S. and 49 pawn locations in Mexico also offer consumer loan products. Total revenues from consumer loan andcredit services operations accounted for approximately 4% of total revenues in 2017.The Company offers fee-based credit services organization programs (“CSO Programs”) to assist consumers in obtaining extensions of credit. The Company’sstand-alone consumer loan stores and select pawn stores in the states of Texas and Ohio offer the CSO Programs. The Company’s CSO Programs comply withthe respective jurisdiction’s credit services organization act, credit access business law or a similar statute. Under the CSO Programs, the Company assistscustomers in applying for a short-term extension of credit from independent, non-bank, consumer lending companies (the “Independent Lenders”) and issuesthe Independent Lenders a guarantee for the repayment of the extension of credit. The Company also offers an automobile title lending product under theCSO Programs. Total credit services fees accounted for 2% of the Company’s revenue during fiscal 2017.The Company also offers small, unsecured consumer loans to customers in various states within the U.S. and in Mexico. To qualify for a consumer loan, acustomer generally must have proof of steady income, residence and valid identification. At maturity, the customer typically returns to the store to pay off theloan and related fee with cash. If the customer fails to repay the loan, the Company initiates collection procedures. These consumer loan fees accounted for2% of the Company’s revenue during fiscal 2017.The Company operates a stand-alone franchised based, check cashing business, operating under the “Mr. Payroll” brand. The Company receives franchisefees from each franchisee based on the gross revenue of check cashing services provided within the franchisee’s facility. Total revenue from franchise feesaccounted for less than 1% of consolidated total revenue during fiscal 2017.See additional discussion of the credit loss provision and related allowances/accruals in “Item 7. Management’s Discussion and Analysis of FinancialCondition and Results of Operations—Critical Accounting Policies.”Financial Information about Geographic AreasFinancial information regarding the Company’s revenue and long-lived assets by geographic areas is provided in Note 16 of Notes to Consolidated FinancialStatements contained herein.5Table of Contents Locations and OperationsAs of December 31, 2017, the Company had 2,111 store locations in 26 U.S. states (including the District of Columbia), 32 states in Mexico, Guatemala andEl Salvador, which represents a net store-count increase of 1% over the number of stores at December 31, 2016. The Company also intends to open its firststores in Colombia in 2018.The following table details store count activity for the twelve months ended December 31, 2017: ConsumerLoanLocations (2) PawnLocations (1) TotalLocationsU.S.: Total locations, beginning of period 1,085 45 1,130New locations opened 2 — 2Locations acquired 1 — 1Locations closed or consolidated (20) (1) (21)Total locations, end of period 1,068 44 1,112 Latin America: Total locations, beginning of period 927 28 955New locations opened 45 — 45Locations acquired 5 — 5Locations closed or consolidated (6) — (6)Total locations, end of period 971 28 999 Total: Total locations, beginning of period 2,012 73 2,085New locations opened 47 — 47Locations acquired 6 — 6Locations closed or consolidated (26) (1) (27)Total locations, end of period 2,039 72 2,111(1) At December 31, 2017, 313 of the U.S. pawn stores, which are primarily located in Texas and Ohio, also offered consumer loans or credit services products, while 49 Mexicopawn stores offered consumer loan products.(2) The Company’s U.S. free-standing consumer loan locations offer consumer loans and/or credit services products and are located in Ohio, Texas, California and limitedmarkets in Mexico. The table does not include 62 check cashing locations operated by independent franchisees under franchising agreements with the Company.The Company maintains its primary administrative offices in Fort Worth, Texas and Monterrey, Mexico.6Table of Contents As of December 31, 2017, the Company’s stores were located in the following countries and states: ConsumerLoanLocations (1) Total Locations PawnLocations U.S.: Texas388 24 412Ohio110 9 119Florida76 — 76Georgia44 — 44Tennessee43 — 43North Carolina40 — 40Indiana35 — 35Arizona35 — 35Washington33 — 33Colorado30 — 30Maryland28 — 28Nevada27 — 27South Carolina27 — 27Kentucky26 — 26Illinois25 — 25Louisiana25 — 25Missouri25 — 25Oklahoma18 — 18California— 11 11Alabama8 — 8Utah7 — 7Alaska6 — 6Virginia6 — 6District of Columbia3 — 3Wyoming2 — 2Nebraska1 — 1 1,068 44 1,112Mexico: Estado de. Mexico (State of Mexico)108 — 108Baja California78 3 81Veracruz71 — 71Nuevo Leon64 2 66Jalisco59 4 63Puebla56 4 60Tamaulipas52 3 55Chihuahua40 2 42Coahuila41 — 41Guanajuato35 6 41Estado de Ciudad de Mexico (State of Mexico City)31 — 31Sonora27 — 27Guerrero26 — 267Table of Contents ConsumerLoanLocations (1) Total Locations PawnLocations Mexico (continued): Sinaloa24 — 24Quintana Roo22 — 22Michoacan17 — 17Morelos17 — 17Oaxaca17 — 17Aguascalientes13 3 16Durango15 — 15Queretaro14 1 15San Luis Potosi14 — 14Hidalgo13 — 13Baja California Sur10 — 10Chiapas10 — 10Tabasco10 — 10Zacatecas10 — 10Yucatan9 — 9Campeche6 — 6Tlaxcala6 — 6Colima5 — 5Nayarit5 — 5 925 28 953 Guatemala33 — 33 El Salvador13 — 13 Total2,039 72 2,111(1) The table does not include 62 U.S. check cashing locations operated by independent franchisees under franchising agreements with the Company.Pawn Store OperationsThe typical Company pawn store is a freestanding building or part of a retail shopping center with adequate, well-lit parking. Management has established astandard store design intended to distinguish the Company’s stores from the competition. The design consists of a well-illuminated exterior with distinctivesignage and a layout similar to other contemporary specialty retailers. The Company’s stores are typically open six to seven days a week from 9:00 a.m. tobetween 6:00 p.m. and 9:00 p.m.The Company attempts to attract customers primarily through the pawn stores’ visibility and neighborhood presence. The Company uses seasonalpromotions, special discounts for regular customers, prominent display of impulse purchase items such as consumer electronics, jewelry and power tools, tentand sidewalk sales, and a layaway purchasing plan to attract retail shoppers. The Company attempts to attract and retain pawn customers by lending acompetitive percentage of the estimated sale value of items presented for pledge and by providing quick financing, renewal and redemption services in anappealing atmosphere.8Table of Contents Generally, each pawnshop employs a manager, one or two assistant managers, and between one and eight sales personnel, depending upon the size, salesvolume and location of the store. The store manager is responsible for supervising personnel and assuring the store is managed in accordance with Companyguidelines and established policies and procedures. Each manager reports to a district manager, who typically oversees four to seven store managers. Districtmanagers typically report to a regional manager who, in turn, typically report to a regional operations director. Regional operations directors report to a vicepresident of operations.The Company believes the profitability of its pawnshops is dependent, among other factors, upon its employees’ ability to engage in transactions thatachieve optimum pawn yields and merchandise sales margins, to be effective sales people and to provide prompt and courteous service. The Company’scomputer system permits a store manager or clerk to rapidly recall the cost of an item in inventory and the date it was purchased, as well as the priortransaction history of a particular customer. It also facilitates the timely valuation of goods by showing values assigned to similar goods. The Company hasnetworked its stores to allow employees to more accurately determine the retail value of merchandise and to permit the Company’s headquarters to moreefficiently monitor each store’s operations, including merchandise sales, service charge revenue, pawns written and redeemed and changes in inventory.The Company trains its employees through direct instruction and on-the-job pawn and sales experience. New employees are introduced to the businessthrough an orientation and training program that includes on-the-job training in lending practices, layaways, merchandise valuation and generaladministration of store operations. Certain experienced employees receive training and an introduction to the fundamentals of management to acquire theskills necessary to advance into management positions within the organization. Management training typically involves exposure to income maximization,recruitment, inventory control and cost efficiency. The Company maintains a performance-based compensation plan for all store employees based on sales,gross profit and other performance criteria.Credit Services and Consumer Loan OperationsSimilar to the Company’s pawn store operations, the Company’s credit services and consumer loan locations are typically part of a retail strip shoppingcenter with good visibility from a major street and easy access to parking. Management has established a standard store design intended to distinguish theCompany’s stores from the competition, which consists of a well-illuminated exterior with distinctive signage. The interiors typically feature an ample lobbyseparated from employee work areas by glass teller windows. The Company’s credit services and consumer loan locations are typically open six to seven daysa week from 9:00 a.m. to between 6:00 p.m. and 9:00 p.m.CompetitionThe Company encounters significant competition in connection with all aspects of its business operations. These competitive conditions may adverselyaffect the Company’s revenue, profitability and ability to expand. The Company believes the primary elements of competition in the businesses in which itoperates are store location, the ability to lend competitive amounts on pawn loans, customer service and management of store employees. In addition, theCompany competes with financial institutions, such as banks and consumer finance companies, which generally lend on an unsecured as well as a securedbasis. Other lenders may and do lend money on terms more favorable than those offered by the Company. Many of these financial institutions have greaterfinancial resources than the Company in which to compete for consumer loans.The Company’s pawn business competes primarily with other pawn store operators, other specialty consumer finance operators, rent-to-own stores andspecialty consumer goods retailers. Management believes the pawn industry remains highly fragmented with an estimated 12,000 to 14,000 total pawnshopsin the U.S. and 6,500 to 8,000 pawnshops in Mexico. Including the Company, there are two publicly-held, U.S.-based pawnshop operators, both of whichhave pawn operations in the U.S., Mexico, Guatemala and El Salvador. Of these two, the Company had the most pawn stores and the largest marketcapitalization as of December 31, 2017, and believes it is the largest public or private operator of large format, full-service pawn stores in the U.S. andMexico. The pawnshop and other specialty consumer finance industries are characterized by a large number of independent owner-operators, some of whomown and operate multiple locations.In both its U.S. and Latin American retail pawn operations, the Company’s competitors include numerous retail and wholesale merchants, including jewelrystores, rent-to-own stores, discount retail stores, “second-hand” stores, consumer electronics stores, other specialty retailers, online retailers, online auctionsites, online classified advertising sites and other pawnshops. Competitive factors in the Company’s retail operations include the ability to provide thecustomer with a variety of merchandise items at attractive prices. Many of the retail competitors have significantly greater size and financial resources thanthe Company.9Table of Contents Intellectual PropertyThe Company relies on a combination of copyright, trade secret, trademark, website domain names and other rights, including confidentiality procedures andcontractual provisions to protect its proprietary technology, processes and other intellectual property.The Company’s competitors may develop products that are similar to its technology, such as the Company’s proprietary point of sale software. The Companyenters into agreements with its employees, consultants and partners, and through these and other written agreements, the Company attempts to control accessto and distribution of its software, documentation and other proprietary technology and information. Despite the Company’s efforts to protect its proprietaryrights, third parties may, in an authorized or unauthorized manner, attempt to use, copy or otherwise obtain and market or distribute its intellectual propertyrights or technology or otherwise develop a product with the same functionality as its solution. Policing all unauthorized use of the Company’s intellectualproperty rights is nearly impossible. The Company cannot be certain that the steps it has taken or will take in the future will prevent misappropriations of itstechnology or intellectual property rights.“FirstCash,” “First Cash,” “First Cash Pawn,” “Cash America” and “Cashland” are registered trademarks in the U.S. “First Cash,” “First Cash Empeño yJoyeria,” “Cash Ya,” “Cash & Go,” “CA,” “Cash America,” “Presta Max,” “Realice Empeños,” “Empeños Mexicanos” and “Maxi Prenda” are registeredtrademarks in Latin America. Other significant trade names used by the Company in the U.S. and abroad include First Cash Advance, Famous Pawn, Fast CashPawn & Gold Center, King Pawn, Mister Money Pawn, Money Man Pawn, Valu + Pawn, Dan’s Discount Jewelry & Pawn, Quick Cash Pawn, Atomic Pawn,Loftis Jewelry & Pawnbrokers, Regent Pawn & Jewelry, Smart Pawn, Piazza Jewelry & Pawn, David’s Pawn Shop, Sharp Mart, Lakelands Pawn & Gun, CashAmerica Pawn, SuperPawn, Cash America Payday Advance, Mr. Payroll and American Trade & Loan.FranchisesAs of December 31, 2017, the Company had 62 unconsolidated franchised check cashing locations in the U.S. operating under its “Mr. Payroll” brand. Eachof the Company’s unconsolidated franchised check cashing locations is subject to a franchise agreement that is negotiated individually with each franchisee.The franchise agreements have varying durations.Governmental RegulationGeneralThe Company is subject to significant regulation of its pawn, consumer loan and general business operations in all of the jurisdictions in which it operates.These regulations are implemented through various laws, ordinances and regulatory pronouncements from federal, state and municipal governmental entitiesin the U.S. and Latin America. These regulatory bodies often have broad discretionary authority over the establishment, interpretation and enforcement ofsuch regulations. These regulations are subject to change, sometimes significantly, as a result of political, economic or social trends, events and mediaperception.The Company is subject to specific laws, regulations and ordinances primarily concerning its pawn and consumer lending operations. Many statutes andregulations prescribe, among other things, the general terms of the Company’s pawn and consumer loan agreements, including maximum service fees and/orinterest rates that may be charged and collected and mandatory consumer disclosures. In many municipal, state and federal jurisdictions, in both the U.S. andcountries in Latin America, the Company must obtain and maintain regulatory operating licenses and comply with regular or frequent regulatory reportingand registration requirements, including reporting and recording of pawn loans, pawned collateral, used merchandise purchased from the general public,retail sales activities, firearm transactions, export, import and transfer of merchandise, and currency transactions, among other things.In both the U.S. and Latin America, certain elected officials, regulators, consumer advocacy groups and the media have advocated for governmental action tofurther restrict or even prohibit pawn transactions or small consumer loans, such as payday advances and credit services products. The elected officials,regulators, consumer groups and media typically focus on the aggregated cost to a consumer for pawn and consumer loans, which is typically higher than theinterest generally charged by banks, credit unions and credit card issuers to a more creditworthy consumer. They also focus on affordability issues such as theborrower’s ability to repay such loans, real or perceived patterns of sustained or cyclical usage of such lending products and consumer loan collectionpractices perceived to be unfair or abusive. The elected officials, regulators, consumer groups and media often characterize pawn and payday lendingactivities as unfair or potentially abusive to consumers. During the last few years, legislation, ordinances and edicts (on federal, state and municipal levels)have been introduced or enacted to prohibit, restrict or further regulate pawn and related transactions, including acceptance of pawn collateral and usedmerchandise in general or, from certain individuals, sales of such merchandise in general or specific categories such as firearms, payday loans, consumerloans, credit services and related service fees on these products. In addition, public officials and regulatory authorities, including law enforcement in variouslevels10Table of Contents of government in the U.S. and countries in Latin America have and will likely continue to make edicts, proposals or public statements concerning new orexpanded regulations that would prohibit or further restrict pawn and consumer lending activities or other related pawn transactions.The Company is subject to numerous other types of regulations including, but not limited to, regulations related to securities and exchange activities,including financial reporting and internal controls processes, data protection and privacy, tax compliance, health and safety, labor and employment practices,import/export activities, real estate transactions, electronic banking, credit card transactions, marketing, advertising and other general business activities.There can be no assurance that the current political domestic and international climate, including additional local, state or federal statutes, regulations oredicts will not affect or be enacted or that existing laws and regulations will not be amended, decreed or interpreted at some future date that could prohibit orlimit the ability of the Company to profitably operate any or all of its services. For example, such regulations could restrict the ability of the Company tooffer pawn loans, consumer loans and credit services, significantly decrease the interest rates or service fees for such lending activities, prohibit or morestringently regulate the acceptance of pawn collateral or buying used merchandise and the sale, exportation or importation of such pawn merchandise, orprocessing of consumer loan transactions through the banking system, any of which could have a material adverse effect on the Company’s operations andfinancial condition. If legislative, regulatory or other arbitrary actions or interpretations are taken at a federal, state or local level in the U.S. or countries inLatin America which negatively affect the pawn, consumer loan or credit services industries where the Company has a significant number of stores, thoseactions could have a material adverse effect on the Company’s business operations. There can be no assurance that such regulatory action at any jurisdictionlevel will not be enacted, or that existing laws and regulations will not be amended, decreed or interpreted in such a way which could have a material adverseeffect on the Company’s operations and financial condition.U.S. Federal RegulationsThe U.S. government and its agencies have significant regulatory authority over consumer financial services activities. In recent years, additional legislationand regulations have been enacted or proposed which has increased or could continue to increase regulation of the consumer finance industry. Theseregulations and restrictions are or may be specific to pawn, credit services and consumer loan/payday advance operations.The Consumer Financial Protection Bureau (the “CFPB”), created by Title X of the Dodd Frank Wall Street Reform and Consumer Protection Act of 2010 (the“Dodd-Frank Act”), has broad regulatory, supervisory and enforcement powers over most non-bank providers of consumer credit. The CFPB’s powers includeexplicit supervisory authority to examine and require registration of providers of consumer financial products and services, including providers of securedand unsecured consumer loans, such as the Company, the authority to adopt rules describing specified acts and practices as being “unfair,” “deceptive,”“abusive” and hence “unlawful,” and the authority to impose recordkeeping obligations and promulgate additional compliance requirements.Over the years, the CFPB has systematically gathered data related to all aspects of the consumer loan industry and its impact on consumers. The CFPBcontinues to use its Short-Term, Small-Dollar Lending Procedures, the field guide CFPB examiners use when examining small-dollar lenders like theCompany. The CFPB’s examination authority permits examiners to inspect the Company’s books and records and ask questions about its business and itspractices. The examination procedures include, among other things, specific modules for examining marketing activities, loan application and originationactivities, payment processing activities and sustained use by consumers, collections and collection practices, defaults, consumer reporting and third-party orvendor relationships.In addition to the Dodd-Frank Act’s grant of regulatory and supervisory powers to the CFPB, the Dodd-Frank Act gives the CFPB authority to pursueadministrative proceedings or litigation for actual or perceived violations of federal consumer laws (including the CFPB’s own rules). In these proceedings,the CFPB can seek consent orders, memorandums of understandings, obtain cease and desist orders (which can include orders for redisclosure, restitution orrescission of contracts, as well as affirmative or injunctive relief) and monetary penalties ranging from $5,000 per day for certain violations of federalconsumer laws to $25,000 per day for reckless violations, and $1,000,000 per day for knowing or intentional violations. Also, where a company has beenfound to have violated consumer laws, the Dodd-Frank Act (in addition to similar state consumer laws) empowers state attorneys general and state regulatorsto bring administrative or civil actions seeking the same equitable relief available to the CFPB, in addition to state-led enforcement actions and consentorders. If the CFPB or one or more state officials believe that the Company has violated any of the applicable laws or regulations, they could exercise theirenforcement powers in ways that could have a material adverse effect on the Company or its business.11Table of Contents On July 11, 2017, the CFPB issued a final rule on consumer arbitration agreements banning waiver of class action in pre-dispute arbitration clauses (the“Arbitration Rule”) with an effective date of March 2019. The rule, as written, would have prohibited financial services companies, including the Company,from using arbitration clauses that ban consumers from participating in class actions. On July 25, 2017, the House of Representatives voted to repeal theArbitration Rule using the Congressional Review Act (the “CRA”) and on October 24, 2017, the Senate also voted to repeal the Arbitration Rule under theCRA. Congress’ override and repeal of the Arbitration Rule was signed by the President on November 1, 2017. The congressional repeal prevents the measurefrom returning to legislative consideration for the next five years. The Arbitration Rule was also legally challenged by various industry trades and groupsseeking declaratory and injunctive relief and challenging the constitutionality and legality of the Arbitration Rule and the CFPB, among other things (the“Arbitration Lawsuit”). The CRA repeal likely makes the Arbitration Lawsuit moot unless the plaintiffs continue to pursue additional relief or declarationthat the CFPB is unconstitutional.On October 5, 2017, the CFPB released its small-dollar loan rule (the “SDL Rule”). The SDL Rule technically became effective on January 16, 2018, but thereis no practical effect until April 2018 at the earliest, and most of the SDL Rule’s provisions do not become effective until July 2019. However, on January 16,2018, the CFPB announced that it intends “to engage in a rulemaking process so that the Bureau may reconsider the payday rule.” The outcome of thisannouncement is unclear but it is possible that the CFPB could amend portions of the SDL Rule before it takes effect and avoid having Congress repeal theSDL Rule using the CRA. If the SDL Rule takes effect, lenders, like the Company, will be required, among other things, to determine whether consumers havethe ability to repay their loans before issuing certain short-term small dollar, payday and auto title loans, verification by the consumer of certain debts andverification through outside sources by lenders of certain debts, mandatory cooling off periods and restrictions on collection practices. Importantly, the SDLRule does not apply to non-recourse pawn loans. If the CFPB fails to amend the perceived problematic portions of the SDL Rule, it is likely that the SDLRule will be subject to legislative challenges and trade association litigation. If the SDL Rule remains effective in its current form, the small dollar lendingindustry will experience a significant regulatory change. While the SDL Rule has been finalized, it is still not certain whether it will take effect, and to whatextent it will impact the Company since the CFPB (under new leadership appointed by the President) issued a formal statement notifying the public that itintends to engage in a “rulemaking process” to reconsider the rule. While the SDL Rule currently requires consumer lenders to register with the CFPB byApril 16, 2018, the CFPB formally notified the public that it will entertain waiver requests from lenders to avoid this registration requirement. The SDL Rulemay also be repealed under the Congressional Review Act. A resolution was introduced in the House of Representatives on December 1, 2017 to begin theprocess of repealing the rule, and it is currently pending in the House Financial Services Committee.The Company believes that the SDL Rule (even in its current form) will not directly impact the vast majority of its pawn products, which compriseapproximately 96% of its total revenues. On a consolidated basis, the Company expects consumer loan revenue for the year ending December 31, 2018 toaccount for approximately 3.5% of the Company’s consolidated total revenue.In July 2015, the U.S. Department of Defense published a finalized set of additional requirements and restrictions under the Military Lending Act (“MLARule”). The MLA Rule (and rules previously adopted thereunder) have prevented the Company from offering its pawn services and its short-term unsecuredcredit products to members of the military or their dependents because none of the Company’s products carry a military annual percentage rate of 36% or less.The MLA Rule, which went into effect on October 3, 2016, amended requirements for its “safe harbor” (making covered member attestation insufficient on itsown to comply with the “safe harbor” provision of the MLA Rule) and expanded the scope of the credit products covered by the MLA to include certain non-purchase money loans secured by personal property, including pawn loans, or vehicles and certain unsecured installment loan products to the extent anysuch products have a military annual percentage rate greater than 36%. Under the MLA Rule, the Company is unable to offer any of its current creditproducts, including pawn loans, to members of the U.S. military or their dependents. While the Company does not believe that active members of the U.S.military or their dependents comprise a significant percentage of the historical customer base in most locations, compliance with the MLA Rule, including itssafe harbor provisions, is complex, increases compliance risks and related costs and limits the potential customer base of the Company.In addition to the federal laws and frameworks already governing the financial industry, the U.S. Justice Department (“DOJ” or “Department of Justice”), inconjunction with federal banking regulators, began an initiative in 2013 (“Operation Choke Point”) which was directed at banks in the U.S. that do businesswith payment processors, payday lenders, pawn operators and other companies believed to be at higher risk for fraud and money laundering. It is believed theintent of this initiative was to restrict the ability of banks to provide financial services to companies in the targeted industries. In January 2015, the FederalDeposit Insurance Corporation (the “FDIC”) issued a publication encouraging banks to take a risk-based approach in assessing individual customerrelationships, rather than declining to provide banking services to entire categories of customers without regard to the risks presented by an individualcustomer or the financial institution’s ability to manage the risk. While many believe this publication effectively ended Operation Choke Point, theCompany continues to experience difficulty in securing new banking services and maintaining existing banking services in certain markets. There can be noassurance that Operation Choke Point and its subsequent effects will not pose a further threat to the Company’s ability to access credit, maintain bankaccounts and treasury services, process payday lending transactions or obtain other banking services needed to operate efficiently and profitably.12Table of Contents In connection with pawn transactions and credit services/consumer loan transactions, the Company must comply with the various disclosure requirementsunder the Federal Truth in Lending Act (and Federal Reserve Regulation Z promulgated thereunder). These disclosures include, among other things, the totalamount of the finance charges and annualized percentage rate of the charges associated with pawn transactions, consumer loan and credit servicestransactions.The credit services/consumer loan business is also subject to various laws, rules and guidelines relating to the procedures and disclosures needed for debitinga debtor’s checking account for amounts due via an automated clearing house (“ACH”) transaction. Additionally, the Company is subject to the Federal FairDebt Collection Practices Act (“FDCPA”) and applicable state collection laws when conducting its collection activities.Under the Bank Secrecy Act, the U.S. Department of the Treasury (the “Treasury Department”) regulates transactions involving currency in an amount greaterthan $10,000 and the purchase of monetary instruments for cash in amounts from $3,000 to $10,000 must be recorded. In general, financial institutions,including the Company, must report each deposit, withdrawal, exchange of currency or other payment or transfer, whether by, through or to the financialinstitution, that involves currency in an amount greater than $10,000 during a specific period. In addition, multiple related currency transactions must betreated as single transactions if the financial institution has knowledge that the transactions are by, or on behalf of, any one person and result in either cash inor cash out totaling more than $10,000 during any one business day or over a certain time period.Under the USA PATRIOT Act passed by Congress in 2001 and revised in 2006, the Company is required to maintain an anti-money laundering complianceprogram. The program must include (1) the development of internal policies, procedures and controls, (2) the designation of a compliance officer, (3) anongoing employee-training program, and (4) a review function to test the program.The Gramm-Leach-Bliley Act requires the Company to generally protect the confidentiality of its customers’ nonpublic personal information and to discloseto its customers its privacy policy and practices, including those regarding sharing the customers’ nonpublic personal information with third parties. Suchdisclosure must be made to customers at the time the customer relationship is established, at least annually thereafter, and if there is a change in theCompany’s privacy policy. In addition, the Company is subject to strict document retention and destruction policies.The federal Equal Credit Opportunity Act (“ECOA”) prohibits discrimination against any credit applicant on the basis of any protected category, such asrace, color, religion, national origin, sex, marital status, or age, and requires the Company to notify credit applicants of the Company’s consumer loanproducts of any action taken on the individual’s credit application. The Company must provide a loan applicant a Notice of Adverse Action (“NOAA”) whenthe Company denies an application for credit. The NOAA must inform the applicant of (1) the action taken regarding the credit application, (2) a statement ofthe ECOA’s prohibition on discrimination, (3) the name and address of both the creditor and the federal agency that monitors compliance with the ECOA,and (4) the applicant’s right to learn the specific reasons for the denial of credit and the contact information for the parties the applicant can contact to obtainthose reasons. The Company provides NOAA letters and maintains records of all such letters as required by the ECOA and its regulations.The Company’s consumer loan products are also subject to the Fair Credit Reporting Act, which requires the Company to provide certain information tocustomers whose credit applications are not approved on the basis of a report obtained from a consumer reporting agency and to respond to consumers whoinquire regarding any adverse reporting submitted by the Company to the consumer reporting agencies.The Company’s advertising and marketing activities, in general, are subject to additional federal laws and regulations administered by the Federal TradeCommission and the CFPB which prohibit unfair or deceptive acts or practices and false or misleading advertisements.The federal Fair and Accurate Credit Transactions Act (“FACTA”) requires the Company to adopt written guidance and procedures for detecting, mitigating,preventing and responding appropriately to identity theft and to adopt various employee policies, procedures, and provide employee training and materialsthat address the importance of protecting nonpublic personal information and aid the Company in detecting and responding to suspicious activity, includingsuspicious activity which may suggest a possible identity theft red flag, as appropriate.The Company is subject to the Foreign Corrupt Practices Act (“FCPA”) and other laws that prohibit improper payments or offers of improper payments toforeign governments and their officials and political parties by U.S. persons and issuers (as defined by the statute) for the purpose of obtaining or retainingbusiness. It is the Company’s policy to maintain safeguards to discourage these practices by its employees and follow Company standards of conduct for itsbusiness throughout the U.S. and Latin America,13Table of Contents including the prohibition of any direct or indirect payment or transfer of Company funds or assets to suppliers, vendors, or government officials in the form ofbribes, kickbacks or other illegal payoffs.Each pawn store location that handles pawned firearms or buys and sells firearms must comply with the Brady Handgun Violence Prevention Act (the “BradyAct”). The Brady Act requires that federally licensed firearms dealers conduct a background check in connection with any disposition of handguns. Inaddition, the Company must comply with the regulations of the U.S. Department of Justice-Bureau of Alcohol, Tobacco and Firearms that require each pawnlending location dealing in guns to obtain a Federal Firearm License (“FFL”) and maintain a permanent written record of all receipts and dispositions offirearms. As of December 31, 2017, the Company had 695 locations in the U.S. with an active FFL.U.S. State and Local RegulationsThe Company operates pawn stores in 25 U.S. states (including the District of Columbia), all of which have licensing and/or fee regulations on pawnshopoperations. In general, state statutes and regulations establish licensing requirements for pawnbrokers and regulate various aspects of pawn transactions,including the purchase and sale of merchandise, service charges, interest rates, the content and form of the pawn transaction agreement and the length of timea pawnbroker must hold a purchased item or forfeited pawn before it is made available for sale. Additionally, these statutes and regulations in variousjurisdictions restrict or prohibit the Company from transferring and/or relocating its pawn licenses and restrict or prohibit the issuance of new licenses. TheCompany’s fee structures are at or below the applicable rate ceilings adopted by each of these states. The Company offers its pawn and retail customers aninterest free layaway plan which complies with applicable state laws. In addition, the Company is in compliance with the net asset requirements in stateswhere it is required to maintain certain levels of liquid assets for each pawn store it operates in the applicable state. Failure to observe a state’s legalrequirements for pawn brokering could result, among other things, in loss of pawn licenses, fines, refunds, and other civil or criminal proceedings.Many of the Company’s pawn locations are also subject to local ordinances that require, among other things, local permits, licenses, record keepingrequirements and procedures, reporting of daily transactions, and adherence to local law enforcement “do not buy lists” by checking law enforcement createddatabases. Specifically, under some county and municipal ordinances, pawn stores must provide local law enforcement agencies with reports of all dailytransactions involving pawns and over-the-counter merchandise purchases. These daily transaction reports are designed to provide local law enforcementofficials with a detailed description of the merchandise involved, including serial numbers, if any, or other specific identifying information, including thename and address of the customer obtained from a valid identification card and photographs of the customers and/or merchandise in certain jurisdictions.Goods held to secure pawns or goods purchased may be subject to mandatory holding periods before they can be resold by the Company. If pawned orpurchased merchandise is determined to belong to an owner other than the borrower or seller, it may be subject to confiscation by police for recovery by therightful owners. Historically, the Company has not found the volume of the confiscations or claims to have a material adverse effect upon results ofoperations. The Company does not maintain insurance to cover the costs of returning merchandise to its rightful owners but historically has benefited fromcivil and criminal restitution efforts.The Company operates its consumer loan business in 12 states which are regulated under a variety of enabling state statutes and subject to various local rules,regulations and ordinances. The scope of these regulations, including the fees and terms of the Company’s consumer loan products and services, varies bystate, county and city. These laws generally define the services that the Company can provide to consumers and require the Company to provide a contract tothe customer outlining the Company’s services and the cost of those services to the customer. During fiscal 2017, the Company’s consumer loan and creditservices fee revenue represented approximately 4% of the Company’s overall revenues.The states with laws that specifically regulate the Company’s consumer loan products and services typically limit the principal amount of a consumer loanand set maximum fees or interest rates that customers may be charged. Most states also limit a customer’s ability to renew a short-term consumer loan andrequire various disclosures to consumers. State statutes often specify minimum and maximum maturity dates for consumer loans and, in some cases, specifymandatory cooling-off periods between transactions. The Company’s collection activities regarding past due amounts are subject to consumer protectionlaws and state regulations relating to debt collection practices. Also, some states require the Company to report loan activity to state-wide databases andrestrict the number and/or principal amount of loans a consumer may have outstanding at any particular time or over the course of a particular period of time,typically twelve months. In addition, these laws may require additional disclosures to consumers and may require the Company to be registered with thejurisdiction and/or be bonded.As a credit services organization in certain jurisdictions, the Company assists customers in applying for a short-term extension of credit from the IndependentLenders and issues the Independent Lenders a guarantee for the repayment of the extension of credit. When a consumer executes a credit services agreementwith the Company, the customer agrees to pay a fee to the Company if the Independent Lenders approve the extension of credit, and the Company agrees toguarantee the customer’s obligation to repay the14Table of Contents extension of credit received by the customer from the Independent Lenders if the customer fails to do so. The credit services organization must give aconsumer the right to cancel the credit services agreement without penalty within three days after the agreement is signed. In addition, credit serviceslocations generally must be registered as a credit services organization and are subject to various other jurisdictional regulations and requirements.Local rules, regulations and ordinances vary widely from county to county or city to city. While many of the local rules and regulations relate primarily tozoning and land use restrictions, certain cities have restrictive regulations specific to pawn and consumer loan products. Additionally, local jurisdictions’efforts to regulate or restrict the terms of pawn, consumer loan and credit services products will likely continue to increase.It is expected that additional legislation and/or regulations relating to pawn transactions, credit services, installment loans and other consumer loan productswill be proposed in several state legislatures and/or city councils where the Company has pawn, consumer loan products and credit services operations.Though the Company cannot accurately predict the scope, extent and nature of future regulations, it is likely that such legislation may address the maximumallowable interest rates on loans, significantly restrict the ability of customers to obtain such loans by limiting the maximum number of consecutive loantransactions that may be provided to a customer, and/or limiting the total loans a customer may have outstanding at any point in time. Any or all of thesechanges could make offering these products less profitable and could restrict or even eliminate the availability of consumer loan, pawn transactions andcredit services products in some or all of the states or localities in which the Company offers such products.Many local government entities prohibit or restrict pawn and other consumer finance and check cashing activities through zoning ordinances, which cansignificantly limit the ability of the Company to move, expand, remodel or relocate store locations, and in some cases cause existing stores to be closed. Insome jurisdictions, check cashing companies or money transmission agents are required to meet minimum bonding or capital requirements and are subject torecord-keeping requirements. Consequently, the Company has de-emphasized its consumer loan business over the last few years and will likely continue todo so in the future, and beginning in fiscal 2018, the Company no longer offers fee-based check cashing services in its non-franchised stores.The Company cannot currently assess the likelihood of any other proposed legislation, regulations or amendments, such as those described above, whichcould be enacted. However, if such legislation or regulations were enacted in certain jurisdictions, it could have a materially adverse impact on the revenueand profitability of the Company.Mexico Federal RegulationsFederal law in Mexico provides for administrative regulation of the pawnshop industry by the Federal Consumer Protection Bureau (“PROFECO”), Mexico’sprimary federal consumer protection agency, which requires the Company to annually register its pawn stores, approve the pawn contracts and disclose theinterest rate and fees charged on pawn and consumer loan transactions. In addition, the pawnshop and consumer finance industries in Mexico are subject tovarious general business regulations in the areas of tax compliance, customs, consumer protections, money laundering, public safety and employmentmatters, among others, by various federal, state and local governmental agencies.PROFECO regulates the form and non-financial terms of pawn contracts and defines certain operating standards and procedures for pawnshops, includingretail operations, consumer disclosures and establishes reporting requirements. In January 2013, federal legislation conveyed additional regulatory authorityto PROFECO regarding the pawn industry and the national registration process. The 2013 legislation requires all pawn businesses and its owners to registerannually with and be approved by PROFECO in order to legally operate. In addition, all operators must comply with additional customer notice anddisclosure provisions, bonding requirements to insure against loss or insolvency, reporting of certain types of suspicious transactions, and reporting to statelaw enforcement officials of certain transactions (or series of transactions) or suspicious transactions on a monthly basis to states’ attorneys general offices.PROFECO continues to modify its process and procedures regarding its annual registration requirements and the Company has complied and complies in allmaterial respects with this process and registration requirements as administered by PROFECO. There are significant fines and sanctions, including operatingsuspensions for failure to register and/or comply with PROFECO’s rules and regulations. Effective in November 2013, the federal government of Mexico enacted anti-money laundering regulations, The Federal Law for the Prevention andIdentification of Transactions with Funds From Illegal Sources (“Anti-Money Laundering Law”), which requires monthly reporting of certain transactions (orseries of transactions) exceeding certain monetary limits, imposed stricter maintenance of customer identification records and controls and requires reportingof all foreign (non-Mexican) customer transactions. This law affects all industries in Mexico and is intended to detect commercial activities arising fromillicit or ill-gotten means though bilateral cooperation between Mexico’s Ministry of Finance and Public Credit (“Hacienda”), and all of Mexico’s variousstates’ attorneys general offices (“PGR”). This law restricts the use of cash in certain transactions associated with high-value assets, and limits, to the extentpossible, money laundering activities protected by the anonymity that cash transactions provide. The law15Table of Contents empowers Hacienda to oversee and enforce these regulations and to follow up on the information received from other agencies in Mexico and abroad.Relevant aspects of the law specifically affecting the pawn industry include monthly reporting by the Company to Hacienda and the PGR on “vulnerableactivities,” which encompass the sale of jewelry, precious metals and watches exceeding $60,769 Mexican pesos, individually, and retail and pawntransactions (of cash or credit) exceeding $121,161 Mexican pesos, in aggregate. There are significant fines and sanctions for failure to comply with the Anti-Money Laundering Law.In January 2012, the Federal Personal Information Protection Act (“Mexico Privacy Law”) went into effect, which requires companies to protect theircustomers’ personal information, among other things. Specifically, the Mexico Privacy Law requires that the Company create and maintain a privacy policyand inform its customers whether the Company shares the customer’s personal information with third parties or transfers personal information to thirdparties. It also requires public posting (both on-line and in-store) of the Company’s privacy policy, which includes a process for the customer to revoke anyprevious consent granted to the Company for the use of the customer’s personal information, or limit the use or disclosure of such information.Mexico State and Local RegulationsCertain state and local governmental entities in Mexico also regulate pawn, other consumer finance and retail businesses through state laws and local zoningand permitting ordinances. For example, in certain states where the Company has significant operations, the states have enacted legislation or implementedregulations which require items such as special state operating permits for pawn stores, certification of pawn employees trained in valuation of merchandise,stricter customer identification controls, collateral ownership certifications and/or detailed and specified transactional reporting of customers and operations.Certain other states have proposed similar legislation but have not yet enacted such legislation. Additionally, certain municipalities in Mexico haveattempted to curtail the operation of new and existing pawn stores through additional local business licensing, permitting and reporting requirements. Stateand local agencies, including local and state police officials, often have unlimited and discretionary authority to suspend store operations pending aninvestigation of suspicious pawn transactions or resolution of actual or alleged regulatory, licensing and permitting issues.Other Latin American Federal and Local RegulationsSimilar to Mexico, certain federal, department and local governmental entities in Guatemala and El Salvador also regulate the pawn industry, other consumerfinance (including consumer lending and disclosures) and retail and commercial businesses. Certain federal laws and local zoning and permitting ordinancesrequire basic commercial business licenses and signage permits. Operating in these countries also subjects the Company to other types of regulationsincluding, but not limited to, regulations related to commercialization of merchandise, financial reporting, privacy and data protection, tax compliance, laborand employment practices, real estate transactions, anti-money laundering, commercial and electronic banking restrictions or cancellations, credit cardtransactions, marketing, advertising and other general business activities. Like Mexico, department agencies, including local and state police officials haveunlimited and discretionary authority in their application of their rules and requirements.As the scope of the Company’s international operations increases, the Company may face additional administrative and regulatory costs in operating andmanaging its business. In addition, unexpected changes, arbitrary or adverse court decisions, adverse action by financial regulators, aggressive publicofficials or regulators attacking the Company’s business models, administrative interpretations of federal or local requirements or legislation, or publicremarks by elected officials could negatively impact the Company’s operations and profitability.EmployeesThe Company had almost 17,000 employees as of December 31, 2017, including approximately 1,200 persons employed in executive, supervisory,administrative and accounting functions. None of the Company’s employees are covered by collective bargaining agreements. The Company considers itsemployee relations to be satisfactory.InsuranceThe Company maintains property all-risk coverage and liability insurance for each of its locations in amounts management believes to be adequate. TheCompany maintains workers’ compensation or employer’s indemnification insurance in states in which the Company operates.16Table of Contents FirstCash WebsiteThe Company’s primary website is at www.firstcash.com. The Company makes available, free of charge, at its corporate website, its annual report on Form10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of theSecurities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably practicable after they are electronically filed with the Securitiesand Exchange Commission (“SEC”). The SEC maintains an internet site that contains reports, proxy and information statements, and other informationregarding issuers that file electronically with the SEC at www.sec.gov.Item 1A. Risk FactorsImportant risk factors that could materially affect the Company’s business, financial condition or results of operations in future periods are described below.These factors are not intended to be an all-encompassing list of risks and uncertainties and are not the only risks and uncertainties facing the Company.Additional risks not currently known to the Company or that it currently deems to be immaterial also may materially adversely affect its business, financialcondition or results of operations in future periods.Risks Related to the Company’s Business and IndustryThe Company’s financial position and results of operations may fluctuate significantly due to fluctuations in currency exchange rates in Latin Americanmarkets.The Company derives significant revenue, earnings and cash flow from operations in Latin America, where business operations are transacted in Mexicanpesos and Guatemalan quetzales. The Company’s exposure to currency exchange rate fluctuations results primarily from the translation exposure associatedwith the preparation of the Company’s consolidated financial statements, as well as from transaction exposure associated with transactions and assets andliabilities denominated in currencies other than the respective subsidiary’s functional currency. While the Company’s consolidated financial statements arereported in U.S. dollars, the financial statements of the Company’s Latin American subsidiaries are prepared using their respective functional currency andtranslated into U.S. dollars by applying appropriate exchange rates. As a result, fluctuations in the exchange rate of the U.S. dollar relative to the LatinAmerican currencies could cause significant fluctuations in the value of the Company’s assets, liabilities, stockholders’ equity and operating results. Inaddition, while expenses with respect to foreign operations are generally denominated in the same currency as corresponding sales, the Company hastransaction exposure to the extent expenditures are incurred in currencies other than the respective subsidiary’s functional currency. The costs of doingbusiness in foreign jurisdictions also may increase as a result of adverse currency rate fluctuations. In addition, changes in currency rates could negativelyaffect customer demand, especially in Latin America and in U.S. stores located along the Mexican border. The average value of the Mexican peso to the U.S.dollar exchange rate for fiscal 2017 was 18.9 to 1, compared to 18.7 to 1 in fiscal 2016 and 15.8 to 1 in fiscal 2015. The average value of the Guatemalanquetzal to the U.S. dollar exchange rate for fiscal 2017 was 7.4 to 1, compared to 7.6 to 1 in fiscal 2016 and 7.7 to 1 in fiscal 2015. The Company also hasoperations in El Salvador where the reporting and functional currency is the U.S. dollar.The Company’s products and services are subject to extensive regulation and supervision under various federal, state and local laws, ordinances andregulations in both the U.S. and Latin America. If changes in regulations affecting the Company’s pawn, credit services and consumer loan businessescreate increased restrictions, or have the effect of prohibiting loans in the jurisdictions where the Company offers these products, such regulations couldmaterially impair or reduce the Company’s pawn, credit services and consumer loan businesses and limit its expansion into new markets.The Company’s products and services are subject to extensive regulation and supervision under various federal, state and local laws, ordinances andregulations in both the U.S. and Latin America. The Company faces the risk that restrictions or limitations on loan products, loan amounts, loan yields, loanfees and customer acceptance of loan products resulting from the enactment, change, or interpretation of laws and regulations in the U.S. or Latin Americacould have a negative effect on the Company’s business activities. Both consumer loans, including vehicle title loans, and, to a lesser extent, pawntransactions and buy/sell agreements, have come under increased scrutiny and increasingly restrictive regulation in recent years. Other enacted or recentlyproposed regulatory activity may limit the number of loans that customers may receive or have outstanding and require the Company to offer an extendedpayment plan to its customers, and regulations adopted by some states require that all borrowers of certain loan products be listed on a database, limit theyield on pawn or consumer loans and limit the number of such loans borrowers may have outstanding. Certain consumer advocacy groups and federal andstate legislators have also asserted that laws and regulations should be tightened so as to severely limit, if not eliminate, the availability of pawn transactions,buy/sell agreements, consumer loans and credit services products to consumers. It is difficult to assess the likelihood of the enactment of any unfavorable17Table of Contents federal or state legislation or local ordinances, and there can be no assurance that additional legislative or regulatory initiatives will not be enacted thatwould severely restrict, prohibit, or eliminate the Company’s ability to offer certain products and services.In Latin America, restrictions and regulations affecting pawn, buy/sell and consumer loan industries, including licensing restrictions, customer identificationrequirements, suspicious activity reporting, disclosure requirements and limits on interest rates, loan service fees, or other fees have been and continue to beproposed from time to time. Adoption of such federal, state or local regulation or legislation in the U.S. and Latin America could restrict, or even eliminate,the availability of pawn transactions, buy/sell agreements and consumer loans at some or all of the Company’s locations, which would adversely affect theCompany’s operations and financial condition.The extent of the impact of any future legislative or regulatory changes will depend on the political climate, the nature of the legislative or regulatorychange, the jurisdictions to which the new or modified laws would apply, and the amount of business the Company does in that jurisdiction. Moreover,similar actions by states or foreign countries in which the Company does not currently operate could limit its opportunities to pursue its growth strategies. Amore detailed discussion of the regulatory environment and current developments and risks to the Company is provided in “Business—GovernmentalRegulation.”Media reports, statements made by regulators and elected officials and public perception in general of pawnshop and consumer loan operations, includingpayday advances or pawn transactions, as being predatory or abusive could materially adversely affect the Company’s pawn, consumer loan and creditservices businesses. In recent years, consumer advocacy groups and some media reports, in both the U.S. and Latin America, have advocated governmentalaction to prohibit or place severe restrictions on consumer loans, including payday advances and pawn services.Reports and statements made by consumer advocacy groups, members of the media, regulators and elected officials often focus on the annual or monthly costto a consumer of consumer loans and pawn transactions, which are generally higher than the interest typically charged by banks to consumers with bettercredit histories. These reports and statements typically characterize pawn and/or consumer loans as predatory or abusive or focus on alleged instances ofpawn operators purchasing or accepting stolen property as pawn collateral. If the negative characterization of these types of transactions becomesincreasingly accepted by consumers, demand for pawn and/or consumer loan products could significantly decrease, which could materially affect theCompany’s results of operations and financial condition. Additionally, if the negative characterization of these types of transactions becomes increasinglyaccepted by legislators and regulators, the Company could become subject to more restrictive laws and regulations that could have a material adverse effecton the Company’s financial condition and results of operations.The CFPB has regulatory, supervisory and enforcement powers over providers of consumer financial products and services in the U.S., and it couldexercise its enforcement powers in ways that could have a material adverse effect on the Company’s business and financial results.The CFPB has been exercising its supervisory review over certain non-bank providers of consumer financial products and services, including providers ofconsumer loans and certain title pawn loans such as the Company. The CFPB’s examination authority permits CFPB examiners to inspect the books andrecords of providers of short-term, small dollar lenders, such as the Company, and ask questions about their business practices. The CFPB’s examinationprocedures include specific modules for examining marketing activities, loan application and origination activities, payment processing activities, sustaineduse by consumers, collection practices, accounts in default and consumer reporting activities as well as third-party relationships. As a result of theseexaminations of non-bank providers of consumer credit, the Company could be required to change its practices or procedures, whether as a result of anotherparty being examined or as a result of an examination of the Company, or could be subject to monetary penalties, which could adversely affect the Company.Under certain circumstances, the CFPB may also be able to exercise regulatory authority over providers of pawn services through its rule making authority.For example, on July 11, 2017, the CFPB issued the Arbitration Rule banning waiver of class action in pre-dispute arbitration clauses with an effective dateof March 2019. The rule, as written, would have prohibited financial services companies, including the Company, from using arbitration clauses that banconsumers from participating in class actions. However, the Arbitration Rule was repealed by Congress and the repeal was signed by the President onNovember 1, 2017. The congressional repeal prevents the measure from returning to legislative consideration for the next five years.Another example is the SDL Rule released by the CFPB on October 5, 2017. The SDL Rule technically became effective on January 16, 2018, but there is nopractical effect until April 2018, at the earliest, with most of the SDL Rule’s provisions becoming effective July 2019. On January 16, 2018, however, theCFPB announced that it intends “to engage in a rulemaking process so that the Bureau may reconsider the payday rule.” The outcome of this announcementis unclear, but it is possible that the CFPB could amend portions of the SDL Rule before it takes effect. If the SDL Rule takes effect, lenders, like theCompany, will likely be required, among other things, to determine whether consumers have the ability to repay their loans before issuing certain short-18Table of Contents term small dollar, payday and auto title loans, obtain verification from the consumer of certain debts and verification through outside sources by lenders ofcertain debts, implement mandatory cooling off periods and increase restrictions on collection practices. The SDL Rule defines the Company’s consumerloan products, both short-term loans, and installment loans, as loans covered under the rule, but the vast majority of the Company’s pawn loans are notcovered by the rule. If the SDL Rule remains effective in its current form, the small dollar lending industry will experience a significant regulatory change.While the SDL Rule has been finalized, it is still not certain whether it will take effect, and to what extent it will impact the Company since the CFPB issued aformal statement notifying the public that it intends to engage in a “rulemaking process” to reconsider the rule. The Company continues to review the SDLRule to determine its potential impact on the Company’s consumer loan portfolio if the rule is not repealed or otherwise revised. On a consolidated basis, theCompany expects consumer loan revenue for the year ending December 31, 2018 to account for approximately 3.5% of the Company’s consolidated totalrevenue.In addition to having the authority to obtain monetary penalties for violations of applicable federal consumer financial laws (including the CFPB’s ownrules), the CFPB can require remediation of practices, including through memorandums of understanding and consent orders, pursue administrativeproceedings or litigation and obtain cease and desist orders (which can include orders for restitution or rescission of contracts, as well as other kinds ofaffirmative relief). Also, where a company has violated Title X of the Dodd-Frank Act or CFPB regulations implemented under Title X of the Dodd-Frank Act,the Dodd-Frank Act empowers state attorneys general and state regulators to bring civil actions to remedy violations of state law. If the CFPB or one or morestate attorneys general or state regulators believe that the Company has violated any of the applicable laws or regulations or any consent orders ormemorandums of understanding instituted by the CFPB or state regulators against the Company, they could exercise their enforcement powers in ways thatcould have a material adverse effect on the Company’s business and financial results.See “Business—Government Regulation” for a further discussion of the regulatory authority of the CFPB.PROFECO has regulatory, supervisory and enforcement powers over pawn operators in Mexico, and it could exercise its enforcement powers in ways thatcould have a material adverse effect on the Company’s business and financial results.Federal law in Mexico provides for administrative regulation of the pawnshop industry by PROFECO, Mexico’s primary federal consumer protection agency.PROFECO requires all pawn operators like the Company to register its pawn stores, pawn contracts and to disclose the interest rate and fees charged on pawnand consumer loan transactions. PROFECO also regulates the form and non-financial terms of pawn contracts and defines certain operating standards andprocedures for pawnshops and establishes reporting requirements.In January 2013, federal legislation conveyed additional regulatory authority to PROFECO regarding the pawn industry and national registration process.The 2013 legislation requires all pawn businesses and their owners to annually register with and be approved by PROFECO in order to legally operate. Inaddition, all operators must comply with additional customer notice and disclosure provisions, bonding requirements to insure against loss or insolvency,reporting of certain types of suspicious transactions and monthly reporting to state law enforcement officials of certain transactions (or series of transactions).There are significant fines and sanctions, including operating suspensions, for failure to register and/or comply with PROFECO’s rules and regulations.PROFECO continues to modify its process and procedures regarding its annual registration requirements and the Company has complied and complies in allmaterial respects with this process and registration requirements as administered by PROFECO.The adoption of new laws or regulations or adverse changes in, or the interpretation or enforcement of, existing laws or regulations affecting theCompany’s products and services could adversely affect its financial condition and operating results. Governments at the national, state and local levels, may seek to impose new laws, regulatory restrictions or licensing requirements that affect the Company’sproducts or services it offers, the terms on which it may offer them, and the disclosure, compliance and reporting obligations it must fulfill in connection withits business. They may also interpret or enforce existing requirements in new ways that could restrict the Company’s ability to continue its current methods ofoperation or to expand operations, impose significant additional compliance costs, and could have a material adverse effect on the Company’s financialcondition and results of operations. In some cases these measures could even directly prohibit some or all of the Company’s current business activities incertain jurisdictions, or render them unprofitable and/or impractical to continue.In July 2015, the U.S. Department of Defense published the MLA Rule. The MLA Rule (and rules previously adopted thereunder) have prevented theCompany from offering its pawn services and short-term unsecured credit products to members of the military or their dependents because none of theCompany’s products carry a military annual percentage rate of 36% or less. The MLA Rule, which went into effect on October 3, 2016, amended requirementsfor its “safe harbor” (making covered member attestation insufficient on its own to comply with the “safe harbor” provision of the MLA Rule) and expandedthe scope of the credit products covered by the MLA to include certain non-purchase money loans secured by personal property, including pawn loans, orvehicles19Table of Contents and certain unsecured installment loan products to the extent any such products have a military annual percentage rate greater than 36%. Under the MLARule, the Company is unable to offer any of its current credit products, including pawn loans, to members of the U.S. military or their dependents. While theCompany does not believe that active members of the U.S. military or their dependents comprise a significant percentage of the historical customer base inmost locations, compliance with the MLA Rule, including its safe harbor provisions, is complex, increases compliance risks and related costs and limits thepotential customer base of the Company.Declines in commodity market prices of gold and other precious metals and diamonds could negatively affect the Company’s profits.The Company’s profitability could be adversely impacted by commodity market fluctuations. As of December 31, 2017, approximately 56% of theCompany’s pawn loans were collateralized with jewelry, which is primarily gold, and 51% of its inventories consisted of jewelry, which is also primarilygold. The Company sells significant quantities of gold, other precious metals and diamonds acquired through collateral forfeitures or direct purchases fromcustomers. A significant and sustained decline in gold and/or other precious metal and diamond prices could result in decreased merchandise sales andrelated margins, decreased inventory valuations and sub-standard collateralization of outstanding pawn loans. In addition, a significant decline in marketprices could result in a lower balance of pawn loans outstanding for the Company, as customers would receive lower loan amounts for individual pieces ofjewelry or other gold items. For a detailed discussion of the impact of a decline in market prices on wholesale scrap jewelry sales, see “Item 7A. Quantitativeand Qualitative Disclosures About Market Risk.”Risks and uncertainties related to the Company’s foreign operations could negatively impact the Company’s operating results.As of December 31, 2017, the Company had 999 store locations in Latin America, including 953 in Mexico, 33 in Guatemala and 13 in El Salvador. TheCompany plans to open additional stores in Latin America, including stores in Colombia beginning in 2018. Doing business in each of these countries, andin Latin America generally, involves increased risks related to geo-political events, political instability, corruption, economic volatility, drug cartel andgang-related violence, social and ethnic unrest including riots and looting, enforcement of property rights, governmental regulations, tax policies, bankingpolicies or restrictions, foreign investment policies, public safety and security, anti-money laundering regulations and import/export regulations amongothers. As in many developing markets, there are also uncertainties as to how both local law and U.S. federal law is applied, including areas involvingcommercial transactions and foreign investment. As a result, actions or events could occur in Mexico, Guatemala or El Salvador that are beyond theCompany’s control, which could restrict or eliminate the Company’s ability to operate some or all of its locations in these countries or significantly reducecustomer traffic, product demand and the expected profitability of such operations.Changes impacting U.S. international trade and corporate tax provisions may have an adverse effect on the Company’s financial condition and results ofoperations.Because international operations increase the complexity of an organization, the Company may face additional administrative costs in managing itsbusiness. In addition, most countries typically impose additional burdens on non-domestic companies through the use of local regulations, tariffs, laborcontrols and other federal or state requirements or legislation. As the Company derives significant revenue, earnings and cash flow from operations in LatinAmerica, primarily in Mexico, there are some inherent risks regarding the overall stability of the trading relationship between Mexico and the U.S. and theburdens imposed thereon by any changes to (or the adoption of new) regulations, tariffs or other federal or state legislation. Specifically, the Company hassignificant exposure to fluctuations and devaluations of the Mexican peso and the health of the Mexican economy, which, in each case, may be negativelyimpacted by changes in U.S. trade treaties (such as the North American Free Trade Agreement (“NAFTA”)) and corporate tax policy, including the impositionof a tax on imports from countries with which the U.S. runs a trade deficit, which includes countries such as Mexico. In particular, the current president hasindicated that NAFTA and future import taxes are under scrutiny by his administration and that NAFTA may be renegotiated and new import taxes imposedwith respect to imports from Mexico and other countries in which the U.S. runs a trade deficit. Additionally, the reduction of the U.S. corporate tax rate, to arate which is substantially below the corporate rate in Mexico, could create unforeseen risks. In some cases, there have been negative reactions to the enactedand/or proposed policies as expressed in the media and by politicians in Mexico, which could potentially negatively impact U.S. companies operating inMexico. While the Company engages in limited cross-border transactions other than those involving scrap jewelry sales, any such changes in regulations,trade treaties, corporate tax policy, import taxes or adverse court or administrative interpretations of the foregoing could adversely and significantly affect theMexican economy and ultimately the Mexican peso, which could adversely and significantly affect the Company’s financial position and results of theCompany’s Latin America operations.20Table of Contents The Company’s allowance for credit losses for credit services and consumer loans may not be sufficient to cover actual credit losses, which could adverselyaffect its financial condition and operating results.The Company offers fee-based CSO Programs through which the Company assists customers in applying for short-term extensions of credit from IndependentLenders. The Company’s stand-alone consumer loan stores and select pawn stores in the states of Texas and Ohio offer the CSO Programs. When an extensionof credit is granted, the Company provides a guarantee to the Independent Lenders for the repayment of the customer’s extension of credit. The Companyrecords the estimated fair value of the guarantee liability in accrued liabilities. The Company also has customer loans arising from its consumer loanoperations. The Company is required to recognize losses resulting from the inability of credit services and consumer loan customers and/or borrowers torepay such receivables or loans. The Company maintains an allowance for credit losses in an attempt to cover credit losses inherent in its consumer loanoperations. Additional credit losses will likely occur in the future and may occur at a rate greater than the Company has experienced to date. The allowancefor credit losses is based primarily upon historical credit loss experience, with consideration given to delinquency levels, collateral values, economicconditions and underwriting and collection practices. This evaluation is inherently subjective, as it requires estimates of material factors that may besusceptible to significant change, especially in the event of a change in the governmental regulations that affect the Company’s ability to generate new loansor collect outstanding loans. If the Company’s assumptions and judgments prove to be incorrect, its current allowance may not be sufficient and adjustmentsmay be necessary to allow for different economic conditions or adverse developments in its loan portfolio, which could adversely affect its financialcondition and operating results.The failure or inability of third-parties who provide products, services or support to the Company to maintain their products, services or support coulddisrupt Company operations or result in a loss of revenue.The Company’s credit services operations depend, in part, on the willingness and ability of the Independent Lenders to make extensions of credit to itscustomers. The loss of the relationship with these lenders, and an inability to replace them with new lenders, or the failure of the lenders to fund newextensions of credit and to maintain volumes, quality and consistency in its loan programs could cause the Company to lose customers and substantiallydecrease the revenue and earnings of the Company’s credit services business. In addition, the Company’s lending, pawn retail, scrap jewelry and cashmanagement operations are dependent upon the Company’s ability to maintain retail banking relationships with commercial banks. Recent actions byfederal regulators in the U.S. and other Latin American countries where the Company operates have caused many commercial banks, including certain banksused by the Company, to cease offering such services to the Company and other companies in the Company’s industry. The Company also reliessignificantly on outside vendors to provide services such as financial transaction processing (including foreign exchange), utilities, store security, armoredtransport, precious metal smelting, data and voice networks, and other information technology products and services. The failure or inability of any of thesethird-party lenders, financial institutions or vendors to provide such services could limit the Company’s ability to grow its business and could increase theCompany’s costs of doing business, which could adversely affect the Company’s operations if the Company is unable to timely replace them withcomparable service providers at a comparable cost.An inability to disburse consumer loan proceeds or collect consumer loan payments through the ACH system would materially adversely affect theCompany’s consumer loan business.The Company’s consumer loan businesses, including loans made through the CSO Programs, depend all or in part on the ACH system to collect amounts dueto the Company by withdrawing funds from its customers’ bank accounts when the Company has obtained written authorization to do so from its customers.The Company’s ACH transactions are processed by banks, and if these banks cease to provide ACH processing services to the Company, the Company wouldhave to materially alter, or possibly discontinue, some or all of its credit services and consumer loan business if alternative ACH processors are not available.It was reported that actions by the Department of Justice, the FDIC and certain state regulators appear to be discouraging banks, non-bank providers, andACH payment processors from providing access to the ACH system (e.g. debiting/crediting consumer accounts) for certain short-term consumer loanproviders that they believe are operating illegally. The heightened regulatory scrutiny by the Department of Justice, the FDIC and other state and federalregulators has the potential to cause banks and ACH payment processors to cease doing business with consumer lenders who are operating legally, withoutregard to whether that lender is complying with applicable laws, simply to avoid the risk of heightened scrutiny or even unwarranted litigation. In addition,the National Automated Clearing House Association (“NACHA”) adopted certain operating rules that govern the use of the ACH system (“Rules”). Changesto the Rules were effective in 2015 and 2016. For example, some of the Rules add more options for which NACHA may begin an initial investigation orenforcement proceeding when an entity originates an excessive number of unauthorized entries. This could result in increased investigations of originatoractivity, and could ultimately result in fines passed on to those originators. Other portions of the Rules establish acceptable guidelines for certain returns ofan originator. Return rates that exceed these guidelines may trigger an inquiry and review process by NACHA and the engagement of an industry reviewpanel to evaluate the facts behind an originator's ACH activity. The evaluation could also result in a Rules violation or a Rules21Table of Contents enforcement proceeding. Lastly, the NACHA Rules now formally define the types of entries that may be reinitiated, and those that are prohibited fromreinitiation, among other notable changes. There can be no assurance the Company’s access to the ACH system will not be impaired as a result of this heightened scrutiny or the NACHA ruleamendments. If this access is impaired, the Company’s consumer loan business could be materially adversely affected and the Company may find it difficultor impossible to continue some or all of its credit services and consumer loan business, which could have a material adverse effect on the Company’sbusiness, prospects and results of operations and financial condition.Increased competition from banks, credit unions, internet-based lenders, other short-term consumer lenders, and other entities offering similar financialservices, as well as retail businesses that offer products and services offered by the Company, could adversely affect the Company’s results of operations.The Company’s principal competitors are other pawnshops, consumer loan companies, internet-based lenders, consumer finance companies, rent-to-ownstores, retail finance programs, payroll lenders, banks, credit unions and other financial institutions that serve the Company’s primary cost conscious andunderbanked customer base. Many other financial institutions or other businesses that do not now offer products or services directed toward the Company’straditional customer base, many of whom may be much larger than the Company, could begin doing so. Significant increases in the number and size ofcompetitors for the Company’s business could result in a decrease in the number of consumer loans or pawn transactions that the Company writes, resultingin lower levels of revenue and earnings in these categories. Furthermore, the Company has many competitors to its retail operations, such as retailers of newmerchandise, retailers of pre-owned merchandise, other pawnshops, thrift shops, online retailers, online classified advertising sites and online auction sites.Increased competition or aggressive marketing and pricing practices by these competitors could result in decreased revenue, margins and turnover rates in theCompany’s retail operations. In Mexico, the Company competes directly with certain pawn stores owned by government affiliated or sponsored non-profitfoundations. The government could take actions that would harm the Company’s ability to compete in the Mexico market.A sustained deterioration of economic conditions or an economic crisis could reduce demand or profitability for the Company’s products and services andincrease credit losses which would result in reduced earnings.The Company’s business and financial results may be adversely impacted by sustained unfavorable economic conditions or unfavorable economicconditions associated with a global or regional economic crisis which, in either case, include adverse changes in interest or tax rates, effects of governmentinitiatives to manage economic conditions and increased volatility of commodity markets and foreign currency exchange rates. Specifically, a sustained orrapid deterioration in the economy could cause deterioration in the performance of the Company’s loan portfolios and in consumer or market demand for pre-owned merchandise or gold such as that sold in the Company’s pawnshops. A sustained deterioration in the economy could reduce the demand and resalevalue of pre-owned merchandise and reduce the amount that the Company could effectively lend on an item of collateral. Such reductions could adverselyaffect pawn book balances, pawn redemption rates, inventory balances, inventory mixes, sales volumes and gross profit margins. An economic slowdown alsocould result in a decrease in loan demand and an increase in loan defaults on consumer loan and credit services products. During such a slowdown, theCompany could be required to tighten its underwriting standards, which would reduce consumer loan balances and related revenue and credit services fees,and could face more difficulty in collecting defaulted consumer loans, which could lead to an increase in loan losses. As consumer loans and credit servicescustomers generally have to be employed to qualify for a loan or extension of credit, an increase in the unemployment rate would reduce the number ofpotential customers.A decrease in demand for the Company’s products and services and the failure of the Company to adapt to such decreases could adversely affect theCompany’s results of operations.Although the Company actively manages its products and service offerings to ensure that such offerings meet the needs and preferences of its customer base,the demand for a particular product or service may decrease due to a variety of factors, including many that the Company may not be able to anticipate orrespond to in a timely manner, such as the availability and pricing of competing products, changes in customers’ financial conditions as a result of changes inunemployment levels, fuel prices or other events, real or perceived loss of consumer confidence or regulatory restrictions that increase or reduce customeraccess to particular products. Should the Company fail to adapt to a significant change in its customers’ demand for, or regulatory access to, its products, theCompany’s revenue could decrease significantly. Even if the Company does make adaptations, customers may resist or may reject products whoseadaptations make them less attractive or less available. In any event, the effect of any product change on the results of the Company’s business may not befully ascertainable until the change has been in effect for some time. In particular, the Company has changed, and will continue to change, some of theconsumer loan products and services it offers due to regulatory developments. Demand may also fluctuate by geographic region. The current geographicconcentration of the Company’s stores creates exposure to local economies and regional downturns (see “—Item 1. Business—Locations and Operations” forstore22Table of Contents concentration by state). As a result, the business is currently more susceptible to regional conditions than the operations of more geographically diversifiedcompetitors, and the Company is vulnerable to economic downturns in those regions. Any unforeseen events or circumstances that negatively affect theseareas could materially adversely affect the Company’s revenues and profitability.Changes in the capital markets or the Company’s financial condition could reduce availability of capital on favorable terms, if at all.The Company has, in the past, accessed the debt capital markets to refinance existing debt obligations and to obtain capital to finance growth. Efficientaccess to these markets is critical to the Company’s ongoing financial success. However, the Company’s future access to the debt capital markets couldbecome restricted due to a variety of factors, including a deterioration of the Company’s earnings, cash flows, balance sheet quality, regulatory restrictions,fines, or orders or other regulatory action causing reputational harm, or overall business or industry prospects, a significant deterioration in the state of thecapital markets, including impacts of inflation or rising interest rates or a negative bias toward the Company’s industry by market participants. Inability toaccess the credit markets on acceptable terms, if at all, could have a material adverse effect on the Company’s financial condition and ability to fund futuregrowth.The Company's existing and future levels of indebtedness could adversely affect its financial health, its ability to obtain financing in the future, its abilityto react to changes in its business and its ability to fulfill its obligations under such indebtedness.As of December 31, 2017, including the Company's 5.375% senior notes issued in May 2017 (“Notes”) and the Company’s current credit facility, theCompany had outstanding principal indebtedness of $407.0 million and availability of $287.9 million under its credit facility. The Company's level ofindebtedness could:•make it more difficult for it to satisfy its obligations with respect to the Notes and its other indebtedness, resulting in possible defaults on andacceleration of such indebtedness;•require it to dedicate a substantial portion of its cash flow from operations to the payment of principal and interest on its indebtedness, therebyreducing the availability of such cash flows to fund working capital, acquisitions, new store openings, capital expenditures and other general corporatepurposes;•limit its ability to obtain additional financing for working capital, acquisitions, new store openings, capital expenditures, debt service requirementsand other general corporate purposes;•limit its ability to refinance indebtedness or cause the associated costs of such refinancing to increase;•restrict the ability of its subsidiaries to pay dividends or otherwise transfer assets to the Company, which could limit its ability to, among other things,make required payments on its debt;•increase the Company's vulnerability to general adverse economic and industry conditions, including interest rate fluctuations (because a portion ofits borrowings are at variable rates of interest); and•place the Company at a competitive disadvantage compared to other companies with proportionately less debt or comparable debt at more favorableinterest rates who, as a result, may be better positioned to withstand economic downturns.Any of the foregoing impacts of the Company's level of indebtedness could have a material adverse effect on its business, financial condition and results ofoperations.The Company’s business depends on the uninterrupted operation of the Company’s facilities, systems and business functions, including its informationtechnology and other business systems and the Company relies on other companies to provide key components of its business systems.The Company’s business depends highly upon its employees’ ability to perform, in an efficient and uninterrupted fashion, necessary business functions suchas operating, managing and securing its retail locations, technical support centers, call centers, security monitoring, treasury and accounting functions andother administrative support functions. Additionally, the Company’s storefront operations depend on the efficiency and reliability of the Company’s point-of-sale and loan management system. A shut-down of or inability to access the facilities in which the Company’s storefront point-of-sale and loanmanagement system and other technology infrastructure are based, such as due to a power outage, a security breach, a failure of one or more of its informationtechnology, telecommunications or other systems, a cyber attack, or sustained or repeated disruptions of such systems could significantly impair its ability toperform such functions on a timely basis and could result in a deterioration of the Company’s ability to perform efficient storefront lending and merchandisedisposition activities, provide customer service, perform collection activities, or perform other necessary business functions.23Table of Contents Furthermore, third parties provide a number of the key components necessary to the Company’s business functions and systems. While the Company hascarefully selected these third party vendors and has ongoing programs to review these vendors and assess risk, the Company does not control their actions.Any problems caused by these third parties, including those resulting from disruptions in communication services provided by a vendor, failure of a vendorto handle current or higher volumes, cyber-attacks and security breaches at a vendor, regulatory restrictions, fines, or orders or other regulatory action causingreputational harm, failure of a vendor to provide services for any reason or poor performance of services, could adversely affect the Company’s ability todeliver products and services to its customers and otherwise conduct its business. Financial or operational difficulties of a third-party vendor could also hurtits operations if those difficulties interfere with the vendor's ability to serve the Company. Furthermore, the Company’s vendors could also be sources ofoperational and information security risk to the Company, including from breakdowns or failures of their own systems or capacity constraints. Replacingthese third-party vendors could also create significant delay and expense. Accordingly, use of such third parties creates an unavoidable inherent risk to theCompany’s business operations.Security breaches, cyber attacks or fraudulent activity could result in damage to the Company’s operations or lead to reputational damage and expose theCompany to significant liabilities.A security breach of the Company’s computer systems, or those of the Company’s third party service providers, including as a result of cyber attacks, couldinterrupt or damage its operations or harm its reputation. In addition, the Company could be subject to liability if confidential customer or employeeinformation is misappropriated from its computer systems. Any compromise of security, including security breaches perpetrated on persons with whom theCompany has commercial relationships, that results in the unauthorized access to or use of personal information or the unauthorized access to or use ofconfidential employee, customer, supplier or Company information, could result in a violation of applicable privacy and other laws, significant legal andfinancial exposure, damage to the Company’s reputation, and a loss of confidence of the Company’s customers, vendors and others, which could harm itsbusiness and operations. Any compromise of security could deter people from entering into transactions that involve transmitting confidential information tothe Company’s systems and could harm relationships with the Company’s suppliers, which could have a material adverse effect on the Company’s business.Actual or anticipated cyber attacks may cause the Company to incur substantial costs, including costs to investigate, deploy additional personnel andprotection technologies, train employees and engage third-party experts and consultants. Despite the implementation of significant security measures, thesesystems may still be vulnerable to physical break-ins, computer viruses, programming errors, attacks by third parties or similar disruptive problems. TheCompany may not have the resources or technical sophistication to anticipate or prevent rapidly evolving types of cyber attacks.Most of the Company’s customers provide personal information in three ways: (1) when conducting a pawn transaction or selling merchandise, (2) during aconsumer loan transaction (when personal and bank account information is necessary for approving this transaction), and (3) when conducting a retailpurchase whereby a customer’s payment method is via a credit card, debit card or check. While the Company has implemented systems and processes toprotect against unauthorized access to or use of such personal information, there is no guarantee that these procedures are adequate to safeguard against allsecurity breaches or misuse of the information. Furthermore, the Company relies on encryption and authentication technology to provide security andauthentication to effectively secure transmission of confidential information, including customer bank account, credit card information and other personalinformation. However, there is no guarantee that these systems or processes will address all of the cyber threats that continue to evolve.In addition, many of the third parties who provide products, services, or support to the Company could also experience any of the above cyber risks orsecurity breaches, which could impact the Company’s customers and its business and could result in a loss of customers, suppliers or revenue.Lastly, the regulatory environment related to information security, data collection and use, and privacy is increasingly rigorous, with new and constantlychanging requirements applicable to the Company’s business, and compliance with those requirements could result in additional costs. These costsassociated with information security, such as increased investment in technology, the costs of compliance with privacy laws, and costs incurred to prevent orremediate information security breaches, could be substantial and adversely impact the Company’s business.Judicial or administrative decisions, CFPB rule-making or amendments to the Federal Arbitration Act (the “FAA”) could render the arbitrationagreements the Company uses illegal or unenforceable.The Company includes dispute arbitration provisions in many of its customer loan and pawn agreements. These provisions are designed to allow theCompany to resolve any customer disputes through individual arbitration rather than in court. The Company’s arbitration provisions explicitly provide thatall arbitrations will be conducted on an individual and not on a class basis. Thus, the Company’s arbitration agreements, if enforced, have the effect ofmitigating class and collective action liability. The Company’s arbitration agreements do not have any impact on regulatory enforcement proceedings. TheCompany takes the position that the24Table of Contents FAA requires enforcement, in accordance with the terms of its arbitration agreements, of class and collective action waivers of the type the Company uses,particularly now that the CFPB’s Arbitration Rule was officially repealed in November 2017.In the past, however, a number of state and federal circuit courts, including the California and Nevada Supreme Courts, and the National Labor RelationsBoard concluded that arbitration agreements with class action waivers are “unconscionable” and hence unenforceable, particularly where a small dollaramount is in controversy on an individual basis. In April 2011, however, the U.S. Supreme Court ruled in a 5-4 decision in AT&T Mobility v. Concepcion thatthe FAA preempts state laws that would otherwise invalidate consumer arbitration agreements with class action waivers. In December 2015, the SupremeCourt in a 6-3 decision in DIRECTV, Inc. v. Imburgia upheld DIRECTV’s service agreement that included a binding arbitration provision with a class actionwaiver, and declared that the arbitration clause at issue was governed by the FAA. The Company’s arbitration agreements differ in some respects from theagreement at issue in Concepcion and DIRECTV and some courts have continued, in the aftermath of Concepcion, to find reasons to rule that arbitrationagreements are unenforceable.In light of conflicting court decisions and potential future CFPB rulemaking, it is possible that the Company’s arbitration agreements will be renderedunenforceable. Additionally, Congress has considered legislation that would generally limit or prohibit mandatory dispute arbitration in consumer contracts,and it has adopted such prohibitions with respect to certain mortgage loans and certain consumer loans to active-duty members of the military and theirdependents.Any judicial or administrative decision, federal legislation or CFPB rule that would impair the Company’s ability to enter into and enforce consumerarbitration agreements with class action waivers could significantly increase the Company’s exposure to class action litigation as well as litigation inplaintiff friendly jurisdictions. Such litigation could have a material adverse effect on the Company’s business, results of operations and financial condition.The Company is subject to goodwill impairment risk.At December 31, 2017, the Company had $831.1 million of goodwill on its consolidated balance sheet, all of which represents assets capitalized inconnection with the Company’s acquisitions and business combinations. Accounting for goodwill requires significant management estimates and judgment.Management performs periodic reviews of the carrying value of goodwill to determine whether events and circumstances indicate that an impairment in valuemay have occurred. A variety of factors could cause the carrying value of goodwill to become impaired. A write-down of the carrying value of goodwill couldresult in a non-cash charge, which could have an adverse effect on the Company’s results of operations.The Company depends on its senior management and may not be able to retain those employees or recruit additional qualified personnel.The Company depends on its senior management. The loss of services of any of the members of the Company’s senior management could adversely affect theCompany’s business until a suitable replacement can be found. There may be a limited number of persons with the requisite skills to serve in these positions,and the Company cannot ensure that it would be able to identify or employ such qualified personnel on acceptable terms.The inability to successfully identify attractive acquisition targets, realize administrative and operational synergies and integrate completed acquisitionscould adversely affect results.The Company has historically grown, in part, through strategic acquisitions, including its Merger with Cash America and its Maxi Prenda acquisition, both in2016, and its acquisition of six stores during 2017. The Company’s strategy is to continue to pursue attractive acquisition opportunities if and when theybecome available. The success of an acquisition is subject to numerous internal and external factors, such as competition rules, the ability to consolidateinformation technology and accounting functions, the management of additional sales, administrative, operations and management personnel, overallmanagement of a larger organization, competitive market forces, and general economic factors. It is possible that the integration process could result inunrealized administrative and operational synergies, the loss of key employees, the disruption of ongoing businesses, tax costs or inefficiencies, orinconsistencies in standards, controls, information technology systems, procedures and policies, any of which could adversely affect the Company’s abilityto maintain relationships with customers, employees, or other third-parties or the Company’s ability to achieve the anticipated benefits of such acquisitionsand could harm its financial performance. Furthermore, future acquisitions may be in jurisdictions in which the Company does not currently operate in, whichcould make the successful consummation and integration of any such acquisitions more difficult. Failure to successfully integrate an acquisition could havean adverse effect on the Company’s business, results of operations and financial condition and failure to successfully identify attractive acquisition targetsand complete such acquisitions could have an adverse effect on the Company’s growth. Additionally, any acquisition has the risk that the Company may notrealize a return on the acquisition or the Company’s investment. In particular, the Company continues to integrate the Cash America businesses and stores,which if such integration is not successful, could25Table of Contents result in the benefits of the Merger not being fully realized and adversely impact the performance of the legacy Cash America stores.Current and future litigation or regulatory proceedings, both in the U.S. and Latin America, could have a material adverse effect on the Company’sbusiness, prospects, results of operations and financial condition.The Company or its subsidiaries has been or may be involved in the future, in lawsuits, regulatory or administrative proceedings, examinations,investigations, consent orders, memorandums of understanding or other actions arising in the ordinary course of business, including those related toconsumer protection, federal or state wage and hour laws, product liability, unclaimed property, employment, personal injury and other matters that couldcause it to incur substantial expenditures and generate adverse publicity. In particular, the Company may be involved in lawsuits or regulatory actionsrelated to employment, marketing, unclaimed property, competition matters, and other matters, including class action lawsuits brought against it for allegedviolations of the Fair Labor Standards Act, state wage and hour laws, state or federal advertising laws, consumer protection, lending, unclaimed property andother laws. The consequences of defending proceedings or an adverse ruling in any current or future litigation, judicial or administrative proceeding,including consent orders or memorandums of understanding, could cause the Company to incur substantial legal fees, to have to refund fees and/or interestcollected, refund the principal amount of advances, pay treble or other multiple damages, pay monetary penalties, fines, and/or modify or terminate theCompany’s operations in particular states or countries. Defense or filing of any lawsuit or administrative proceeding, even if successful, could requiresubstantial time, resources, and attention of the Company’s management and could require the expenditure of significant amounts for legal fees and otherrelated costs. Settlement of lawsuits or administrative proceedings may also result in significant payments and modifications to the Company’s operations.Due to the inherent uncertainties of litigation, administrative proceedings and other claims, the Company cannot accurately predict the ultimate outcome ofany such matters.Adverse court and administrative interpretations of the various laws and regulations under which the Company operates could require the Company to alterthe products that it offers or cease doing business in the jurisdiction where the court, state or federal agency interpretation is applicable. The Company is alsosubject to regulatory proceedings, and the Company could suffer losses from interpretations of state or federal laws in those regulatory proceedings, even if itis not a party to those proceedings. Any of these events could have a material adverse effect on the Company’s business, prospects, results of operations andfinancial condition and could impair the Company’s ability to continue current operations. Besides regulation specific to consumer lending, which isdiscussed previously, the Company’s pawn, credit services and consumer loan businesses are subject to other federal, state and local regulations, tax laws andimport/export laws, including but not limited to the Dodd-Frank Act, Unfair Deceptive or Abusive Acts and Practices, Federal Truth in Lending Act andRegulation Z adopted thereunder, Fair Debt Collections Practices Act, Military Lending Act, Bank Secrecy Act, Money Laundering Suppression Act of 1994,USA PATRIOT Act, Gramm-Leach-Bliley Act, Equal Credit Opportunity Act, Fair Credit Reporting Act, Electronic Funds Transfer Act, Fair and AccurateCredit Transactions Act, Foreign Corrupt Practices Act and the Brady Handgun Violence Prevention Act. In addition, the Company’s marketing efforts andthe representations the Company makes about its products and services are subject to federal and state unfair and deceptive practice statutes, including theFederal Trade Commission Act and analogous state statutes under which the Federal Trade Commission, state attorneys general or private plaintiffs maybring legal actions. If the Company is found to have engaged in an unfair and deceptive practice, it could have a material adverse effect on its business,prospects, results of operations and financial condition.The Company sells products manufactured by third parties, some of which may be defective. Many such products are manufactured overseas in countrieswhich may utilize quality control standards that vary from those legally allowed or commonly accepted in the U.S., which may increase the Company’s riskthat such products may be defective. If any products that the Company sells were to cause physical injury or injury to property, the injured party or partiescould bring claims against the Company as the retailer of the products based upon strict product liability. In addition, the Company’s products are subject tothe federal Consumer Product Safety Act and the Consumer Product Safety Improvement Act, which empower the Consumer Product Safety Commission toprotect consumers from hazardous products. The Consumer Product Safety Commission has the authority to exclude from the market and recall certainconsumer products that are found to be hazardous. Similar laws exist in some states and cities in the U.S. If the Company fails to comply with government andindustry safety standards, the Company may be subject to claims, lawsuits, product recalls, fines and negative publicity that could have a material adverseeffect on its business, prospects, results of operations and financial condition.Some of the Company’s U.S. stores sell firearms, ammunition and certain related accessories, which may be associated with an increased risk of injury andrelated lawsuits. The Company may incur losses due to lawsuits relating to its performance of background checks on firearms purchases as mandated by stateand federal law or the improper use of firearms sold by the Company, including lawsuits by individuals, municipalities or other organizations attempting torecover damages or costs from firearms retailers relating to the misuse of firearms. Commencement of such lawsuits against the Company could have amaterial adverse effect on its business, prospects, results of operations and financial condition.26Table of Contents The Company is also subject to similar applicable laws and regulations in Latin America. For example, Mexico’s Anti-Money Laundering Law, whichrequires monthly reporting of certain transactions (or series of transactions) exceeding monetary limits, and require stricter maintenance of customeridentification records and controls, and reporting of all foreign (non-Mexican) customer transactions. Guatemala and El Salvador also have similar reportingrequirements. The Company is also subject to the terms and enforcement of the Mexico Privacy Law, which requires companies to protect their customers’personal information, among other things including mandatory disclosures.Certain state and local governmental entities in Latin America also regulate pawn, other consumer finance and retail businesses through state laws and localzoning and permitting ordinances. State and local agencies, including local police authorities, often have unlimited, broad and discretionary authority tointerpret and apply laws, and suspend store operations pending investigation of suspicious pawn transactions and resolution of actual or alleged regulatory,licensing and permitting issues, among other issues.Compliance with applicable laws and regulations is costly, can affect operating results and may result in operational restrictions. The Company’s failure tocomply with applicable laws and regulations could subject it to regulatory enforcement actions, result in the assessment against the Company of civil,monetary, criminal or other penalties, require the Company to abandon operations or certain product offerings, refund interest or fees, result in adetermination that certain loans are not collectible, result in a revocation of licenses, or cause damage to its reputation, brands and customer relationships,any of which could have a material adverse effect on the Company’s business, prospects, results of operations and financial condition.The sale and ownership of firearms, ammunition and certain related accessories is subject to current and potential regulation, which could have a materialadverse effect on the Company’s reputation, business, prospects, results of operations and financial condition.Because the Company sells firearms, ammunition and certain related accessories, the Company is required to comply with federal, state and local laws andregulations pertaining to the purchase, storage, transfer and sale of such products, and the Company is subject to reputational harm if a customer purchases afirearm that is later used in a deadly shooting. These laws and regulations require the Company, among other things, to ensure that each pawn locationoffering firearms has its FFL, that all purchasers of firearms are subjected to a pre-sale background check, to record the details of each firearm sale onappropriate government-issued forms, to record each receipt or transfer of a firearm and to maintain these records for a specified period of time. The Companyis also required to timely respond to traces of firearms by law enforcement agencies. Over the past several years, the purchase, sale and ownership of firearms,ammunition and certain related accessories has been the subject of increased media scrutiny and federal, state and local regulation. The media scrutiny andregulatory efforts are likely to continue in the Company’s current markets and other markets into which the Company may expand. If enacted, new laws andregulations could limit the types of licenses, firearms, ammunition and certain related accessories that the Company is permitted to purchase and sell andcould impose new restrictions and requirements on the manner in which the Company offers, purchases and sells these products. If the Company fails tocomply with existing or newly enacted laws and regulations relating to the purchase and sale of firearms, ammunition and certain related accessories, itslicenses to sell or maintain inventory of firearms at its stores may be suspended or revoked, which could have a material adverse effect on the Company’sbusiness, prospects, results of operations and financial condition. In addition, new laws and regulations impacting the ownership of firearms and ammunitioncould cause a decline in the demand for and sales of the Company’s products, which could materially adversely impact its revenue and profitability.Complying with increased regulation relating to the sale of firearms, ammunition and certain related accessories could be costly.The Company is subject to the FCPA and other anti-corruption laws, and the Company’s failure to comply with these anti-corruption laws could result inpenalties that could have a material adverse effect on its business, results of operations and financial condition.The Company is subject to the FCPA, which generally prohibits companies and their agents or intermediaries from making improper payments to foreignofficials for the purpose of obtaining or keeping business and/or other benefits. Although the Company has policies and procedures designed to ensure thatit, its employees, agents, and intermediaries comply with the FCPA and other anti-corruption laws, there can be no assurance that such policies or procedureswill work effectively all of the time or protect the Company against liability for actions taken by its employees, agents, and intermediaries with respect to itsbusiness or any businesses that it may acquire. In the event the Company believes, or has reason to believe, its employees, agents, or intermediaries have ormay have violated applicable anti-corruption laws, including the FCPA, the Company may be required to investigate or have a third party investigate therelevant facts and circumstances, which can be expensive and require significant time and attention from senior management. The Company’s continuedoperation and expansion outside the U.S., especially in Latin America, could increase the risk, perceived or otherwise, of such violations in the future. If theCompany is found to have violated the FCPA or other laws governing the conduct of business with government entities (including local laws), the Companymay be subject to criminal and civil penalties and other remedial measures, which could have an adverse effect on its business, results of operations, andfinancial condition. Investigation of any potential or perceived violations of the FCPA or other anti-corruption laws by U.S.27Table of Contents or foreign authorities could harm the Company’s reputation and could have a material adverse effect on its business, results of operations and financialcondition.Failure to maintain certain criteria required by state and local regulatory bodies could result in fines or the loss of the Company’s licenses to conductbusiness.Most states and many local jurisdictions both in the U.S. and in Latin America in which the Company operates, as well as the federal governments in LatinAmerica, require registration and licenses to conduct the Company’s business. These states or their respective regulatory bodies have established criteria theCompany must meet in order to obtain, maintain, and renew those licenses. For example, many of the states in which the Company operates require it to meetor exceed certain operational, advertising, disclosure, collection, and recordkeeping requirements and to maintain a minimum amount of net worth or equity.From time to time, the Company is subject to audits in these states to ensure it is meeting the applicable requirements to maintain these licenses. Failure tomeet these requirements could result in various fines and penalties or store closures, which could include temporary suspension of operations, the revocationof existing licenses or the denial of new and renewal licensing requests. The Company cannot guarantee future license applications or renewals will begranted. If the Company were to lose any of its licenses to conduct its business, it could result in the temporary or permanent closure of stores, which couldadversely affect the Company’s business, results of operations and cash flows.The complexity of the political and regulatory environment in which the Company operates and the related cost of compliance are both increasing due to thechanging political landscape, additional legal and regulatory requirements, the Company’s ongoing expansion into new markets and the fact that foreignlaws occasionally are vague or conflict with domestic laws. In addition to potential damage to the Company’s reputation and brand, failure to comply withapplicable federal, state and local laws and regulations such as those outlined above may result in the Company being subject to claims, lawsuits, fines andadverse publicity that could have a material adverse effect on its business, results of operations and financial condition.Adverse real estate market fluctuations and/or the inability to renew and extend store operating leases could affect the Company’s profits.The Company leases most of its locations. A significant rise in real estate prices or real property taxes could result in an increase in store lease costs as theCompany opens new locations and renews leases for existing locations, thereby negatively impacting the Company’s results of operations. The Companyalso owns certain developed and undeveloped real estate, which could be impacted by adverse market fluctuations. In addition, the inability of the Companyto renew, extend or replace expiring store leases could have an adverse effect on the Company’s results of operations.The Company’s lending business is somewhat seasonal, which causes the Company’s revenues and operating cash flows to fluctuate and may adverselyaffect the Company’s ability to service its debt obligations.The Company’s U.S. lending business typically experiences reduced demand in the first and second quarters as a result of its customers’ receipt of federal taxrefund checks typically in February of each year. Demand for the Company’s U.S. lending services is generally greatest during the third and fourth quarters.Also, retail sales are seasonally higher in the fourth quarter associated with holiday shopping. Typically, the Company experiences seasonal growth ofservice fees in the third and fourth quarter of each year due to loan balance growth. Service fees generally decline in the first and second quarter of each yearafter the heavy repayment period of pawn loans in Latin America associated with statutory bonuses received by customers in the fourth quarter. Thisseasonality requires the Company to manage its cash flows over the course of the year. If a governmental authority were to pursue economic stimulus actionsor issue additional tax refunds, tax credits or other statutory payments at other times during the year, such actions could have a material adverse effect on theCompany’s business, prospects, results of operations and financial condition during these periods. If the Company’s revenues were to fall substantially belowwhat it would normally expect during certain periods, the Company’s annual financial results and its ability to service its debt obligations could be adverselyaffected.Inclement weather, natural disasters or health epidemics can adversely impact the Company’s operating results.The occurrence of weather events such as rain, cold weather, snow, wind, storms, hurricanes, earthquakes, volcanic eruptions, or other natural disasters orhealth epidemics in the Company’s markets could adversely affect consumer traffic, retail sales and loan origination or collection activities at the Company’sstores and have a material adverse effect on the Company’s results of operations. In addition, the Company may incur property, casualty or other losses notcovered by insurance. The Company maintains a program of insurance coverage for various types of property, casualty and other risks. The types andamounts of insurance that the Company obtains vary from time to time, depending on availability, cost and management’s decisions with respect to riskretention. The Company’s insurance policies are subject to deductibles and exclusions that result in the Company’s retention of a level of risk28Table of Contents on a self-insurance basis. Losses not covered by insurance could be substantial and may increase the Company’s expenses, which could harm the Company’sresults of operations and financial condition.The Company’s growth is subject to external factors and other circumstances over which it has limited control or that are beyond its control. These factorsand circumstances could adversely affect the Company’s ability to grow through the opening of new store locations.The success of the Company’s expansion strategy is subject to numerous external factors, such as the availability of sites with favorable customerdemographics, limited competition, acceptable regulatory restrictions and landscape, political or community acceptance, suitable lease terms, its ability toattract, train and retain qualified associates and management personnel, the ability to obtain required government permits and licenses and the ability toidentify attractive acquisition targets and complete such acquisitions. Some of these factors are beyond the Company’s control. The failure to execute theCompany’s expansion strategy would adversely affect the Company’s ability to expand its business and could materially adversely affect its business,prospects, results of operations and financial condition.The Company’s reported results require the judgment of management, and the Company could be subject to risks associated with these judgments or couldbe adversely affected by the implementation of new, or changes in the interpretation of existing, accounting principles or financial reporting requirements.The preparation of the Company’s financial statements requires management to make estimates and assumptions that affect the reported amounts of assetsand liabilities, and disclosure of contingent assets and liabilities, at the dates of the consolidated financial statements and the reported amounts of revenueand expenses during the reporting periods. In addition, the Company prepares its financial statements in accordance with generally accepted accountingprinciples (“GAAP”), and GAAP and its interpretations are subject to change over time. If new rules or interpretations of existing rules require the Companyto change its financial reporting, the Company’s results of operations and financial condition could be materially adversely affected, and the Company couldbe required to restate historical financial reporting.Unexpected changes in both domestic and foreign tax rates could negatively impact the Company’s operating results.While the Company expects the recently enacted significant tax reform in the United States to have a positive impact on the Company’s net income, theCompany is continuing to evaluate the impact of the tax reform on the Company’s business and such impact is uncertain. Furthermore, the Company’sfinancial results may be negatively impacted should tax rates in the U.S. and in Latin America be increased in the future or otherwise adversely affected bychanges in allowable expense deductions, or as a result of the imposition of new withholding requirements on repatriation of foreign earnings.Certain tax positions taken by the Company require the judgment of management and could be challenged by federal taxing authorities in the U.S. andLatin America.Management’s judgment is required in determining the provision for income taxes, the deferred tax assets and liabilities and any valuation allowancerecorded against deferred tax assets. Management’s judgment is also required in evaluating whether tax benefits meet the more-likely-than-not threshold forrecognition under ASC 740-10-25, Income Taxes.If the Company is unable to protect its intellectual property rights, its ability to compete could be negatively impacted.The success of the Company’s business depends to a certain extent upon the value associated with its intellectual property rights, including its proprietary,internally developed point-of-sale and loan management system that is in use in all of its stores. The Company uses the trademarks “FirstCash,” “First Cash,”“First Cash Pawn,” “Cash America,” “Cashland,” “First Cash Empeño y Joyeria,” “Cash Ya,” “Cash & Go,” “CA,” “Presta Max,” “Realice Empeños,”“Empeños Mexicanos” and “Maxi Prenda” along with numerous other trade names as described herein. The Company relies on a combination of copyright,trade secret, trademark, and other rights, as well as confidentiality procedures and contractual provisions to protect its proprietary technology, processes andother intellectual property. While the Company intends to vigorously protect its trademarks and proprietary point of sale systems against infringement, itmay not be successful. In addition, the laws of certain foreign countries may not protect intellectual property rights to the same extent as the laws of the U.S.The costs required to protect the Company’s intellectual property rights and trademarks could be substantial.29Table of Contents Because the Company maintains a significant supply of cash, loan collateral and inventories in its stores, the Company may be subject to employee andthird-party robberies, riots, looting, burglaries and thefts. The Company also may be subject to liability as a result of crimes at its stores.The Company’s business requires it to maintain a significant supply of cash, loan collateral and inventories in most of its stores. As a result, the Company issubject to the risk of riots, looting, robberies, burglaries and thefts. Although the Company has implemented various programs in an effort to reduce theserisks, maintains insurance coverage for riots, looting, robberies, burglaries and thefts and utilizes various security measures at its facilities, there can be noassurance that riots, looting, robberies, burglaries and thefts will not occur. The extent of the Company’s cash, loan collateral and inventory losses orshortages could increase as it expands the nature and scope of its products and services. Riots, looting, robberies, burglaries and thefts could lead to lossesand shortages and could adversely affect the Company’s business, prospects, results of operations and financial condition. It is also possible that violentcrimes such as riots, assaults and armed robberies may be committed at the Company’s stores. The Company could experience liability or adverse publicityarising from such crimes. For example, the Company may be liable if an employee, customer, guard or bystander suffers bodily injury or other harm. Any suchevent may have a material adverse effect on the Company’s business, prospects, results of operations and financial condition.If the Merger does not qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code, the former Cash Americashareholders may be required to pay substantial U.S. federal income taxes.Although the Company intends that the Merger qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code, it ispossible that the Internal Revenue Service (“IRS”) may assert that the Merger fails to qualify as such. If the IRS were to be successful in any such contentionor if for any other reason the Merger were to fail to qualify as a “reorganization,” each former Cash America shareholder would recognize a gain or loss withrespect to all such shareholder’s shares of Cash America’s common stock based on the difference between (i) the former Cash America shareholders’ tax basisin such shares and (ii) the aggregate cash and the fair market value of the Company common stock received.The CFPB issued a consent order with respect to Cash America, and any noncompliance could have a material adverse effect.On November 20, 2013, Cash America consented to the issuance of a consent order by the CFPB pursuant to which it agreed, without admitting or denyingany of the facts or conclusions made by the CFPB from its 2012 review of Cash America’s consumer loan business, including self-disclosed issues, to pay acivil money penalty of $5.0 million and to set aside $8.0 million for a period of 180 days to fund any further payments to eligible Ohio customers (the “OhioReimbursement Program”), collectively, the “Consent Order.” The Company likely remains subject to certain obligations of the Consent Order, includingensuring compliance with federal consumer financial laws and consumer compliance management system. However, certain restrictions and obligationsexpired on November 20, 2016. In addition, Cash America’s former subsidiary, Enova International, Inc. (“Enova”), also remains subject to the Consent Orderbecause it was part of Cash America when it was issued. The Company cannot assure that Enova has complied or will continue to comply with the ConsentOrder now that it is a separate publicly traded company. If Enova does not comply with the Consent Order, the Company could be held liable for Enova’snoncompliance. Any noncompliance with the Consent Order, continuing obligations or similar orders or agreements from other regulators could lead tofurther regulatory penalties and could have a material adverse effect on the Company’s business.The Company could be responsible for U.S. federal and state income tax liabilities that relate to the spin-off by Cash America of Enova, in November 2014(the “Enova Spin-off”).The Enova Spin-off was conditioned on the receipt of an opinion of tax counsel that the Enova Spin-off will be treated as a transaction that is tax-free for U.S.federal income tax purposes under Section 355(a) of the Internal Revenue Code. An opinion of tax counsel is not binding on the IRS. Accordingly, the IRSmay reach conclusions with respect to the Enova Spin-off that are different from the conclusions reached in the opinion. The opinion was based on certainfactual statements and representations made by Cash America, which, if incomplete or untrue in any material respect, could alter tax counsel’s conclusions. Inaddition, Cash America received a private letter ruling from the IRS to the effect that the then retention by Cash America of up to 20% of Enova’s stock willnot be in pursuant to a plan having as one of its principal purposes the avoidance of U.S. federal income tax within the meaning of Section 355(a)(1)(D)(ii) ofthe Internal Revenue Code. The private letter ruling does not address any other tax issues related to the Enova Spin-off. Notwithstanding the private letterruling, the IRS could determine on audit that the retention of the Enova stock was in pursuant to a plan having as one of its principal purposes the avoidanceof U.S. federal income tax if it determines that any of the facts, assumptions, representations or undertakings that Cash America or Enova have made orprovided to the IRS are not correct. If the retention is in pursuant to a plan having as one of its principal purposes the avoidance of U.S. federal income tax,then the distribution could ultimately be determined to be taxable, and the Company would recognize a gain in an amount equal to the excess of the fairmarket value of shares of Enova’s common stock distributed to Cash America’s shareholders on the distribution date over Cash America’s tax basis in suchshares of Enova’s common stock. In addition, Cash30Table of Contents America agreed to certain actions in connection with the private letter ruling, such as disposing of the Enova common stock by September 15, 2017. All ofthe shares held by the Company as of the Merger date were sold in open market transactions at an average price of $10.40 per share, with the final salescompleted on December 6, 2016.While the Company believes that the Merger did not and will not adversely impact the tax-free status of the Enova Spin-off, it is possible that the IRS couldassert that the Merger should result in the Enova Spin-off being treated as a taxable transaction for U.S. federal income tax purposes. If the IRS were to besuccessful in any contention that the Enova Spin-off should be treated as a taxable transaction or, if for any other reason, the Company were to take actionsthat would cause the Enova Spin-off to be treated as a taxable transaction, the Company could be subject to significant tax liabilities. In addition, inaccordance with a tax matters agreement entered into between Cash America and Enova in connection with the Enova Spin-off, the Company could besubject to liability for any tax liabilities incurred by Enova or Enova’s shareholders if the Merger were to cause the Enova Spin-off to be deemed taxable.In connection with the Enova Spin-off, Enova and Cash America agreed to indemnify each other for certain liabilities; if the Company is required to acton these indemnities to Enova, it may need to divert cash to meet those obligations, and Enova’s indemnity could be insufficient or Enova could be unableto satisfy its indemnification obligations.Pursuant to a separation and distribution agreement and certain other agreements that Cash America entered into with Enova at the time of the Enova Spin-off, including a tax matters agreement, Enova agreed to indemnify Cash America for certain liabilities that could be related to tax, regulatory, litigation orother liabilities, and Cash America agreed to indemnify Enova for certain similar liabilities, in each case for uncapped amounts. In addition, the tax mattersagreement prohibits Enova from taking any action or failing to take any action that could reasonably be expected to cause the Enova Spin-off to be taxableor to jeopardize the conclusions of the private letter ruling obtained in connection with the Enova Spin-off or opinions of counsel received by Cash Americaor Enova. Indemnities that Cash America may be required to provide Enova are not subject to any cap, may be significant and could negatively impact theCompany’s results of operations and financial condition, particularly indemnities relating to actions that could impact the tax-free nature of the distribution.Third parties could also seek to hold the Company responsible for any of the liabilities that Enova has agreed to assume. Further, the indemnity from Enovacould be insufficient to protect the Company against the full amount of such liabilities, or Enova may be unable to fully satisfy its indemnificationobligations. Moreover, even if the Company ultimately succeeds in recovering from Enova any amounts for which it is held liable, the Company may betemporarily required to bear these losses and could suffer reputational risks if the losses are related to regulatory, litigation or other matters.A discussion of certain market risks is covered in “Item 7A. Quantitative and Qualitative Disclosures About Market Risk.”Item 1B. Unresolved Staff CommentsNone.Item 2. PropertiesAs of December 31, 2017, the Company owned the real estate and buildings for 67 of its pawn stores and owned five other parcels of real estate, including theCompany’s corporate headquarters building in Fort Worth, Texas. The Company’s strategy is generally to lease, rather than purchase, space for its pawnshopand consumer loan locations, unless the Company finds what it believes is a superior location at an attractive price. As of December 31, 2017, the Companyleased 2,072 store locations that were open or were in the process of opening. Leased facilities are generally leased for a term of three to five years with one ormore options to renew. A majority of the store leases can be terminated early upon an adverse change in law which negatively affects the store’s profitability.The Company’s leases expire on dates ranging between 2018 and 2045. All store leases provide for specified periodic rental payments ranging fromapproximately $1,000 to $25,000 per month as of December 31, 2017. For more information about the Company’s pawn store locations, see “—Item 1.Business—Locations and Operations.”The following table details material corporate locations leased by the Company (dollars in thousands):Description Location Square Footage Lease Expiration Date Monthly Rental PaymentAdministrative operations Monterrey, Mexico 15,000 December 31, 2019 $14Administrative operations Fort Worth, Texas 24,000 July 31, 2021 $10Administrative operations Cincinnati, Ohio 10,000 April 30, 2019 $1031Table of Contents Most leases require the Company to maintain the property and pay the cost of insurance and property taxes. The Company believes termination of anyparticular lease would not have a material adverse effect on the Company’s operations. The Company believes the facilities currently owned and leased by itas pawn stores and consumer loan stores are suitable for such purposes. The Company considers its equipment, furniture and fixtures to be in good condition.Item 3. Legal ProceedingsThe Company is a defendant in certain routine litigation matters encountered in the ordinary course of its business. Certain of these matters are covered to anextent by insurance. In the opinion of management, the resolution of these matters is not expected to have a material adverse effect on the Company’sfinancial position, results of operations or liquidity.Item 4. Mine Safety DisclosuresNot Applicable.PART IIItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesGeneral Market InformationThe Company’s common stock is quoted on the New York Stock Exchange (“NYSE”) under the symbol “FCFS.” In connection with the closing of theMerger, shares of First Cash ceased trading on the NASDAQ Global Select Market at the close of trading on September 1, 2016 and began trading on theNYSE under the stock symbol “FCFS” on September 2, 2016.The following table sets forth the quarterly high and low sales prices per share for the common stock during fiscal 2017 and 2016, as reported by the NYSEand NASDAQ Global Select Market, and cash dividends declared and paid per share during fiscal 2017 and 2016: First Quarter Second Quarter Third Quarter Fourth Quarter2017 High$49.60 $59.35 $63.60 $68.60Low48.10 58.50 62.90 67.75Cash dividends declared and paid0.19 0.19 0.19 0.20 2016 High$46.72 $53.67 $53.95 $53.25Low29.64 43.11 44.94 44.60Cash dividends declared and paid0.125 0.125 0.125 0.19On February 12, 2018, there were approximately 292 stockholders of record of the Company’s common stock.The dividend and earnings retention policies are reviewed by the Board of Directors of the Company from time to time in light of, among other things, theCompany’s earnings, cash flows, financial position and debt covenant restrictions. In January 2018, the Company’s Board of Directors approved a plan toincrease the annual dividend to $0.88 per share, or $0.22 per share quarterly, beginning in the first quarter of 2018. The declared $0.22 first quarter cashdividend on common shares outstanding, or an aggregate of $10.3 million based on December 31, 2017 share counts, will be paid on February 28, 2018 tostockholders of record as of February 14, 2018.Issuer Purchases of Equity SecuritiesIn January 2015, the Company’s Board of Directors authorized a common stock repurchase program for up to 2,000,000 shares of the Company’s outstandingcommon stock. During the first quarter of 2017, the Company repurchased 228,000 shares of its common stock at an aggregate cost of $10.0 million and anaverage cost per share of $43.94. In May 2017, the Company’s Board of Directors authorized a new common stock repurchase program for up to$100.0 million of the Company’s outstanding common stock. The new share repurchase program replaced the Company’s prior share repurchase plan, whichwas terminated in May 2017.32Table of Contents Under the May 2017 stock repurchase program, the Company has repurchased 1,388,000 shares of its common stock at an aggregate cost of $83.0 millionand an average cost per share of $59.80 and $17.0 million remained available for repurchases as of December 31, 2017. On January 31, 2018, the Companycompleted the May 2017 stock repurchase program after repurchasing 239,000 shares of common stock at an aggregate cost of $17.0 million. The Companydid not repurchase any of its shares in 2016 as it suspended its share repurchase program in 2016 due to the Merger.In October 2017, the Company’s Board of Directors authorized an additional common stock repurchase program for up to $100.0 million of the Company’soutstanding common stock, which became effective on January 31, 2018 upon completion of the May 2017 stock repurchase program. The Company intendsto continue repurchases under its repurchase program in 2018 through open market transactions under trading plans in accordance with Rule 10b5-1 andRule 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, creditavailability, debt covenant restrictions, general business conditions, regulatory requirements, the market price of the Company’s stock, the dividend policyand the availability of alternative investment opportunities.The following table provides the information with respect to purchases made by the Company of shares of its common stock during each month the programswere in effect during fiscal 2017 (in thousands, except per share amounts): TotalNumberOf SharesPurchased AveragePricePaidPer Share TotalNumber OfSharesPurchasedAs Part OfPubliclyAnnouncedPlans MaximumNumber OfShares ThatMay Yet BePurchasedUnder ThePlans ApproximateDollar ValueOf SharesThat May YetBe PurchasedUnder ThePlansJanuary 1 through January 31, 2017 — $— — 1,148 (2) February 1 through February 28, 2017 228 43.94 228 920 (2) March 1 through March 31, 2017 — — — 920 (2) April 1 through April 30, 2017 — — — 920 (2) May 1 through May 31, 2017 — — — (1) $100,000June 1 through June 30, 2017 290 56.06 290 (1) 83,731July 1 through July 31, 2017 292 58.21 292 (1) 66,733August 1 through August 31, 2017 269 58.53 269 (1) 50,989September 1 through September 30, 2017 103 58.22 103 (1) 44,970October 1 through October 31, 2017 161 60.30 161 (1) 35,267November 1 through November 30, 2017 70 66.03 70 (1) 30,658December 1 through December 31, 2017 203 67.37 203 (1) 16,991Total 1,616 $57.56 1,616 (1) The 2,000,000 share repurchase program was terminated in May 2017.(2) The $100.0 million repurchase program was initiated in May 2017.33Table of Contents Performance GraphThe graph set forth below compares the cumulative total stockholder return on the common stock of the Company for the period from December 31, 2012through December 31, 2017, with the cumulative total return on the S&P 600 Small Cap Index and the Russell 2000 Index, representing broad-based equitymarket indexes, and the S&P 600 Small Cap Consumer Finance Index and the S&P 600 Small Cap Specialty Stores Index, representing industry-basedindexes, over the same period (assuming the investment of $100 on December 31, 2012 and assuming the reinvestment of all dividends on the date paid). TheCompany has previously included a peer group index, however believes the comparison to the above mentioned industry-based indexes is a more applicablecomparison. As a result, the performance graph below no longer includes a peer group index. Note that historic performance is not necessarily indicative offuture performance.Item 6. Selected Financial DataThe information below should be read in conjunction with “Item 7. Management’s Discussion and Analysis of Financial Condition and Results ofOperations” and the Company’s consolidated financial statements and related notes thereto in “Item 8. Financial Statements and Supplementary Data.” Theinformation below is derived from and qualified by reference to the Company’s audited financial statements for each of the five years ended December 31,2017.34Table of Contents Year Ended December 31, 2017 2016 2015 2014 2013 (in thousands, except per share amounts and location counts)Income Statement Data (1): Revenue: Retail merchandise sales$1,051,099 $669,131 $449,296 $428,182 $367,187Pawn loan fees510,905 312,757 195,448 199,357 181,555Wholesale scrap jewelry sales140,842 62,638 32,055 48,589 68,325Consumer loan and credit services fees76,976 43,851 27,803 36,749 43,781Total revenue1,779,822 1,088,377 704,602 712,877 660,848 Cost of revenue: Cost of retail merchandise sold679,703 418,556 278,631 261,673 221,361Cost of wholesale scrap jewelry sold132,794 53,025 27,628 41,044 58,545Consumer loan and credit services loss provision19,819 11,993 7,159 9,287 11,368Total cost of revenue832,316 483,574 313,418 312,004 291,274 Net revenue947,506 604,803 391,184 400,873 369,574 Expenses and other income: Store operating expenses551,874 328,014 207,572 198,986 181,321Administrative expenses122,473 96,537 51,883 53,588 47,180Depreciation and amortization55,233 31,865 17,939 17,476 15,361Interest expense, net22,438 19,569 15,321 12,845 3,170Merger and other acquisition expenses9,062 36,670 2,875 998 2,350Loss on extinguishment of debt14,114 — — — —Net gain on sale of common stock of Enova— (1,299) — — —Goodwill impairment - U.S. consumer loanoperations— — 7,913 — —Total expenses and other income775,194 511,356 303,503 283,893 249,382 Income from continuing operations before incometaxes172,312 93,447 87,681 116,980 120,192 Provision for income taxes28,420 33,320 26,971 31,542 35,713 Income from continuing operations143,892 60,127 60,710 85,438 84,479 Loss from discontinued operations, net of tax— — — (272) (633)Net income$143,892 $60,127 $60,710 $85,166 $83,846 Dividends declared per common share$0.77 $0.565 $— $— $—35Table of Contents Year Ended December 31, 2017 2016 2015 2014 2013Income Statement Data (Continued) (1): Net income per share: Basic: Income from continuing operations$3.01 $1.72 $2.16 $2.98 $2.91Net income3.01 1.72 2.16 2.97 2.89Diluted: Income from continuing operations3.00 1.72 2.14 2.94 2.86Net income3.00 1.72 2.14 2.93 2.84 Balance Sheet Data: Inventories$276,771 $330,683 $93,458 $91,088 $77,793Pawn loans344,748 350,506 117,601 118,536 115,234Net working capital721,626 748,507 279,259 258,194 236,417Total assets 2,062,784 2,145,203 752,895 711,880 660,999Long-term liabilities466,880 551,589 275,338 234,880 201,889Total liabilities587,451 695,217 321,513 277,439 250,650Stockholders’ equity1,475,333 1,449,986 431,382 434,441 410,349 Statement of Cash Flows Data: Net cash flows provided by (used in): Operating activities$220,357 $96,854 $92,749 $97,679 $106,718Investing activities1,397 (25,967) (71,676) (85,366) (140,726)Financing activities(197,506) (58,713) 9,127 (9,098) 54,644 Location Counts: Pawn stores2,039 2,012 1,005 912 821Credit services/consumer loan stores72 73 70 93 85 2,111 2,085 1,075 1,005 906(1) See “Management’s Discussion and Analysis of Financial Condition and Results of Operations —Non-GAAP Financial Information—Adjusted Net Income and AdjustedNet Income Per Share” for additional information about certain 2017, 2016 and 2015 income and expense items that affected the Company’s consolidated income fromoperations, income before income taxes, net income and net income per share.Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsGeneral On September 1, 2016, the Company completed its Merger with Cash America, whereby Cash America merged with and into a wholly owned subsidiary ofthe Company. The accompanying audited results of operations for the year ended December 31, 2017 includes the results of operations for Cash Americawhile the comparable prior-year period includes the results of operations for Cash America for the period September 2, 2016 to December 31, 2016, affectingcomparability of fiscal 2017 and 2016 amounts. See Note 3 of Notes to Consolidated Financial Statements for additional information about the Merger.The Company is a leading operator of retail-based pawn stores with over 2,100 store locations in the U.S. and Latin America. The Company’s pawn storesgenerate significant retail sales primarily from the merchandise acquired through collateral forfeitures and over-the-counter purchases from customers. Thestores also offer pawn loans to help customers meet small short-term cash needs. Personal property, such as consumer electronics, jewelry, power tools,household appliances, sporting goods and musical instruments is pledged as collateral for the pawn loans and held by the Company over the term of the loanplus a stated grace36Table of Contents period. In addition, some of the Company’s pawn stores offer consumer loans or credit services products. The Company’s strategy is to focus on growing itsretail-based pawn operations in the U.S. and Latin America through new store openings and strategic acquisition opportunities as they arise. Pawn operationsaccounted for approximately 96% of the Company’s consolidated revenue during fiscal 2017 and 2016.The Company organizes its operations into two reportable segments. The U.S. operations segment consists of all pawn and consumer loan operations in theU.S. and the Latin America operations segment consists of all pawn and consumer loan operations in Latin America, which currently includes operations inMexico, Guatemala and El Salvador.The Company recognizes pawn loan fee revenue on a constant-yield basis over the life of the pawn loan for all pawn loans of which the Company deemscollection to be probable based on historical redemption statistics. If a pawn loan is not repaid prior to the expiration of the loan term, including anyextension or grace period, if applicable, the property is forfeited to the Company and transferred to inventory at a value equal to the principal amount of theloan, exclusive of accrued pawn fee revenue. The Company records merchandise sales revenue at the time of the sale and presents merchandise sales net ofany sales or value-added taxes collected. The Company does not provide direct financing to customers for the purchase of its merchandise, but does permit itscustomers to purchase merchandise on an interest-free layaway plan. Should the customer fail to make a required payment pursuant to a layaway plan, theprevious payments are typically forfeited to the Company. Interim payments from customers on layaway sales are recorded as deferred revenue andsubsequently recorded as income during the period in which final payment is received or when previous payments are forfeited to the Company. Somejewelry is processed at third-party facilities and the precious metal and diamond content is sold at either prevailing market commodity prices or a previouslyagreed upon price with a commodity buyer. The Company records revenue from these wholesale scrap jewelry transactions when a price has been agreedupon and the Company ships the commodity to the buyer.The Company operates a small number of stand-alone consumer finance stores in the U.S. and Mexico. These stores provide consumer financial servicesproducts including credit services, consumer loans and check cashing. In addition, 362 of the Company’s pawn stores also offer credit services and/orconsumer loans as an ancillary product, which products have been deemphasized by the Company in recent years due to regulatory constraints and increasedinternet based competition for such products. Beginning in fiscal 2018, the Company no longer offers fee-based check cashing services in its non-franchisedstores. Consumer loan and credit services revenue accounted for approximately 4% of consolidated revenue for fiscal 2017 and 2016.The Company recognizes service fee income on consumer loan transactions on a constant-yield basis over the life of the loan and recognizes credit servicesfees ratably over the life of the extension of credit made by the Independent Lenders. Changes in the valuation reserve on consumer loans and credit servicestransactions are charged or credited to the consumer loan credit loss provision. The credit loss provision associated with the Company’s CSO Programs andconsumer loans is based primarily upon historical credit loss experience, with consideration given to recent credit loss trends, delinquency rates, economicconditions and management’s expectations of future credit losses.Stores included in the same-store calculations presented in this annual report are those stores that were opened or acquired prior to the beginning of the prior-year comparative fiscal period and remained open through the end of the reporting period. Also included are stores that were relocated during the year withina specified distance serving the same market where there is not a significant change in store size and where there is not a significant overlap or gap in timingbetween the opening of the new store and the closing of the existing store. Unless otherwise noted, same-store calculations exclude the results of the mergedCash America stores. Legacy Cash America same-store calculations refer to Cash America stores that were opened prior to the beginning of the prior-yearcomparative fiscal period (although not then owned by the Company) and remained open through the end of the reporting period.Operating expenses consist of all items directly related to the operation of the Company’s stores, including salaries and related payroll costs, rent, utilities,facilities maintenance, advertising, property taxes, licenses, supplies and security. Administrative expenses consist of items relating to the operation of thecorporate offices, including the compensation and benefit costs of corporate management, area supervisors and other operations management personnel,collection operations and personnel, accounting and administrative costs, information technology costs, liability and casualty insurance, outside legal andaccounting fees and stockholder-related expenses. Merger and other acquisition expenses primarily include incremental costs directly associated with theMerger and integration of Cash America, including professional fees, legal expenses, severance, retention and other employee-related costs, acceleratedvesting of certain equity compensation awards, contract breakage costs and costs related to consolidation of technology systems and corporate facilities.37Table of Contents The following table details income statement items as a percent of total revenue and other operating metrics: Year Ended December 31, 2017 2016 2015Revenue: Retail merchandise sales59.1% 61.5 % 63.8%Pawn loan fees28.7 28.7 27.7Wholesale scrap jewelry sales7.9 5.8 4.5Consumer loan and credit services fees4.3 4.0 4.0 Cost of revenue: Cost of retail merchandise sold38.2 38.4 39.6Cost of wholesale scrap jewelry sold7.5 4.9 3.9Consumer loan and credit services loss provision1.1 1.1 1.0 Net revenue53.2 55.6 55.5 Expenses and other income: Store operating expenses31.0 30.1 29.5Administrative expenses6.9 8.9 7.4Depreciation and amortization3.1 2.9 2.5Interest expense, net1.2 1.8 2.2Merger and other acquisition expenses0.5 3.4 0.4Loss on extinguishment of debt0.8 — —Net gain on sale of common stock of Enova— (0.1) —Goodwill impairment - U.S. consumer loan operations— — 1.1 Income before income taxes9.7 8.6 12.4Provision for income taxes1.6 3.1 3.8Net income8.1 5.5 8.6 Retail merchandise sales gross profit margin35.3% 37.4 % 38.0%Pre-tax operating margin (1)20.3 23.2 23.9(1) Pre-tax operating profit is an amount equal to net revenues less store operating expenses less store depreciation expense.Critical Accounting PoliciesThe preparation of financial statements in conformity with GAAP requires management to make estimates, assumptions and judgments that affect the reportedamounts of assets and liabilities, related revenue and expenses, and disclosure of gain and loss contingencies at the date of the financial statements. Suchestimates, assumptions and judgments are subject to a number of risks and uncertainties, which may cause actual results to differ materially from theCompany’s estimates. The significant accounting policies that the Company believes are the most critical to aid in fully understanding and evaluating itsreported financial results include the following:Customer loans and revenue recognition - Receivables on the balance sheet consist of pawn loans and consumer loans. Pawn loans are collateralized bypledged tangible personal property, which the Company holds during the term of the loan plus a stated grace period. The Company accrues pawn loan feerevenue on a constant-yield basis over the life of the pawn for all pawns for which the Company deems collection to be probable based on historical pawnredemption statistics. The typical pawn loan term is generally 30 days plus an additional grace period of 14 to 90 days depending on geographical marketsand local regulations. Pawn loans may be either paid in full with accrued pawn loan fees and service charges or, where permitted by law, may be renewed38Table of Contents or extended by the customer’s payment of accrued pawn loan fees and service charges. If the pawn is not repaid upon expiration of the grace period, theprincipal amount loaned becomes the carrying value of the forfeited collateral, which is typically recovered through sales of the forfeited items at prices wellabove the carrying value.The Company’s pawn merchandise sales are primarily retail sales to the general public in its pawn stores. The Company acquires pawn merchandiseinventory through forfeited pawn loans and through purchases of used goods directly from the general public. The Company also retails limited quantities ofnew or refurbished merchandise obtained directly from wholesalers and manufacturers. The Company records sales revenue at the time of the sale. TheCompany presents merchandise sales net of any sales or value-added taxes collected. The Company does not provide direct financing to customers for thepurchase of its merchandise, but does permit its customers to purchase merchandise on an interest-free layaway plan. Should the customer fail to make arequired payment pursuant to a layaway plan, the previous payments are typically forfeited to the Company. Interim payments from customers on layawaysales are recorded as deferred revenue and subsequently recorded as retail merchandise sales revenue when the final payment is received or when previouspayments are forfeited to the Company. Some jewelry is processed at third-party facilities and the precious metal and diamond content is sold at eitherprevailing market commodity prices or a previously agreed upon price with a commodity buyer. The Company records revenue from these wholesale scrapjewelry transactions when a price has been agreed upon and the Company ships the precious metals to the buyer.The Company accrues consumer loan service fees on a constant-yield basis over the term of the consumer loan. Consumer loans have terms that typicallyrange from 7 to 365 days. The Company recognizes credit services fees ratably over the life of the extension of credit made by the Independent Lenders. Theextensions of credit made by the Independent Lenders to credit services customers typically have terms of 7 to 365 days.Credit loss provisions - The Company has determined no allowance related to credit losses on pawn loans is required as the fair value of the pledgedcollateral is significantly in excess of the pawn loan amount. The Company maintains an allowance for credit losses on consumer loans on an aggregate basisat a level it considers sufficient to cover estimated losses in the collection of its consumer loans. The allowance for credit losses is based primarily uponhistorical credit loss experience, with consideration given to recent credit loss trends and changes in loan characteristics (e.g., average amount financed andterm), delinquency levels, collateral values, economic conditions and underwriting and collection practices. The allowance for credit losses is periodicallyreviewed by management with any changes reflected in current operations.The Company fully reserves or charges off consumer loans once the loan has been classified as delinquent for 60 days. Short-term loans are considereddelinquent when payment of an amount due is not made as of the due date. Installment loans are considered delinquent when a customer misses twopayments. If a loan is estimated to be uncollectible before it is fully reserved, it is charged off at that point. Recoveries on loans previously charged to theallowance, including the sale of delinquent loans to unaffiliated third parties, are credited to the allowance when collected or when sold to a third party. TheCompany generally does not accrue interest on delinquent consumer loans. In addition, delinquent consumer loans generally may not be renewed, and if,during its attempt to collect on a delinquent consumer loan, the Company allows additional time for payment through a payment plan or a promise to pay, itis still considered delinquent. Generally, all payments received are first applied against accrued but unpaid interest and fees and then against the principalbalance of the loan.Under the CSO Programs, the Company assists customers in applying for a short-term extension of credit from Independent Lenders and issues theIndependent Lenders a guarantee for the repayment of the extension of credit. The Company is required to recognize, at the inception of the guarantee, aliability for the fair value of the obligation undertaken by issuing the guarantee. According to the guarantee, if the borrower defaults on the extension ofcredit, the Company will pay the Independent Lenders the principal, accrued interest, insufficient funds and late fee, if applicable, all of which the Companyrecords as a component of its credit loss provision. The Company is entitled to seek recovery, directly from its customers, of the amounts it pays theIndependent Lenders in performing under the guarantees. The Company records the estimated fair value of the liability in accrued liabilities. The estimatedfair value of the liability is periodically reviewed by management with any changes reflected in current operations.Inventories - Inventories represent merchandise acquired from forfeited pawns and merchandise purchased directly from the general public. The Companyalso retails limited quantities of new or refurbished merchandise obtained directly from wholesalers and manufacturers. Inventories from forfeited pawns arerecorded at the amount of the pawn principal on the unredeemed goods, exclusive of accrued interest. Inventories purchased directly from customers,wholesalers and manufacturers are recorded at cost. The cost of inventories is determined on the specific identification method. Inventories are stated at thelower of cost or net realizable value and, accordingly, inventory valuation allowances are established, if necessary, when inventory carrying values are inexcess of estimated selling prices, net of direct costs of disposal. Management has evaluated inventories and determined that a valuation allowance is notnecessary.39Table of Contents Goodwill and other indefinite-lived intangible assets - Goodwill represents the excess of the purchase price over the fair value of the net assets acquired ineach business combination. The Company performs its goodwill impairment assessment annually as of December 31, and between annual assessments if anevent occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The Company’sreporting units, which are tested for impairment, are U.S. operations and Latin America operations. The Company assesses goodwill for impairment at areporting unit level by first assessing a range of qualitative factors, including, but not limited to, macroeconomic conditions, industry conditions, thecompetitive environment, changes in the market for the Company’s products and services, regulatory and political developments, entity specific factors suchas strategy and changes in key personnel, and overall financial performance. If, after completing this assessment, it is determined that it is more likely thannot that the fair value of a reporting unit is less than its carrying value, the Company proceeds to the two-step impairment testing methodology. As describedin “—Results of Operations—Goodwill Impairment—U.S. Consumer Loan Operations” below, the Company recorded a goodwill impairment charge of $7.9million during 2015.The Company’s indefinite-lived intangible assets consist of trade names, pawn licenses and franchise agreements related to a check-cashing operation. TheCompany performs its indefinite-lived intangible asset impairment assessment annually as of December 31, and between annual assessments if an eventoccurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The Company determinedthere was no impairment as of December 31, 2017 and 2016.Foreign currency transactions - The Company has significant operations in Latin America, where in Mexico and Guatemala the functional currency is theMexican peso and Guatemalan quetzal, respectively. Accordingly, the assets and liabilities of these subsidiaries are translated into U.S. dollars at theexchange rate in effect at each balance sheet date, and the resulting adjustments are accumulated in other comprehensive income (loss) as a separatecomponent of stockholders’ equity. Revenues and expenses are translated at the average exchange rates occurring during the respective fiscal period. Prior totranslation, U.S. dollar-denominated transactions of the foreign subsidiaries are remeasured into their functional currency using current rates of exchange formonetary 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 and Guatemala are included in store operating expenses. Deferred taxes are not currently provided oncumulative foreign currency translation adjustments as the Company indefinitely reinvests earnings of its foreign subsidiaries. The Company also hasoperations in El Salvador where the reporting and functional currency is the U.S. dollar.40Table of Contents Results of OperationsConstant Currency ResultsThe Company’s management reviews and analyzes certain operating results in Latin America on a constant currency basis because the Company believes thisbetter represents the Company’s underlying business trends. Constant currency results are non-GAAP measures, which exclude the effects of foreign currencytranslation and are calculated by translating current year results at prior year average exchange rates. The scrap jewelry generated in Latin America is sold andsettled in U.S. dollars and is therefore not affected by foreign currency translation. A small percentage of the operating and administrative expenses in LatinAmerica are also billed and paid in U.S. dollars which are not affected by foreign currency translation.Business operations in Mexico and Guatemala are transacted in Mexican pesos and Guatemalan quetzales, respectively. The Company also has operations inEl Salvador where the reporting and functional currency is the U.S. dollar. The following table provides exchange rates for the Mexican peso and Guatemalanquetzal for the current and prior year periods: 2017 2016 2015 Rate % ChangeOver PriorYear PeriodFavorable /(Unfavorable) Rate % ChangeOver PriorYear PeriodFavorable /(Unfavorable) RateMexican peso / U.S. dollar exchange rate: End-of-period 19.7 5 % 20.7 (20)% 17.2Twelve months ended 18.9 (1)% 18.7 (18)% 15.8 Guatemalan quetzal / U.S. dollar exchange rate: End-of-period 7.3 3 % 7.5 1 % 7.6Twelve months ended 7.4 3 % 7.6 1 % 7.7Amounts presented on a constant currency basis are denoted as such. See “—Non-GAAP Financial Information” for additional discussion of constantcurrency operating results.41Table of Contents Operating Results for the Twelve Months Ended December 31, 2017 Compared to the Twelve Months Ended December 31, 2016U.S. Operations SegmentThe following table details earning assets, which consist of pawn loans, consumer loans, net and inventories as well as other earning asset metrics of the U.S.operations segment as of December 31, 2017 as compared to December 31, 2016 (dollars in thousands, except as otherwise noted): Balance at December 31, Increase / 2017 2016 (Decrease)U.S. Operations Segment Earning assets: Pawn loans$276,570 $293,392 (6)% Consumer loans, net (1) 23,179 28,847 (20)% Inventories 216,739 282,860 (23)% $516,488 $605,099 (15)% Average outstanding pawn loan amount (in ones)$162 $152 7 % Composition of pawn collateral: General merchandise34% 36% Jewelry66% 64% 100% 100% Composition of inventories: General merchandise42% 47% Jewelry58% 53% 100% 100% Percentage of inventory aged greater than one year6% 11% (1) Does not include the off-balance sheet principal portion of active CSO extensions of credit made by independent third-party lenders. These amounts, net of the Company’sestimated fair value of its liability for guaranteeing the extensions of credit, totaled $9.3 million and $12.1 million as of December 31, 2017 and 2016, respectively.42Table of Contents The following table presents segment pre-tax operating income of the U.S. operations segment for the fiscal year ended December 31, 2017 as compared tothe fiscal year ended December 31, 2016 (dollars in thousands). Store operating expenses include salary and benefit expense of store-level employees,occupancy costs, bank charges, security, insurance, utilities, supplies and other costs incurred by the stores. Year Ended December 31, 2017 2016 IncreaseU.S. Operations Segment Revenue: Retail merchandise sales $717,490 $386,026 86% Pawn loan fees 380,596 195,883 94% Wholesale scrap jewelry sales 119,197 47,680 150% Consumer loan and credit services fees 75,209 41,922 79% Total revenue 1,292,492 671,511 92% Cost of revenue: Cost of retail merchandise sold 468,527 241,086 94% Cost of wholesale scrap jewelry sold 112,467 41,357 172% Consumer loan and credit services loss provision 19,431 11,494 69% Total cost of revenue 600,425 293,937 104% Net revenue 692,067 377,574 83% Segment expenses: Store operating expenses 423,214 215,227 97% Depreciation and amortization 24,073 13,618 77% Total segment expenses 447,287 228,845 95% Segment pre-tax operating income $244,780 $148,729 65% Retail Merchandise Sales OperationsU.S. retail merchandise sales increased 86% to $717.5 million during fiscal 2017 compared to $386.0 million for fiscal 2016. The increase was primarily dueto fiscal 2016 only including the results of operations for Cash America for the period September 2, 2016 to December 31, 2016 (“Cash America 2016 PartialPeriod”), as the Merger was completed on September 1, 2016. Same-store retail sales decreased 1% in legacy First Cash stores and decreased 4% in legacyCash America stores during fiscal 2017 compared to fiscal 2016. Gross profit margin on retail merchandise sales in the U.S. was 35% during fiscal 2017compared to a margin of 38% during fiscal 2016, reflecting the impact of historically lower margins in the Cash America stores and a focus during 2017 onliquidating aged inventory items in the Cash America stores.U.S. inventories decreased 23% from $282.9 million at December 31, 2016 to $216.7 million at December 31, 2017. The decrease was primarily a result offocused liquidation of aged inventories though promotional discounts and jewelry scrapping. Inventories aged greater than one year in the U.S. were 6%overall and 7% and 5% in the legacy Cash America stores and legacy First Cash U.S. stores, respectively.Pawn Lending OperationsU.S. pawn loan fees increased 94% totaling $380.6 million during fiscal 2017 compared to $195.9 million for fiscal 2016. The increase was primarily due tothe Cash America 2016 Partial Period. Legacy First Cash same-store pawn loan fees increased 4%, while legacy Cash America same-store pawn loan feesdecreased 9% during fiscal 2017 compared to fiscal 2016. Pawn loan receivables in the U.S. as of December 31, 2017 decreased 6% compared to December31, 2016 and decreased 7% on a same-store basis. Legacy First Cash same-store pawn receivables increased 6%, while legacy Cash America same-store pawnreceivables decreased 10% as of December 31, 2017 compared to December 31, 2016. The decline in legacy Cash America same-store pawn43Table of Contents receivables and pawn loan fees was primarily due to the expected impact of reducing the holding period on delinquent pawn loans, optimizing loan-to-valueratios and to a lesser extent, the impact of Hurricane Harvey on pawn receivables in coastal Texas markets.Wholesale Scrap Jewelry OperationsU.S. wholesale scrap jewelry revenue, consisting primarily of gold sales, increased 150% to $119.2 million during fiscal 2017 compared to $47.7 millionduring fiscal 2016. The increase in wholesale scrap jewelry revenue was primarily due to the Cash America 2016 Partial Period and an increase in volume dueto the clearing of aged inventory in the Cash America stores. The scrap gross profit margin in the U.S. was 6% compared to the prior-year margin of 13%,primarily as a result of the typically higher cost basis in scrap jewelry sold by the Cash America stores. Scrap jewelry profits accounted for 1% of U.S. netrevenue (gross profit) for fiscal 2017 compared to 2% in fiscal 2016.Consumer Lending OperationsService fees from U.S. consumer loans and credit services transactions (collectively, consumer lending operations) increased 79% to $75.2 million duringfiscal 2017 compared to $41.9 million for fiscal 2016. The increase in fees was due to the Cash America 2016 Partial Period. Excluding the increase due tothe Cash America 2016 Partial Period, consumer loan and credit services fees decreased 31% as the Company continues to de-emphasize consumer lendingoperations in light of increasing internet-based competition and regulatory constraints. Revenues from consumer lending operations comprised 6% of totalU.S. revenue during fiscal 2017 and 2016.Segment Expenses and Segment Pre-Tax Operating IncomeU.S. store operating expenses increased 97% to $423.2 million during fiscal 2017 compared to $215.2 million during fiscal 2016, primarily as a result of theMerger. Same-store operating expenses increased 2% and decreased 3% in the legacy First Cash and Cash America stores, respectively, compared with theprior-year period.U.S. store depreciation and amortization increased 77% to $24.1 million during fiscal 2017 compared to $13.6 million during fiscal 2016, primarily as aresult of the Merger.The U.S. segment pre-tax operating income for fiscal 2017 was $244.8 million, which generated a pre-tax segment operating margin of 19% compared to$148.7 million and 22% in the prior year, respectively. The decline in the segment pre-tax operating margin was primarily due to historically lower operatingmargins in the Cash America stores and a focus during 2017 on liquidating aged inventory levels in Cash America stores, resulting in lower gross profitmargins on retail merchandise sales.44Table of Contents Latin America Operations SegmentThe following table details earning assets, which consist of pawn loans, consumer loans, net and inventories as well as other earning asset metrics of the LatinAmerica operations segment as of December 31, 2017 as compared to December 31, 2016 (dollars in thousands, except as otherwise noted): Constant Currency Basis Balance at December 31, Increase / Balance at December 31, Increase / 2017 (Decrease) 2017 2016 (Decrease) (Non-GAAP) (Non-GAAP)Latin America Operations Segment Earning assets: Pawn loans$68,178 $57,114 19 % $65,238 14 % Consumer loans, net 343 357 (4)% 328 (8)% Inventories 60,032 47,823 26 % 57,400 20 % $128,553 $105,294 22 % $122,966 17 % Average outstanding pawn loan amount(in ones)$64 $58 10 % $61 5 % Composition of pawn collateral: General merchandise80% 80% Jewelry20% 20% 100% 100% Composition of inventories: General merchandise75% 76% Jewelry25% 24% 100% 100% Percentage of inventory aged greaterthan one year1% 1% 45Table of Contents The following table presents segment pre-tax operating income of the Latin America operations segment for the fiscal year ended December 31, 2017 ascompared to the fiscal year ended December 31, 2016 (dollars in thousands). Store operating expenses include salary and benefit expense of store-levelemployees, occupancy costs, bank charges, security, insurance, utilities, supplies and other costs incurred by the stores. Constant Currency Basis Year Ended December 31, Increase / Year Ended December 31, Increase / 2017 (Decrease) 2017 2016 (Decrease) (Non-GAAP) (Non-GAAP)Latin America Operations Segment Revenue: Retail merchandise sales $333,609 $283,105 18 % $338,009 19 % Pawn loan fees 130,309 116,874 11 % 131,972 13 % Wholesale scrap jewelry sales 21,645 14,958 45 % 21,645 45 % Consumer loan and credit servicesfees 1,767 1,929 (8)% 1,793 (7)% Total revenue 487,330 416,866 17 % 493,419 18 % Cost of revenue: Cost of retail merchandise sold 211,176 177,470 19 % 213,925 21 % Cost of wholesale scrap jewelry sold 20,327 11,668 74 % 20,568 76 % Consumer loan and credit servicesloss provision 388 499 (22)% 394 (21)% Total cost of revenue 231,891 189,637 22 % 234,887 24 % Net revenue 255,439 227,229 12 % 258,532 14 % Segment expenses: Store operating expenses 128,660 112,787 14 % 130,154 15 % Depreciation and amortization 10,311 10,429 (1)% 10,432 — % Total segment expenses 138,971 123,216 13 % 140,586 14 % Segment pre-tax operating income $116,468 $104,013 12 % $117,946 13 % Retail Merchandise Sales OperationsLatin America retail merchandise sales increased 18% (19% on a constant currency basis) to $333.6 million during fiscal 2017 compared to $283.1 millionfor fiscal 2016. The increase was primarily due to an 11% increase (12% on a constant currency basis) in same-store retail sales driven by strong retail demandtrends, a 47% increase (50% on a constant currency basis) in retail sales in the 166 Maxi Prenda stores located in Mexico (acquired on January 6, 2016 andtherefore not included in the same-store figure above) driven by operating synergies as a result of the utilization of the Company’s proprietary IT platformand best practice retailing strategies, and the maturation of existing stores. The gross profit margin on retail merchandise sales was 37% during fiscal 2017and 2016.Inventories in Latin America increased 26% (20% on a constant currency basis) from $47.8 million at December 31, 2016 to $60.0 million at December 31,2017. Increased inventory levels in the Maxi Prenda stores, which historically carried lower inventory balances than the typical First Cash store, accountedfor 22% of the increase with growth from new store openings and the maturation of existing stores accounting for the remainder of the increase.46Table of Contents Pawn Lending OperationsPawn loan fees in Latin America increased 11% (13% on a constant currency basis) totaling $130.3 million during fiscal 2017 compared to $116.9 millionfor fiscal 2016 as a result of the 19% (14% on a constant currency basis) increase in pawn loan receivables as of December 31, 2017 compared to December31, 2016. The increase in pawn receivables reflects a same-store pawn receivable increase of 17% (12% on a constant currency basis) and new store additions.The increase in same-store pawn receivables was primarily due to strong demand for pawn loans and the maturation of existing stores.Wholesale Scrap Jewelry OperationsLatin America wholesale scrap jewelry revenue, consisting primarily of gold sales, increased 45% to $21.6 million during fiscal 2017 compared to$15.0 million during fiscal 2016. The increase in wholesale scrap jewelry revenue was primarily due to a reduced volume of scrapping activities in the MaxiPrenda stores during fiscal 2016 as those stores were being converted to the Company’s proprietary point of sale and loan management system. The scrapgross profit margin in Latin America was 6% (5% on a constant currency basis) compared to the prior-year margin of 22%. The 22% scrap gross profit marginin fiscal 2016 was unusually high due to the 18% decline in the average value of the Mexican peso that year, which effectively lowered the cost of the scrapjewelry (scrap is sold in U.S. dollars but sourced in Mexican pesos). Scrap jewelry profits accounted for approximately 1% of Latin America net revenue(gross profit) for fiscal 2017 and fiscal 2016.Segment Expenses and Segment Pre-Tax Operating IncomeStore operating expenses increased 14% (15% on a constant currency basis) to $128.7 million during fiscal 2017 compared to $112.8 million during fiscal2016 and same-store operating expenses increased 6% (increased 7% on a constant currency basis) compared to the prior-year period. The increase in bothtotal and same-store operating expenses was due in large part to increased compensation expense related to incentive pay and wage inflation.The segment pre-tax operating income for fiscal 2017 was $116.5 million, which generated a pre-tax segment operating margin of 24% compared to$104.0 million and 25% in the prior year, respectively.47Table of Contents Consolidated Results of OperationsThe following table reconciles pre-tax operating income of the Company’s U.S. operations segment and Latin America operations segment discussed aboveto consolidated net income for the fiscal year ended December 31, 2017 as compared to the fiscal year ended December 31, 2016 (dollars in thousands): Year Ended December 31, Increase / 2017 2016 (Decrease)Consolidated Results of Operations Segment pre-tax operating income: U.S. operations segment pre-tax operating income $244,780 $148,729 65 % Latin America operations segment pre-tax operating income 116,468 104,013 12 % Consolidated segment pre-tax operating income 361,248 252,742 43 % Corporate expenses and other income: Administrative expenses 122,473 96,537 27 % Depreciation and amortization 20,849 7,818 167 % Interest expense 24,035 20,320 18 % Interest income (1,597) (751) 113 % Merger and other acquisition expenses 9,062 36,670 (75)% Loss on extinguishment of debt 14,114 — — % Net gain on sale of common stock of Enova — (1,299) (100)% Total corporate expenses and other income 188,936 159,295 19 % Income before income taxes 172,312 93,447 84 % Provision for income taxes 28,420 33,320 (15)% Net income $143,892 $60,127 139 % Comprehensive income $151,821 $18,731 711 % Corporate Expenses and TaxesAdministrative expenses increased 27% to $122.5 million during fiscal 2017 compared to $96.5 million during fiscal 2016, primarily as a result of theMerger and a 36% increase in the weighted-average store count resulting in additional management and supervisory compensation and other supportexpenses required for such growth. As a percentage of revenue, administrative expenses decreased from 9% during fiscal 2016 to 7% during fiscal 2017,primarily due to synergies realized from the Merger and the Maxi Prenda acquisition.Corporate depreciation and amortization increased to $20.8 million during fiscal 2017 compared to $7.8 million during fiscal 2016, primarily due to theassumption of $118.2 million in property and equipment and $23.4 million in intangible assets subject to amortization as a result of the Merger, which weredepreciated and amortized during all of fiscal 2017 as compared to the period September 2, 2016 to December 31, 2016 during fiscal 2016.Interest expense increased to $24.0 million during fiscal 2017 compared to $20.3 million for fiscal 2016. See “—Liquidity and Capital Resources.”Merger and other acquisition expenses decreased to $9.1 million during fiscal 2017 compared to $36.7 million during fiscal 2016, reflecting the timing oftransaction and integration costs related to the Merger. See “—Non-GAAP Financial Information” for additional details of Merger related expenses.48Table of Contents During fiscal 2017, the Company repurchased through a tender offer, or otherwise redeemed, its outstanding $200 million, 6.75% senior notes due 2021incurring a loss on extinguishment of debt of $14.1 million. See “—Liquidity and Capital Resources.”The Company’s effective income tax rate for fiscal 2017 was 16.5%, primarily a result of the passage of the Tax Cuts and Jobs Act (“Tax Act”) in fiscal 2017,as the Company recorded a provisional net one-time tax benefit of $27.3 million during the fourth quarter of 2017. Excluding the tax benefit realized as aresult of the Tax Act, the effective income tax rate for fiscal 2017 was 32.3% compared to 35.7% for fiscal 2016. The decrease in the adjusted fiscal 2017effective tax rate as compared to the 2016 effective tax rate was primarily due to an increase in certain foreign permanent tax benefits and certain significantMerger related expenses being non-deductible for income tax purposes during fiscal 2016, which increased the 2016 effective tax rate. The Company expectsits effective income tax rate for fiscal 2018 to be between 26.5% and 27.5% as a result of the Tax Act. See Note 11 of Notes to Consolidated FinancialStatements.Net Income, Adjusted Net Income, Net Income Per Share and Adjusted Net Income Per ShareThe following table sets forth revenue, net revenue, net income, net income per share, adjusted net income and adjusted net income per share for the fiscalyear ended December 31, 2017 as compared to the fiscal year ended December 31, 2016 (in thousands, except per share amounts): Year Ended December 31, 2017 2016 As Reported Adjusted As Reported Adjusted (GAAP) (Non-GAAP) (GAAP) (Non-GAAP)Revenue $1,779,822 $1,779,822 $1,088,377 $1,088,377Net revenue $947,506 $947,506 $604,803 $604,803Net income $143,892 $131,225 $60,127 $85,332Diluted earnings per share $3.00 $2.74 $1.72 $2.44Weighted average diluted shares 47,888 47,888 35,004 35,004GAAP and adjusted earnings per share for fiscal 2017 compared to fiscal 2016 were negatively impacted by $0.02 per share due to the year-over-year 1%unfavorable change in the average value of the Mexican peso. Adjusted net income removes certain items from GAAP net income that the Company does notconsider to be representative of its actual operating performance, such as the non-recurring 2017 net tax benefit from the Tax Act, debt extinguishment costsand Merger and other acquisition expenses, but does not adjust for the effects of foreign currency rate fluctuations. See “—Non-GAAP Financial Information—Adjusted Net Income and Adjusted Net Income Per Share” below.49Table of Contents Operating Results for the Twelve Months Ended December 31, 2016 Compared to the Twelve Months Ended December 31, 2015U.S. Operations SegmentThe following table details earning assets, which consist of pawn loans, consumer loans, net and inventories as well as other earning asset metrics of the U.S.operations segment as of December 31, 2016 as compared to December 31, 2015 (dollars in thousands, except as otherwise noted): Balance at December 31, Increase / 2016 2015 (Decrease)U.S. Operations Segment Earning assets: Pawn loans$293,392 $68,153 330 % Consumer loans, net (1) 28,847 688 4,093 % Inventories 282,860 56,040 405 % $605,099 $124,881 385 % Average outstanding pawn loan amount (in ones)$152 $169 (10)% Composition of pawn collateral: General merchandise36% 45% Jewelry64% 55% 100% 100% Composition of inventories: General merchandise47% 57% Jewelry53% 43% 100% 100% Percentage of inventory aged greater than one year11% 8% (1) Does not include the off-balance sheet principal portion of active CSO extensions of credit made by independent third-party lenders. These amounts, net of the Company’sestimated fair value of its liability for guaranteeing the extensions of credit, totaled $12.1 million and $7.0 million as of December 31, 2016 and 2015, respectively.50Table of Contents The following table presents segment pre-tax operating income of the U.S. operations segment for the fiscal year ended December 31, 2016 as compared tothe fiscal year ended December 31, 2015 (dollars in thousands). Store operating expenses include salary and benefit expense of store-level employees,occupancy costs, bank charges, security, insurance, utilities, supplies and other costs incurred by the stores. Year Ended December 31, 2016 2015 IncreaseU.S. Operations Segment Revenue: Retail merchandise sales $386,026 $197,011 96%Pawn loan fees 195,883 94,761 107%Wholesale scrap jewelry sales 47,680 19,380 146% Consumer loan and credit services fees 41,922 25,696 63%Total revenue 671,511 336,848 99% Cost of revenue: Cost of retail merchandise sold 241,086 117,059 106% Cost of wholesale scrap jewelry sold 41,357 17,530 136% Consumer loan and credit services loss provision 11,494 6,770 70% Total cost of revenue 293,937 141,359 108% Net revenue 377,574 195,489 93% Segment expenses: Store operating expenses 215,227 107,852 100% Depreciation and amortization 13,618 6,146 122% Total segment expenses 228,845 113,998 101% Segment pre-tax operating income $148,729 $81,491 83% Retail Merchandise Sales OperationsU.S. retail merchandise sales increased 96% to $386.0 million during fiscal 2016 compared to $197.0 million for fiscal 2015. The increase was primarily dueto the Cash America 2016 Partial Period, which accounted for 96% of the increase in retail merchandise sales. During fiscal 2016, the gross profit margin onretail merchandise sales in the U.S. was 38% compared to a margin of 41% during fiscal 2015, reflecting an increased mix of general merchandise inventoriescompared to jewelry inventories in legacy First Cash stores and the impact of lower margins in the Cash America stores.U.S. inventories increased 405% from $56.0 million at December 31, 2015 to $282.9 million at December 31, 2016. The increase was due to the inclusion of$232.6 million of Cash America inventories partially offset by a 10% decline in legacy First Cash store inventories. Included in the Cash America inventorybalance as of December 31, 2016 was $13.5 million of scrap inventories in transit or held in processing locations. The shift in the composition of pawninventory from general merchandise to jewelry was primarily due to the Cash America stores carrying greater quantities of jewelry merchandise compared tolegacy First Cash stores. The increase in inventory aged greater than one year was primarily due to the inclusion of the Cash America stores, which havehistorically carried higher aged balances than legacy First Cash stores, partially offset by a decrease in aged inventory at legacy First Cash stores.Pawn Lending OperationsU.S. pawn loan fees increased 107% totaling $195.9 million during fiscal 2016 compared to $94.8 million for fiscal 2015. Pawn loan receivables in the U.S.as of December 31, 2016 increased 330% compared to December 31, 2015. The increase in pawn loan fees and pawn loan receivables was due to theinclusion of the Cash America 2016 Partial Period, which accounted for 101% of the pawn fee increase and 100% of the pawn receivable increase. LegacyFirst Cash same-store pawn receivables increased 1% as of December 31, 2016 compared to December 31, 2015. Legacy First Cash same-store pawn loan feesdeclined 4% in fiscal51Table of Contents 2016 compared to fiscal 2015, as a result of a 6% decline in the beginning of year same-store pawn loans. The shift in the composition of pawn receivablesfrom general merchandise to jewelry was primarily due to the Cash America stores, which have historically carried a higher percentage of jewelry loans thanlegacy First Cash stores.Wholesale Scrap Jewelry OperationsU.S. wholesale scrap jewelry revenue, consisting primarily of gold sales, increased 146% to $47.7 million during fiscal 2016 compared to $19.4 millionduring fiscal 2015. The increase in wholesale scrap jewelry revenue was primarily due to the inclusion of the Cash America 2016 Partial Period, whichaccounted for 92% of the increase in wholesale scrap jewelry revenue. The scrap gross profit margin in the U.S. was 13% compared to the prior-year margin of10%, due primarily to an 8% increase in the average spot price of gold in 2016. Scrap jewelry profits accounted for 2% of U.S. net revenue (gross profit) forfiscal 2016 compared to 1% in fiscal 2015.Consumer Lending OperationsService fees from U.S. consumer loans and credit services transactions (collectively, consumer lending operations) increased 63% to $41.9 million duringfiscal 2016 compared to $25.7 million for fiscal 2015. The increase in fees was due to the Cash America 2016 Partial Period. Excluding the increase due tothe Cash America 2016 Partial Period, consumer loan and credit services fees decreased 29% as the Company continues to de-emphasize consumer lendingoperations in light of increasing internet-based competition and regulatory constraints. Consumer/payday loan-related products comprised 6% of total U.S.revenue during fiscal 2016 compared to 8% during fiscal 2015.Segment Expenses and Segment Pre-Tax Operating IncomeU.S. store operating expenses increased 100% to $215.2 million during fiscal 2016 compared to $107.9 million during fiscal 2015, primarily as a result of theMerger. Same-store operating expenses in the First Cash legacy stores were consistent with the prior-year period.The U.S. segment pre-tax operating income for fiscal 2016 was $148.7 million, which generated a pre-tax segment operating margin of 22% compared to$81.5 million and 24% in the prior year, respectively.52Table of Contents Latin America Operations SegmentThe following table details earning assets, which consist of pawn loans, consumer loans, net and inventories as well as other earning asset metrics of the LatinAmerica operations segment as of December 31, 2016 as compared to December 31, 2015 (dollars in thousands, except as otherwise noted): Constant Currency Basis Balance at December 31, Increase / Balance at December 31, Increase / 2016 (Decrease) 2016 2015 (Decrease) (Non-GAAP) (Non-GAAP)Latin America Operations Segment Earning assets: Pawn loans$57,114 $49,448 16 % $67,745 37 % Consumer loans, net 357 430 (17)% 429 — % Inventories 47,823 37,418 28 % 56,908 52 % $105,294 $87,296 21 % $125,082 43 % Average outstanding pawn loan amount(in ones)$58 $63 (8)% $69 10 % Composition of pawn collateral: General merchandise80% 87% Jewelry20% 13% 100% 100% Composition of inventories: General merchandise76% 85% Jewelry24% 15% 100% 100% Percentage of inventory aged greaterthan one year1% 2% 53Table of Contents The following table presents segment pre-tax operating income of the Latin America operations segment for the fiscal year ended December 31, 2016 ascompared to the fiscal year ended December 31, 2015 (dollars in thousands). Store operating expenses include salary and benefit expense of store-levelemployees, occupancy costs, bank charges, security, insurance, utilities, supplies and other costs incurred by the stores. Constant Currency Basis Year Ended December 31, Year Ended December 31, Increase / 2016 Increase 2016 2015 (Decrease) (Non-GAAP) (Non-GAAP)Latin America Operations Segment Revenue: Retail merchandise sales $283,105 $252,285 12 % $331,325 31% Pawn loan fees 116,874 100,687 16 % 136,259 35% Wholesale scrap jewelry sales 14,958 12,675 18 % 14,958 18% Consumer loan and credit servicesfees 1,929 2,107 (8)% 2,271 8% Total revenue 416,866 367,754 13 % 484,813 32% Cost of revenue: Cost of retail merchandise sold 177,470 161,572 10 % 207,615 28% Cost of wholesale scrap jewelry sold 11,668 10,098 16 % 13,505 34% Consumer loan and credit servicesloss provision 499 389 28 % 587 51% Total cost of revenue 189,637 172,059 10 % 221,707 29% Net revenue 227,229 195,695 16 % 263,106 34% Segment expenses: Store operating expenses 112,787 99,720 13 % 130,029 30% Depreciation and amortization 10,429 8,803 18 % 12,064 37% Total segment expenses 123,216 108,523 14 % 142,093 31% Segment pre-tax operating income $104,013 $87,172 19 % $121,013 39% Retail Merchandise Sales OperationsLatin America retail merchandise sales increased 12% (31% on a constant currency basis) to $283.1 million during fiscal 2016 compared to $252.3 millionfor fiscal 2015. The increase was primarily due to the retail revenue contribution from the Maxi Prenda stores acquired in the fourth quarter of 2015 and firstquarter of 2016, which accounted for 53% of the constant currency increase, and a 10% increase in same-store constant currency retail sales. During fiscal2016, the gross profit margin on retail merchandise sales was 37% compared to a margin of 36% on retail merchandise sales during fiscal 2015.Inventories in Latin America increased 28% (52% on a constant currency basis) from $37.4 million at December 31, 2015 to $47.8 million at December 31,2016. The increase was consistent with the growth in store counts from acquisitions and store openings in Latin America and the maturation of existingstores. The shift in the composition of pawn inventory from general merchandise to jewelry was primarily due to the Maxi Prenda stores carrying a higherpercentage of jewelry inventories and a lower percentage of general merchandise inventories compared to legacy First Cash stores.54Table of Contents Pawn Lending OperationsPawn loan fees in Latin America increased 16% (35% on a constant currency basis) totaling $116.9 million during fiscal 2016 compared to $100.7 millionfor fiscal 2015. Latin America pawn loan receivables as of December 31, 2016 increased 16% (37% on a constant currency basis) compared to December 31,2015. The increase in pawn loan fees and pawn receivables was primarily due to the contribution from the Maxi Prenda stores, which accounted for 71% ofthe constant currency increase in pawn loan fees and 63% of the constant currency increase in pawn receivables. While Latin America same-store pawnreceivables decreased 8% on a U.S. dollar basis compared to the prior year period, constant currency same-store pawn receivables increased 11%, primarilyaccounting for the remainder of the constant currency increase in Latin America pawn loan fees and pawn receivables. The shift in the composition of pawnreceivables from general merchandise to jewelry was primarily due to the Maxi Prenda stores carrying a higher percentage of jewelry loans compared tolegacy First Cash stores.Wholesale Scrap Jewelry OperationsLatin America wholesale scrap jewelry revenue, consisting primarily of gold sales, increased 18% to $15.0 million during fiscal 2016 compared to $12.7million during fiscal 2015. The increase in wholesale scrap jewelry revenue was primarily due to the contribution from the Maxi Prenda stores. The scrapgross profit margin in Latin America was 22% (10% on a constant currency basis) compared to the prior-year margin of 20%. Scrap jewelry profits accountedfor 1% of Latin America net revenue (gross profit) for fiscal 2016, which equaled fiscal 2015.Segment Expenses and Segment Pre-Tax Operating IncomeStore operating expenses increased 13% (30% on a constant currency basis) to $112.8 million during fiscal 2016 compared to $99.7 million during fiscal2015, primarily as a result of the Maxi Prenda acquisition, partially offset by an 18% year-over-year unfavorable change in the average value of the Mexicanpeso. Same-store operating expenses decreased 9% (increased 6% on a constant currency basis) compared to the prior-year period.The segment pre-tax operating income for fiscal 2016 was $104.0 million, which generated a pre-tax segment operating margin of 25% compared to $87.2million and 24% in the prior year, respectively.55Table of Contents Consolidated Results of OperationsThe following table reconciles pre-tax operating income of the Company’s U.S. operations segment and Latin America operations segment discussed aboveto consolidated net income for the fiscal year ended December 31, 2016 as compared to the fiscal year ended December 31, 2015 (dollars in thousands): Year Ended December 31, Increase / 2016 2015 (Decrease)Consolidated Results of Operations Segment pre-tax operating income: U.S. operations segment pre-tax operating income $148,729 $81,491 83 % Latin America operations segment pre-tax operating income 104,013 87,172 19 % Consolidated segment pre-tax operating income 252,742 168,663 50 % Corporate expenses and other income: Administrative expenses 96,537 51,883 86 % Depreciation and amortization 7,818 2,990 161 % Interest expense 20,320 16,887 20 % Interest income (751) (1,566) (52)% Merger and other acquisition expenses 36,670 2,875 1,175 % Net gain on sale of common stock of Enova (1,299) — — % Goodwill impairment - U.S. consumer loan operations — 7,913 (100)% Total corporate expenses and other income 159,295 80,982 97 % Income before income taxes 93,447 87,681 7 % Provision for income taxes 33,320 26,971 24 % Net income $60,127 $60,710 (1)% Comprehensive income $18,731 $22,578 (17)% Goodwill Impairment - U.S. Consumer Loan OperationsAs a result of the Company’s fiscal 2015 goodwill impairment analysis, a $7.9 million goodwill impairment charge was recorded associated with its formerU.S. consumer loan operations reporting unit, which is no longer a goodwill reporting unit of the Company.Corporate Expenses, Other Income and TaxesAdministrative expenses increased to $96.5 million during fiscal 2016 compared to $51.9 million during fiscal 2015, primarily as a result of the Merger and a49% increase in the weighted-average store count resulting in additional management and supervisory compensation and other support expenses required forsuch growth, partially offset by an 18% unfavorable change in the average value of the Mexican peso, which reduced comparative administrative expenses inMexico. As a percentage of revenue, administrative expenses increased from 7% during fiscal 2015 to 9% during fiscal 2016 primarily due to the Merger andthe Maxi Prenda acquisition.Corporate depreciation and amortization increased to $7.8 million during fiscal 2016 compared to $3.0 million during fiscal 2015, primarily due to theassumption of $118.2 million in property and equipment and $23.4 million in intangible assets subject to amortization as a result of the Merger.56Table of Contents Interest expense increased to $20.3 million during fiscal 2016 compared to $16.9 million for fiscal 2015 primarily related to increased borrowings on theCompany’s revolving unsecured credit facility primarily used to pay off assumed debt in conjunction with the Merger. See “—Liquidity and CapitalResources.”Merger and other acquisition expenses increased to $36.7 million during fiscal 2016 compared to $2.9 million during fiscal 2015, reflecting transaction andintegration costs primarily related to the Merger. See “—Non-GAAP Financial Information” for additional details of Merger related expenses.In conjunction with the Merger, the Company assumed Cash America’s investment in the common stock of Enova International, Inc., a publicly tradedcompany focused on providing online consumer lending products. Subsequent to the Merger, all of the Enova shares were sold in open market transactionswhich resulted in a net gain on sale of $1.3 million.For fiscal 2016 and 2015, the Company’s effective federal income tax rates were 35.7% and 30.8%, respectively. The increase in the effective tax rate wasprimarily due to certain significant Merger related expenses being non-deductible for income tax purposes and, to a lesser extent, the increase in taxable U.S.sourced income due to the Merger, which is subject to a higher tax rate than taxable income sourced in Latin America.Net Income, Adjusted Net Income, Net Income Per Share and Adjusted Net Income Per ShareThe following table sets forth revenue, net revenue, net income, net income per share, adjusted net income and adjusted net income per share for the fiscalyear ended December 31, 2016 as compared to the fiscal year ended December 31, 2015 (in thousands, except per share amounts): Year Ended December 31, 2016 2015 As Reported Adjusted As Reported Adjusted (GAAP) (Non-GAAP) (GAAP) (Non-GAAP)Revenue $1,088,377 $1,088,377 $704,602 $704,602Net revenue $604,803 $604,803 $391,184 $391,184Net income $60,127 $85,332 $60,710 $68,483Diluted earnings per share $1.72 $2.44 $2.14 $2.42Weighted average diluted shares 35,004 35,004 28,326 28,326While as-reported GAAP net income and earnings per share for fiscal 2016 declined 1% and 20%, respectively, compared to the prior year primarily due toMerger and other acquisition expenses, adjusted net income and earnings per share increased 25% and 1%, respectively, compared to the prior year. Thesmaller increase in adjusted earnings per share for fiscal 2016 compared to fiscal 2015 was a result of an increase in the weighted average diluted sharesoutstanding from the Merger. Adjusted net income removes certain items from GAAP net income that the Company does not consider to be representative ofits actual operating performance, such as Merger and other acquisition expenses, but does not adjust for the effects of foreign currency rate fluctuations. See“—Non-GAAP Financial Information—Adjusted Net Income and Adjusted Net Income Per Share” below.57Table of Contents Liquidity and Capital ResourcesAs of December 31, 2017, the Company’s primary sources of liquidity were $114.4 million in cash and cash equivalents, $287.9 million of available andunused funds under the Company's long-term line of credit with its commercial lenders, $411.0 million in customer loans and fees and service chargesreceivable and $276.8 million in inventories. As of December 31, 2017, the amount of cash associated with indefinitely reinvested foreign earnings was$79.8 million, which is primarily held in Mexican pesos. The Company had working capital of $721.6 million as of December 31, 2017 and total equityexceeded liabilities by a ratio of 2.5 to 1.On May 30, 2017, the Company completed an offering of $300.0 million of 5.375% senior notes due on June 1, 2024 (the “Notes”). Interest on the Notes ispayable semi-annually in arrears on June 1 and December 1, commencing on December 1, 2017. The Notes were sold to the placement agents as initialpurchasers for resale only to qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”),and outside the United States in accordance with Regulation S under the Securities Act. The Company used the proceeds from the offering to repurchase, orotherwise redeem, its outstanding $200.0 million, 6.75% senior notes due 2021 (the “2021 Notes”), to pay related fees and expenses and for general corporatepurposes, including share repurchases and repaying borrowings under the Company’s credit facility. The Company capitalized $5.1 million in issuance costs,which consisted primarily of placement agent fees and legal and other professional expenses. The issuance costs are being amortized over the life of the Notesas a component of interest expense and are carried as a direct deduction from the carrying amount of the Notes in the accompanying consolidated balancesheets.The Notes are fully and unconditionally guaranteed on a senior unsecured basis jointly and severally by all of the Company's existing and future domesticsubsidiaries that guarantee its primary revolving bank credit facility. The Notes will permit the Company to make share repurchases of up to $100.0 millionwith the net proceeds of the Notes and other available funds and to make restricted payments, such as purchasing shares of its stock and paying cashdividends, in an unlimited amount if, after giving pro forma effect to the incurrence of any indebtedness to make such payment, the Company's consolidatedtotal debt ratio (“Net Debt Ratio”) is less than 2.25 to 1. The Net Debt Ratio is defined generally in the indenture governing the Notes (the “Indenture”) as theratio of (1) the total consolidated debt of the Company minus cash and cash equivalents of the Company to (2) the Company’s consolidated trailing twelvemonths EBITDA, as adjusted to exclude certain non-recurring expenses and giving pro forma effect to operations acquired during the measurement period. Asof December 31, 2017, the Net Debt Ratio was 1.1 to 1, see the table below for additional information on the calculation of the Net Debt Ratio.The Company may redeem the Notes at any time on or after June 1, 2020, at the redemption prices set forth in the Indenture, plus accrued and unpaid interest,if any. In addition, prior to June 1, 2020, the Company may redeem some or all of the Notes at a price equal to 100% of the principal amount thereof, plusaccrued and unpaid interest, if any, plus a “make-whole” premium set forth in the Indenture. The Company may redeem up to 35% of the Notes prior to June1, 2020, with the proceeds of certain equity offerings at a redemption price of 105.375% of the principal amount of the Notes redeemed, plus accrued andunpaid interest, if any. In addition, upon a change of control, noteholders have the right to require the Company to purchase the Notes at a price equal to101% of the principal amount of the Notes, plus accrued and unpaid interest, if any.During fiscal 2017, the Company recognized a $14.1 million loss on extinguishment of debt related to the repurchase or redemption of the 2021 Notes whichincludes the tender or redemption premiums paid over the outstanding $200.0 million principal amount of the 2021 Notes and other reacquisition costs of$10.9 million and the write off of unamortized debt issuance costs of $3.2 million.At December 31, 2017, the Company maintained a line of credit with a group of U.S. based commercial lenders (the “2016 Credit Facility”) in the amount of$400.0 million. In May 2017, the term of the 2016 Credit Facility was extended through September 2, 2022. The calculation of the fixed charge coverageratio was also amended to remove share repurchases from the calculation to provide greater flexibility for making future share repurchases and paying cashdividends.At December 31, 2017, the Company had $107.0 million in outstanding borrowings and $5.1 million in outstanding letters of credit under the 2016 CreditFacility, leaving $287.9 million available for future borrowings. The 2016 Credit Facility bears interest, at the Company’s option, at either (i) the prevailingLondon Interbank Offered Rate (“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 (ii)the prevailing prime or base rate plus a fixed spread of 1.5%. The agreement has a LIBOR floor of 0%. Additionally, the Company is required to pay anannual commitment fee of 0.50% on the average daily unused portion of the 2016 Credit Facility commitment. The weighted-average interest rate onamounts outstanding under the 2016 Credit Facility at December 31, 2017 was 4.00% based on 1 week LIBOR. Under the terms of the 2016 Credit Facility,the Company is required to maintain certain financial ratios and comply with certain financial covenants. The 2016 Credit Facility also contains customaryrestrictions on the Company’s ability to incur additional debt, grant liens, make investments, consummate acquisitions and similar negative covenants withcustomary carve-outs and baskets. The Company was58Table of Contents in compliance with the covenants of the 2016 Credit Facility as of December 31, 2017, and believes it has the capacity to borrow a substantial portion of theamount available under the 2016 Credit Facility under the most restrictive covenant. During fiscal 2017, the Company made net payments of $153.0 millionpursuant to the 2016 Credit Facility.In general, revenue growth is dependent upon the Company’s ability to fund the addition of store locations (both de novo openings and acquisitions) andgrowth in customer loan balances and inventories. In addition to these factors, changes in loan balances, collection of pawn fees, merchandise sales,inventory levels, seasonality, operating expenses, administrative expenses, expenses related to the Merger, tax rates, gold prices, foreign currency exchangerates and the pace of new store expansions and acquisitions, affect the Company’s liquidity. Management believes cash on hand, the borrowings availableunder its credit facility, anticipated cash generated from operations (including the normal seasonal increases in operating cash flows occurring in the first andfourth quarters) and other current working capital will be sufficient to meet the Company’s anticipated capital requirements for its business for at least thenext twelve months. Where appropriate or desirable, in connection with the Company’s efficient management of its liquidity position, the Company couldseek to raise additional funds from a variety of sources, including the sale of assets, reductions in capital spending, the issuance of debt or equity securitiesand/or changes to its management of current assets. The characteristics of the Company’s current assets, specifically the ability to rapidly liquidate goldjewelry inventory and adjust outflows of cash in its lending practices, gives the Company flexibility to quickly modify its business strategy to increase cashflow from its business, if necessary. Regulatory developments affecting the Company’s operations may also impact profitability and liquidity. See “—Item 1—Business—Governmental Regulation.”The Company regularly evaluates opportunities to optimize its capital structure, including through consideration of the issuance of debt or equity, torefinance existing debt and to fund ongoing cash needs such as general corporate purposes, growth initiatives and its stock repurchase program.The following tables set forth certain historical information with respect to the Company’s sources and uses of cash and other key indicators of liquidity(dollars in thousands): Year Ended December 31, 2017 2016 2015Cash flow provided by operating activities $220,357 $96,854 $92,749Cash flow provided by (used in) investing activities 1,397 (25,967) (71,676)Cash flow provided by (used in) financing activities (197,506) (58,713) 9,127 Balance at December 31, 2017 2016 2015Net working capital $721,626 $748,507 $279,259Current ratio7.0:1 6.2:1 7.0:1 Liabilities to equity0.4:1 0.5:1 0.7:1 Net Debt Ratio (1)1.1:1 2.1:1 1.3:1 (1)Pursuant to the covenants of the Notes, the Company may make restricted payments, such as purchasing shares of its stock and paying cash dividends, in an unlimited amountif, after giving pro forma effect to the incurrence of any indebtedness to make such payment, the Company's Net Debt Ratio is less than 2.25 to 1. Adjusted EBITDA, acomponent of the Net Debt Ratio, is a non-GAAP measure. See “—Non-GAAP Financial Information” for a calculation of the Net Debt Ratio.Net cash provided by operating activities increased $123.5 million, or 128%, from $96.9 million for fiscal 2016 to $220.4 million for fiscal 2017, dueprimarily to an increase in net income of $83.8 million and net changes in certain adjustments and operating assets and liabilities (as detailed in thestatements of cash flows).59Table of Contents Net cash provided by investing activities increased $27.4 million, or 105%, from net cash used in investing activities of $26.0 million during fiscal 2016 tonet cash provided by investing activities of $1.4 million during fiscal 2017. Cash flows from investing activities are utilized primarily to fund pawn storeacquisitions and purchases of property and equipment. In addition, net cash flows related to fundings/repayments of pawn and consumer loans are includedin investing activities. The Company paid $2.2 million in cash related to acquisitions during fiscal 2017 compared to $29.9 million in fiscal 2016. Inaddition, the portion of the aggregate Merger consideration paid in cash upon closing of the Merger, net of cash acquired, was $8.3 million during fiscal2016. The Company received funds from a net decrease in pawn and consumer loans of $40.7 million during fiscal 2017 compared to funding a net increasein loans of $16.1 million during fiscal 2016, and received proceeds of $62.1 million from the sale of approximately six million shares of common stock ofEnova International, Inc. during fiscal 2016.Net cash used in financing activities increased $138.8 million from $58.7 million during fiscal 2016 to $197.5 million during fiscal 2017. Net payments onthe Company’s credit facility were $153.0 million during fiscal 2017 compared to net borrowings of $202.0 million during fiscal 2016, which was primarilyused to pay Merger related expenses and pay off assumed debt in conjunction with the Merger. During fiscal 2017, the Company received $300.0 million inproceeds from the private offering of the Notes and paid $5.3 million in debt issuance costs related to the issuance of the Notes and the extension of the 2016Credit Facility. Using part of the proceeds from the Notes, the Company repurchased, or otherwise redeemed, the $200.0 million 2021 Notes and paid tenderor redemption premiums over the face value of the 2021 Notes and other reacquisition costs of $10.9 million during fiscal 2017. The Company paid $2.4million of debt issuance costs related to the 2016 Credit Facility during fiscal 2016. In addition, the Company repaid $6.5 million in peso-denominated debtassumed from the Maxi Prenda acquisition and $232.0 million in debt assumed in conjunction with the Merger during fiscal 2016. The Companyrepurchased $91.7 million worth of shares of its common stock, realized proceeds from the exercise of stock options of $0.3 million and paid dividends of$36.8 million during fiscal 2017, compared to dividends paid of $19.8 million during fiscal 2016.During fiscal 2017, the Company opened 45 new pawn stores in Latin America, acquired five pawn stores in Latin America, opened two pawn stores in theU.S. and acquired one pawn store in the U.S. The cumulative all-cash purchase price of the 2017 acquisitions was $1.2 million, net of cash acquired andcertain post-closing adjustments. During fiscal 2017, the Company also paid $1.0 million of deferred purchase price amounts payable related to prior-yearacquisitions. The Company funded $37.1 million in capital expenditures during fiscal 2017, of which $11.2 million related to the purchase of real estateprimarily at existing stores with the remainder related primarily to maintenance capital expenditures and new store additions. Acquisition purchase prices,real estate purchase prices, capital expenditures, working capital requirements and start-up losses related to new store openings have been primarily fundedthrough cash balances, operating cash flows and the Company’s credit facility. The Company’s cash flow and liquidity available to fund expansion in 2017included net cash flow from operating activities of $220.4 million for fiscal 2017.The Company intends to continue expansion primarily through acquisitions and new store openings. For fiscal 2018, the Company expects to addapproximately 85 stores, primarily in Latin America, including plans for its first stores in Colombia. Additionally, the Company intends to continuepurchasing the real estate from landlords at its existing stores as opportunities arise at attractive prices. Excluding these real estate purchases, the Companyexpects total capital expenditures for 2018, including expenditures for new and remodeled stores and other corporate assets, to total approximately $27.5million to $32.5 million. Management believes cash on hand, the amounts available to be drawn under the credit facility and cash generated from operationswill be sufficient to accommodate the Company’s current operations and store expansion plans for 2018.The Company continually looks for, and is presented with, potential acquisition opportunities. The Company currently has no other contractualcommitments for materially significant future acquisitions, business combinations or capital commitments. The Company will evaluate potential acquisitionsbased upon growth potential, purchase price, available liquidity, debt covenant restrictions, strategic fit and quality of management personnel, among otherfactors. If the Company encounters an attractive opportunity to acquire new stores in the near future, the Company may seek additional financing, the termsof which will be negotiated on a case-by-case basis.In January 2015, the Company’s Board of Directors authorized a common stock repurchase program for up to 2,000,000 shares of the Company’s outstandingcommon stock. During the first quarter of 2017, the Company repurchased 228,000 shares of its common stock at an aggregate cost of $10.0 million and anaverage cost per share of $43.94. In May 2017, the Company’s Board of Directors authorized a new common stock repurchase program for up to$100.0 million of the Company’s outstanding common stock. The new share repurchase program replaced the Company’s prior share repurchase plan, whichwas terminated in May 2017. Under the May 2017 stock repurchase program, the Company has repurchased 1,388,000 shares of its common stock at anaggregate cost of $83.0 million and an average cost per share of $59.80 and $17.0 million remained available for repurchases as of December 31, 2017. OnJanuary 31, 2018, the Company completed the May 2017 stock repurchase program after repurchasing approximately 239,000 shares of common stock at anaggregate cost of $17.0 million. The Company did not repurchase any of its shares in 2016 as it suspended its share repurchase program in 2016 due to theMerger.60Table of Contents In October 2017, the Company’s Board of Directors authorized an additional common stock repurchase program for up to $100.0 million of the Company’soutstanding common stock, which became effective on January 31, 2018 upon completion of the May 2017 stock repurchase program. The Company intendsto continue repurchases under its repurchase program in 2018 through open market transactions under trading plans in accordance with Rule 10b5-1 andRule 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, creditavailability, debt covenant restrictions, general business conditions, regulatory requirements, the market price of the Company’s stock, the dividend policyand the availability of alternative investment opportunities.Total cash dividends paid in fiscal 2017 and 2016 were $36.8 million and $19.8 million, respectively. In January 2018, the Company’s Board of Directorsapproved a plan to increase the annual dividend to $0.88 per share, or $0.22 per share quarterly, beginning in the first quarter of 2018. The declared $0.22first quarter cash dividend on common shares outstanding, or an aggregate of $10.3 million based on December 31, 2017 share counts, will be paid onFebruary 28, 2018 to stockholders of record as of February 14, 2018. On an annualized basis, this represents aggregate dividends of $41.2 million based onDecember 31, 2017 share counts as compared to aggregate dividends of $36.8 million in fiscal 2017. The declaration and payment of cash dividends in thefuture (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. Non-GAAP Financial InformationThe Company uses certain financial calculations such as adjusted net income, adjusted net income per share, EBITDA, adjusted EBITDA, free cash flow,adjusted free cash flow and constant currency results (as defined or explained below) as factors in the measurement and evaluation of the Company’soperating performance and period-over-period growth. The Company derives these financial calculations on the basis of methodologies other than GAAP,primarily by excluding from a comparable GAAP measure certain items the Company does not consider to be representative of its actual operatingperformance. These financial calculations are “non-GAAP financial measures” as defined in SEC rules. The Company uses these non-GAAP financialmeasures in operating its business because management believes they are less susceptible to variances in actual operating performance that can result fromthe excluded items, other infrequent charges and currency fluctuations. The Company presents these financial measures to investors because managementbelieves they are useful to investors in evaluating the primary factors that drive the Company’s operating performance and because management believesthey provide greater transparency into the Company’s results of operations. However, items that are excluded and other adjustments and assumptions that aremade in calculating adjusted net income, adjusted net income per share, EBITDA, adjusted EBITDA, free cash flow, adjusted free cash flow and constantcurrency results are significant components in understanding and assessing the Company’s financial performance. These non-GAAP financial measuresshould be evaluated in conjunction with, and are not a substitute for, the Company’s GAAP financial measures. Further, because these non-GAAP financialmeasures are not determined in accordance with GAAP and are thus susceptible to varying calculations, adjusted net income, adjusted net income per share,EBITDA, adjusted EBITDA, free cash flow, adjusted free cash flow and constant currency results, as presented, may not be comparable to other similarly titledmeasures of other companies.The Company has adjusted the applicable financial measures to exclude, among other expenses and benefits, Merger related expenses because it generallywould not incur such costs and expenses as part of its continuing operations. The Merger related expenses are predominantly incremental costs directlyassociated with the Merger and integration of Cash America, including professional fees, legal expenses, severance and retention payments, acceleratedvesting of certain equity compensation awards, contract breakage costs and costs related to consolidation of technology systems and corporate facilities.61Table of Contents Adjusted Net Income and Adjusted Net Income Per ShareManagement believes the presentation of adjusted net income and adjusted net income per share (“Adjusted Income Measures”) provides investors withgreater transparency and provides a more complete understanding of the Company’s financial performance and prospects for the future by excluding itemsmanagement believes are non-operating in nature and not representative of the Company’s core operating performance. In addition, management believes theadjustments shown below are useful to investors in order to allow them to compare the Company’s financial results for the current periods presented with theprior periods presented.The following table provides a reconciliation between the net income and diluted earnings per share calculated in accordance with GAAP to the AdjustedIncome Measures, which are shown net of tax (unaudited, in thousands, except per share amounts): Year Ended December 31, 2017 2016 2015 InThousands Per Share InThousands Per Share InThousands Per ShareNet income, as reported$143,892 $3.00 $60,127 $1.72 $60,710 $2.14Adjustments, net of tax: Merger and other acquisitionexpenses: Transaction— — 14,399 0.41 — —Severance and retention2,456 0.05 9,594 0.27 — —Other3,254 0.07 2,030 0.06 1,989 0.07Total Merger and otheracquisition expenses5,710 0.12 26,023 0.74 1,989 0.07Net tax benefit from Tax Act(27,269) (0.57) — — — —Loss on extinguishment of debt8,892 0.19 — — — —Net gain on sale of commonstock of Enova— — (818) (0.02) — —Restructuring expenses relatedto U.S. consumer loanoperations— — — — 5,784 0.21Adjusted net income$131,225 $2.74 $85,332 $2.44 $68,483 $2.4262Table of Contents The following table provides a reconciliation of the gross amounts, the impact of income taxes and the net amounts for each of the adjustments included inthe table above (unaudited, in thousands): Year Ended December 31, 2017 2016 2015 Pre-tax Tax After-tax Pre-tax Tax After-tax Pre-tax Tax After-taxMerger and otheracquisitionexpenses (1)$9,062 $3,352 $5,710 $36,670 $10,647 $26,023 $2,875 $886 $1,989Net tax benefitfrom Tax Act— 27,269 (27,269) — — — — — —Loss onextinguishmentof debt14,114 5,222 8,892 — — — — — —Net gain on sale ofcommon stockof Enova— — — (1,299) (481) (818) — — —Restructuringexpensesrelated to U.S.consumer loanoperations— — — — — — 8,878 3,094 5,784Totaladjustments$23,176 $35,843 $(12,667) $35,371 $10,166 $25,205 $11,753 $3,980 $7,773(1) Resulting tax benefit for fiscal 2016 is less than the statutory rate as a portion of the transaction costs were not deductible for tax purposes. See Note 4 of Notes toConsolidated Financial Statements for further information.63Table of Contents Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDAThe Company defines EBITDA as net income before income taxes, depreciation and amortization, interest expense and interest income and adjusted EBITDAas EBITDA adjusted for certain items as listed below that management considers to be non-operating in nature and not representative of its actual operatingperformance. The Company believes EBITDA and adjusted EBITDA are commonly used by investors to assess a company’s financial performance andadjusted EBITDA is used in the calculation of the Net Debt Ratio as defined in the Company’s senior notes covenants. The following table provides areconciliation of net income to EBITDA and adjusted EBITDA (unaudited, dollars in thousands): Year Ended December 31, 2017 2016 2015Net income$143,892 $60,127 $60,710Income taxes 28,420 33,320 26,971Depreciation and amortization (1) 55,233 31,865 17,446Interest expense 24,035 20,320 16,887Interest income (1,597) (751) (1,566)EBITDA 249,983 144,881 120,448Adjustments: Merger and other acquisition expenses 9,062 36,670 2,875Loss on extinguishment of debt 14,114 — —Net gain on sale of common stock of Enova — (1,299) —Restructuring expenses related to U.S. consumer loan operations — — 8,878Adjusted EBITDA$273,159 $180,252 $132,201 Net Debt Ratio calculated as follows: Total debt (outstanding principal)$407,000 $460,000 $258,000Less: cash and cash equivalents (114,423) (89,955) (86,954)Net debt$292,577 $370,045 $171,046Adjusted EBITDA$273,159 $180,252 $132,201Net Debt Ratio1.1:1 2.1:1 1.3:1(1) For fiscal 2015, excludes $0.5 million of depreciation and amortization, which is included in the restructuring expenses related to U.S. consumer loan operations.Free Cash Flow and Adjusted Free Cash FlowFor purposes of its internal liquidity assessments, the Company considers free cash flow and adjusted free cash flow. The Company defines free cash flow ascash flow from operating activities less purchases of property and equipment and net fundings/repayments of pawn and consumer loans, which are consideredto be operating in nature by the Company but are included in cash flow from investing activities, and adjusted free cash flow as free cash flow adjusted forMerger related expenses paid that management considers to be non-operating in nature. Free cash flow and adjusted free cash flow are commonly used byinvestors as an additional measure of cash generated by business operations that may be used to repay scheduled debt maturities and debt service or,following payment of such debt obligations and other non-discretionary items, may be available to invest in future growth through new businessdevelopment activities or acquisitions, repurchase stock, pay cash dividends or repay debt obligations prior to their maturities. These metrics can also beused to evaluate the Company’s ability to generate cash flow from business operations and the impact that this cash flow has on the Company’s liquidity.However, free cash flow and adjusted free cash flow have limitations as analytical tools and should not be considered in isolation or as a substitute for cashflow from operating activities or other income statement data prepared in accordance with GAAP. The following table reconciles net cash flow from operatingactivities to free cash flow and adjusted free cash flow (unaudited, in thousands):64Table of Contents Year Ended December 31, 2017 2016 2015Cash flow from operating activities$220,357 $96,854 $92,749Cash flow from investing activities: Loan receivables, net of cash repayments40,735 (16,072) (3,716)Purchases of property and equipment (1)(37,135) (33,863) (21,073)Free cash flow223,957 46,919 67,960Merger related expenses paid, net of tax benefit6,659 20,939 —Adjusted free cash flow$230,616 $67,858 $67,960(1)Includes $11.2 million, $13.4 million and $3.6 million of real estate expenditures primarily at existing stores for the twelve months ended December 31, 2017, 2016 and 2015,respectively.Constant Currency ResultsThe Company’s reporting currency is the U.S. dollar. However, certain performance metrics discussed in this report are presented on a “constant currency”basis, which is considered a non-GAAP measurement of financial performance. The Company’s management uses constant currency results to evaluateoperating results of business operations in Latin America, which are primarily transacted in local currencies.The Company believes constant currency results provide investors with valuable supplemental information regarding the underlying performance of itsbusiness operations in Latin America, consistent with how the Company’s management evaluates such performance and operating results. Constant currencyresults reported herein are calculated by translating certain balance sheet and income statement items denominated in local currencies using the exchangerate from the prior-year comparable period, as opposed to the current comparable period, in order to exclude the effects of foreign currency rate fluctuationsfor purposes of evaluating period-over-period comparisons. Business operations in Mexico and Guatemala are transacted in Mexican pesos and Guatemalanquetzales, respectively. The Company also has operations in El Salvador where the reporting and functional currency is the U.S. dollar. See the Latin Americaoperations segment tables in “—Results of Operations” above for an additional reconciliation of certain constant currency amounts to as reported GAAPamounts.Contractual CommitmentsA tabular disclosure of contractual obligations at December 31, 2017 is as follows (in thousands): Payments Due by Period Total Less Than 1Year 1 - 3 Years 3 - 5 Years More Than 5YearsOperating leases$367,596 $102,299 $151,995 $73,648 $39,654Revolving unsecured credit facility (1)107,000 — — 107,000 —Senior unsecured notes300,000 — — — 300,000Interest on senior unsecured notes104,813 16,125 32,250 32,250 24,188Employment contracts14,153 3,425 6,713 4,015 —Total$893,562 $121,849 $190,958 $216,913 $363,842(1)Excludes interest obligations under the Company's revolving unsecured credit facility. See Note 10 of Notes to Consolidated Financial Statements.Off-Balance Sheet ArrangementsThe Company offers a fee-based credit services organization program to assist consumers in obtaining extensions of credit. The Company’s stand-aloneconsumer loan stores and select pawn stores in the states of Texas and Ohio offer the CSO Programs. The Company’s CSO Programs comply with therespective jurisdiction’s credit services organization act, credit access business law or a similar statute. Under the CSO Programs, the Company assistscustomers in applying for a short-term extension of credit from the Independent Lenders and issues the Independent Lenders a guarantee for the repayment ofthe extension of credit.65Table of Contents For extension of credit products originated by the Independent Lenders, the Independent Lenders are responsible for evaluating each of its customers’applications, determining whether to approve an extension of credit based on an application and determining the amount of the extension of credit. TheCompany is not involved in the Independent Lenders’ extension of credit approval processes or in determining the Independent Lenders’ approvalprocedures or criteria. At December 31, 2017, the outstanding amount of active extensions of credit originated and held by the Independent Lenders was$9.7 million.Since the Company may not be successful in collection of delinquent accounts under the CSO Programs, the Company’s consumer loan loss provisionincludes amounts estimated to be adequate to absorb credit losses from extensions of credit in the aggregate consumer loan portfolio, including thoseexpected to be assigned to the Company or acquired by the Company as a result of its guaranty obligations. Estimated losses of $0.4 million on portfoliosowned by the Independent Lenders are included in accounts payable and accrued liabilities in the consolidated balance sheet as of December 31, 2017. TheCompany believes this amount is adequate to absorb credit losses from extensions of credit expected to be assigned to the Company or acquired by theCompany as a result of its guaranty obligations.InflationThe Company does not believe inflation has had a material effect on the volume of customer loans originated, merchandise sales, or results of operations.SeasonalityThe Company’s business is subject to seasonal variations and operating results for each quarter and year-to-date periods are not necessarily indicative of theresults of operations for the full year. Typically, the Company experiences seasonal growth of service fees in the third and fourth quarter of each year due toloan balance growth. Service fees generally decline in the first and second quarter of each year after the heavy repayment period of pawn and consumer loansassociated with statutory bonuses received by customers in the fourth quarter in Mexico and with tax refund proceeds received by customers in the firstquarter in the U.S. Retail sales are seasonally higher in the fourth quarter associated with holiday shopping, and to a lesser extent, in the first quarterassociated with tax refunds.Recent Accounting PronouncementsSee discussion in Note 2 of Notes to Consolidated Financial Statements.Item 7A. Quantitative and Qualitative Disclosures About Market RiskMarket risks relating to the Company’s operations result primarily from changes in interest rates, gold prices and foreign currency exchange rates. TheCompany does not engage in speculative or leveraged transactions, nor does it hold or issue financial instruments for trading purposes.Gold Price RiskThe Company has significant holdings of gold in the form of jewelry inventories and pawn collateral and a significant portion of retail merchandise sales aregold jewelry as are most of the wholesale scrap jewelry sales. At December 31, 2017, the Company held approximately $141.2 million in jewelry inventories,representing 51% of total inventory. In addition, approximately $193.1 million, or 56%, of total pawn loans were collateralized by jewelry, which wasprimarily gold. Of the Company’s total retail merchandise revenue during fiscal 2017, approximately $325.8 million, or 31%, was jewelry sales. During fiscal2017, the average market price of gold increased by 1%, from $1,251 to $1,257 per ounce. A significant and sustained decline in the price of gold wouldnegatively impact the value of jewelry inventories held by the Company and the value of gold jewelry pledged as collateral by pawn customers. As a result,the Company’s profit margins from the sale of existing jewelry inventories would be negatively impacted, as would the potential profit margins on goldjewelry currently pledged as collateral by pawn customers in the event it was forfeited by the customer. In addition, a decline in gold prices could result in alower balance of pawn loans outstanding for the Company, as customers would receive lower loan amounts for individual pieces of pledged gold jewelry.The Company believes that many customers would be willing to add additional items of value to their pledge in order to obtain the desired loan amount, thusmitigating a portion of this risk.66Table of Contents Foreign Currency RiskThe financial statements of the Company’s subsidiaries in Mexico and Guatemala are translated into U.S. dollars using period-end exchange rates for assetsand liabilities and average exchange rates for revenues and expenses. Adjustments resulting from translating net assets are reported as a separate componentof accumulated other comprehensive income (loss) within stockholders’ equity under the caption, currency translation adjustment. Exchange rate gains orlosses related to foreign currency transactions are recognized as transaction gains or losses in the Company’s income statement as incurred. The Companyalso has operations in El Salvador where the reporting and functional currency is the U.S. dollar.Latin America revenues and cost of revenues account for 27% and 28%, respectively, of consolidated amounts for the year ended December 31, 2017. Themajority of Latin America revenues and a smaller portion of expenses are denominated in currencies other than the U.S. dollar and the Company therefore hasforeign currency risk related to these currencies, which are primarily the Mexican peso, and to a much lesser extent, the Guatemalan quetzal.Accordingly, changes in exchange rates, and in particular a weakening of foreign currencies relative to the U.S. dollar, may negatively affect the Company’srevenue and earnings of its Latin America operations as expressed in U.S. dollars. For the year ended December 31, 2017, the Company’s Latin Americarevenues and pre-tax operating income would have been approximately $6.1 million and $1.5 million higher, respectively, had foreign currency exchangerates remained consistent with those for the year ended December 31, 2016. See “Item 7. Management’s Discussion and Analysis of Financial Condition andResults of Operations—Results of Operations” for further discussion of Latin America constant currency results.The Company does not typically use foreign exchange contracts or derivatives to hedge any foreign currency exposures. The volatility of exchange ratesdepends on many factors that it cannot forecast with reliable accuracy. The Company’s continued Latin America expansion increases exposure to exchangerate fluctuations and, as a result, such fluctuations could have a significant impact on future results of operations. The average value of the Mexican peso tothe U.S. dollar exchange rate for fiscal 2017 was 18.9 to 1, compared to 18.7 to 1 in fiscal 2016 and 15.8 to 1 in fiscal 2015. It is anticipated that for 2018 aone point change in the average Mexican peso to the U.S. dollar exchange rate will impact annual earnings by approximately $3.7 million to $4.6 million.The average value of the Guatemalan quetzal to the U.S. dollar exchange rate for fiscal 2017 was 7.4 to 1, compared to 7.6 to 1 in fiscal 2016 and 7.7 to 1 infiscal 2015.Interest Rate RiskThe Company is potentially exposed to market risk in the form of interest rate risk in regards to its long-term line of credit. At December 31, 2017, theCompany had $107.0 million outstanding under its revolving line of credit. The revolving line of credit is generally priced with a variable rate based on a 1week or 1, 2, 3 or 6 month LIBOR plus a fixed spread. Based on the average outstanding indebtedness during fiscal 2017, a 1% (100 basis points) increase ininterest rates would have increased the Company’s interest expense by approximately $1.6 million for fiscal 2017.Interest rate fluctuations will generally not affect the Company’s future earnings or cash flows on its fixed rate debt unless such instruments mature or areotherwise terminated. However, interest rate changes will affect the fair value of the Company’s fixed rate instruments. At December 31, 2017, the fair valueof the Company’s fixed rate debt was approximately $314.0 million and the outstanding principal of the Company’s fixed rate debt was $300.0 million. Thefair value estimate of the Company’s fixed rate debt was estimated based on a discounted cash flow analysis using a discount rate representing theCompany’s estimate of the rate that would be used by market participants. Changes in assumptions or estimation methodologies may have a material effecton this estimated fair value. As the Company expects to hold its fixed rate instruments to maturity and the amounts due under such instruments would belimited to the outstanding principal balance and any accrued and unpaid interest, the Company does not expect that fluctuations in interest rates, and theresulting change in fair value of its fixed rate instruments, would have a significant impact on the Company’s operations.The Company’s cash and cash equivalents are sometimes invested in money market accounts. Accordingly, the Company is subject to changes in marketinterest rates. However, the Company does not believe a change in these rates would have a material adverse effect on the Company’s operating results,financial condition, or cash flows.67Table of Contents Item 8. Financial Statements and Supplementary DataThe financial statements prepared in accordance with Regulation S-X are included in a separate section of this report. See the index to Financial Statements atItem 15(a)(1) and (2) of this report.Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Not applicable.Item 9A. Controls and ProceduresEvaluation of Disclosure Controls and Procedures The Company’s management, under the supervision and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, hasevaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) under the Exchange Act) as of December 31,2017 (the “Evaluation Date”). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date,the Company’s disclosure controls and procedures were effective.Limitations on Effectiveness of Controls and ProceduresThe Company’s management, including its Chief Executive Officer and Chief Financial Officer, does not expect the Company’s disclosure controls andprocedures or internal controls will prevent all possible error and fraud. The Company’s disclosure controls and procedures are, however, designed to providereasonable assurance of achieving their objectives, and the Company’s Chief Executive Officer and Chief Financial Officer have concluded that theCompany’s disclosure controls and procedures are effective at that reasonable assurance level.Management’s Report on Internal Control Over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting and for the assessment of the effectiveness ofthe Company’s internal control over financial reporting. Internal control over financial reporting (as defined in Rules 13a-15(f) and 15d(f) under theExchange Act) is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financialstatements for external reporting purposes in accordance with GAAP. Internal control over financial reporting includes those policies and procedures that(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of assets, (2) providereasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, (3) providereasonable assurance that receipts and expenditures are being made only in accordance with appropriate authorization of management and the board ofdirectors, and (4) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of assets that couldhave 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 provideonly 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 theeffectiveness of the Company’s internal control over financial reporting as of December 31, 2017. To make this assessment, management used the criteria foreffective internal control over financial reporting described in Internal Control-Integrated Framework (2013) issued by the Committee of SponsoringOrganizations of the Treadway Commission. Based on this assessment, management concludes that, as of December 31, 2017, the Company’s internal controlover financial reporting is effective based on those criteria.The Company’s internal control over financial reporting as of December 31, 2017, has been audited by RSM US LLP, the independent registered publicaccounting firm that audited the Company’s financial statements included in this report, and RSM’s attestation report is included below.Changes in Internal Control Over Financial ReportingThere have been no changes in the Company’s internal control over financial reporting during the quarter ended December 31, 2017 that have materiallyaffected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.68Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the Board of Directors and StockholdersFirstCash, Inc.Opinion on the Internal Control Over Financial ReportingWe have audited FirstCash, Inc. and its subsidiaries (the Company) internal control over financial reporting as of December 31, 2017, based on criteriaestablished in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. In ouropinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on criteriaestablished in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidatedbalance sheets as of December 31, 2017 and 2016, the related consolidated statements of income, comprehensive income, stockholders' equity and cash flowsfor each of the two years in the period ended December 31, 2017 and the related notes to the consolidated financial statements of the Company and our reportdated February 20, 2018 expressed an unqualified opinion.Basis for OpinionThe Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness ofinternal control over financial reporting in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is toexpress an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with thePCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules andregulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining anunderstanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design andoperating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary inthe circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial ReportingA company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal controlover financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are beingmade only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention ortimely detection of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate./s/ RSM US LLPDallas, TexasFebruary 20, 201869Table of Contents Item 9B. Other InformationNot applicable.PART IIIItem 10. Directors, Executive Officers and Corporate GovernanceThe information required by Item 10 to this Annual Report on Form 10-K with respect to the directors, executive officers and compliance with Section 16(a)of the Exchange Act is incorporated herein by reference from the information provided under the headings “Election of Directors,” “Executive Officers,”“Corporate Governance, Board Matters and Director Compensation” and “Section 16(a) Beneficial Ownership Reporting Compliance,” contained in theCompany’s Proxy Statement to be filed with the SEC in connection with the solicitation of proxies for the Company’s 2018 Annual Meeting of Stockholdersto be held on or about May 29, 2018 (the “2018 Proxy Statement”).The Company has adopted a Code of Ethics that applies to all of its directors, officers, and employees. This Code of Ethics is publicly available on theCompany’s website at www.firstcash.com. The Company intends to disclose future amendments to, or waivers from, certain provisions of its Code of Ethicson its website in accordance with applicable NYSE and SEC requirements. Copies of the Company’s Code of Ethics are also available, free of charge, bysubmitting a written request to FirstCash, Inc., Investor Relations, 1600 West 7th Street, Fort Worth, Texas 76102.Item 11. Executive CompensationThe information required by Item 11 to this Annual Report on Form 10-K is incorporated herein by reference from the information provided under theheadings “Executive Compensation” and “Compensation Committee Interlocks and Insider Participation” of the 2018 Proxy Statement.Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersThe information required by Item 12 to this Annual Report on Form 10-K is incorporated herein by reference from the information provided under theheading “Equity Compensation Plan Information” and “Security Ownership of Certain Beneficial Owners and Management and Related StockholderMatters” of the 2018 Proxy Statement.Item 13. Certain Relationships and Related Transactions, and Director IndependenceThe information required by Item 13 to this Annual Report on Form 10-K is incorporated herein by reference from the information provided under theheadings “Certain Relationships and Related Person Transactions” and “Corporate Governance, Board Matters and Director Compensation” of the 2018Proxy Statement.Item 14. Principal Accountant Fees and ServicesThe information required by Item 14 to this Annual Report on Form 10-K is incorporated herein by reference from the information provided under theheading “Ratification of Independent Registered Public Accounting Firm” of the 2018 Proxy Statement.70Table of Contents PART IVItem 15. Exhibits and Financial Statement Schedules(a)The following documents are filed as part of this report: (1)Consolidated Financial Statements:Page Report of Independent Registered Public Accounting FirmF-1 Consolidated Balance SheetsF-3 Consolidated Statements of IncomeF-4 Consolidated Statements of Comprehensive IncomeF-5 Consolidated Statements of Changes in Stockholders’ EquityF-6 Consolidated Statements of Cash FlowsF-9 Notes to Consolidated Financial StatementsF-11 (2)All schedules are omitted because they are not applicable or the required information is shown in the financial statements or the notes thereto. (3)Exhibits: Incorporated by Reference ExhibitNo. Exhibit Description Form FileNo. Exhibit Filing Date FiledHerewith2.1 Agreement and Plan of Merger, dated as of April 28,2016, by and among First Cash Financial Services,Inc., Frontier Merger Sub, LLC and Cash AmericaInternational, Inc.* 8-K 0-19133 2.1 04/29/2016 3.1 Amended and Restated Certificate of Incorporation DEF 14A 0-19133 B 04/29/2004 3.2 Amendment to Amended and Restated Certificateof Incorporation 8-K 001-10960 3.1 09/02/2016 3.3 Amended and Restated Bylaws 8-K 001-10960 3.2 09/02/2016 4.1 Common Stock Specimen S-1 33-48436 4.2a 06/05/1992 4.2 Indenture, dated as of March 24, 2014, by andamong First Cash Financial Services, Inc., theguarantors listed therein and BOKF, NA, dba Bankof Texas (including the form of Note attached as anexhibit thereto) 8-K 0-19133 4.1 03/25/2014 4.3 Indenture, dated as of May 30, 2017, by and amongFirstCash, Inc., the guarantors listed therein andBOKF, NA (including the form of Note attached asan exhibit thereto) 8-K 001-10960 4.1 05/31/2017 4.4 Third Supplemental Indenture, dated as of May 30,2017, to Indenture dated as of March 24, 2014, byand among FirstCash, Inc., the guarantors listedtherein and BOKF, NA 8-K 001-10960 4.2 05/31/2017 10.1 First Cash Financial Services, Inc. 2004 Long-TermIncentive Plan ** DEF 14A 0-19133 C 04/29/2004 10.2 First Cash Financial Services, Inc. 2011 Long-TermIncentive Plan ** DEF 14A 0-19133 A 04/28/2011 10.3 Amendment to the FirstCash, Inc. 2011 Long-TermIncentive Plan ** S-8 333-214452 99.2 11/04/2016 10.4 First Cash 401(k) Profit Sharing Plan, as amendedeffective as of October 1, 2010 (executed on August5, 2010) S-8 333-106881 4(g) 05/31/2012 71Table of Contents Incorporated by Reference ExhibitNo. Exhibit Description Form File No. Exhibit Filing Date FiledHerewith10.5 Amended and Restated Credit Agreement, datedJuly 25, 2016, between First Cash FinancialServices, Inc., Certain Subsidiaries of theBorrower From Time to Time Party Thereto, theLenders Party Thereto, and Wells Fargo Bank,National Association 8-K 0-19133 10.1 07/26/2016 10.6 Employment Agreement between Rick L.Wessel and First Cash Financial Services, Inc.,dated August 26, 2016 ** 8-K 0-19133 10.1 08/26/2016 10.7 Employment Agreement between T. BrentStuart and First Cash Financial Services, Inc.,dated August 26, 2016 ** 8-K 0-19133 10.2 08/26/2016 10.8 Employment Agreement between R. DouglasOrr and First Cash Financial Services, Inc.,dated August 26, 2016 ** 8-K 0-19133 10.3 08/26/2016 10.9 Performance-Based Restricted Stock UnitAward Agreement ** 10-Q 001-10960 10.1 05/05/2017 10.10 First Amendment to Amended and RestatedCredit Agreement and Waiver, dated May 30,2017, between FirstCash, Inc., certainsubsidiaries of the borrower from time to timeparty thereto, the lenders party thereto, andWells Fargo Bank, National Association 8-K 001-10960 10.1 05/31/2017 16.1 Letter from Hein & Associates LLP to theSecurities and Exchange Commission datedAugust 29, 2016 8-K 0-19133 16.1 08/30/2016 21.1 Subsidiaries X23.1 Consent of Independent Registered PublicAccounting Firm, RSM US LLP X23.2 Consent of Independent Registered PublicAccounting Firm, Hein & Associates LLP X31.1 Certification Pursuant to Section 302 of theSarbanes-Oxley Act provided by Rick L.Wessel, Chief Executive Officer X31.2 Certification Pursuant to Section 302 of theSarbanes-Oxley Act provided by R. DouglasOrr, Chief Financial Officer X32.1 Certification Pursuant to 18 U.S.C. Section1350, as Adopted Pursuant to Section 906 ofthe Sarbanes-Oxley Act of 2002 provided byRick L. Wessel, Chief Executive Officer X32.2 Certification Pursuant to 18 U.S.C. Section1350, as Adopted Pursuant to Section 906 ofthe Sarbanes-Oxley Act of 2002 provided by R.Douglas Orr, Chief Financial Officer X 72Table of Contents Incorporated by Reference ExhibitNo. Exhibit Description Form File No. Exhibit Filing Date FiledHerewith101 (1) The following financial information from theCompany's Annual Report on Form 10-K forfiscal 2017, filed with the SEC on February 20,2018, is formatted in Extensible BusinessReporting Language (XBRL): (i) ConsolidatedBalance Sheets at December 31, 2017 andDecember 31, 2016, (ii) ConsolidatedStatements of Income for the years endedDecember 31, 2017, December 31, 2016 andDecember 31, 2015, (iii) ConsolidatedStatements of Comprehensive Income for theyears ended December 31, 2017, December 31,2016 and December 31, 2015, (iv) ConsolidatedStatements of Changes in Stockholders’ Equityfor the years ended December 31, 2017,December 31, 2016 and December 31, 2015, (v)Consolidated Statements of Cash Flows for theyears ended December 31, 2017, December 31,2016 and December 31, 2015, and (vi) Notes toConsolidated Financial Statements. X*The schedules to the Agreement and Plan of Merger have been omitted from this filing pursuant to Item 601(b)(2) of Regulation S-K. Registrant willfurnish copies of such schedules to the U.S. Securities and Exchange Commission upon request by the Commission.**Indicates management contract or compensatory plan, contract or arrangement. (1) The XBRL related information in Exhibit 101 to this Annual Report on Form 10-K shall not be deemed “filed” for purposes of Section 18 of theSecurities Exchange Act of 1934, as amended, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing orother document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.Item 16. Form 10-K SummaryNone.73Table of Contents SIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized. Dated: February 20, 2018FIRSTCASH, INC. (Registrant) /s/ RICK L. WESSEL Rick L. Wessel Chief Executive Officer (On behalf of the Registrant)Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrantand in the capacities and on the dates indicated.SignatureCapacityDate /s/ RICK L. WESSELRick L. WesselVice-Chairman of the Board and Chief Executive Officer(Principal Executive Officer)February 20, 2018 /s/ R. DOUGLAS ORRR. Douglas OrrExecutive Vice President and Chief Financial Officer(Principal Financial and Accounting Officer)February 20, 2018 /s/ DANIEL R. FEEHANDaniel R. FeehanChairman of the BoardFebruary 20, 2018 /s/ DANIEL E. BERCEDaniel E. BerceDirectorFebruary 20, 2018 /s/ MIKEL D. FAULKNERMikel D. FaulknerDirectorFebruary 20, 2018 /s/ JAMES H. GRAVESJames H. GravesDirectorFebruary 20, 2018 /s/ JORGE MONTAÑOJorge MontañoDirectorFebruary 20, 2018 /s/ RANDEL G. OWENRandel G. OwenDirectorFebruary 20, 201874Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and Board of Directors of FirstCash, Inc.Opinion on the Financial StatementsWe have audited the accompanying consolidated balance sheets of FirstCash, Inc., and subsidiaries (the Company) as of December 31, 2017 and 2016, therelated consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the two years in the period endedDecember 31, 2017, and the related notes to the consolidated financial statements (collectively, the financial statements). In our opinion, the consolidatedfinancial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of itsoperations and its cash flows for each of the two years in the period ended December 31, 2017, in conformity with accounting principles generally acceptedin the United States of America.We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company'sinternal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework issued by theCommittee of Sponsoring Organizations of the Treadway Commission in 2013, and our report dated February 20, 2018 expressed an unqualified opinion onthe effectiveness of the Company's internal control over financial reporting.Basis for OpinionThese financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financialstatements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Companyin accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonableassurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing proceduresto assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also includedevaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financialstatements. We believe that our audits provide a reasonable basis for our opinion./s/ RSM US LLPWe have served as the Company’s auditor since 2016.Dallas, TexasFebruary 20, 2018F-1Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and StockholdersFirstCash, Inc.We have audited the accompanying consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows of First Cash FinancialServices, Inc. and subsidiaries (collectively the “Company”) for the year ended December 31, 2015. These financial statements are the responsibility of theCompany’s management. Our responsibility is to express an opinion on these financial statements based on our audit.We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our auditsprovide a reasonable basis for our opinion.In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated results of operations and cashflows of First Cash Financial Services, Inc. and subsidiaries for the year ended December 31, 2015, in conformity with U.S. generally accepted accountingprinciples./s/ Hein & Associates LLPDallas, TexasFebruary 17, 2016F-2Table of Contents FIRSTCASH, INC.CONSOLIDATED BALANCE SHEETS(in thousands, except per share amounts) December 31, 2017 2016 ASSETS Cash and cash equivalents $114,423 $89,955 Fees and service charges receivable 42,736 41,013 Pawn loans 344,748 350,506 Consumer loans, net 23,522 29,204 Inventories 276,771 330,683 Income taxes receivable 19,761 25,510 Prepaid expenses and other current assets 20,236 25,264 Total current assets 842,197 892,135 Property and equipment, net 230,341 236,057 Goodwill 831,145 831,151 Intangible assets, net 93,819 104,474 Other assets 54,045 71,679 Deferred tax assets 11,237 9,707 Total assets $2,062,784 $2,145,203 LIABILITIES AND STOCKHOLDERS’ EQUITY Accounts payable and accrued liabilities $84,331 $109,354 Customer deposits 32,019 33,536 Income taxes payable 4,221 738 Total current liabilities 120,571 143,628 Revolving unsecured credit facility 107,000 260,000 Senior unsecured notes 295,243 196,545 Deferred tax liabilities 47,037 61,275 Other liabilities 17,600 33,769 Total liabilities 587,451 695,217 Commitments and contingencies (Note 12) Stockholders’ equity: Preferred stock; $0.01 par value; 10,000 shares authorized; no shares issued or outstanding — — Common stock; $0.01 par value; 90,000 shares authorized; 49,276 and 49,276 shares issued, respectively; 46,914 and 48,507 shares outstanding, respectively 493 493 Additional paid-in capital 1,220,356 1,217,969 Retained earnings 494,457 387,401 Accumulated other comprehensive loss (111,877) (119,806) Common stock held in treasury, 2,362 and 769 shares at cost, respectively (128,096) (36,071) Total stockholders’ equity 1,475,333 1,449,986 Total liabilities and stockholders’ equity $2,062,784 $2,145,203 The accompanying notes are an integral partof these consolidated financial statements.F-3Table of Contents FIRSTCASH, INC.CONSOLIDATED STATEMENTS OF INCOME(in thousands, except per share amounts) Year Ended December 31, 2017 2016 2015Revenue: Retail merchandise sales $1,051,099 $669,131 $449,296Pawn loan fees 510,905 312,757 195,448Wholesale scrap jewelry sales 140,842 62,638 32,055Consumer loan and credit services fees 76,976 43,851 27,803Total revenue 1,779,822 1,088,377 704,602 Cost of revenue: Cost of retail merchandise sold 679,703 418,556 278,631Cost of wholesale scrap jewelry sold 132,794 53,025 27,628Consumer loan and credit services loss provision 19,819 11,993 7,159Total cost of revenue 832,316 483,574 313,418 Net revenue 947,506 604,803 391,184 Expenses and other income: Store operating expenses 551,874 328,014 207,572Administrative expenses 122,473 96,537 51,883Depreciation and amortization 55,233 31,865 17,939Interest expense 24,035 20,320 16,887Interest income (1,597) (751) (1,566)Merger and other acquisition expenses 9,062 36,670 2,875Loss on extinguishment of debt 14,114 — —Net gain on sale of common stock of Enova — (1,299) —Goodwill impairment - U.S. consumer loan operations — — 7,913Total expenses and other income 775,194 511,356 303,503 Income before income taxes 172,312 93,447 87,681 Provision for income taxes 28,420 33,320 26,971 Net income $143,892 $60,127 $60,710 Net income per share: Basic $3.01 $1.72 $2.16Diluted 3.00 1.72 2.14 Dividends declared per common share $0.77 $0.565 $— The accompanying notes are an integral partof these consolidated financial statements.F-4Table of Contents FIRSTCASH, INC.CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(in thousands) Year Ended December 31, 2017 2016 2015Net income $143,892 $60,127 $60,710Other comprehensive income (loss): Currency translation adjustment 7,929 (41,396) (38,132)Comprehensive income $151,821 $18,731 $22,578 The accompanying notes are an integral partof these consolidated financial statements.F-5Table of Contents FIRSTCASH, INC.CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY(in thousands) PreferredStock CommonStock AdditionalPaid-InCapital RetainedEarnings Accum-ulatedOtherCompre-hensiveLoss Common StockHeld in Treasury TotalStock-holders’Equity Shares Amount Shares Amount Shares Amount Balance at12/31/2016— $— 49,276 $493 $1,217,969 $387,401 $(119,806) 769 $(36,071) $1,449,986Shares issuedunder share-basedcompensa-tion plan— — — — (440) — — (10) 440 —Exercise ofstockoptions— — — — (242) — — (13) 549 307Share-basedcompensa-tion expense— — — — 3,069 — — — — 3,069Net income— — — — — 143,892 — — — 143,892Dividendspaid— — — — — (36,836) — — — (36,836)Currencytranslationadjustment— — — — — — 7,929 — — 7,929Repurchasesof treasurystock— — — — — — — 1,616 (93,014) (93,014)Balance at12/31/2017— $— 49,276 $493 $1,220,356 $494,457 $(111,877) 2,362 $(128,096) $1,475,333 The accompanying notes are an integral partof these consolidated financial statements.F-6Table of Contents FIRSTCASH, INC.CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITYCONTINUED(in thousands) PreferredStock CommonStock AdditionalPaid-InCapital RetainedEarnings Accum-ulatedOtherCompre-hensiveLoss Common StockHeld in Treasury TotalStock-holders’Equity Shares Amount Shares Amount Shares Amount Balance at12/31/2015— $— 40,288 $403 $202,393 $643,604 $(78,410) 12,052 $(336,608) $431,382Sharesissuedundershare-basedcompensa-tion plan— — 7 — (3,903) — — (83) 3,903 —Sharesissueduponmergerwith CashAmerica— — 20,181 202 1,015,305 — — — — 1,015,507Share-basedcompensa-tionexpense— — — — 4,174 — — — — 4,174Net income— — — — — 60,127 — — — 60,127Dividendspaid— — — — — (19,808) — — — (19,808)Currencytranslationadjustment— — — — — — (41,396) — — (41,396)Retirementof treasurystock— — (11,200) (112) — (296,522) — (11,200) 296,634 —Balance at12/31/2016— $— 49,276 $493 $1,217,969 $387,401 $(119,806) 769 $(36,071) $1,449,986 The accompanying notes are an integral partof these consolidated financial statements.F-7Table of Contents FIRSTCASH, INC.CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITYCONTINUED(in thousands) PreferredStock CommonStock AdditionalPaid-InCapital RetainedEarnings Accum-ulatedOtherCompre-hensiveLoss Common StockHeld in Treasury TotalStock-holders’Equity Shares Amount Shares Amount Shares Amount Balance at12/31/2014— $— 39,708 $397 $188,062 $582,894 $(40,278) 11,200 $(296,634) $434,441Shares issuedunder share-basedcompensa-tion plan— — 5 — — — — — — —Exercise ofstockoptions, netof 80 sharesnet-settled— — 575 6 8,776 — — — — 8,782Income taxbenefit fromexercise ofstockoptions— — — — 5,126 — — — — 5,126Share-basedcompensa-tion expense— — — — 429 — — — — 429Net income— — — — — 60,710 — — — 60,710Currencytranslationadjustment— — — — — — (38,132) — — (38,132)Repurchasesof treasurystock— — — — — — — 852 (39,974) (39,974)Balance at12/31/2015— $— 40,288 $403 $202,393 $643,604 $(78,410) 12,052 $(336,608) $431,382 The accompanying notes are an integral partof these consolidated financial statements.F-8Table of Contents FIRSTCASH, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands) Year Ended December 31, 2017 2016 2015Cash flow from operating activities: Net income$143,892 $60,127 $60,710Adjustments to reconcile net income to net cash flow provided byoperating activities: Non-cash portion of credit loss provision12,727 5,970 761Share-based compensation expense3,069 4,174 429Net gain on sale of common stock of Enova— (1,299) —Depreciation and amortization expense55,233 31,865 17,939Amortization of debt issuance costs1,838 1,427 943Amortization of favorable/(unfavorable) lease intangibles, net(976) (232) —Loss on extinguishment of debt14,114 — —Impairment of goodwill - U.S. consumer loan operations— — 7,913Deferred income taxes, net(14,497) 11,912 (430)Changes in operating assets and liabilities, net of businesscombinations: Fees and service charges receivable(1,411) 1,776 (100)Inventories16,193 (4,619) (1,404)Prepaid expenses and other assets13,702 4,878 490Accounts payable, accrued expenses and other liabilities(35,135) (16,335) 4,350Income taxes11,608 (2,790) 1,148Net cash flow provided by operating activities220,357 96,854 92,749Cash flow from investing activities: Loan receivables, net of cash repayments40,735 (16,072) (3,716)Purchases of property and equipment(37,135) (33,863) (21,073)Portion of aggregate merger consideration paid in cash, net of cashacquired— (8,250) —Acquisitions of pawn stores, net of cash acquired(2,203) (29,866) (46,887)Proceeds from sale of common stock of Enova— 62,084 —Net cash flow provided by (used in) investing activities1,397 (25,967) (71,676)Cash flow from financing activities: Borrowings from revolving credit facility206,000 400,000 120,000Repayments of revolving credit facility(359,000) (198,000) (84,400)Repayments of debt assumed with merger and other acquisitions— (238,532) —Issuance of senior unsecured notes300,000 — —Repurchase/redemption of senior unsecured notes(200,000) — —Repurchase/redemption premiums paid on senior unsecured notes(10,895) — —Debt issuance costs paid(5,342) (2,373) (407)Purchases of treasury stock(91,740) — (39,974)Proceeds from exercise of share-based compensation awards307 — 9,895Income tax benefit from exercise of stock options— — 5,126Dividends paid(36,836) (19,808) —Payment of minimum withholding taxes on net share settlement ofstock options exercised— — (1,113)Net cash flow provided by (used in) financing activities(197,506) (58,713) 9,127Effect of exchange rates on cash220 (9,173) (11,238)F-9Table of Contents FIRSTCASH, INC.CONSOLIDATED STATEMENTS OF CASH FLOWSCONTINUED(in thousands) Year Ended December 31, 2017 2016 2015Change in cash and cash equivalents24,468 3,001 18,962Cash and cash equivalents at beginning of the year89,955 86,954 67,992Cash and cash equivalents at end of the year$114,423 $89,955 $86,954 Supplemental disclosure of cash flow information: Cash paid during the period for: Interest$24,301 $18,663 $15,464Income taxes29,813 21,535 21,579 Supplemental disclosure of non-cash investing and financing activity: Non-cash transactions in connection with pawn loans settled throughforfeitures of collateral transferred to inventories$436,705 $265,060 $186,389Amounts payable assumed in connection with pawn acquisitions (seeNote 3)— 2,554 575Issuance of common stock associated with the merger (see Note 3)— 1,015,507 —Revolving unsecured credit facility assumed as a result of the merger(see Note 3)— (232,000) —Notes payable assumed in other acquisitions (see Note 3)— (6,630) — The accompanying notes are an integral partof these consolidated financial statements. F-10Table of Contents FIRSTCASH, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE 1 - ORGANIZATION AND NATURE OF THE COMPANYFirstCash, Inc., (together with its wholly-owned subsidiaries, the “Company”) is incorporated in the state of Delaware. The Company is engaged primarily inthe operation of pawn stores, which lend money on the collateral of pledged personal property and retail previously owned merchandise acquired throughpawn forfeitures and purchases directly from the general public. The Company also retails limited quantities of new or refurbished merchandise obtaineddirectly from wholesalers and manufacturers. In addition to making short-term secured pawn loans, certain of the Company’s pawn stores offer short-termconsumer loans and credit services. The Company also operates consumer loan stores that provide consumer loans, credit services and check cashing services,although beginning in fiscal 2018, the Company will no longer offer fee-based check cashing services in its non-franchised stores. As of December 31, 2017,the Company owned and operated 2,039 pawn stores and 72 consumer loan stores in 26 U.S. states (including the District of Columbia), 32 states in Mexicoand the countries of Guatemala and El Salvador.On September 1, 2016, the Company completed its merger with Cash America International, Inc. (“Cash America”), whereby Cash America merged with andinto a wholly owned subsidiary of the Company (the “Merger”). The accompanying audited consolidated results of operations for the year ended December31, 2017 includes the results of operations for Cash America, while the comparable prior-year period includes the results of operations for Cash America forthe period September 2, 2016 to December 31, 2016, affecting comparability of fiscal 2017 and 2016 amounts. See Note 3 for additional information aboutthe Merger.NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESThe following is a summary of significant accounting policies followed in the preparation of these financial statements:Principles of consolidation - The accompanying consolidated financial statements include the accounts of FirstCash, Inc. and its wholly-owned subsidiaries.The Company regularly makes acquisitions and the results of operations for the acquired stores have been consolidated since the acquisition dates. Allsignificant intercompany accounts and transactions have been eliminated. See Note 3.Cash and cash equivalents - The Company considers any highly liquid investments with an original maturity of three months or less at the date ofacquisition to be cash equivalents. As of December 31, 2017, the amount of cash associated with indefinitely reinvested foreign earnings was $79.8 million,which is primarily held in Mexican pesos.Customer loans and revenue recognition - Pawn loans typically have a term of 30 days and are secured by the customer’s pledge of tangible personalproperty, which the Company holds during the term of the loan. If a pawn loan defaults, the Company relies on the sale of the pawned property to recover theprincipal amount of an unpaid pawn loan, plus a yield on the investment, because the Company’s pawn loans are non-recourse against the customer. Thecustomer’s creditworthiness does not affect the Company’s financial position or results of operations. The Company accrues pawn loan fee revenue on aconstant-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 redemptionstatistics. If the pawn loan is not repaid, the principal amount loaned becomes the carrying value of the forfeited collateral, which is recovered through salesto other customers at prices above the carrying value.The Company’s pawn merchandise sales are primarily retail sales to the general public in its pawn stores. The Company acquires pawn merchandiseinventory through forfeited pawn loans and through purchases of used goods directly from the general public. The Company also retails limited quantities ofnew or refurbished merchandise obtained directly from wholesalers and manufacturers. The Company records sales revenue at the time of the sale. TheCompany presents merchandise sales net of any sales or value-added taxes collected. The Company does not provide direct financing to customers for thepurchase of its merchandise, but does permit its customers to purchase merchandise on an interest-free layaway plan. Should the customer fail to make arequired payment pursuant to a layaway plan, the previous payments are typically forfeited to the Company. Interim payments from customers on layawaysales are recorded as deferred revenue and subsequently recorded as retail merchandise sales revenue when the final payment is received or when previouspayments are forfeited to the Company. Some jewelry is processed at third-party facilities and the precious metal and diamond content is sold at eitherprevailing market commodity prices or a previously agreed upon price with a commodity buyer. The Company records revenue from these wholesale scrapjewelry transactions when a price has been agreed upon and the Company ships the jewelry to the buyer.F-11Table of Contents Consumer loans are unsecured cash advances and installment loans with terms that typically range from 7 to 365 days. The Company accrues consumer loanfees on a constant-yield basis over the term of the consumer loan. The Company offers fee-based credit services organization programs (“CSO Programs”) toassist consumers in obtaining extensions of credit from independent, non-bank, consumer lending companies (the “Independent Lenders”). The Company’sstand-alone consumer loan stores and select pawn stores in the states of Texas and Ohio offer the CSO Programs. The Company’s CSO Programs comply withthe respective jurisdiction’s credit services organization act, credit access business law or a similar statute. The Company recognizes credit services feesratably over the life of the extension of credit made by the Independent Lenders. The extensions of credit made by the Independent Lenders to credit servicescustomers typically have terms of 7 to 365 days. Credit loss provisions - The Company has determined no allowance related to credit losses on pawn loans is required as the fair value of the pledgedcollateral is significantly in excess of the pawn loan amount. The Company maintains an allowance for credit losses on consumer loans on an aggregate basisat a level it considers sufficient to cover estimated losses in the collection of its consumer loans. The allowance for credit losses is based primarily uponhistorical credit loss experience, with consideration given to recent credit loss trends and changes in loan characteristics (e.g., average amount financed andterm), delinquency levels, collateral values, economic conditions and underwriting and collection practices. The allowance for credit losses is periodicallyreviewed by management with any changes reflected in current operations.The Company fully reserves or charges off consumer loans once the loan has been classified as delinquent for 60 days. Short-term loans are considereddelinquent when payment of an amount due is not made as of the due date. Installment loans are considered delinquent when a customer misses twopayments. If a loan is estimated to be uncollectible before it is fully reserved, it is charged off at that point. Recoveries on loans previously charged to theallowance, including the sale of delinquent loans to unaffiliated third parties, are credited to the allowance when collected or when sold to a third party. TheCompany generally does not accrue interest on delinquent consumer loans. In addition, delinquent consumer loans generally may not be renewed, and if,during its attempt to collect on a delinquent consumer loan, the Company allows additional time for payment through a payment plan or a promise to pay, itis still considered delinquent. Generally, all payments received are first applied against accrued but unpaid interest and fees and then against the principalbalance of the loan.Under the CSO Programs, the Company assists customers in applying for a short-term extension of credit from Independent Lenders and issues theIndependent Lenders a guarantee for the repayment of the extension of credit. The Company is required to recognize, at the inception of the guarantee, aliability for the fair value of the obligation undertaken by issuing the guarantee. According to the guarantee, if the borrower defaults on the extension ofcredit, the Company will pay the Independent Lenders the principal, accrued interest, insufficient funds and late fee, if applicable, all of which the Companyrecords as a component of its credit loss provision. The Company is entitled to seek recovery, directly from its customers, of the amounts it pays theIndependent Lenders in performing under the guarantees. The Company records the estimated fair value of the liability in accrued liabilities. The estimatedfair value of the liability is periodically reviewed by management with any changes reflected in current operations.Although it is at least reasonably possible that events or circumstances could occur in the future that are not presently foreseen which could cause actualcredit losses to be materially different from the recorded allowance for credit losses, the Company believes it has given appropriate consideration to allrelevant factors and has made reasonable assumptions in determining the allowance for credit losses.Foreign currency transactions - The Company has significant operations in Latin America, where in Mexico and Guatemala the functional currency is theMexican peso and Guatemalan quetzal, respectively. Accordingly, the assets and liabilities of these subsidiaries are translated into U.S. dollars at theexchange rate in effect at each balance sheet date, and the resulting adjustments are accumulated in other comprehensive income (loss) as a separatecomponent of stockholders’ equity. Revenues and expenses are translated at the average exchange rates occurring during the respective fiscal period. Prior totranslation, U.S. dollar-denominated transactions of the foreign subsidiaries are remeasured into their functional currency using current rates of exchange formonetary 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 and Guatemala are included in store operating expenses. Deferred taxes are not currently provided oncumulative foreign currency translation adjustments as the Company indefinitely reinvests earnings of its foreign subsidiaries. The Company also hasoperations in El Salvador where the reporting and functional currency is the U.S. dollar.The average value of the Mexican peso to the U.S. dollar exchange rate for fiscal 2017 was 18.9 to 1, compared to 18.7 to 1 in fiscal 2016 and 15.8 to 1 infiscal 2015. The average value of the Guatemalan quetzal to the U.S. dollar exchange rate for fiscal 2017 was 7.4 to 1, compared to 7.6 to 1 in fiscal 2016 and7.7 to 1 in fiscal 2015.F-12Table of Contents Store operating expenses - Costs incurred in operating the pawn stores and consumer loan stores have been classified as store operating expenses. Operatingexpenses include salary and benefit expense of store-level employees, occupancy costs, bank charges, security, insurance, utilities, supplies and other costsincurred by the stores.Layaway and deferred revenue - Interim payments from customers on layaway sales are credited to deferred revenue and subsequently recorded as retailmerchandise sales revenue when the final payment is received or when the previous payments are forfeited to the Company. Layaway payments fromcustomers are included in customer deposits in the accompanying consolidated balance sheets.Inventories - Inventories represent merchandise acquired from forfeited pawns and merchandise purchased directly from the general public. The Companyalso retails limited quantities of new or refurbished merchandise obtained directly from wholesalers and manufacturers. Inventories from forfeited pawns arerecorded at the amount of the pawn principal on the unredeemed goods, exclusive of accrued interest. Inventories purchased directly from customers,wholesalers and manufacturers are recorded at cost. The cost of inventories is determined on the specific identification method. Inventories are stated at thelower of cost or net realizable value and, accordingly, inventory valuation allowances are established when inventory carrying values are in excess ofestimated selling prices, net of direct costs of disposal. Management has evaluated inventories and determined that a valuation allowance is not necessary.Property and equipment - Property and equipment are recorded at cost. Depreciation is recorded on the straight-line method generally based on estimateduseful lives of 30 to 40 years for buildings and three to five years for furniture, fixtures and equipment. The costs of improvements on leased stores arecapitalized as leasehold improvements and are depreciated using the straight-line method over the applicable lease period, or useful life, if shorter.Maintenance and repairs are charged to expense as incurred; renewals and betterments are charged to the appropriate property and equipment accounts. Uponsale or retirement of depreciable assets, the cost and related accumulated depreciation is removed from the accounts, and the resulting gain or loss is includedin the results of operations in the period the assets are sold or retired.Goodwill and other indefinite-lived intangible assets - Goodwill represents the excess of the purchase price over the fair value of the net assets acquired ineach business combination. The Company performs its goodwill impairment assessment annually as of December 31, and between annual assessments if anevent occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The Company’sreporting units, which are tested for impairment, are U.S. operations and Latin America operations. The Company assesses goodwill for impairment at areporting unit level by first assessing a range of qualitative factors, including, but not limited to, macroeconomic conditions, industry conditions, thecompetitive environment, changes in the market for the Company’s products and services, regulatory and political developments, entity specific factors, suchas strategy and changes in key personnel, and overall financial performance. If, after completing this assessment, it is determined that it is more likely thannot that the fair value of a reporting unit is less than its carrying value, the Company proceeds to the two-step impairment testing methodology. See Note 13.The Company’s indefinite-lived intangible assets consist of trade names, pawn licenses and franchise agreements related to a check-cashing operation. TheCompany performs its indefinite-lived intangible asset impairment assessment annually as of December 31, and between annual assessments if an eventoccurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. See Note 13.Long-lived assets - Property and equipment, intangible assets subject to amortization and non-current assets are reviewed for impairment whenever events orchanges in circumstances indicate that the net book value of the asset may not be recoverable. An impairment loss is recognized if the sum of the expectedfuture cash flows (undiscounted and before interest) from the use of the asset is less than the net book value of the asset. Generally, the amount of theimpairment loss is measured as the difference between the net book value of the asset and the estimated fair value of the related asset. The Company has notrecorded any material impairment loss for the fiscal years ended December 31, 2017, 2016 and 2015.Fair value of financial instruments - The fair value of financial instruments is determined by reference to various market data and other valuation techniques,as appropriate. Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. TheCompany’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of the fair valueof assets and liabilities and their placement within the fair value hierarchy levels. All fair value measurements related to acquisitions are level 3, non-recurring measurements, based on non-observable inputs. Unless otherwise disclosed, the fair values of financial instruments approximate their recordedvalues, due primarily to their short-term nature. See Note 6.F-13Table of Contents Income taxes - The Company uses the asset and liability method of computing deferred income taxes on all material temporary differences. Temporarydifferences are the differences between the reported amounts of assets and liabilities and their tax bases. The Tax Cuts and Jobs Act (“Tax Act”), which wasenacted in December 2017, had a substantial impact on the Company’s income taxes for the year ended December 31, 2017. See Note 11.Advertising - The Company expenses the costs of advertising the first time the advertising takes place. Advertising expense for the fiscal years endedDecember 31, 2017, 2016 and 2015, was $1.8 million, $1.9 million, and $0.7 million, respectively.Share-based compensation - All share-based payments to employees and directors are recognized in the financial statements based on the grant date or ifapplicable, the subsequent modification date fair value. The Company recognizes compensation cost net of estimated forfeitures and recognizes thecompensation cost for only those awards expected to vest on a straight-line basis over the requisite service period of the award, which is generally the vestingterm. The Company records share-based compensation cost as an administrative expense. See Note 14.Earnings per share - Basic income per share is computed by dividing income by the weighted-average number of shares outstanding during the year. Dilutedincome per share is calculated by giving effect to the potential dilution that could occur if securities or other contracts to issue common shares were exercisedand converted into common shares during the year.The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share amounts): Year Ended December 31, 2017 2016 2015Numerator: Net income$143,892 $60,127 $60,710 Denominator: Weighted-average common shares for calculating basic earningsper share47,854 34,997 28,138Effect of dilutive securities: Stock options and nonvested stock awards34 7 188Weighted-average common shares for calculating diluted earningsper share47,888 35,004 28,326 Net income per share: Basic$3.01 $1.72 $2.16Diluted$3.00 $1.72 $2.14Pervasiveness of estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States ofAmerica 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 anduncertainties, which may cause actual results to differ materially from the Company’s estimates. Significant estimates include allowances for doubtfulaccounts receivable and related credit loss provisions, impairment of goodwill and other intangible assets and current and deferred tax assets and liabilities.Recent accounting pronouncements - In May 2014, the Financial Accounting Standards Board issued ASU No. 2014-09, “Revenue from Contracts withCustomers (Topic 606)” (“ASU 2014-09”). ASU 2014-09 is a comprehensive revenue recognition model that requires a company to recognize revenue todepict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services.ASU 2014-09 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts,including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In August 2015, theFinancial Accounting Standards Board issued ASU No. 2015-14 “Revenue from Contracts with Customers (Topic 606),” which delayed the effective date ofASU 2014-09 by one year. In addition, between March 2016 and December 2016, the Financial Accounting Standards Board issued ASU No. 2016-08,“Revenue from Contracts with Customers - Principal versus Agent Considerations (Reporting revenue gross versus net)” (“ASU 2016-08”), ASU No. 2016-10,“Identifying Performance Obligations and Licensing” (“ASU 2016-10”), ASU No. 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-ScopeF-14Table of Contents Improvements and Practical Expedients” (“ASU 2016-12”), and ASU No. 2016-20, “Technical Corrections and Improvements to Topic 606, Revenue fromContracts with Customers” (“ASU 2016-20”). ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU 2016-20 clarify certain aspects of ASU 2014-09 andprovide additional implementation guidance. ASU 2014-09, ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU 2016-20 (collectively, “ASC 606”)become effective for annual reporting periods (including interim periods within those periods) beginning after December 15, 2017 for public companies.Early adoption is permitted but not before annual reporting periods beginning after December 15, 2016. Entities are permitted to adopt ASC 606 using one oftwo methods: (a) full retrospective adoption, meaning the standard is applied to all periods presented, or (b) modified retrospective adoption, meaning thecumulative effect of applying the new standard is recognized as an adjustment to the opening retained earnings balance.The Company will adopt ASC 606 on January 1, 2018 using the modified retrospective method. The Company evaluated the impact of ASC 606 and hasconcluded ASC 606 will not impact the Company’s revenue recognition for pawn loan fees or consumer loan fees, as it believes neither is within the scope ofASC 606. Further, the Company has not identified any impacts to its consolidated financial statements that it believes will be material as a result of theadoption of ASC 606 for other revenue streams (retail merchandise sales, credit services fees and wholesale scrap jewelry sales).In July 2015, the Financial Accounting Standards Board issued ASU No. 2015-11, “Simplifying the Measurement of Inventory” (“ASU 2015-11”). ASU2015-11 requires inventory be measured at the lower of cost or net realizable value. ASU 2015-11 defines net realizable value as the estimated selling price inthe ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Inventory measured using last-in, first-out(“LIFO”) or the retail inventory method are excluded from the scope of this update. ASU 2015-11 requires prospective application and is effective for fiscalyears beginning after December 15, 2016 and interim periods within those fiscal years, with early adoption permitted. The Company adopted ASU 2015-11as of January 1, 2017, and the guidance was applied prospectively. There were no changes to the Company’s financial position, results of operations,financial statement disclosures or valuation of inventory.In February 2016, the Financial Accounting Standards Board issued ASU No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). ASU 2016-02 requires alessee to recognize, in the statement of financial position, a liability to make lease payments (the lease liability) and a right-to-use asset representing its rightto use the underlying asset for the lease term. Leases will be classified as either financing or operating, with classification affecting the pattern of expenserecognition in the income statement. Lessor accounting remains largely unchanged. ASU 2016-02 is effective for annual reporting periods beginning afterDecember 15, 2018, and interim periods within those annual periods, with early adoption permitted. An entity will be required to recognize and measureleases at the beginning of the earliest period presented using a modified retrospective approach. The Company is currently assessing the potential impact ofASU 2016-02 on its consolidated financial statements.In June 2016, the Financial Accounting Standards Board issued ASU No. 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement ofCredit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 amends the impairment model by requiring entities to use a forward-lookingapproach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables. ASU 2016-13 is effectivefor public entities for fiscal years beginning after December 15, 2019, with early adoption permitted. The Company is currently assessing the potential impactof ASU 2016-13 on its consolidated financial statements.In August 2016, the Financial Accounting Standards Board issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain CashReceipts and Cash Payments” (“ASU 2016-15”). ASU 2016-15 clarifies how companies present and classify certain cash receipts and cash payments in thestatement of cash flows. ASU 2016-15 addresses eight specific cash flow issues with the objective of reducing existing diversity in practice. ASU 2016-15 iseffective for public entities for fiscal years beginning after December 15, 2017, with early adoption permitted. The Company does not expect ASU 2016-15 tohave a material effect on its consolidated financial statements or current financial statement disclosures.In January 2017, the Financial Accounting Standards Board issued ASU No. 2017-01, “Business Combinations (Topic 805) - Clarifying the Definition of aBusiness” (“ASU 2017-01”). ASU 2017-01 provides amendments to clarify the definition of a business and affect all companies and other reportingorganizations that must determine whether they have acquired or sold a business. The amendments are intended to help companies and other organizationsevaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The guidance is effective for public businessentities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years and should be applied prospectively as of thebeginning of the period of adoption. Early adoption is permitted under certain circumstances. The Company does not expect ASU 2017-01 to have a materialeffect on the Company’s current financial position, results of operations or financial statement disclosures.F-15Table of Contents In January 2017, the Financial Accounting Standards Board issued ASU No. 2017-04, “Intangibles - Goodwill and Other (Topic 350) - Simplifying the Testfor Goodwill Impairment” (“ASU 2017-04”). These amendments eliminate step 2 from the goodwill impairment test. The amendments also eliminate therequirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to performstep 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitativeimpairment test is necessary. The guidance is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019.Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017 and should be adopted on aprospective basis. The Company does not expect ASU 2017-04 to have a material effect on the Company’s current financial position, results of operations orfinancial statement disclosures.NOTE 3 - MERGER AND OTHER ACQUISITIONS2017 AcquisitionsDuring fiscal 2017, the Company completed the acquisitions of five stores in Mexico and one store in the U.S., which were not material to the Company’sconsolidated financial statements.2016 Cash America MergerOn September 1, 2016, the Company completed its Merger of equals business combination with Cash America as contemplated by the Agreement and Plan ofMerger, dated as of April 28, 2016 (the “Merger Agreement”), by and among the Company, Cash America and Frontier Merger Sub LLC, a wholly ownedsubsidiary of the Company (“Merger Sub”). Pursuant to the Merger Agreement, Cash America merged with and into Merger Sub, with Merger Sub continuingas the surviving entity in the Merger and a wholly owned subsidiary of the Company.Under the terms of the Merger Agreement, each former share of Cash America common stock issued and outstanding immediately prior to September 1, 2016was converted to 0.84 shares of the Company’s common stock with fractional shares paid in cash. As a result, the Company issued approximately 20,181,000shares of its common stock to former holders of Cash America common stock. Additionally, Cash America employee and director based restricted stockawards outstanding immediately prior to the Merger were fully-vested and paid out in cash in conjunction with the closing of the Merger. The Company wasdetermined to be the accounting acquirer in the Merger.The following table summarizes the consideration transferred in connection with the Merger (in thousands, except ratio and per share amount): Cash AmericaMergerCash America shares outstanding at September 1, 201624,025Exchange ratio0.84Shares of First Cash common stock issued20,181Company common stock per share price at September 1, 2016$50.32Fair value of Company common stock issued to Cash America shareholders$1,015,507Cash in lieu of fractional shares paid by the Company10Cash America outstanding stock awards settled in cash50,760Aggregate Merger consideration$1,066,277F-16Table of Contents The following amounts represent the final determination (as of the Merger date) of the fair value of identifiable assets acquired and liabilities assumed in theMerger, including adjustments made during the twelve month measurement period from the date of the Merger (in thousands): Cash AmericaMergerCash and cash equivalents$42,520Pawn loans234,761Fees and service charges receivable26,893Consumer loans27,549Inventories224,548Income taxes receivable25,276Other current assets28,547Investment in common stock of Enova (1)60,785Property and equipment118,199Goodwill (2)519,418Intangible assets (3)103,250Other assets62,994Current liabilities(95,630)Customer deposits(21,536)Revolving unsecured credit facility (4)(232,000)Deferred tax liabilities(27,120)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 lendingproducts. 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 netgain on sale of $1.3 million and generated net proceeds of $62.1 million.(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 andis considered to represent the synergies and economies of scale expected from combining the operations of the Company and Cash America. This goodwill has been assignedto the U.S. operations reporting unit. Approximately $223.0 million 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 (dollars in thousands): Amount Useful life (in years)Trade names $46,300 IndefinitePawn licenses 32,300 IndefiniteCustomer relationships 14,700 FiveExecutive non-compete agreements 8,700 TwoFranchise 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 ofCash 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 andfranchise 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 revolvingunsecured credit facility was repaid by the Company using proceeds from the 2016 Credit Facility (as described in Note 10) and was terminated upon completion of theMerger.F-17Table of Contents In accordance with applicable accounting guidance, measurement period adjustments pertaining to the Merger were recorded during fiscal 2017 and were notretroactively reclassified to prior periods. Such measurement period adjustments were not material.Transaction costs associated with the Merger were expensed as incurred and are included in Merger and other acquisition expenses in the consolidatedstatements of income. These expenses included 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 AcquisitionsThe Company completed other acquisitions during fiscal 2016, as described below, consistent with its strategy to continue its expansion of pawn stores inselected markets. The purchase price of each acquisition was allocated to assets acquired and liabilities assumed based upon their estimated fair marketvalues 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. Thegoodwill arising from these acquisitions consists largely of the synergies and economies of scale expected from combining the operations of the Companyand 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 assetsand 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 relatedtransactions (collectively the “Latin America Acquisition”). The combined purchase price for the all-cash transaction was $30.1 million, net of cash acquiredbefore certain post-closing adjustments. Subsequent to the acquisition, $0.2 million of post closing adjustments were identified, resulting in a combinedpurchase price of $29.9 million, net of cash acquired and is subject to further post-closing adjustments. The purchase was composed of $27.4 million in cashpaid during fiscal 2016 and remaining payables to the sellers of approximately $2.5 million. In addition, the Company assumed approximately $6.6 millionin peso-denominated debt from these acquisitions which was repaid in full by the Company in January 2016. The assets, liabilities and results of operationsof the locations are included in the Company’s consolidated results as of the acquisition dates. The goodwill resulting from the Latin America Acquisitionhas 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$2.0 million, net of cash acquired. During fiscal 2016, the Company also paid $0.6 million of deferred purchase price amounts payable related to prior-yearacquisitions. The goodwill resulting from the U.S. Acquisitions has been assigned to the U.S. operations reporting unit.Supplemental Pro Forma InformationThe following unaudited supplemental pro forma financial information for the years ended December 31, 2016 and 2015 reflects the consolidated results ofoperations of the Company as if the Merger, the Latin America Acquisition and the U.S. Acquisitions had occurred on January 1, 2015 (in thousands, exceptper share amounts): Year Ended Year Ended December 31, 2016 December 31, 2015 As Reported Pro Forma As Reported Pro FormaTotal revenue$1,088,377 $1,771,835 $704,602 $1,792,523Net income60,127 118,333 60,710 61,479 Net income per share: Basic$1.72 $2.44 $2.16 $1.27Diluted1.72 2.44 2.14 1.27Pro forma adjustments are included only to the extent they are directly attributable to the Merger and 2016 acquisitions. The unaudited pro forma resultshave 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 intangibleassets acquired and liabilities assumed;F-18Table of Contents •interest expense based on a lower combined weighted-average interest rate on borrowings (see Note 10) partially offset by an increase in totalindebtedness 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 terminatedupon completion of the Merger; and•the inclusion in the pro forma fiscal 2015 amount of $68.8 million in Merger and other acquisition expenses incurred by both the acquirees andacquirer (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 potentialbenefits 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 theMerger and 2016 acquisitions, including, but not limited to, additional professional fees, legal expenses, severance, retention and other employee-relatedcosts, contract breakage costs and costs related to consolidation of technology systems and corporate facilities. Pro forma results do not purport to beindicative of what would have resulted had the acquisitions occurred on the date indicated or what may result in the future.NOTE 4 - MERGER AND OTHER ACQUISITION EXPENSESThe Company incurred significant expenses in 2017 and 2016 in connection with the Merger and integration with Cash America. The Merger relatedexpenses are predominantly incremental costs directly associated with the Merger and integration of Cash America, including professional fees, legalexpenses, severance, retention and other employee-related costs, accelerated vesting of certain equity compensation awards, contract breakage costs and costsrelated to consolidation of technology systems and corporate facilities. In addition, the Company incurred transaction and integration costs in connectionwith the Company’s other acquisitions in 2016 and 2015. The Company presents Merger and other acquisition expenses separately in the consolidatedstatements of income to identify these activities apart from the expenses incurred to operate the business. The table below summarizes the major componentsof Merger and other acquisition expenses (in thousands): Year Ended December 31, 2017 2016 2015Merger related expenses: Transaction (1) $— $18,252 $—Severance and retention (2) 3,897 15,229 —Other (3) 5,165 2,739 —Total Merger related expenses 9,062 36,220 — Other acquisition expenses: Transaction and integration — 450 2,875Total other acquisition expenses — 450 2,875Total Merger and other acquisition expenses $9,062 $36,670 $2,875(1) For the year ended December 31, 2016, the Company recognized an income tax benefit of $3.9 million, respectively, related to the Merger transaction expenses; a significantportion of these expenses were not deductible for income tax purposes.(2) For the year ended December 31, 2017 and 2016, the Company made severance and retention payments of $7.4 million and $10.4 million, respectively, and as of December31, 2017 and 2016, had $1.3 million and $4.8 million, respectively, accrued for future payments. Accrued severance and retention is included in accounts payable and accruedexpenses in the accompanying consolidated balance sheets.(3) Represents accelerated share-based compensation expense related to restricted stock awards for certain First Cash employees which vested as a result of the Merger and otherintegration expenses.F-19Table of Contents NOTE 5 - CAPITAL STOCKIn January 2015, the Company’s Board of Directors authorized a common stock repurchase program for up to 2,000,000 shares of the Company’s outstandingcommon stock. During the first quarter of 2017, the Company repurchased 228,000 shares of its common stock at an aggregate cost of $10.0 million and anaverage cost per share of $43.94. In May 2017, the Company’s Board of Directors authorized a new common stock repurchase program for up to$100.0 million of the Company’s outstanding common stock. The new share repurchase program replaced the Company’s prior share repurchase plan, whichwas terminated in May 2017. Under the May 2017 stock repurchase program, the Company has repurchased 1,388,000 shares of its common stock at anaggregate cost of $83.0 million and an average cost per share of $59.80 and $17.0 million remained available for repurchases as of December 31, 2017. OnJanuary 31, 2018, the Company completed the May 2017 stock repurchase program after repurchasing approximately 239,000 shares of common stock at anaggregate cost of $17.0 million. The Company did not repurchase any of its shares in 2016 as it suspended its share repurchase program in 2016 due to theMerger.In October 2017, the Company’s Board of Directors authorized an additional common stock repurchase program for up to $100.0 million of the Company’soutstanding common stock, which became effective on January 31, 2018 upon completion of the May 2017 stock repurchase program. The Company intendsto continue repurchases under its repurchase program in 2018 through open market transactions under trading plans in accordance with Rule 10b5-1 andRule 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, creditavailability, debt covenant restrictions, general business conditions, regulatory requirements, the market price of the Company’s stock, the dividend policyand the availability of alternative investment opportunities.Total cash dividends paid in fiscal 2017 and 2016 were $36.8 million and $19.8 million, respectively. The declaration and payment of cash dividends in thefuture (quarterly or otherwise) will be made by the Board of Directors, from time to time, subject to the Company’s financial condition, results of operations,business requirements, compliance with legal requirements and debt covenant restrictions.NOTE 6 - FAIR VALUE OF FINANCIAL INSTRUMENTSThe fair value of financial instruments is determined by reference to various market data and other valuation techniques, as appropriate. Financial assets andliabilities are classified based on the lowest level of input that is significant to the fair value measurement. The Company's assessment of the significance of aparticular input to the fair value measurement requires judgment, and may affect the valuation of the fair value of assets and liabilities and their placementwithin the fair value hierarchy levels. The three fair value levels are (from highest to lowest):Level 1: Quoted market prices in active markets for identical assets or liabilities.Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.Level 3: Unobservable inputs that are not corroborated by market data.Recurring Fair Value MeasurementsAs of December 31, 2017, the Company did not have any financial assets or liabilities that are measured at fair value on a recurring basis. The Company’sfinancial assets that were measured at fair value on a recurring basis as of December 31, 2016 were as follows (in thousands): December 31, Fair Value Measurements Using 2016 Level 1 Level 2 Level 3Financial assets: Cash America nonqualified savings plan (see Note 15) $12,663 $12,663 $— $— $12,663 $12,663 $— $—Prior to the Merger, Cash America had a nonqualified savings plan that was available to certain members of management. Upon completion of the Merger, thenonqualified savings plan was terminated and during the three months ended March 31, 2017, the Company dissolved the plan and distributed the remainingassets to the participants. As of December 31, 2016, the assets of the nonqualified savings plan included marketable equity securities, which were classified asLevel 1 and the fair values are based on quoted market prices. The nonqualified savings plan assets were included in prepaid expenses and other currentassets in the accompanying consolidated balance sheet with an offsetting liability of equal amount, which was included in accounts payable and accruedexpenses in the accompanying consolidated balance sheet.F-20Table of Contents Fair Value Measurements on a Nonrecurring BasisThe Company measures non-financial assets and liabilities such as property and equipment and intangible assets at fair value on a nonrecurring basis or whenevents or circumstances indicate that the carrying amount of the assets may be impaired.Financial Assets and Liabilities Not Measured at Fair ValueThe Company’s financial assets and liabilities as of December 31, 2017 and 2016 that are not measured at fair value in the consolidated balance sheets are asfollows (in thousands): Carrying Value Estimated Fair Value December 31, December 31, Fair Value Measurements Using 2017 2017 Level 1 Level 2 Level 3Financial assets: Cash and cash equivalents $114,423 $114,423 $114,423 $— $—Pawn loans 344,748 344,748 — — 344,748Consumer loans, net 23,522 23,522 — — 23,522Fees and service charges receivable 42,736 42,736 — — 42,736 $525,429 $525,429 $114,423 $— $411,006 Financial liabilities: Revolving unsecured credit facility $107,000 $107,000 $— $107,000 $—Senior unsecured notes, outstandingprincipal 300,000 314,000 — 314,000 — $407,000 $421,000 $— $421,000 $— Carrying Value Estimated Fair Value December 31, December 31, Fair Value Measurements Using 2016 2016 Level 1 Level 2 Level 3Financial assets: Cash and cash equivalents $89,955 $89,955 $89,955 $— $—Pawn loans 350,506 350,506 — — 350,506Consumer loans, net 29,204 29,204 — — 29,204Fees and service charges receivable 41,013 41,013 — — 41,013 $510,678 $510,678 $89,955 $— $420,723 Financial liabilities: Revolving unsecured credit facility $260,000 $260,000 $— $260,000 $—Senior unsecured notes, outstandingprincipal 200,000 208,000 — 208,000 — $460,000 $468,000 $— $468,000 $—As cash and cash equivalents have maturities of less than three months, the carrying value of cash and cash equivalents approximates fair value. Due to theirshort-term maturities, the carrying value of pawn loans and fees and service charges receivable approximate fair value. Short-term loans and installment loans,collectively, represent consumer loans, net on the accompanying consolidated balance sheets and are carried net of the allowance for estimated loan losses,which is calculated by applying historical loss rates combined with recent default trends to the gross consumer loan balance. The unobservable inputs used tocalculate the fair value of these loans include historical loss rates, recent default trends and estimated remaining loan terms. Therefore, the carrying valueapproximated the fair value.F-21Table of Contents The carrying value of the Company’s revolving unsecured credit facility approximates fair value as of December 31, 2017 and 2016. The fair value of thesenior unsecured notes have been estimated based on a discounted cash flow analysis using a discount rate representing the Company’s estimate of the ratethat would be used by market participants. Changes in assumptions or estimation methodologies may have a material effect on these estimated fair values.NOTE 7 - CUSTOMER LOANS AND VALUATION ACCOUNTSCustomer loans, including pawn receivables and net of unearned finance fees, consist of the following (in thousands): Pawn Consumer Loan TotalDecember 31, 2017 Total customer loans$344,748 $25,337 $370,085Less allowance for doubtful accounts— (1,815) (1,815) $344,748 $23,522 $368,270 December 31, 2016 Total customer loans$350,506 $31,455 $381,961Less allowance for doubtful accounts— (2,251) (2,251) $350,506 $29,204 $379,710Changes in the allowance for consumer loan credit losses are as follows (in thousands): Year Ended December 31, 2017 2016 2015Balance at beginning of year$2,251 $66 $81Provision for credit losses12,762 6,049 808Charge-offs, net of recoveries from customers(13,198) (3,864) (823)Balance at end of year$1,815 $2,251 $66Under the CSO Programs, the Company assists customers in applying for a short-term extension of credit from Independent Lenders and issues theIndependent Lenders a guarantee for the repayment of the extension of credit. The Company is required to recognize, at the inception of the guarantee, aliability for the fair value of the obligation undertaken by issuing the guarantee. The Company records the estimated fair value of the liability in accruedliabilities. Changes in the liability for credit services losses are as follows (in thousands): Year Ended December 31, 2017 2016 2015Balance at beginning of year$582 $498 $493Provision for credit losses7,057 5,944 6,351Amounts paid to Independent Lenders under guarantees, net ofrecoveries from customers(7,199) (5,860) (6,346)Balance at end of year$440 $582 $498F-22Table of Contents NOTE 8 - PROPERTY AND EQUIPMENTProperty and equipment consists of the following (in thousands): Year Ended December 31, 2017 2016Land$33,700 $30,364Buildings63,016 55,137Furniture, fixtures, equipment and leasehold improvements313,545 284,391 410,261 369,892Less: accumulated depreciation(179,920) (133,835) $230,341 $236,057Depreciation expense for the fiscal years ended December 31, 2017, 2016 and 2015, was $44.5 million, $26.6 million, and $16.1 million, respectively.NOTE 9 - ACCOUNTS PAYABLE AND ACCRUED LIABILITIESAccounts payable and accrued liabilities consist of the following (in thousands): Year Ended December 31, 2017 2016Accrued compensation$25,203 $25,285Sales, property, and payroll withholding taxes payable14,812 13,546Current unfavorable lease intangible liability7,767 9,258Deferred CSO fees7,560 7,776Trade accounts payable4,791 11,664Benefits liabilities and withholding payable3,465 4,501Accrued interest payable1,402 3,506Merger related severance and retention payable1,336 4,848Liability for expected losses on outstanding CSO guarantees440 582Cash America nonqualified savings plan (see Note 15)— 12,663Other accrued liabilities17,555 15,725 $84,331 $109,354NOTE 10 - LONG-TERM DEBTAs of December 31, 2017, annual maturities of the outstanding long-term debt for each of the five years after December 31, 2017 are as follows (inthousands):Fiscal 2018$—2019—2020—2021—2022107,000Thereafter300,000 $407,000F-23Table of Contents The following table details the Company’s long-term debt at the respective principal amounts, net of unamortized debt issuance costs (in thousands): As of December 31, 2017 2016Senior unsecured notes: 5.375% senior notes due 2024 (1)$295,243 $—6.75% senior notes due 2021 (2)— 196,545 $295,243 $196,545 Revolving unsecured credit facility, maturing 2022$107,000 $260,000(1)As of December 31, 2017, deferred debt issuance costs of $4.8 million are included as a direct deduction from the carrying amount of the seniorunsecured notes due 2024 in the accompanying consolidated balance sheets.(2) As of December 31, 2016, deferred debt issuance costs of $3.5 million are included as a direct deduction from the carrying amount of the seniorunsecured notes due 2021 in the accompanying consolidated balance sheets.Senior Unsecured NotesOn May 30, 2017, the Company completed an offering of $300.0 million of 5.375% senior notes due on June 1, 2024 (the “Notes”). Interest on the Notes ispayable semi-annually in arrears on June 1 and December 1, commencing on December 1, 2017. The Notes were sold to the placement agents as initialpurchasers for resale only to qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”),and outside the United States in accordance with Regulation S under the Securities Act. The Company used the proceeds from the offering to repurchase, orotherwise redeem, its outstanding $200.0 million, 6.75% senior notes due 2021 (the “2021 Notes”), to pay related fees and expenses and for general corporatepurposes, including share repurchases and paying borrowings under the Company’s credit facility. The Company capitalized $5.1 million in issuance costs,which consisted primarily of placement agent fees and legal and other professional expenses. The issuance costs are being amortized over the life of the Notesas a component of interest expense and are carried as a direct deduction from the carrying amount of the Notes in the accompanying consolidated balancesheets.The Notes are fully and unconditionally guaranteed on a senior unsecured basis jointly and severally by all of the Company's existing and future domesticsubsidiaries that guarantee its primary revolving bank credit facility. The Notes will permit the Company to make share repurchases of up to $100.0 millionwith the net proceeds of the Notes and other available funds and to make restricted payments, such as purchasing shares of its stock and paying cashdividends, in an unlimited amount if, after giving pro forma effect to the incurrence of any indebtedness to make such payment, the Company's consolidatedtotal debt ratio (“Net Debt Ratio”) is less than 2.25 to 1. The Net Debt Ratio is defined generally in the indenture governing the Notes (the “Indenture”) as theratio of (1) the total consolidated debt of the Company minus cash and cash equivalents of the Company to (2) the Company’s consolidated trailing twelvemonths EBITDA, as adjusted to exclude certain non-recurring expenses and giving pro forma effect to operations acquired during the measurement period.The Company may redeem the Notes at any time on or after June 1, 2020, at the redemption prices set forth in the Indenture, plus accrued and unpaid interest,if any. In addition, prior to June 1, 2020, the Company may redeem some or all of the Notes at a price equal to 100% of the principal amount thereof, plusaccrued and unpaid interest, if any, plus a “make-whole” premium set forth in the Indenture. The Company may redeem up to 35% of the Notes prior to June1, 2020, with the proceeds of certain equity offerings at a redemption price of 105.375% of the principal amount of the Notes redeemed, plus accrued andunpaid interest, if any. In addition, upon a change of control, noteholders have the right to require the Company to purchase the Notes at a price equal to101% of the principal amount of the Notes, plus accrued and unpaid interest, if any.During fiscal 2017, the Company recognized a $14.1 million loss on extinguishment of debt related to the repurchase or redemption of the 2021 Notes whichincludes the tender or redemption premiums paid over the outstanding $200.0 million principal amount of the 2021 Notes and other reacquisition costs of$10.9 million and the write off of unamortized debt issuance costs of $3.2 million.F-24Table of Contents Revolving Credit FacilityAt December 31, 2017, the Company maintained a line of credit with a group of U.S. based commercial lenders (the “2016 Credit Facility”) in the amount of$400.0 million. In May 2017, the term of the 2016 Credit Facility was extended through September 2, 2022. The calculation of the fixed charge coverageratio was also amended to remove share repurchases from the calculation to provide greater flexibility for making future share repurchases and paying cashdividends.At December 31, 2017, the Company had $107.0 million in outstanding borrowings and $5.1 million in outstanding letters of credit under the 2016 CreditFacility, leaving $287.9 million available for future borrowings. The 2016 Credit Facility bears interest, at the Company’s option, at either (i) the prevailingLondon Interbank Offered Rate (“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 (ii)the prevailing prime or base rate plus a fixed spread of 1.5%. The agreement has a LIBOR floor of 0%. Additionally, the Company is required to pay anannual commitment fee of 0.50% on the average daily unused portion of the 2016 Credit Facility commitment. The weighted-average interest rate onamounts outstanding under the 2016 Credit Facility at December 31, 2017 was 4.00% based on 1 week LIBOR. Under the terms of the 2016 Credit Facility,the Company is required to maintain certain financial ratios and comply with certain financial covenants. The 2016 Credit Facility also contains customaryrestrictions on the Company’s ability to incur additional debt, grant liens, make investments, consummate acquisitions and similar negative covenants withcustomary carve-outs and baskets. The Company was in compliance with the covenants of the 2016 Credit Facility as of December 31, 2017. During fiscal2017, the Company made net payments of $153.0 million pursuant to the 2016 Credit Facility.NOTE 11 - INCOME TAXESOn December 22, 2017, the Tax Act was enacted into law. The Tax Act significantly changes U.S. corporate income tax laws by, among other things,reducing the U.S. corporate income tax rate from 35% to 21% starting in 2018 and creating a territorial tax system with a one-time mandatory tax onpreviously deferred foreign earnings of U.S. corporations. As a result, the Company recorded a provisional net income tax benefit of $27.3 million during thefourth quarter of 2017. This amount, which is included in the provision for income taxes in the consolidated statements of income, consists of twocomponents: (i) a $29.2 million income tax benefit resulting from the remeasurement of the Company’s domestic net deferred tax liabilities based on the newlower U.S. corporate income tax rate, and (ii) a $1.9 million U.S. tax expense relating to the one-time mandatory tax on previously deferred earnings of theCompany’s foreign subsidiaries, which will be paid over an eight-year period.While the Company has substantially completed its provisional analysis of the income tax effects of the Tax Act and recorded a reasonable estimate of sucheffects, the $27.3 million net income tax benefit may differ due to, among other things, further refinement of the Company’s calculations, changes ininterpretations and assumptions the Company made, implementation guidance from the Internal Revenue Service and clarifications of state law. Once theCompany finalizes certain estimates and tax positions when it files its 2017 U.S. and state tax returns, it will be able to conclude whether any furtheradjustments are required to its domestic net deferred tax liability balance as of December 31, 2017, as well as to the liability associated with the one-timemandatory tax on previously deferred foreign earnings. Any adjustments to these provisional amounts will be included in provision for income taxes in thereporting period in which any such adjustments are determined, which will be no later than the fourth quarter of 2018.F-25Table of Contents Components of the provision for income taxes and the income to which it relates for the years ended December 31, 2017, 2016 and 2015 consist of thefollowing (in thousands): Year Ended December 31, 2017 2016 2015Income before income taxes (1): Domestic$93,365 $30,804 $27,599Foreign78,947 62,643 60,082Income before income taxes$172,312 $93,447 $87,681 Current income taxes: Federal (2)$15,995 $1,419 $7,933Foreign23,340 18,787 18,763State and local968 1,139 705Current provision for income taxes40,303 21,345 27,401 Deferred provision (benefit) for income taxes: Federal (3)(11,509) 11,826 931Foreign(1,079) (528) (1,414)State and local705 677 53Total deferred provision (benefit) for income taxes(11,883) 11,975 (430) Provision for income taxes$28,420 $33,320 $26,971(1) Includes the allocation of certain administrative expenses and the payment of royalties between domestic and foreign subsidiaries.(2) The year ended December 31, 2017 includes an estimated $1.9 million income tax expense relating to the one-time mandatory tax on previously deferred earnings of theCompany’s foreign subsidiaries as a result of the Tax Act.(3) The year ended December 31, 2017 includes an estimated $29.2 million income tax benefit resulting from the remeasurement of the Company’s domestic net deferred taxliabilities based on the new lower corporate income tax rate as a result of the Tax Act.The Company does not include foreign subsidiaries in its consolidated U.S. federal income tax return and it is the Company’s intent to indefinitely reinvestthe earnings of these subsidiaries outside the U.S. At December 31, 2017, the cumulative amount of indefinitely reinvested earnings of foreign subsidiaries is$155.1 million, a portion of which has been included in the Company’s computation of the one-time mandatory tax on previously deferred earnings as aresult of the Tax Act discussed above.F-26Table of Contents The principal deferred tax assets and liabilities consist of the following at December 31, 2017 and 2016 (in thousands): December 31, 2017 2016Deferred tax assets: Property and equipment in foreign jurisdictions$6,752 $5,604Accrued fees on forfeited pawn loans7,002 8,221Deferred cost of goods sold deduction2,058 1,674Cash America nonqualified savings plan (see Note 15)— 4,685Accrued compensation and employee benefits1,749 3,626Accrued Merger severance and retention— 2,718State net operating losses (1)6,219 —Other5,459 8,024Total deferred tax assets29,239 34,552 Deferred tax liabilities: Intangible assets55,121 75,998Property and equipment in domestic jurisdictions1,054 7,716Other2,645 2,406Total deferred tax liabilities58,820 86,120 Net deferred tax liabilities before valuation allowance(29,581) (51,568)Valuation allowance (1)(6,219) —Net deferred tax liabilities$(35,800) $(51,568) Reported as: Deferred tax assets$11,237 $9,707Deferred tax liabilities(47,037) (61,275)Net deferred tax liabilities$(35,800) $(51,568)(1) The state net operating losses and related valuation allowance relate primarily to entities assumed in conjunction with the Merger and were identified during fiscal 2017 as aresult of the Company’s finalization of the fair value of assets acquired and liabilities assumed during the twelve month measurement period from the date of the Merger, asrequired by applicable accounting guidance.The Company has a valuation allowance of $6.2 million as of December 31, 2017 related to the deferred tax assets associated with its state net operatinglosses. The Company has evaluated the nature and timing of its other deferred tax assets and concluded that no additional valuation allowance is necessary.F-27Table of Contents The effective rate on net income differs from the U.S. federal statutory rate of 35%. The following is a reconciliation of such differences (dollars inthousands): Year Ended December 31, 2017 2016 2015Tax at the U.S. federal statutory rate$60,309 $32,706 $30,688State income taxes, net of federal tax benefit of $586, $636 and $265,respectively1,087 1,181 493Rate benefit from foreign earnings (1)(5,442) (3,642) (3,531)Net tax benefit resulting from the enactment of the Tax Act(27,269) — —Nondeductible transaction related costs— 2,659 —Other taxes and adjustments, net(265) 416 (679)Provision for income taxes$28,420 $33,320 $26,971Effective tax rate16.5% 35.7% 30.8%(1) Includes a $4.0 million, $1.5 million and $1.4 million foreign permanent tax benefit related to an inflation index adjustment allowed under Mexico tax law for the years endedDecember 31, 2017, 2016 and 2015, respectively.The Company’s foreign operating subsidiaries are owned by a wholly-owned subsidiary located in the Netherlands. The foreign operating subsidiaries aresubject to their respective foreign statutory rates, which differ from the U.S. federal statutory rate. The statutory tax rates in Mexico, Guatemala and ElSalvador are 30%, 25% and 30%, respectively. The statutory tax rate in the Netherlands is 0% on eligible dividends received from its foreign subsidiaries.The Company reviews the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financialstatements. The Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustainedon examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such aposition are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. Interest andpenalties related to income tax liabilities that could arise would be classified as interest expense in the Company’s consolidated statements of income.As of December 31, 2017 and 2016, the Company had no unrecognized tax benefits and, therefore, the Company did not have a liability for accrued interestand penalties and no such interest or penalties were incurred for the fiscal years ended December 31, 2017, 2016 and 2015. The Company does not believe itsunrecognized tax benefits will significantly change over the next twelve months.The Company files federal income tax returns in the U.S., Mexico, Guatemala, El Salvador and the Netherlands, as well as multiple state and local income taxreturns in the U.S. The Company’s U.S. federal returns are not subject to examination for tax years prior to 2014. The Company’s U.S. state income tax returnsare not subject to examination for the tax years prior to 2014 with the exception of six states, which are not subject to examination for tax years prior to 2013.With respect to federal tax returns in Mexico, Guatemala, El Salvador and the Netherlands, the tax years prior to 2012 are closed to examination. There are nostate income taxes in Mexico, Guatemala, El Salvador or the Netherlands.F-28Table of Contents NOTE 12 - COMMITMENTS AND CONTINGENCIESLeasesThe Company leases certain of its facilities and equipment under operating leases with terms generally ranging from three to five years. Most facility leasescontain renewal options. Remaining future minimum rentals due under non-cancelable operating leases are as follows (in thousands):Fiscal 2018$102,299201985,949202066,046202147,174202226,474Thereafter39,654 $367,596Rent expense under such leases was $117.7 million, $74.3 million and $50.0 million for the years ended December 31, 2017, 2016 and 2015, respectively.As a result of the Merger, the Company recognized a favorable lease intangible asset and an unfavorable lease intangible liability related to assumed CashAmerica leases to the extent such leases contained favorable or unfavorable terms relative to market (together the “Lease Intangibles”). The current portion offavorable lease intangibles is included in prepaid expenses and other current assets and the non-current portion is included in other assets in theaccompanying consolidated balance sheets. The current portion of unfavorable lease intangibles is included in accounts payable and accrued liabilities andthe non-current portion is included in other liabilities in the accompanying consolidated balance sheets. The Lease Intangibles are amortized to rent expense,which is a component of store operating expenses, on a straight-line basis over the lives of the respective leases.The following table details amounts for the Lease Intangibles for the years ending December 31, 2017 and 2016 (in thousands): Year Ended December 31, 2017 2016Favorable lease intangible asset$53,429 $61,875Unfavorable lease intangible liability$(25,367) $(34,989)The net amortization of the Lease Intangibles reduced store operating expense by $1.0 million and $0.2 million for the years ended December 31, 2017 and2016, respectively. Additionally, the Company closed 12 stores with Lease Intangibles during the year ended December 31, 2017 and wrote-off $0.2 millionin net unfavorable lease intangibles. The remaining weighted-average amortization period for favorable and unfavorable lease intangibles is 5.1 and 2.3years, respectively. Estimated future net amortization of the Lease Intangibles is as follows (in thousands):Fiscal 2018$(73)201992920201,92020212,39520222,906Thereafter19,985 $28,062F-29Table of Contents LitigationThe Company, in the ordinary course of business, is a defendant (actual or threatened) in certain lawsuits, arbitration claims and other general claims. Inmanagement’s opinion, any potential adverse result should not have a material adverse effect on the Company’s financial position, results of operations, orcash flows.GuaranteesThe Company offers fee-based CSO Programs to assist consumers in obtaining extensions of credit from Independent Lenders. The Company’s CSO Programscomply with the respective jurisdiction’s credit services organization act, credit access business law or a similar statute. Under the CSO Programs, theCompany assists customers in applying for a short-term extension of credit from the Independent Lenders and issues the Independent Lenders a guarantee forthe repayment of the extension of credit. The extensions of credit made by the Independent Lenders to credit services customers typically range in amountfrom $50 to $1,500 and have terms of 7 to 365 days. The Independent Lenders are considered variable interest entities of the Company. The net loansoutstanding represent less than 50% of the Independent Lenders’ total assets. In addition, the Company does not have any ownership interest in theIndependent Lenders, does not exercise control over them and is not the primary beneficiary and, therefore, does not consolidate the Independent Lenders’results with its results.The Company is required to recognize, at the inception of the guarantee, a liability for the fair value of the obligation undertaken by issuing the guarantees.According to the guarantee, if the borrower defaults on the extension of credit, the Company will pay the Independent Lenders the principal, accrued interest,insufficient funds fee and late fees, if applicable, all of which the Company records as a component of its credit loss provision. The Company is entitled toseek recovery, directly from its customers, of the amounts it pays the Independent Lenders in performing under the guarantees. The Company records theestimated fair value of the liability in accrued liabilities. The loss provision associated with the CSO Programs is based primarily upon historical lossexperience, with consideration given to recent loss trends, delinquency rates, economic conditions and management’s expectations of future credit losses.The Company’s maximum loss exposure under all of the outstanding guarantees issued on behalf of its customers to the Independent Lenders as ofDecember 31, 2017 was $10.1 million compared to $13.2 million at December 31, 2016.NOTE 13 - GOODWILL AND OTHER INTANGIBLE ASSETS GoodwillChanges in the carrying value of goodwill by segment were as follows (in thousands):December 31, 2017U.S. operationssegment Latin Americaoperationssegment TotalBalance, beginning of year$746,204 $84,947 $831,151Merger and other acquisitions (see Note 3)414 140 554Effect of foreign currency translation— 2,061 2,061Other adjustments(2,621) — (2,621)Balance, end of year$743,997 $87,148 $831,145 December 31, 2016 Balance, beginning of year$222,901 $72,708 $295,609Merger and other acquisitions (see Note 3)523,303 20,413 543,716Effect of foreign currency translation— (8,276) (8,276)Other adjustments— 102 102Balance, end of year$746,204 $84,947 $831,151The Company performed its annual assessment of goodwill and determined there was no impairment as of December 31, 2017 and 2016. As a result of theCompany’s fiscal 2015 goodwill impairment analysis, a $7.9 million goodwill impairment charge was recorded associated with its U.S. consumer loanoperations reporting unit, which is no longer a goodwill reporting unit of the Company. Therefore, accumulated goodwill impairment included in thegoodwill balance at January 1, 2016 was $7.9 million.F-30Table of Contents Definite-Lived Intangible AssetsThe following table summarizes the components of gross and net definite-lived intangibles assets subject to amortization as of December 31, 2017 and 2016(in thousands): As of December 31, 2017 2016 GrossCarryingAmount AccumulatedAmortization NetCarryingAmount GrossCarryingAmount AccumulatedAmortization NetCarryingAmountCustomer relationships $24,533 $(15,256) $9,277 $24,452 $(8,861) $15,591Executive non-competeagreements 8,700 (5,800) 2,900 8,700 (1,450) 7,250 $33,233 $(21,056) $12,177 $33,152$(10,311) $22,841The customer relationships are generally amortized using an accelerated amortization method that reflects the future cash flows expected from the returningpawn customers. The executive non-compete agreements are being amortized over a straight-line basis over the life of the executive non-competeagreements.Amortization expense for definite-lived intangible assets was $10.7 million, $5.2 million and $1.8 million for the years ended December 31, 2017, 2016 and2015, respectively. The remaining weighted-average amortization period for customer relationships, executive non-compete agreements and total definite-lived intangible assets is 1.5, 0.4 and 1.3 years, respectively. Estimated future amortization expense is as follows (in thousands):Fiscal 2018$6,53320192,59020202,05320211,0012022— $12,177Indefinite-Lived Intangible AssetsThe Company performed its annual assessment of indefinite-lived intangible assets and determined there was no impairment as of December 31, 2017 and2016. Indefinite-lived intangible assets as of December 31, 2017 and 2016, consist of the following (in thousands): As of December 31, 2017 2016Trade names $46,300 $46,300Pawn licenses (1) 34,092 34,083Franchise agreements related to check-cashing operation 1,250 1,250 $81,642 $81,633(1) Costs to renew licenses with indefinite lives are expensed as incurred and recorded in store operating expenses in the consolidated statements of income.F-31Table of Contents NOTE 14 - EQUITY COMPENSATION PLANS AND SHARE-BASED COMPENSATIONThe Company has previously adopted equity and share-based compensation plans to attract and retain executives, directors and key employees. Under theseplans, the Company has granted qualified and non-qualified common stock options and nonvested common stock awards to officers, directors and other keyemployees. At December 31, 2017, 872,000 shares were reserved for future grants to all employees and directors under the plans. Additionally, there were2,021,000 shares reserved for future grants to current employees and directors who were not employees or directors of the Company at the date of the Merger.Nonvested Common Stock Awards (Restricted Stock Unit Awards)The Company has granted nonvested common stock awards (in the form of restricted stock units) under the Company’s equity and share-based incentivecompensation plans. The restricted stock units are settled in shares of common stock upon vesting. The awards granted in 2017 include up to 117,000 shareswith performance-based criteria over a three-year cumulative performance period beginning in the year of grant. The vesting performance criteria for the 2017performance-based grants relate to growth in the Company’s net income, adjusted for certain non-core and/or non-recurring items, and total store additionsover the three-year cumulative period. The awards granted in 2016 and 2015 each included 40,000 shares with performance-based criteria with four annualmeasurement periods beginning in each year of issuance. The vesting performance criteria for the 2016 and 2015 performance-based grants relate to growthin the Company’s EBITDA, adjusted for certain non-core and/or non-recurring items, compared to the base period, which is the fiscal year prior to the year ofissuance. All other awards granted in 2017, 2016 and 2015 vest ratably over a five or six year period from the grant date. The grant date fair value of therestricted stock units is based on the Company’s closing stock price on the day of the grant or subsequent award modification date, if applicable, and the fairvalue of performance-based awards is based on the maximum amount of the award expected to be achieved. The amount attributable to award grants isamortized to expense over the vesting periods.The following table summarizes the restricted stock unit award activity during 2017, 2016 and 2015 (shares in thousands): 2017 2016 2015 Weighted- Weighted- Weighted- Average Average Average Underlying Fair Value Underlying Fair Value Underlying Fair Value Shares of Grant Shares of Grant Shares of GrantOutstanding at beginning of year30 $45.93 79 $48.10 87 $48.99Granted137 47.57 51 42.60 45 47.08Vested(10) 45.93 (100) 45.96 (5) 43.26Canceled or forfeited— — — — (48) 49.26Outstanding at end of year157 47.36 30 45.93 79 48.10Restricted stock unit awards vesting in 2017, 2016 and 2015 had an aggregate intrinsic value of $0.7 million, $4.9 million and $0.2 million, respectively,based on the closing price of the Company’s stock on the date of vesting. The outstanding award units had an aggregate intrinsic value of $10.6 million atDecember 31, 2017. During 2016, with the exception of 40,000 performance based awards granted in 2016 to senior executives which included double-trigger change in control provisions, the change of control provisions triggered by the Merger resulted in immediate vesting of 83,000 restricted stock unitawards outstanding as of September 1, 2016, the date of the Merger.F-32Table of Contents Stock OptionsThe Company has not issued any common stock options in the last six fiscal years. Previous option awards have been granted to purchase the Company’scommon stock at an exercise price equal to or greater than the fair market value at the date of grant and generally had a maximum duration of ten years. TheCompany typically issues treasury shares to satisfy option exercises.Stock options outstanding as of December 31, 2017 are as follows (shares in thousands): Weighted-Average CurrentlyExercise Price Option Shares Remaining Life Exercisable Shares $38.00 40 3.9 — $40.00 50 3.0 20 90 3.4 20 A summary of stock option activity for the years ended December 31, 2017, 2016 and 2015, is as follows (shares in thousands): 2017 2016 2015 Weighted- Weighted- Weighted- Average Average Average Underlying Exercise Underlying Exercise Underlying Exercise Shares Price Shares Price Shares PriceOutstanding at beginning ofyear103 $37.34 103 $37.34 758 $20.67Exercised(13) 24.57 — — (655) 18.06Outstanding at end of year90 $39.11 103 $37.34 103 $37.34 Exercisable at end of year20 $40.00 23 $31.43 13 $24.57At December 31, 2017, the aggregate intrinsic value for the stock options outstanding was $2.6 million, of which $0.5 million was exercisable at the end ofthe year, with weighted-average remaining contractual terms of 3.4 years. The aggregate intrinsic value reflects the total pre-tax intrinsic value (the differencebetween the Company’s closing stock price on the last trading day of the period and the exercise price of the options, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on December 31, 2017.The total intrinsic value of options exercised for fiscal 2017, 2016 and 2015, was $0.3 million, $0.0 million and $14.6 million, respectively. The intrinsicvalues are based on the closing price of the Company’s stock on the date of exercise.F-33Table of Contents Share-Based Compensation ExpenseThe Company’s net income includes the following compensation costs related to share-based compensation arrangements (in thousands): Year Ended December 31, 2017 2016 2015Gross compensation costs: Nonvested “restricted” stock2,959 4,038 280Stock options110 136 149Total gross compensation costs3,069 4,174 429 Income tax benefits: Nonvested “restricted” stock (1)(1,036) (782) (98)Stock options(39) (48) (52)Total income tax benefits(1,075) (830) (150) Net compensation expense$1,994 $3,344 $279 Tax benefit realized from stock options exercised during the year$— $— $5,126(1) Income tax benefit on nonvested stock compensation expense for 2016 is less than the statutory rate as a portion of the expense is not tax deductible.As of December 31, 2017, the total compensation cost related to nonvested restricted stock unit awards not yet recognized was $4.9 million and is expectedto be recognized over the weighted-average period of 1.5 years. As of December 31, 2017, the total compensation cost related to nonvested stock options notyet recognized was $0.1 million and is expected to be recognized over the weighted-average period of 1.5 years.NOTE 15 - BENEFIT PLANSThe Company’s 401(k) savings plan (the “Plan”) is available to all full-time, U.S.-based, employees who have been employed with the Company for sixmonths or longer. Effective January 1, 2017, under the Plan, a participant may contribute up to 100% of earnings, with the Company matching the first 5% ofcontributions at a rate of 50%. Prior to January 1, 2017, the Company matched the first 6% of contributions at a rate of 40%. The employee and Companycontributions are paid to a corporate trustee and invested in various funds. Company contributions made to participants’ accounts become fully vested uponcompletion of five years of service. The total Company matching contributions to the Plan were $4.2 million, $2.0 million and $0.8 million for the yearsended December 31, 2017, 2016 and 2015, respectively.Cash America had a 401(k) savings plan that was available to substantially all of its employees whereby participants could contribute up to 75% of theireligible earnings, subject to regulatory and other plan restrictions. Cash America made matching cash contributions of 50% of each participant’scontributions to the 401(k) plan, based on participant contributions of up to 5% of eligible compensation. Effective December 31, 2016, the Cash America401(k) savings plan was merged into the Plan.Prior to the Merger, Cash America had a nonqualified savings plan that was available to certain members of management. Upon completion of the Merger, thenonqualified savings plan was terminated and during the three months ended March 31, 2017, the Company dissolved the plan and distributed the remainingassets to the participants. At December 31, 2016, the nonqualified savings plan assets were included in prepaid expenses and other current assets in theaccompanying consolidated balance sheet with an offsetting liability of equal amount, which was included in accounts payable and accrued expenses in theaccompanying consolidated balance sheet.F-34Table of Contents NOTE 16 - SEGMENT AND GEOGRAPHIC INFORMATIONSegment InformationThe Company organizes its operations into two reportable segments as follows:•U.S. operations - Includes all pawn and consumer loan operations in the U.S.•Latin America operations - Includes all pawn and consumer loan operations in Latin America, which currently includes operations in Mexico,Guatemala and El SalvadorThe following tables present reportable segment information for the three years ended December 31, 2017, 2016 and 2015 as well as separately identifiedsegment assets (in thousands): Year Ended December 31, 2017 U.S.Operations Latin AmericaOperations Corporate ConsolidatedRevenue: Retail merchandise sales $717,490 $333,609 $— $1,051,099Pawn loan fees 380,596 130,309 — 510,905Wholesale scrap jewelry sales 119,197 21,645 — 140,842Consumer loan and credit services fees 75,209 1,767 — 76,976Total revenue 1,292,492 487,330 — 1,779,822 Cost of revenue: Cost of retail merchandise sold 468,527 211,176 — 679,703Cost of wholesale scrap jewelry sold 112,467 20,327 — 132,794Consumer loan and credit services loss provision 19,431 388 — 19,819Total cost of revenue 600,425 231,891 — 832,316 Net revenue 692,067 255,439 — 947,506 Expenses and other income: Store operating expenses 423,214 128,660 — 551,874Administrative expenses — — 122,473 122,473Depreciation and amortization 24,073 10,311 20,849 55,233Interest expense — — 24,035 24,035Interest income — — (1,597) (1,597)Merger and other acquisition expenses — — 9,062 9,062Loss on extinguishment of debt — — 14,114 14,114Total expenses and other income 447,287 138,971 188,936 775,194 Income (loss) before income taxes $244,780 $116,468 $(188,936) $172,312 December 31, 2017 U.S.Operations Latin AmericaOperations Corporate ConsolidatedPawn loans $276,570 $68,178 $— $344,748Consumer loans, net $23,179 $343 $— $23,522Inventories $216,739 $60,032 $— $276,771Total assets $1,527,012 $282,605 $253,167 $2,062,784F-35Table of Contents Year Ended December 31, 2016 U.S.Operations Latin AmericaOperations Corporate ConsolidatedRevenue: Retail merchandise sales $386,026 $283,105 $— $669,131Pawn loan fees 195,883 116,874 — 312,757Wholesale scrap jewelry sales 47,680 14,958 — 62,638Consumer loan and credit services fees 41,922 1,929 — 43,851Total revenue 671,511 416,866 — 1,088,377 Cost of revenue: Cost of retail merchandise sold 241,086 177,470 — 418,556Cost of wholesale scrap jewelry sold 41,357 11,668 — 53,025Consumer loan and credit services loss provision 11,494 499 — 11,993Total cost of revenue 293,937 189,637 — 483,574 Net revenue 377,574 227,229 — 604,803 Expenses and other income: Store operating expenses 215,227 112,787 — 328,014Administrative expenses — — 96,537 96,537Depreciation and amortization 13,618 10,429 7,818 31,865Interest expense — — 20,320 20,320Interest income — — (751) (751)Merger and other acquisition expenses — — 36,670 36,670Net gain on sale of common stock of Enova — — (1,299) (1,299)Total expenses and other income 228,845 123,216 159,295 511,356 Income (loss) before income taxes $148,729 $104,013 $(159,295) $93,447 December 31, 2016 U.S.Operations Latin AmericaOperations Corporate ConsolidatedPawn loans $293,392 $57,114 $— $350,506Consumer loans, net $28,847 $357 $— $29,204Inventories $282,860 $47,823 $— $330,683Total assets $1,637,995 $247,915 $259,293 $2,145,203F-36Table of Contents Year Ended December 31, 2015 U.S.Operations Latin AmericaOperations Corporate ConsolidatedRevenue: Retail merchandise sales $197,011 $252,285 $— $449,296Pawn loan fees 94,761 100,687 — 195,448Wholesale scrap jewelry sales 19,380 12,675 — 32,055Consumer loan and credit services fees 25,696 2,107 — 27,803Total revenue 336,848 367,754 — 704,602 Cost of revenue: Cost of retail merchandise sold 117,059 161,572 — 278,631Cost of wholesale scrap jewelry sold 17,530 10,098 — 27,628Consumer loan and credit services loss provision 6,770 389 — 7,159Total cost of revenue 141,359 172,059 — 313,418 Net revenue 195,489 195,695 — 391,184 Expenses and other income: Store operating expenses 107,852 99,720 — 207,572Administrative expenses — — 51,883 51,883Depreciation and amortization 6,146 8,803 2,990 17,939Interest expense — — 16,887 16,887Interest income — — (1,566) (1,566)Merger and other acquisition expenses — — 2,875 2,875Goodwill impairment - U.S. consumer loanoperations — — 7,913 7,913Total expenses and other income 113,998 108,523 80,982 303,503 Income (loss) before income taxes $81,491 $87,172 $(80,982) $87,681 December 31, 2015 U.S.Operations Latin AmericaOperations Corporate ConsolidatedPawn loans $68,153 $49,448 $— $117,601Consumer loans, net $688 $430 $— $1,118Inventories $56,040 $37,418 $— $93,458Total assets $423,178 $218,530 $111,187 $752,895F-37Table of Contents Geographic InformationThe following table shows revenue and long-lived assets (all non-current assets except goodwill, intangibles, net and deferred tax assets) by geographic area(in thousands): Year Ended December 31, 2017 2016 2015Revenue: U.S.$1,292,492 $671,511 $336,848Mexico464,161 397,549 367,754Other Latin America23,169 19,317 — $1,779,822 $1,088,377 $704,602 Long-lived assets: U.S.$227,659 $257,939 $65,742Mexico53,175 47,243 49,259Other Latin America3,552 2,554 1,349 $284,386 $307,736 $116,350F-38Table of Contents NOTE 17 - QUARTERLY FINANCIAL DATA (UNAUDITED)Summarized quarterly financial data for the fiscal years ended December 31, 2017 and 2016, are set forth in the table below (in thousands, except per shareamounts). The Company’s operations are subject to seasonal fluctuations. The Company issued 20,181,000 shares of common stock on September 1, 2016 asa result of the Merger, which significantly increased the diluted weighted average shares used in computing diluted income (loss) per share. The Companycomputed the quarterly diluted income per share amounts as if each quarter was a discrete period based on that quarter’s weighted average shares outstanding.As a result, the sum of the diluted earnings per share by quarter will not necessarily total the annual diluted earnings per share. Quarter Ended March 31 June 30 September 30 December 312017 Total revenue$447,576 $416,629 $435,412 $480,205Total cost of revenue204,676 192,205 204,366 231,069Net revenue242,900 224,424 231,046 249,136Total expenses and other income190,658 202,956 189,479 192,101Net income32,645 15,239 28,274 67,734Diluted net income per share0.67 0.32 0.59 1.43Diluted weighted average shares48,402 48,289 47,668 47,212 2016 Total revenue$183,203 $181,979 $261,153 $462,042Total cost of revenue81,340 80,518 113,789 207,927Net revenue101,863 101,461 147,364 254,115Total expenses and other income82,202 84,215 146,941 197,998Net income (loss)13,174 11,673 (1,412) 36,692Diluted net income (loss) per share0.47 0.41 (0.04) 0.76Diluted weighted average shares28,241 28,243 34,631 48,532F-39EXHIBIT 21.1FIRSTCASH, INC.SUBSIDIARIESSubsidiary NameCountry/State of FormationPercentageOwnedBy RegistrantFirstCash, Inc.Delaware100%First Cash, Inc.Nevada100%Famous Pawn, Inc.Maryland100%FCFS OK, Inc.Oklahoma100%FCFS MO, Inc.Missouri100%FCFS IN, Inc.Indiana100%FCFS SC, Inc.South Carolina100%FCFS NC, Inc.North Carolina100%Frontier Merger Sub, LLCDelaware100%FCFS Corp.Delaware100%First Cash Credit Management, LLCTexas100%First Cash Credit, Ltd.Texas100%Pawn TX, Inc.Texas100%First Cash Management, LLCDelaware100%LWC, LLCKentucky100%FCFS KY, Inc.Kentucky100%LTS, IncorporatedColorado100%Mister Money RM, Inc.Colorado100%FCFS CO, Inc.Colorado100%FC International, LLCDelaware100%FCFS Global, B.V.Netherlands100%First Cash, S.A. de C.V.Mexico100%American Loan Employee Services, S.A. de C.V.Mexico100%Maxi Prenda, S.A. de C.V.Mexico100%Empenos Mexicanos, S.A. de C.V.Mexico100%Maxi Realice Servicios Profesionales, S.A. de C.V.Mexico100%Soluciones Prima, S.A. de C.V.Mexico100%Comercializadora Maxi, Sociedad AnonimaGuatemala100%Maxi Prenda Guatemala, Sociedad AnonimaGuatemala100%Soluciones Administrativas de Guatemala, Sociedad AnonimaGuatemala100%Soluciones Prima Guatemala, Sociedad AnonimaGuatemala100%Maxi Realice Guatemala S.A. de C.V.Guatemala100%First Cash SV, Limitada de C.V.El Salvador100%First Cash Colombia, LTDAColombia100%Maxi Prenda Honduras, S.A. de C.V.Honduras100%Soluciones Prima Honduras, S.A. de C.V.Honduras100%FIRSTCASH, INC.SUBSIDIARIESCONTINUEDSubsidiary NameCountry/State of FormationPercentageOwnedBy RegistrantCash America Central, Inc.Tennessee100%Cash America East, Inc.Florida100%Cash America Financial Services, Inc.Delaware100%Cash America Holding, Inc.Delaware100%Cash America Management L.P.Delaware100%Cash America of Mexico, Inc.Delaware100%Cash America Pawn L.P.Delaware100%Cash America West, Inc.Nevada100%Cash America, Inc.Delaware100%Cash America Advance, Inc.Delaware100%Cash America, Inc. of AlaskaAlaska100%Cash America, Inc. of IllinoisIllinois100%Cash America, Inc. of LouisianaDelaware100%Cash America, Inc. of North CarolinaNorth Carolina100%Cash America, Inc. of OklahomaOklahoma100%Cash America Internet Sales, Inc.Delaware100%Cash America of Missouri, Inc.Missouri100%Cashland Financial Services, Inc.Delaware100%Creazione Estilo, S.A. de C.V., a sociedad anónima de capital variable (inliquidation)Mexico100%CSH Holdings LLCDelaware100%Georgia Cash America, Inc.Georgia100%Mr. Payroll CorporationDelaware100%Ohio Neighborhood Finance, Inc.Delaware100%Ohio Neighborhood Credit Solutions, LLCDelaware100%EXHIBIT 23.1CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe consent to the incorporation by reference in Registration Statements Nos. 333-71077 and 333-106878 on Form S-3, and Nos. 333-73391, 333-106880,333-106881, 333-132665, 333-181837 and 333-214452 on Form S-8 of our reports, dated February 20, 2018, relating to the financial statements ofFirstCash, Inc. as of December 31, 2017 and 2016, and for the two years ended December 31, 2017, and to the effectiveness of internal control over financialreporting as of December 31, 2017, appearing in this Annual Report on Form 10-K of FirstCash, Inc./s/ RSM US LLPDallas, TexasFebruary 20, 2018EXHIBIT 23.2CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe consent to the incorporation by reference in the Registration Statement Nos. 333-71077 and 333-106878 on Form S-3, and Nos. 333-73391, 333-106880,333-132665 and 333-181837 on Form S-8 of our report, dated February 17, 2016, relating to the consolidated financial statements of First Cash FinancialServices, Inc. for the year ended December 31, 2015, appearing in this Annual Report on Form 10-K of FirstCash, Inc. for the year ended December 31, 2017./s/ Hein & Associates LLPDallas, TexasFebruary 20, 2018EXHIBIT 31.1CERTIFICATION PURSUANT TOSECTION 302 OF THE SARBANES-OXLEY ACTI, Rick L. Wessel, certify that:1.I have reviewed this Annual Report on Form 10-K of FirstCash, Inc. (the “Registrant”);2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;4.The Registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others withinthose entities, particularly during the period in which this report is being prepared;b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;c.Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; andd.Disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's mostrecent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likelyto materially affect, the Registrant's internal control over financial reporting; and5.The Registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, tothe Registrant's auditors and the audit committee of the Registrant's board of directors (or persons performing the equivalent functions):a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internalcontrol over financial reporting.Date: February 20, 2018/s/ Rick L. WesselRick L. WesselChief Executive OfficerEXHIBIT 31.2CERTIFICATION PURSUANT TOSECTION 302 OF THE SARBANES-OXLEY ACT I, R. Douglas Orr, certify that: 1.I have reviewed this Annual Report on Form 10-K of FirstCash, Inc. (the “Registrant”);2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;4.The Registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others withinthose entities, particularly during the period in which this report is being prepared;b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;c.Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; andd.Disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's mostrecent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likelyto materially affect, the Registrant's internal control over financial reporting; and5.The Registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, tothe Registrant's auditors and the audit committee of the Registrant's board of directors (or persons performing the equivalent functions):a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internalcontrol over financial reporting.Date: February 20, 2018/s/ R. Douglas OrrR. Douglas OrrChief Financial OfficerEXHIBIT 32.1CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TO SECTION 906OF THE SARBANES-OXLEY ACT OF 2002In connection with the Annual Report of FirstCash, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2017, as filed with the Securitiesand Exchange Commission on the date hereof (the “Report”), I, Rick L. Wessel, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C.Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Act of 1934, as amended; and2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.Date: February 20, 2018/s/ Rick L. WesselRick L. WesselChief Executive OfficerEXHIBIT 32.2CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TO SECTION 906OF THE SARBANES-OXLEY ACT OF 2002In connection with the Annual Report of FirstCash, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2017, as filed with the Securitiesand Exchange Commission on the date hereof (the “Report”), I, R. Douglas Orr, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Act of 1934, as amended; and2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.Date: February 20, 2018/s/ R. Douglas OrrR. Douglas OrrChief Financial Officer

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