8-K/A - UPBD - Equibles

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________________________________________

FORM 8-K/A

(Amendment No. 1)

__________________________________________________

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report

(Date of earliest event reported):

February 17, 2021

___________________________________________________

RENT-A-CENTER, INC.

(Exact name of registrant as specified in charter)

___________________________________________________

Delaware	001-38047	45-0491516
(State or other jurisdiction of<br>incorporation or organization)	(Commission<br>File Number)	(IRS Employer<br>Identification No.)

5501 Headquarters Drive

Plano, Texas 75024

(Address of principal executive offices and zip code)

(972) 801-1100

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425).
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12).
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)).
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)).

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 Par Value	RCII	The Nasdaq Stock Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company	☐
If 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 or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.		☐

Introductory Note

On February 17, 2021, Rent-A-Center, Inc. (the “Company”) filed a Current Report on Form 8-K (the “Original Form 8-K”) announcing, among other things, that it had consummated the previously announced acquisition (the “Acquisition”) of Acima Holdings, LLC, a Utah limited liability company (“Acima”), pursuant to that certain Agreement and Plan of Merger, dated as of December 20, 2020, by and among the Company, Radalta, LLC, a Utah limited liability company and wholly owned subsidiary of the Company, Acima, and Aaron Allred, solely in his capacity as the Member Representative.

This Amendment No.1 to the Original Form 8-K is being filed solely for the purpose of amending Items 9.01(a) and (b). This Form 8-K/A should be read in conjunction with the Original Form 8-K.

The pro forma financial information included as Exhibit 99.3 to this Form 8-K/A has been presented for illustrative purposes only, as required by Form 8-K, and is not intended to, and does not purport to, represent what the combined company’s actual results or financial condition would have been if the transactions had occurred on the relevant date, and is not intended to project the future results or financial condition that the combined company may achieve following the Acquisition.

Item 9.01. Financial Statements and Exhibits.

(a) Financial Statements of Business Acquired.

The audited consolidated financial statements of Acima as of December 31, 2019, December 31, 2018 and December 31, 2017, and for the years ended December 31, 2019, December 31, 2018 and December 31, 2017, the notes related thereto, and the independent auditor’s report are filed as Exhibit 99.1 to this Form 8-K/A and incorporated by reference herein.

The unaudited condensed consolidated financial statements of Acima as of September 30, 2020 and September 30, 2019 and for the nine months ended September 30, 2020 and September 30, 2019 and the notes related thereto, are filed as Exhibit 99.2 to this Form 8-K/A and incorporated by reference herein.

(b) Pro Forma Financial Information.

The unaudited pro forma condensed combined financial information of the Company and Acima as of September 30, 2020 and for the year ended December 31, 2019 and the nine months ended September 30, 2020 is filed as Exhibit 99.3 to this Form 8-K/A and incorporated by reference herein.

(d) Exhibits:

Exhibit No.	Description
23.1	Consent of Tanner LLC.
99.1	The audited consolidated financial statements of Acima as of December 31, 2019 , December 31,2018 and December 31,2017 , and for the years ended December 31, 2019 , December 31,2018 and December 31,ex-991_acima123119financia.htm2017 , the notes related thereto and the independent auditor’s report.
99.2	The unaudited condensed consolidated financial statements of Acima as of September 30, 2020 and September 30, 2019 and for the nine months ended September 30, 2020 and September 30, 2019, and the notes related thereto.
99.3	The unaudited pro forma condensed combined financial information of the Company and Acima as of September 30, 2020 and for the nine months ended September 30, 2020 and for the year ended December 31, 2019.
104	Cover Page Interactive Data File (formatted in Inline XBRL and included as Exhibit 101)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		RENT-A-CENTER, INC.
Date:	February 23, 2021	By:	/s/ Bryan Pechersky
			Bryan Pechersky
			Executive Vice President, General Counsel and Secretary

Document

Exhibit 23.1

CONSENT OF INDEPENDENT AUDITORS

We consent to the incorporation by reference in:

1.Registration Statement (Form S-8 No. 333-32296) pertaining to the Rent-A-Center, Inc. 401 (k) Retirement Savings Plan,

2.Registration Statement (Form S-8 No. 333-40958) pertaining to Amended and Restated Rent-A-Center, Inc. Long-Term Incentive Plan,

3.Registration Statement (Form S-8 No. 333-62582) pertaining to Amended and Restated Rent-A-Center, Inc. Long-Term Incentive Plan,

4.Registration Statement (Form S-8 No. 333-136615) pertaining to Rent-A-Center, Inc. 2006 Long-Term Incentive Plan,

5.Registration Statement (Form S-8 No. 333-139792) pertaining to Rent-A-Center, Inc. 2006 Equity Incentive Plan,

6.Registration Statement (Form S-8 No. 333-145121) pertaining to Rent-A-Center, Inc. Deferred Compensation Plan,

7.Registration Statement (Form S-8 No. 333-171926) pertaining to Rent-A-Center East, Inc. Retirement Savings Plan for Puerto Rico Employees, and

8.Registration Statement (Form S-8 No. 333-211859) pertaining to Rent-A-Center, Inc. 2016 Long-Term Incentive Plan;

of our report dated January 14, 2021, relating to the consolidated financial statements of Acima Holdings, LLC, appearing in this Current Report on Form 8-K of Rent-A-Center, Inc.

/s/ Tanner LLC

Lehi, Utah

February 17, 2021

Document

Exhibit 99.1

ACIMA HOLDINGS, LLC

Consolidated Financial Statements and Supplementary Information

Together with Independent Auditors’ Report

December 31, 2019

INDEPENDENT AUDITORS’ REPORT

To the Board of Members of Acima Holdings, LLC

We have audited the accompanying consolidated financial statements of Acima Holdings, LLC and subsidiaries (collectively, the Company), which comprise the consolidated balance sheets as of December 31, 2019, 2018, and 2017, the related consolidated statements of operations, equity, and cash flows for the years then ended, and the related notes to consolidated financial statements.

Management’s Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to error or fraud.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to error or fraud. In making those risk assessments, the auditors consider internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Acima Holdings, LLC and subsidiaries as of December 31, 2019, 2018, and 2017, and the consolidated results of their operations and their cash flows for the years then ended, in accordance with accounting principles generally accepted in the United States of America.

Report on Supplementary Information

Our audits were conducted for the purpose of forming an opinion on the consolidated financial statements as a whole. The supplementary information is presented for purposes of additional analysis and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole.

/s/ Tanner LLC

Lehi, Utah

January 14, 2021

ACIMA HOLDINGS, LLC

Consolidated Balance Sheets

	As of<br>December 31,<br>2019
Assets
Cash		$	20,549,626	$	12,140,271	$	7,970,279
Lease receivables, net		20,754,248		10,547,400		5,729,357
Leased assets, net		268,493,222		177,397,432		86,764,803
Intangible assets, net		10,031,075		7,350,588		5,391,695
Other assets, net		1,327,738		1,386,253		1,218,820
Total assets		$	321,155,909	$	208,821,944	$	107,074,954
Liabilities and Equity
Operating liabilities		$	4,661,525	$	3,124,823	$	3,484,488
Lease liabilities		12,412,079		8,075,061		3,400,419
Income tax distribution payable		5,900,000		1,600,000		800,000
Sales tax obligation, net		3,650,152		3,694,583		3,557,689
Senior debt		150,000,000		125,000,000		63,000,000
Senior debt deferred costs		(313,009)		(1,252,045)		—
Junior debt		2,500,000		5,000,000		9,765,000
Total liabilities		178,810,747		145,242,422		84,007,596
Commitments and contingencies
Equity		142,345,162		63,579,522		23,067,358
Total liabilities and equity		$	321,155,909	$	208,821,944	$	107,074,954
See notes to consolidated financial statements.	1
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ACIMA HOLDINGS, LLC

Consolidated Statements of Operations

	For the<br>Year Ended December 31, 2019
Lease portfolio revenues, net		$	866,456,698	$	488,377,005	$	217,676,502
Direct lease portfolio costs:
Depreciation of leased assets		669,076,377		389,014,022		164,480,927
Direct lease costs		28,157,142		19,764,252		10,101,455
Total direct lease portfolio costs		697,233,519		408,778,274		174,582,382
Gross profit from lease portfolio		169,223,179		79,598,731		43,094,120
Interest costs:
Senior debt facility		12,381,571		10,528,284		5,372,099
Junior debt		481,342		1,566,260		980,877
Total interest costs		12,862,913		12,094,544		6,352,976
Net profit from lease portfolio		156,360,266		67,504,187		36,741,144
Operating costs:
Payroll costs, net		23,348,588		17,214,744		11,531,934
Other operating costs		8,990,956		7,604,339		4,958,842
Equity-based compensation		719,824		422,674		398,532
Total operating costs		33,059,368		25,241,757		16,889,308
Net income		$	123,300,898	$	42,262,430	$	19,851,836
See notes to consolidated financial statements.	2
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ACIMA HOLDINGS, LLC

Consolidated Statements of Equity

	For the<br>Year Ended December 31, 2019
Beginning equity		$	63,579,522	$	23,067,358	$	4,245,282
Equity-based compensation		719,824		422,674		398,532
Redemption of equity		(1,062,500)		—		—
Distributions		(44,192,582)		(2,172,940)		(1,428,292)
Net income		123,300,898		42,262,430		19,851,836
Ending equity		$	142,345,162	$	63,579,522	$	23,067,358
See notes to consolidated financial statements.	3
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ACIMA HOLDINGS, LLC

Consolidated Statements of Cash Flows

	For the<br>Year Ended December 31, 2019
Cash flows from operating activities:
Net income		$	123,300,898	$	42,262,430	$	19,851,836
Adjustments to reconcile net income to cash
provided by (used in) operating activities:
Net change in leased assets:
Purchases of leased assets		(758,882,884)		(477,233,853)		(202,573,016)
Depreciation of leased assets		669,076,377		389,014,022		164,480,927
Capitalized direct lease costs, net		(1,289,283)		(2,412,798)		(861,404)
		(91,095,790)		(90,632,629)		(38,953,493)
Other amortization:
Amortization of intangible assets		2,581,776		1,791,181		930,238
Deferred costs on debt		939,036		541,752		—
Equity-based compensation		719,824		422,674		398,532
		4,240,636		2,755,607		1,328,770
Net changes in other operating accounts:
Lease receivables		(10,206,848)		(4,818,043)		(2,460,718)
Other assets		58,515		(167,433)		(128,022)
Operating liabilities		1,536,702		(359,665)		1,431,648
Lease liabilities		4,337,018		4,674,642		2,676,643
Sales tax obligation		(44,431)		136,894		4,463,873
		(4,319,044)		(533,605)		5,983,424
Net cash provided by (used in)
operating activities		32,126,700		(46,148,197)		(11,789,463)
Cash flows from investing activities:
Investment in intangible assets		(5,262,263)		(3,750,074)		(4,018,269)
Cash flows from financing activities:
Net change in senior debt		25,000,000		62,000,000		19,800,000
Net change in junior debt		(2,500,000)		(4,765,000)		(1,005,151)
Debt costs paid		—		(1,793,797)		—
Redemption of equity		(1,062,500)		—		—
Distributions		(39,892,582)		(1,372,940)		(628,292)
Net cash provided by (used in)
financing activities		(18,455,082)		54,068,263		18,166,557
Net change in cash		8,409,355		4,169,992		2,358,825
Beginning cash		12,140,271		7,970,279		5,611,454
Ending cash		$	20,549,626	$	12,140,271	$	7,970,279
Supplementary information:
Cash paid for interest		$	12,862,913	$	12,742,846	$	6,171,428
See notes to consolidated financial statements.	4
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ACIMA HOLDINGS, LLC

Notes to Consolidated Financial Statements

1.Nature of Business and Summary of Significant Accounting Policies	Nature of Business<br><br>Acima Credit, LLC was organized as a limited liability company in the State of Utah on March 8, 2013 (Inception). Until January 2017, Acima Credit, LLC was named Simple RTO, LLC and did business as Simple Finance. Acima Holdings, LLC was organized as a limited liability company in the State of Utah on April 20, 2018 and owns 100% of Acima Credit, LLC, and the former ownership group of Acima Credit, LLC was effectively transferred to Acima Holdings, LLC. Acima Solutions, LLC was organized as a limited liability company in the State of Utah on December 28, 2018 and is also 100% owned by Acima Holdings, LLC.
	We are required to present consolidated financial statements that include the accounts of Acima Holdings, LLC, Acima Credit, LLC, and Acima Solutions, LLC (collectively, the Company). All material intercompany accounts and transactions are eliminated in consolidation. Acima Holdings, LLC and Acima Solutions, LLC had essentially no activity since their inception in 2018 and through December 31, 2019.
	Headquartered in Salt Lake City, Utah, Acima Credit, LLC offers a lease/purchase program in 46 states to customers of retail stores and merchants as an alternative to traditional financing. Leased assets consist primarily of home furniture, mattresses, appliances, and automobile tires. Under the lease program, lessees enter into a lease agreement, typically with the following basic terms and conditions:<br><br><br><br>•Periodic payments in fixed amounts<br><br>•Lease-to-own term typically approximately twelve months<br><br>•Same-as-cash purchase option within 90 days<br><br>•Discounted purchase option (65% of unpaid obligation)<br><br>•Cancelable anytime
	Use of Estimates<br><br>Management is required to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. The allowance for uncollectable receivables and the reserve for impaired leased assets are significant estimates.
	Management estimates the allowance for uncollectable receivables and the reserve for impaired leased assets using statistical methods based on historical payment behaviors, collection trends, and underwriting characteristics. We have long used these methods to underwrite and monitor our lease portfolio and we believe them to be reliable for purposes of determining the necessary allowance and reserve.
	For accounts with a regularly scheduled billing that is delinquent by 120 days or more, the related receivables are either charged off as uncollectable or reduced to zero net of the allowance, and the related leased asset is either fully depreciated or reduced to zero net of the reserve.
	The provision for uncollectable receivables addressed in Note 2 consists of the net change in the allowance for uncollectable receivables and the amount of all lease receivables charged off during the period. The provision for unrecoverable leased assets addressed in Note 3 consists of the net change in the reserve for impaired leased assets, which acts to temporarily accelerate depreciation.
	Concentrations of Credit Risk<br><br>The Company is exposed to the credit risk associated with its leases. If the Company’s customers quit making payments as contractually provided in their lease arrangements, the related lease receivables may not be collectable, and the related net leased assets may not be recoverable. The Company is also exposed to the credit risk associated with its cash balances that either are not insured or that exceed Federally insured limits.

ACIMA HOLDINGS, LLC

Notes to Consolidated Financial Statements

Continued

1.Nature of Business and Summary of Significant Accounting Policies<br><br>Continued	Lease Portfolio Income Recognition<br><br>Lease portfolio revenues consist of revenues earned from the lease or sale of leased assets. Revenues from the lease of leased assets is earned on a straight-line basis over the term of the lease, commencing once the lessee signs the lease agreement and receives the leased asset and the Company funds the lease, and ending when final payment is made. Revenues from the sale of leased assets (purchase option) is recognized upon receipt of the proceeds from sale.
	Scheduled lease payments are considered receivable when billed. Lease payments received in excess of amounts billed are recognized as lessee deposits. For leases where lease revenues earned exceed the amounts billed, the excess is recognized as unbilled revenues earned. For leases where amounts billed exceed the lease revenues earned, the excess is recognized as unearned revenues billed.
	The lease receivables line item in the consolidated balance sheets consists of billed and uncollected lease payments, unbilled revenues earned, and unearned revenues billed, less the allowance for uncollectable receivables. The lease liabilities line item in the consolidated balance sheets consists of lessee deposits, and sales taxes collected and held for remittance.
	Servicing fees (e.g., late fees and insufficient-fund fees) and other lease income are recognized upon receipt.
	Leased Assets<br><br>Leased assets are recorded at cost less accumulated depreciation and the reserve for impairment. Leased assets are depreciated on a straight-line basis over the term of the lease (generally twelve months). When leased assets are sold (purchase option) or the related accounts are settled or charged off, the remaining net cost is fully depreciated.
	Direct Lease Costs<br><br>Direct lease costs consist of commissions and sales wages directly related to successful lease originations, plus the portion of processing, audit, and credit reporting costs spent on successful lease originations. Direct lease costs are capitalized with leased assets and amortized in a pattern that mirrors the depreciation of leased assets.
	Intangible Assets<br><br>Intangible assets consist predominantly of the cost of developing internal-use software systems used to manage the Company’s lease operations. The cost of development deemed capitalizable under US generally accepted accounting principles (US GAAP) is capitalized in monthly tranches, and each month’s tranche is amortized on a straight-line basis over five years, which is the estimated average useful life of new systems development before it is superseded by new development. The internal-use software systems are evaluated for impairment. Impairment loss is recognized if the net carrying amount of an internal-use software system exceeds the undiscounted sum of cash flows expected to result from its use and disposition. As of December 31, 2019, no impairment has been recognized.
	Fair Value of Financial Instruments<br><br>Our financial instruments include cash, receivables, payables, senior debt, and junior debt. The carrying amounts of cash, receivables, and payables approximate fair value because of the short maturities of these instruments. The interest rates on the senior debt are variable and so the carrying value approximates fair value. The junior debt is due on demand and so the carrying amount approximates fair value.
	Income Taxes<br><br>As a limited liability company, taxable income or loss from the Company is allocated to its members. Therefore, no provision or liability for income taxes has been included in the financial statements.

ACIMA HOLDINGS, LLC

Notes to Consolidated Financial Statements

Continued

1.Nature of Business and Summary of Significant Accounting Policies<br><br>Continued	Sales Tax<br><br>In jurisdictions that require sales tax to be levied on lease payments received from the lessee, sales tax collected from the lessee is recognized as a liability until remitted, and no sales tax expense is recognized. In jurisdictions that require sales tax to be levied on the purchase of leased assets, sales tax has been capitalized as part of the cost of the leased assets.
	Prior to March 1, 2017, sales tax was paid on the purchase of leased assets in all jurisdictions. For any lease executed prior to March 1, 2017 in jurisdictions that instead require sales tax to be levied on lease payments received from the lessee, the Company did not charge the lessee sales tax on lease payments, but has instead chosen to recognize a sales tax obligation, resulting in the recognition of expense.
	Reclassifications<br><br>Certain reclassifications were made to the 2017 and 2018 financial statements to conform to the presentation in the 2019 financial statements.
	Subsequent Events<br><br>The Company has evaluated, for potential accounting and disclosure, events and transactions occurring after December 31, 2019 through January 14, 2021, the date these consolidated financial statements were available to be issued.
2. Lease Receivables	Lease receivables consist of the following:			As of<br>December 31, 2019			As of<br>December 31, 2018			As of<br>December 31, 2017
---	---	---	---	---	---	---	---	---	---
Billed lease receivables		$	42,344,307		$	26,685,812		$	11,147,104
Unbilled revenues earned		16,006,720			7,886,268			3,490,460
Unearned revenues billed		(4,890,503)			(2,863,192)			(1,359,279)
Allowance for uncollectability		(32,706,276)			(21,161,488)			(7,548,928)
Lease receivables, net		$	20,754,248		$	10,547,400		$	5,729,357		The provisions for uncollectable receivables totaling $130,272,481, $78,433,305, and $32,804,629 for the years ended December 31, 2019, 2018, and 2017, respectively, were netted against lease portfolio revenues. Lease receivables charged off totaled $118,727,693, $64,820,745, and $31,631,051 for the years ended December 31, 2019, 2018, and 2017, respectively.
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ACIMA HOLDINGS, LLC

Notes to Consolidated Financial Statements

Continued

| 3. Leased Assets | Leased assets consist of the following: | | --- | --- || | As of December 31, 2019 | | | As of December 31, 2018 | | | As of December 31, 2017 | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Leased assets | | $ | 442,537,281 | | $ | 297,432,595 | | $ | 140,191,659 | | Accumulated depreciation | | (157,427,451) | | | (109,119,678) | | | (50,007,613) | | | Reserve for impairment | | (23,220,598) | | | (16,230,192) | | | (6,321,152) | | | | | 261,889,232 | | | 172,082,725 | | | 83,862,894 | | | Direct lease costs | | 17,451,113 | | | 13,736,211 | | | 7,310,512 | | | Accumulated amortization | | (10,847,123) | | | (8,421,504) | | | (4,408,603) | | | | | 6,603,990 | | | 5,314,707 | | | 2,901,909 | | | Leased assets, net | | $ | 268,493,222 | | $ | 177,397,432 | | $ | 86,764,803 | | | The reserve for impairment is temporarily provided against unrecoverable leased assets until the leased asset becomes recoverable or fully depreciates. The provisions for unrecoverable leased assets totaling $6,990,407, $9,909,039, and $541,704 for the years ended December 31, 2019, 2018, and 2017, respectively, were added to the depreciation of leased assets. | | --- | --- | | | Direct lease costs consist of the capitalized cost of sales commissions and rebates; sales, processing, and underwriting wages; and consumer credit information. Direct lease costs totaling $17,451,113, $13,736,211, and $7,310,512 were capitalized in the years ended December 31, 2019, 2018, and 2017, respectively. | | 4. Intangible Assets | Intangible assets consist of the following: || | As of December 31, 2019 | | | As of December 31, 2018 | | | As of December 31, 2017 | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Internal-use software systems | | $ | 16,018,154 | | $ | 10,755,891 | | $ | 7,005,817 | | Accumulated amortization | | (5,987,079) | | | (3,405,303) | | | (1,614,122) | | | Intangible assets, net | | $ | 10,031,075 | | $ | 7,350,588 | | $ | 5,391,695 | | | Internal-use software systems consist of the capitalized cost of employed software developers. Development costs totaling $5,262,263, $3,750,074, and $4,018,269 were capitalized in the years ended December 31, 2019, 2018, and 2017, respectively. | | --- | --- | | 5. Lease Liabilities | Lease liabilities consist of the following: || | As of December 31, 2019 | | | As of December 31, 2018 | | | As of December 31, 2017 | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Customer deposits held | | $ | 7,356,501 | | $ | 5,209,295 | | $ | 1,950,735 | | Sales tax collected and payable | | 5,055,578 | | | 2,865,766 | | | 1,449,684 | | | Lease liabilities | | $ | 12,412,079 | | $ | 8,075,061 | | $ | 3,400,419 |

ACIMA HOLDINGS, LLC

Notes to Consolidated Financial Statements

Continued

6. Borrowings	Senior debt consists of the following:
			As of<br>December 31, 2018			As of<br>December 31, 2017
---	---	---	---	---	---	---	---	---
Senior Debt Comvest debt facility, borrowings limited to 69% of eligible receivables* limited to 150 million, interest paid monthly at LIBOR plus 6%, principal and unpaid interest is due April 26, 2021	$	150,000,000		$	125,000,000		$	—
Keystone debt facility, borrowings limited to 68% of eligible receivables limited to 70 million, interest paid monthly at 11%, the balance paid off in April 2018	—			—			63,000,000
Total senior debt	150,000,000			125,000,000			63,000,000
Senior debt deferred costs	(313,009)			(1,252,045)			—
Net senior debt	$	149,686,991		$	123,747,995		$	63,000,000

All values are in US Dollars.

*The senior debt is secured by the Company’s leases, its assets, and the members’ ownership in the Company. The senior debt is senior in priority to the junior debt. The Company is in compliance with its senior debt covenants.
**Eligible receivables are defined as the sum of the cost of all leased assets originated in the trailing 12 months multiplied by 127.5%, minus the sum of all lease payments received related to the leased assets originated in the trailing 12 months, subject to certain concentration limits.
Junior debt consists of the following:			As of<br>December 31, 2019			As of<br>December 31, 2018			As of<br>December 31, 2017
---	---	---	---	---	---	---	---	---	---
Junior Debt ***<br><br>Note payable to the CEO (and principal owner), interest at 15% paid monthly, and principal is due on demand		$	2,000,000		$	4,000,000		$	4,000,000
Notes payable to the CEO (and principal owner), interest at 10% paid monthly, and principal is due on demand		500,000			1,000,000			3,750,000
Notes payable to former members		—			—			2,015,000
Total junior debt		$	2,500,000		$	5,000,000		$	9,765,000

ACIMA HOLDINGS, LLC

Notes to Consolidated Financial Statements

Continued

6. Borrowings<br><br>Continued	***All junior debt is unsecured and subordinated to the senior debt. In the event any payment is made on junior debt, the Company must remain in good standing with the senior debt (no event of default).
	As of December 31, 2019, total borrowings come due as follows:		Junior debt due on demand	$	2,500,000
---	---	---
Senior debt due April 26, 2021	150,000,000
	$	152,500,000		7. Contingencies	In the ordinary course of the Company’s operations, the Company may be subject to contingent losses as a result of claims or assessments. As of December 31, 2019, management believes no known asserted claim or assessment will have a significant effect on the financial position or operations of the Company. It is too early to determine whether any unasserted claim or assessment will have a significant effect on the financial position or operations of the Company.
---	---
8. Equity and<br><br>Equity based<br><br>Compensation	The Company’s equity consists of Class A and Class B Units. There is no meaningful difference between the two classes of equity, in terms of preferences or otherwise, except that Class A Units represent capital interests and Class B Units represent profits interests. Class A Units were issued to founders and investors, and Class B Units were issued to certain key employees. As of December 31, 2019, Class A and Class B Units totaled 197,336,578 and the Company was authorized to issue additional Class B Units totaling 2,263,422.
	Equity transactions consist of the following (in units):			For the<br>Year Ended December 31, 2019		For the<br>Year Ended December 31, 2018	For the<br>Year Ended December 31, 2017
---	---	---	---	---	---	---
Class A Units:
Number of units		178,236,600		178,236,600		178,236,600
Class B Units:
Beginning number of units		20,099,978		14,839,978		13,512,200
Issuances as incentives		650,000		5,360,000		1,550,000
Forfeitures of unvested		(895,834)		(100,000)		(222,222)
Redemptions		(754,166)		—		—
Ending number of units		19,099,978		20,099,978		14,839,978
Total number of units		197,336,578		198,336,578		193,076,578	As of December 31, 2019, the number of vested Class B Units totaled 16,481,367 with an estimated intrinsic value totaling $78 million.
---
Equity-based compensation totaled $719,824, $422,674, and $398,532 for the years ended December 31, 2019, 2018, and 2017, respectively. Unrecognized compensation totaling $875,902 from Class B Units outstanding as of December 31, 2019 (and not forfeited as of February 28, 2020) shall be recognized as follows: $507,005 in 2020, $310,611 in 2021, and $58,287 in 2022.

ACIMA HOLDINGS, LLC

Notes to Consolidated Financial Statements

Continued

8. Equity and<br><br>Equity based<br><br>Compensation<br><br>Continued	Class B Units held no intrinsic value on the dates they were individually issued as incentives. However, US GAAP requires that profits interests be valued at fair value, and that the fair value be recognized as compensation on a straight-line basis over the period from the issue date through completion of vesting. Class B Units issued in 2017 were valued at $111,899 in total and vest over 36 months. Class B Units issued in 2018 were valued at $1,847,106 in total and vest over 36 months. Class B Units issued in 2019 were valued at $468,704 in total and vest over 36 months.
	The Class B Units issued in 2019, 2018, and 2017 were valued using the Black-Scholes option pricing model, which model is meant to estimate the price the recipients could have received if they sold their profits interests on the date they were issued. The significant inputs for the Black-Scholes option pricing model include (1) the expected volatility of the equity underlying the instrument, (2) the expected life of the instrument, (3) the risk-free interest rate, and (4) the fair value of the Company’s Class B units as of the date issued.
	Management estimated the expected volatility of the Company’s equity (underlying the profits interests), ranging from 43.78% to 46.87%, by applying the actual volatility of certain public companies who do business in the lease-to-own and subprime lending industries. Management estimated the expected life of the instrument to be 2 to 3 years. Management estimated the risk-free interest rate, ranging from 1.47% to 2.60%, by applying the actual interest rate of two-year to three-year constant maturities near the date the profits interests were issued.
9. Premises Rent	On February 7, 2020, the Company entered into a lease agreement to rent premises in Draper, Utah for a period of 66 months. On January 21, 2016, the Company entered into a lease arrangement (later amended for additional space) to rent premises in Sandy, Utah for a period of 45 months. Minimum rents come due after December 31, 2019 as follows:			Sandy			Draper
---	---	---	---	---	---	---
In the years ending December 31:
2020		$	184,582		$	687,405
2021		—			2,131,866
2022		—			2,195,821
2023		—			2,261,688
2024		—			2,329,529
2025		—			1,994,595
		$	184,582		$	11,600,904		In February 2016, the Financial Accounting Standards Board issued its new lease accounting guidance in ASU No. 2016-02, Leases (Topic 842). Starting in 2021, this guidance will require the Company to recognize its obligation to make future premises lease payments as a liability, and to recognize its right to use the leased premises as an asset, in the consolidated balance sheets. Currently, no premises lease liability or premises right-of-use asset is presented in the consolidated balance sheets.
---	---
	Amortization of the premises right-of-use asset shall be patterned such that, when combined with Interest accrued on the premises lease liability, the combined lease cost behaves as a single lease cost recognized on a straight-line basis over the term of the lease. Currently, premises rent is already recognized on a straight-line basis over the term of the lease.
10. Subsequent<br><br>Event	On December 20, 2020, the Company entered into a definitive agreement to be acquired by Rent-A-Center (NASDAQ: RCII). Total consideration consists of $1.273 billion in cash and approximately 10.8 million shares of Rent-A-Center common stock valued at $377 million at the time of signing. Regulatory approval is required before the acquisition is closed. Regulatory approval remains outstanding as of January 14, 2021, the date these consolidated financial statements were available to be issued.

ACIMA HOLDINGS, LLC

Supplementary Information

	For the<br>Year Ended December 31, 2019			For the<br>Year Ended December 31, 2018
Adjusted EBITDA:
Net income		$	123,300,898		$	42,262,430	$	19,851,836
Interest on senior debt		12,381,571			10,528,284		5,372,099
Interest on junior debt		481,342			1,566,260		980,877
Amortization of intangible assets		2,581,776			1,791,181		930,238
Equity-based compensation		719,824			422,674		398,532
Sales tax obligation exposure		—			100,122		1,857,862
Adjusted EBITDA		$	139,465,411		$	56,670,951	$	29,391,444
	As of<br>December 31, 2019		As of<br>December 31, 2018		As of<br>December 31, 2017
---	---	---	---	---	---	---
Senior debt in ratio to junior debt and equity		1.04		1.82		1.92
Total liabilities in ratio to equity		1.26		2.28		3.64
Debt service coverage ratio		10.59		4.49		4.12
Debt and distributions coverage ratio		2.39		3.81		3.37	See independent auditors’ report	12
---	---

Document

EXHIBIT 99.2

ACIMA HOLDINGS, LLC

Consolidated Financial Statements (Unaudited)

September 30, 2020 and 2019

ACIMA HOLDINGS, LLC

Consolidated Balance Sheets

(Unaudited)

	As of<br>September 30, 2020
Assets
Cash		$	25,407,652	$	18,036,364
Lease receivables, net		19,635,267		17,000,142
Leased assets, net		315,430,446		240,563,099
Intangible assets, net		10,966,109		9,399,536
Other assets, net		2,886,965		1,407,934
Total assets		$	374,326,439	$	286,407,075
Liabilities and Equity
Operating liabilities		$	3,685,042	$	3,747,885
Lease liabilities		17,696,549		12,252,003
Income tax distribution payable		49,900,000		3,300,000
Sales tax obligation, net		3,654,967		3,654,707
Senior debt		150,000,000		125,000,000
Senior debt deferred costs		—		(547,768)
Junior debt		2,500,000		2,500,000
Total liabilities		227,436,558		149,906,827
Commitments and contingencies
Equity		146,889,881		136,500,248
Total liabilities and equity		$	374,326,439	$	286,407,075
See notes to consolidated financial statements.	1
---	---

ACIMA HOLDINGS, LLC

Consolidated Statements of Operations

(Unaudited)

	For the<br>Nine Months Ended September 30, 2020
Lease portfolio revenues, net		$	914,111,811	$	618,927,960
Direct lease portfolio costs:
Depreciation of leased assets		692,572,458		476,450,131
Direct lease costs		25,392,503		20,383,006
Total direct lease portfolio costs		717,964,961		496,833,137
Gross profit from lease portfolio		196,146,850		122,094,823
Interest costs:
Senior debt		8,861,293		9,537,909
Junior debt		259,863		391,205
Total interest costs		9,121,156		9,929,114
Net profit from lease portfolio		187,025,694		112,165,709
Operating costs:
Payroll costs, net		21,323,426		16,763,095
Other operating costs		8,494,532		6,326,754
Equity-based compensation		995,007		532,232
Total operating costs		30,812,965		23,622,081
Net income		$	156,212,729	$	88,543,628
See notes to consolidated financial statements.	2
---	---

ACIMA HOLDINGS, LLC

Consolidated Statements of Equity

(Unaudited)

	For the<br>Nine Months Ended September 30, 2020
Beginning equity		$	142,345,162	$	63,579,522
Equity-based compensation		995,007		532,232
Redemption of equity		(3,235,272)		(62,500)
Distributions		(149,427,745)		(16,092,634)
Net income		156,212,729		88,543,628
Ending equity		$	146,889,881	$	136,500,248
See notes to consolidated financial statements.	3
---	---

ACIMA HOLDINGS, LLC

Consolidated Statements of Cash Flows

(Unaudited)

	For the<br>Nine Months Ended September 30, 2020
Cash flows from operating activities:
Net income		$	156,212,729	$	88,543,628
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Net change in leased assets:
Purchases of leased assets		(739,365,488)		(538,859,690)
Depreciation of leased assets		692,572,458		476,450,131
Capitalized direct lease costs, net		(144,194)		(756,108)
		(46,937,224)		(63,165,667)
Other amortization:
Amortization of intangible assets		2,473,279		1,853,493
Deferred costs on debt		313,009		704,277
Equity-based compensation		995,007		532,232
		3,781,295		3,090,002
Net changes in other operating accounts:
Lease receivables		1,118,981		(6,452,742)
Other assets		(1,559,227)		(21,681)
Operating liabilities		(976,483)		623,062
Lease liabilities		5,284,470		4,176,942
Sales tax obligation		4,815		(39,876)
		3,872,556		(1,714,295)
Net cash provided by (used in) operating activities		116,929,356		26,753,668
Cash flows from investing activities:
Investment in intangible assets		(3,408,313)		(3,902,441)
Cash flows from financing activities:
Net change in junior debt		—		(2,500,000)
Redemption of equity		(3,235,272)		(62,500)
Distributions		(105,427,745)		(14,392,634)
Net cash provided by (used in) financing activities		(108,663,017)		(16,955,134)
Net change in cash		4,858,026		5,896,093
Beginning cash		20,549,626		12,140,271
Ending cash		$	25,407,652	$	18,036,364
Supplementary information:
Cash paid for interest		$	9,121,156	$	9,929,114
See notes to consolidated financial statements.	4
---	---

ACIMA HOLDINGS, LLC

Notes to Consolidated Financial Statements

(Unaudited)

1.Nature of Business and Summary of Significant Accounting Policies	Nature of Business<br><br>Acima Credit, LLC was organized as a limited liability company in the State of Utah on March 8, 2013 (Inception). Until January 2017, Acima Credit, LLC was named Simple RTO, LLC and did business as Simple Finance. Acima Holdings, LLC was organized as a limited liability company in the State of Utah on April 20, 2018 and owns 100% of Acima Credit, LLC, and the former ownership group of Acima Credit, LLC was effectively transferred to Acima Holdings, LLC. Acima Solutions, LLC was organized as a limited liability company in the State of Utah on December 28, 2018 and is also 100% owned by Acima Holdings, LLC.
	Our consolidated financial statements include the accounts of Acima Holdings, LLC, Acima Credit, LLC, and Acima Solutions, LLC (collectively, the Company). All material intercompany accounts and transactions are eliminated in consolidation. Acima Credit, LLC has historically held all lease activity and continues to hold all merchant point-of-sale lease activity. Acima Solutions, LLC took over all merchant ecommerce lease activity in 2020. Acima Holdings, LLC has essentially no activity.
	Headquartered in Salt Lake City, Utah, Acima Credit, LLC offers a lease/purchase program in 46 states to customers of retail stores and merchants as an alternative to traditional financing. Leased assets consist primarily of home furniture, mattresses, appliances, and automobile tires. Under the lease program, lessees enter into a lease agreement, typically with the following basic terms and conditions:<br><br><br><br>•Periodic payments in fixed amounts<br><br>•Lease-to-own term typically approximately twelve months<br><br>•Same-as-cash purchase option within 90 days<br><br>•Discounted purchase option (65% of unpaid obligation)<br><br>•Cancelable anytime
	Use of Estimates<br><br>Management is required to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. The allowance for uncollectable receivables and the reserve for impaired leased assets are significant estimates.
	Management estimates the allowance for uncollectable receivables and the reserve for impaired leased assets using statistical methods based on historical payment behaviors, collection trends, and underwriting characteristics. We have long used these methods to underwrite and monitor our lease portfolio and we believe them to be reliable for purposes of determining the necessary allowance and reserve.
	For accounts with a regularly scheduled billing that is delinquent by 120 days or more, the related receivables are either charged off as uncollectable or reduced to zero net of the allowance, and the related leased asset is either fully depreciated or reduced to zero net of the reserve.
	The provision for uncollectable receivables addressed in Note 2 consists of the net change in the allowance for uncollectable receivables and the amount of all lease receivables charged off during the period. The provision for unrecoverable leased assets addressed in Note 3 consists of the net change in the reserve for impaired leased assets, which acts to temporarily accelerate depreciation.
	Concentrations of Credit Risk<br><br>The Company is exposed to the credit risk associated with its leases. If the Company’s customers quit making payments as contractually provided in their lease arrangements, the related lease receivables may not be collectable, and the related net leased assets may not be recoverable. The Company is also exposed to the credit risk associated with its cash balances that either are not insured or that exceed Federally insured limits.

ACIMA HOLDINGS, LLC

Notes to Consolidated Financial Statements - Continued

(Unaudited)

1.Nature of Business and Summary of Significant Accounting Policies<br><br>Continued	Lease Portfolio Income Recognition<br><br>Lease portfolio revenues consist of revenues earned from the lease or sale of leased assets. Revenues from the lease of leased assets is earned on a straight-line basis over the term of the lease, commencing once the lessee signs the lease agreement and receives the leased asset and the Company funds the lease, and ending when final payment is made. Revenues from the sale of leased assets (purchase option) is recognized upon receipt of the proceeds from sale.
	Scheduled lease payments are considered receivable when billed. Lease payments received in excess of amounts billed are recognized as lessee deposits. For leases where lease revenues earned exceed the amounts billed, the excess is recognized as unbilled revenues earned. For leases where amounts billed exceed the lease revenues earned, the excess is recognized as unearned revenues billed.
	The lease receivables line item in the consolidated balance sheets consists of billed and uncollected lease payments, unbilled revenues earned, and unearned revenues billed, less the allowance for uncollectable receivables. The lease liabilities line item in the consolidated balance sheets consists of lessee deposits, and sales taxes collected and held for remittance.
	Servicing fees (e.g., late fees and insufficient-fund fees) and other lease income are recognized upon receipt.
	Leased Assets<br><br>Leased assets are recorded at cost less accumulated depreciation and the reserve for impairment. Leased assets are depreciated on a straight-line basis over the term of the lease (generally twelve months). When leased assets are sold (purchase option) or the related accounts are settled or charged off, the remaining net cost is fully depreciated.
	Direct Lease Costs<br><br>Direct lease costs consist of commissions and sales wages directly related to successful lease originations, plus the portion of processing, audit, and credit reporting costs spent on successful lease originations. Direct lease costs are capitalized with leased assets and amortized in a pattern that mirrors the depreciation of leased assets.
	Intangible Assets<br><br>Intangible assets consist predominantly of the cost of developing internal-use software systems used to manage the Company’s lease operations. The cost of development deemed capitalizable under US generally accepted accounting principles (US GAAP) is capitalized in monthly tranches, and each month’s tranche is amortized on a straight-line basis over five years, which is the estimated average useful life of new systems development before it is superseded by new development. The internal-use software systems are evaluated for impairment. Impairment loss is recognized if the net carrying amount of an internal-use software system exceeds the undiscounted sum of cash flows expected to result from its use and disposition. Through September 30, 2020, no impairment has been recognized.
	Fair Value of Financial Instruments<br><br>Our financial instruments include cash, receivables, payables, senior debt, and junior debt. The carrying amounts of cash, receivables, and payables approximate fair value because of the short maturities of these instruments. The interest rates on the senior debt are variable and so the carrying value approximates fair value. The junior debt is due on demand and so the carrying amount approximates fair value.

ACIMA HOLDINGS, LLC

Notes to Consolidated Financial Statements - Continued

(Unaudited)

1.Nature of Business and Summary of Significant Accounting Policies	Income Taxes<br><br>As a limited liability company, taxable income or loss from the Company is allocated to its members. Therefore, no provision or liability for income taxes has been included in the financial statements.
Continued	Sales Tax<br><br>In jurisdictions that require sales tax to be levied on lease payments received from the lessee, sales tax collected from the lessee is recognized as a liability until remitted, and no sales tax expense is recognized. In jurisdictions that require sales tax to be levied on the purchase of leased assets, sales tax has been capitalized as part of the cost of the leased assets.
	Prior to March 1, 2017, sales tax was paid on the purchase of leased assets in all jurisdictions. For any lease executed prior to March 1, 2017 in jurisdictions that instead require sales tax to be levied on lease payments received from the lessee, the Company did not charge the lessee sales tax on lease payments, but has instead chosen to recognize a sales tax obligation, resulting in the recognition of expense.
	Subsequent Events<br><br>The Company has evaluated, for potential accounting and disclosure, events and transactions occurring after September 30, 2020 through January 14, 2021, the date these consolidated financial statements were available to be issued.
2. Lease Receivables	Lease receivables consist of the following:			As of<br>September 30, 2020			As of<br>September 30, 2019
---	---	---	---	---	---	---
Billed lease receivables		$	31,590,700		$	36,993,214
Unbilled revenues earned		18,542,261			13,732,133
Unearned revenues billed		(5,324,369)			(4,436,794)
Allowance for uncollectability		(25,173,325)			(29,288,411)
Lease receivables, net		$	19,635,267		$	17,000,142		The provisions for uncollectable receivables totaling $106,871,739 and $88,790,543 for the nine months ended September 30, 2020 and 2019, respectively, were netted against lease portfolio revenues. Lease receivables charged off totaled $114,404,690 and $80,663,620 for the nine months ended September 30, 2020 and 2019, respectively.
---

ACIMA HOLDINGS, LLC

Notes to Consolidated Financial Statements - Continued

(Unaudited)

| 3. Leased Assets | Leased assets consist of the following: | | --- | --- || | As of September 30, 2020 | | | As of September 30, 2019 | | | | --- | --- | --- | --- | --- | --- | --- | | Leased assets | | $ | 501,456,498 | | $ | 399,214,026 | | Accumulated depreciation | | (176,704,830) | | | (143,389,888) | | | Reserve for impairment | | (16,069,406) | | | (21,331,854) | | | | | 308,682,262 | | | 234,492,284 | | | Direct lease costs | | 19,519,612 | | | 16,428,156 | | | Accumulated amortization | | (12,771,428) | | | (10,357,341) | | | | | 6,748,184 | | | 6,070,815 | | | Leased assets, net | | $ | 315,430,446 | | $ | 240,563,099 || | The reserve for impairment is temporarily provided against unrecoverable leased assets until the leased asset becomes recoverable or fully depreciates. The provisions (recoveries) for unrecoverable leased assets totaling $(7,151,191) and $5,101,664 for the nine months ended September 30, 2020 and 2019, respectively, were added to (subtracted from) the depreciation of leased assets. | | --- | --- | | | Direct lease costs consist of the capitalized cost of sales commissions and rebates; sales, processing, and underwriting wages; and consumer credit information. Direct lease costs totaling $14,545,966 and $12,477,467 were capitalized in the nine months ended September 30, 2020 and 2019, respectively. | | 4. Intangible Assets | Intangible assets consist of the following: || | As of September 30, 2020 | | | As of September 30, 2019 | | | | --- | --- | --- | --- | --- | --- | --- | | Internal-use software systems | | $ | 19,426,467 | | $ | 14,658,332 | | Accumulated amortization | | (8,460,358) | | | (5,258,796) | | | Intangible assets, net | | $ | 10,966,109 | | $ | 9,399,536 || Internal-use software systems consist of the capitalized cost of employed software developers. Development costs totaling $3,408,313 and $3,902,441 were capitalized in the nine months ended September 30, 2020 and 2019, respectively. | | --- |

ACIMA HOLDINGS, LLC

Notes to Consolidated Financial Statements - Continued

(Unaudited)

| 5. Lease Liabilities | Lease liabilities consist of the following: | | --- | --- || | As of September 30, 2020 | | | As of September 30, 2019 | | | | --- | --- | --- | --- | --- | --- | --- | | Customer deposits held | | $ | 12,672,248 | | $ | 7,654,841 | | Sales tax collected and payable | | 5,024,301 | | | 4,597,162 | | | Lease liabilities | | $ | 17,696,549 | | $ | 12,252,003 || 6. Borrowings | Senior debt consists of the following: | | --- | --- | | | | | As of September 30, 2019 | | | | --- | --- | --- | --- | --- | --- | | Senior Debt *Comvest debt facility, borrowings limited to 69% of eligible receivables** limited to 150 million, interest paid monthly at LIBOR plus 6%, principal and unpaid interest is due April 26, 2021 | $ | 150,000,000 | | $ | 125,000,000 | | Senior debt deferred costs | — | | | (547,768) | | | Net senior debt | $ | 150,000,000 | | $ | 124,452,232 |

All values are in US Dollars.

*The senior debt is secured by the Company’s leases, its assets, and the members’ ownership in the Company. The senior debt is senior in priority to the junior debt. The Company is in compliance with its senior debt covenants.
**Eligible receivables are defined as the sum of the cost of all leased assets originated in the trailing 12 months multiplied by 127.5%, minus the sum of all lease payments received related to the leased assets originated in the trailing 12 months, subject to certain concentration limits.

ACIMA HOLDINGS, LLC

Notes to Consolidated Financial Statements - Continued

(Unaudited)

| 6. Borrowings Continued | Junior debt consists of the following: | | --- | --- || | As of September 30, 2020 | | | As of September 30, 2019 | | | | --- | --- | --- | --- | --- | --- | --- | | Junior Debt *** Notes payable to the CEO (and principal owner) with principal due on demand: Interest at 15% paid monthly | | $ | 2,000,000 | | $ | 2,000,000 | | Interest at 10% paid monthly | | 500,000 | | | 500,000 | | | Total junior debt | | $ | 2,500,000 | | $ | 2,500,000 || ***All junior debt is unsecured and subordinated to the senior debt. In the event any payment is made on junior debt, the Company must remain in good standing with the senior debt (no event of default). | | --- | | As of September 30, 2020, total borrowings come due as follows: || Junior debt due on demand | $ | 2,500,000 | | --- | --- | --- | | Senior debt due April 26, 2021 | 150,000,000 | | | | $ | 152,500,000 || 7. Contingencies | In the ordinary course of the Company’s operations, the Company may be subject to contingent losses as a result of claims or assessments. As of September 30, 2020, management believes no known asserted claim or assessment will have a significant effect on the financial position or operations of the Company. It is too early to determine whether any unasserted claim or assessment will have a significant effect on the financial position or operations of the Company. | | --- | --- | | 8. Equity and Equity-Based Compensation | The Company’s equity consists of Class A and Class B Units. There is no meaningful difference between the two classes of equity, in terms of preferences or otherwise, except that Class A Units represent capital interests and Class B Units represent profits interests. Class A Units were issued to founders and investors, and Class B Units were issued to certain key employees. As of September 30, 2020, Class A and Class B Units totaled 198,804,633 and the Company was authorized to issue additional Class B Units totaling 1,195,367. |

ACIMA HOLDINGS, LLC

Notes to Consolidated Financial Statements - Continued

(Unaudited)

| 8. Equity and Equity-Based Compensation Continued | Equity transactions consist of the following (in units): | | --- | --- || | As of and For the Nine Months Ended September 30, 2020 | | As of and For the Nine Months Ended September 30, 2019 | | | --- | --- | --- | --- | --- | | Class A Units: | | | | | | Number of units | | 178,236,600 | | 178,236,600 | | Class B Units: | | | | | | Beginning number of units | | 19,099,978 | | 20,099,978 | | Issuances as incentives | | 4,230,000 | | 650,000 | | Forfeitures of unvested | | (734,167) | | (104,167) | | Redemptions | | (2,027,778) | | (45,833) | | Ending number of units | | 20,568,033 | | 20,599,978 | | Total number of units | | 198,804,633 | | 198,836,578 || | Equity-based compensation totaled $995,007 and $532,232 for the nine months ended September 30, 2020 and 2019, respectively. | | --- | --- | | 9. Premises Rent | On February 7, 2020, the Company entered into a lease agreement to rent premises in Draper, Utah for a period of 66 months. Minimum rents come due after September 30, 2020 as follows: || In the years ending December 31: | | | | --- | --- | --- | | 2020 | $ | 155,199 | | 2021 | 2,131,866 | | | 2022 | 2,195,821 | | | 2023 | 2,261,688 | | | 2024 | 2,329,529 | | | 2025 | 1,994,595 | | | | $ | 11,068,698 || | In February 2016, the Financial Accounting Standards Board issued its new lease accounting guidance in ASU No. 2016-02, Leases (Topic 842). Starting for the annual period ending December 31, 2021, this guidance will require the Company to recognize its obligation to make future premises lease payments as a liability, and to recognize its right to use the leased premises as an asset, in the consolidated balance sheets. Currently, no premises lease liability or premises right-of-use asset is presented in the consolidated balance sheets. | | --- | --- | | | Amortization of the premises right-of-use asset shall be patterned such that, when combined with Interest accrued on the premises lease liability, the combined lease cost behaves as a single lease cost recognized on a straight-line basis over the term of the lease. Currently, premises rent is already recognized on a straight-line basis over the term of the lease. The Company has the option to renew the premises lease for an additional five years. | | 10. Subsequent Event | On December 20, 2020, the Company entered into a definitive agreement to be acquired by Rent-A-Center (NASDAQ: RCII). Total consideration consists of $1.273 billion in cash and approximately 10.8 million shares of Rent-A-Center common stock valued at $377 million at the time of signing. Regulatory approval is required before the acquisition is closed. Regulatory approval remains outstanding as of January 14, 2021, the date these consolidated financial statements were available to be issued. | | 11 | | --- |

Document

Exhibit 99.3

Unaudited pro forma condensed combined financial information

On February 17, 2021, Rent-A-Center, Inc. (“Rent-A-Center) consummated the acquisition of Acima Holdings, LLC (“Acima”) contemplated by the Agreement and Plan of Merger dated December 20, 2020, by and among Rent-A-Center, Radalta, LLC, a Utah limited liability company and wholly owned subsidiary of Rent-A-Center, Acima, and Aaron Allred, solely in his capacity as the Member Representative (the “Merger Agreement”), pursuant to which Radalta, LLC merged with and into Acima, with Acima surviving as a wholly owned subsidiary of Rent‑A‑Center (the “Merger”). The unaudited pro forma condensed combined financial information and explanatory notes presented below show the impact of such acquisition, together with related financing transactions consummated by Rent‑A‑Center concurrent therewith (collectively, the “Transactions”), on the historical financial position and results of operations of Rent‑A‑Center and Acima.

The following unaudited pro forma condensed combined balance sheet as of September 30, 2020 and unaudited pro forma condensed combined statement of operations for the nine months ended September 30, 2020 and the year ended December 31, 2019 are based on the individual historical consolidated financial statements of Rent-A-Center and Acima, respectively, included in Rent‑A‑Center’s Annual Report on Form 10‑K for the year ended December 31, 2019 and Quarterly Report on Form 10‑Q for the nine months ended September 30, 2020, and the Current Report on Form 8‑K filed by Rent‑A‑Center on February 23, 2021, all of which financial statements are incorporated herein by reference. The unaudited pro forma condensed combined balance sheet gives effect to the Transactions as if they had occurred on September 30, 2020 and the unaudited pro forma condensed combined statement of operations gives effect to the Transactions as if they had occurred on January 1, 2019.

The unaudited pro forma condensed consolidated financial information was prepared in accordance with Article 11 of Regulation S-X as amended by the Securities and Exchange Commission (the “SEC”) Final Rule, Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses,” using the assumptions set forth in the notes to the unaudited pro forma condensed consolidated financial information. The unaudited pro forma condensed consolidated financial information has been adjusted to include accounting policy alignment adjustments, transaction accounting adjustments and other transaction accounting adjustments, which reflect the application of the accounting required by generally accepted accounting principles in the United States (“GAAP”), linking the effects of the Transactions listed below to the pro forma consolidated financial statements.

The pro forma adjustments set forth in the unaudited pro forma condensed combined financial information reflect the following:

•the Transactions and changes in assets and liabilities to record the estimates

of their respective fair value in accordance with purchase accounting;

•changes in depreciation and amortization expense resulting from the fair

value adjustments to the identifiable net tangible assets and amortizable intangible

assets of Acima in the Transactions;

•changes in indebtedness incurred in connection with the Transactions;

•certain transaction fees and debt issuance costs incurred in connection with the

Transactions;

•changes in interest expense resulting from the Transactions, including amortization of

debt issuance costs;

•changes in stock-based compensation expense resulting from the Transactions;

•estimates of the effect of the above adjustments on deferred income tax

assets, liabilities and related expense; and

•the equity impact of the Transactions and the corresponding elimination of historical equity balances of Acima.

The unaudited pro forma adjustments are based upon available information and reflects estimates and certain assumptions that Rent-A-Center believes is reasonable under the circumstances. Actual adjustments may differ materially from the information presented herein. The unaudited pro forma condensed combined financial information is presented for informational purposes only and does not purport to represent what the results of operations or financial condition would have been had the Transactions actually occurred on the dates indicated, nor do they purport to project the results of operations or financial condition for any future period or as of any future date. The unaudited pro forma condensed combined financial information should be read in conjunction with the audited and unaudited historical financial statements and related notes of each of Rent-A-Center and Acima included in the Form 8-K filed on February 23, 2021 or incorporated by reference in this filing. Assumptions underlying the pro forma adjustments are described in the accompanying notes, which should be read in conjunction with the unaudited pro forma condensed combined financial information.

The unaudited pro forma condensed combined financial information does not reflect the realization of any expected operating efficiencies or other synergies that may result from the Transactions as a result of planned initiatives following the completion of the Transactions.

Rent-A-Center

Unaudited pro forma condensed combined balance sheet

As of September 30, 2020

(Dollars in thousands)

	Historical
	Rent-A-<br><br>Center	Acima as presented (1)	Accounting policy alignment	Transaction accounting adjustments	Other transaction accounting adjustments	Pro forma combined
ASSETS
Cash and cash equivalents	$ 227,398	$ 25,408	-	(1,242,863)	1,256,834	$ 266,777
Receivables, net of allowance for doubtful accounts	75,471	25,477	-	-	-	100,948
Prepaid expenses and other assets	40,172	851	(202)	-	-	40,821
Rental merchandise, net
On rent	680,955	315,430	(3,216)	-	-	993,169
Held for rent	119,903	-	-	-	-	119,903
Merchandise held for installment sale	4,287	-	-	-	-	4,287
Property assets, net of accumulated depreciation	145,298	12,485	-	169,034	-	326,817
Operating lease right-of-use	280,845	-	9,123	-	-	289,968
Deferred tax asset	14,889	-	-	-	-	14,889
Goodwill	70,217	-	-	307,133	-	377,350
Other intangible assets, net	8,130	-	-	440,000	-	448,130
Total assets	$1,667,565	$ 379,651	5,705	(326,696)	1,256,834	$2,983,059
LIABILITIES
Accounts payable - trade	176,304	1,241	-	-	-	177,545
Accrued liabilities	305,919	38,671	(373)	30,400	-	374,617
Operating lease liabilities	283,784	-	9,294	-	-	293,078
Deferred tax liability	168,622	-	-	(111,115)	-	57,507
Senior debt, net	190,599	152,500	-	(152,500)	1,256,834	1,447,433
Total liabilities	$1,125,228	$ 192,412	8,921	(233,215)	1,256,834	$2,350,180
STOCKHOLDERS' EQUITY
Common stock, $0.01 par value	1,103	-	-	27	-	1,130
Additional paid-in capital	878,965	-	-	120,915	-	999,880
Retained earnings	1,051,760	-	-	(30,400)	-	1,021,360
Treasury stock at cost	(1,375,541)	-	-	-	-	(1,375,541)
Accumulated other comprehensive loss	(13,950)	-	-	-	-	(13,950)
Equity	-	187,239	(3,216)	(184,023)	-	-
Total stockholders' equity	$ 542,337	$ 187,239	(3,216)	(93,481)	-	$ 632,879
Total liabilities and stockholders' equity	$1,667,565	$ 379,651	5,705	(326,696)	1,256,834	$2,983,059

All values are in US Dollars.

(See the accompanying notes.)

Rent-A-Center

Unaudited pro forma condensed combined statement of operations

For the nine months ended September 30, 2020

(Dollars in thousands)

	Historical
	Rent-A-Center (1)	Accounting policy alignment	Transaction accounting adjustments	Other transaction accounting adjustments	Pro forma combined
Revenues
Store
Rentals and fees	1,682,310	-	-	-	$2,354,849
Merchandise sales	300,693	-	-	-	542,266
Installment sales	48,970	-	-	-	48,970
Other	2,341	-	-	-	2,341
Total store revenues	2,034,314	-	-	-	2,948,426
Franchise
Merchandise sales	49,553	-	-	-	49,553
Royalty income and fees	13,833	-	-	-	13,833
Total revenues	2,097,700	-	-	-	3,011,812
Cost of revenues
Store
Cost of rentals and fees	489,606	-	-	-	830,890
Cost of merchandise sold	296,894	-	-	-	605,180
Cost of installment sales	16,830	-	-	-	16,830
Total cost of store revenues	803,330	-	-	-	1,452,900
Franchise cost of merchandise sold	49,632	-	-	-	49,632
Total cost of revenues	852,962	-	-	-	1,502,532
Gross profit	1,244,738	-	-	-	1,509,280
Operating expenses
Store expenses
Labor	434,216	-	-	-	450,730
Other store expenses	463,292	(308)	-	-	531,482
General and administrative expenses	113,694	-	103,515	-	228,622
Depreciation and amortization	43,071	-	43,503	-	89,357
Other (gains) and charges	7,768	-	-	-	7,768
Total operating expenses	1,062,041	(308)	147,018	-	1,307,959
Operating profit	182,697	308	(147,018)	-	201,321
Interest expense	11,958	-	-	41,106	62,185
Interest income	(561)	-	-	-	(561)
Earnings before income taxes	171,300	308	(147,018)	(41,106)	139,697
Income tax expense (benefit)	19,485	39,130	(10,876)	(10,277)	37,462
Net earnings	151,815	(38,822)	(136,142)	(30,829)	$ 102,235
Earnings per share:
Basic earnings per share	2.80				$ 1.70
Diluted earnings per share	2.73				$ 1.54
Weighted average number of shares outstanding:
Basic	54,186,000				59,982,254
Diluted	55,662,000				66,442,185

All values are in US Dollars.

(See the accompanying notes.)

Rent-A-Center

Unaudited pro forma condensed combined statement of operations

For the year ended December 31, 2019

(Dollars in thousands)

	Historical
	Rent-A-Center (1)	Accounting policy alignment	Transaction accounting adjustments	Other transaction accounting adjustments	Pro forma combined
Revenues
Store
Rentals and fees	2,224,402	-	-	-	$2,892,424
Merchandise sales	304,630	-	-	-	503,065
Installment sales	70,434	-	-	-	70,434
Other	4,795	-	-	-	4,795
Total store revenues	2,604,261	-	-	-	3,470,718
Franchise
Merchandise sales	49,135	-	-	-	49,135
Royalty income and fees	16,456	-	-	-	16,456
Total revenues	2,669,852	-	-	-	3,536,309
Cost of revenues
Store
Cost of rentals and fees	634,878	-	-	-	990,031
Cost of merchandise sold	319,006	-	-	-	573,899
Cost of installment sales	23,383	-	-	-	23,383
Total cost of store revenues	977,267	-	-	-	1,587,313
Franchise cost of merchandise sold	48,514	-	-	-	48,514
Total cost of revenues	1,025,781	-	-	-	1,635,827
Gross profit	1,644,071	-	-	-	1,900,482
Operating expenses
Store expenses
Labor	630,096	-	-	-	648,667
Other store expenses	617,106	500	-	-	705,694
General and administrative expenses	142,634	-	168,420	-	321,774
Depreciation and amortization	61,104	-	78,846	-	142,818
Other (gains) and charges	(60,728)	-	-	2,698	(58,030)
Total operating expenses	1,390,212	500	247,266	2,698	1,760,923
Operating profit	253,859	(500)	(247,266)	(2,698)	139,559
Debt refinancing charges	2,168	-	-	-	2,168
Interest expense	31,031	-	-	39,020	82,914
Interest income	(3,123)	-	-	-	(3,123)
Earnings before income taxes	223,783	(500)	(247,266)	(41,718)	57,600
Income tax expense (benefit)	50,237	30,700	(27,312)	(10,430)	43,195
Net earnings	173,546	(31,200)	(219,954)	(31,288)	$ 14,405
Earnings per share:
Basic earnings per share	3.19				$ 0.25
Diluted earnings per share	3.10				$ 0.22
Weighted average number of shares outstanding:
Basic	54,325,000				56,949,541
Diluted	55,955,000				66,734,867

All values are in US Dollars.

(See the accompanying notes.)

Notes to unaudited pro forma condensed combined financial information

Note 1 - Basis of pro forma presentation

The Merger will be accounted for as an acquisition in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations (“ASC 805”) which requires the allocation of purchase consideration to the fair value of the identified assets acquired and liabilities assumed upon consummation of a business combination. The unaudited pro forma condensed combined balance sheet as of September 30, 2020 and unaudited pro forma condensed combined statement of operations for the nine months ended September 30, 2020 and the year ended December 31, 2019 have been derived by aggregating Rent-A-Center’s audited and unaudited historical consolidated financial statements and the audited and unaudited historical financial statements of Acima.

The preliminary purchase price for the Merger is listed below, subject to certain closing adjustments. The purchase price includes $1.22 billion in cash, net of cash acquired of $25.4 million, and 2.6 million shares of Rent-A-Center common shares issued in exchange for outstanding Class A and Class B units of Acima. These Rent-A-Center common shares included in the purchase price are issued to non-Acima employees and are subject to certain transfer restrictions post-Merger pursuant to the Lock-up Agreement. These Rent-A-Center shares subject to the Lock-up Agreement will be released from their transfer restrictions over a period of 18 months, in three tranches each in 6-month intervals after the closing date of the Merger. As each tranche of common shares is released based on the terms of the Lock-up Agreement, the fair value of the Rent-A-Center common shares issued at closing of the Merger have been adjusted to reflect the effects of the respective lockup periods. As part of the Transactions, Rent-A-Center issued approximately 8 million shares to Acima employees that are subject to certain vesting conditions over a 36-month period and thus have been excluded from the purchase price and instead are accounted for post-Merger as stock-based compensation expense subject to ASC Topic 718, “Stock-based Compensation” (“ASC 718”).

The purchase price allocated below has been developed based on preliminary estimates of fair value using the historical financial statements and information of Acima as of September 30, 2020. In addition, the allocation of the purchase price to acquired identifiable assets and assumed liabilities is based on the valuation of the tangible and identifiable intangible assets acquired and liabilities assumed by management to prepare the unaudited pro forma condensed combined financial information. The purchase price and purchase price allocation are presented as follows:

	Consideration Transferred	Total
(Dollars in thousands)
Cash consideration paid to unit holders	1,090,363	$ 1,090,363
Cash consideration paid to extinguish Acima historical debt	152,500	152,500
Equity consideration (subject to lock-up)1
Equity subject to 6 month lock-up period	41,717	41,717
Equity subject to 12 month lock-up period	40,161	40,161
Equity subject to 18 month lock-up period	39,064	39,064
Equity consideration (subject to restricted stock agreement)		414,060
Net of cash acquired	(25,408)	(25,408)
Total	1,338,397	$ 1,752,457

All values are in US Dollars.

1 The estimated fair value of the equity consideration subject to the Lock-up Agreement has been determined based on the closing price of Rent-A-Center common stock of $51.14 on the closing date of February 17, 2021, discounted to reflect the timing of the release of the shares from the Lock-Up Agreements.

Purchase price allocation:

Consideration transferred:
Purchase price (net of cash acquired)	$ 1,338,397
Assets acquired:
Receivables, net of allowance for doubtful accounts	25,477
Prepaid expenses and other assets	649
Rental merchandise, net	312,214
Property assets, net of accumulated depreciation	181,519
Intangible assets	440,000
Operating lease right-of-use	9,123
Total assets acquired	968,982
Liabilities assumed:
Accounts payable – trade	1,241
Accrued liabilities	38,298
Operating lease liability	9,294
Deferred tax liability	(111,115)
Total liabilities assumed	(62,282)
Net assets acquired, excluding goodwill	1,031,264
Goodwill (consideration transferred above net assets acquired)	$ 307,133

Any difference between the fair value of the consideration transferred and the fair values of the assets acquired and liabilities assumed is presented as goodwill.

The unaudited pro forma condensed combined statement of operations also includes certain accounting adjustments related to the Transactions, including items that will impact the combined results, such as amortization expense on acquired intangible assets and stock-based compensation expense for Rent-A-Center shares issued as part of the Transactions.

The final allocation of the purchase price is dependent on a number of factors, including the final valuation of the fair value of tangible and identifiable intangible assets acquired and liabilities assumed as of the closing date of the Transactions, the final valuation of the Rent-A-Center shares issued and included in the purchase price as of the closing date and the resolution of any purchase price adjustments pursuant to the Merger Agreement. Accordingly, the final purchase price allocation and acquisition accounting may change upon the receipt of additional and more detailed information, and such changes could result in a material change to the unaudited pro forma condensed combined financial information. The acquisition accounting and related depreciation and amortization reflected in the unaudited pro forma condensed combined financial statements have been made solely for the purpose of preparing these statements and may change upon the receipt of additional and more detailed information. Such changes could result in a material change to the unaudited pro forma condensed combined financial information.

Additionally, the unaudited pro forma condensed combined statement of operations includes certain financing adjustments related to the Credit Agreement, dated February 17, 2021, among Rent-A-Center, as borrower, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (the “ABL Credit Facility”), the term loan credit agreement, dated February 17, 2021, among Rent-A-Center, as borrower, the lenders party thereto and JPMorgan Chase Bank, N.A. as administrative agent (the “Term Loan Facility”) and the $450,000,000 aggregate principal amount of 6.375% Senior Notes due 2029 issued on February 17, 2021 (the “Unsecured Notes), each of which has an effect on the combined results. The unaudited pro forma condensed combined statement of operations do not include the impacts of any

revenue, cost or other operating synergies that may result from the Transactions or any related restructuring costs.

Acima’s accounting policies have been conformed to those of Rent-A-Center based upon currently available information and assumptions management believes to be reasonable. The unaudited pro forma condensed combined balance sheet and statement of operations have been adjusted to reflect these changes as further described in Note 3 - Accounting policy alignment adjustments.

We are not aware of any other material differences between the accounting policies of the two companies, except for the adjustments described in Note 3 - Accounting policy alignment adjustments and the adjustments described in Note 2 - Reclassifications to reclassify certain balances presented in the historical financial statements of Acima to conform their presentation to that of Rent-A-Center. Additional differences between the accounting policies of the two companies, when conformed, could have a material impact on these unaudited pro forma condensed combined financial statements.

Note 2 - Reclassifications

The unaudited condensed combined pro forma financial statements have been adjusted to reflect certain reclassifications of Acima’s financial statements to conform to Rent-A-Center’s financial statement presentation.

Financial information presented in the “Acima as presented” column in the unaudited condensed combined pro forma balance sheet as of September 30, 2020 has been reclassified to conform to the presentation of Rent-A-Center as indicated in the table below:

Presentation in Acima historical financial statements	Presentation in unaudited pro forma combined financial statements	As of September 30, 2020
(Dollars in thousands)
Lease receivables, net	Receivables, net of allowance for doubtful accounts	$ 24,960
	Accrued liabilities	5,324
Leased assets, net	Rental merchandise, net - On rent	315,430
Intangible asset, net	Property assets, net of accumulated depreciation	10,966
Other assets, net	Property assets, net of accumulated depreciation	1,519
	Prepaid expenses and other assets	850
	Receivables, net of allowance for doubtful accounts	518
Lease liabilities	Accrued liabilities	17,697
Operating liabilities	Accounts payable - trade	1,241
	Accrued liabilities	2,444
Income tax distributions payable	Equity	49,900
Sales tax obligation, net	Equity	9,551
	Accrued liabilities	13,206
Senior debt	Senior debt, net	150,000
Junior debt	Senior debt, net	2,500

Financial information presented in the “Acima as presented” column in the unaudited condensed combined pro forma statement of operations for the nine months ended September 30, 2020 and year ended December 31, 2019 have been reclassified to conform to that of Rent-A-Center as indicated in the table below:

Presentation in Acima historical financial statements		Presentation in unaudited pro forma combined financial statement		Nine months ended September 30, 2020	Year ended December 30, 2019
(Dollars in thousands)
Lease portfolio revenues, net		Rentals and fees		672,539	$ 668,022
	Merchandise sales		241,573
Depreciation of leased assets		Cost of rentals and fees		334,435	348,023
	Cost of merchandise sold		308,286
	Other store expenses		49,852
Direct lease costs		Other store expenses		16,070	18,446
		Cost of rentals and fees		6,849	7,130
		Depreciation and amortization		2,473	2,582
Senior debt facility		Interest expense		8,861	12,382
Junior debt		Interest expense		260	481
Payroll costs, net		Labor		16,514	18,571
		General and administrative expenses		4,809	4,777
Equity-based compensation		General and administrative expenses		995	720
Other operating costs		General and administrative expenses		5,609	5,223
		Other store expenses		2,576	3,482
		Depreciation and amortization		310	286

All values are in US Dollars.

Note 3 - Accounting policy alignment adjustments

As stated in Note 1 - Basis of pro forma presentation, as part of preparing the unaudited pro forma condensed combined financial information, Rent-A-Center conducted a review of the accounting policies of Acima to determine if differences in accounting policies potentially required recasting of assets or liabilities to conform to Rent-A-Center’s accounting policies. Identified accounting policy adjustments are presented below.

Unaudited condensed combined pro forma balance sheet as of September 30, 2020

Presentation in Acima historical financial statements	Presentation in unaudited pro forma combined financial statement	As of September 30, 2020
(Dollars in thousands)
Rental merchandise, net - On rent1	Equity	$ (3,216)
- 2	Operating lease right-of-use	9,123
	Accrued liabilities	(373)
	Prepaid expenses and other assets	(202)
	Operating lease liability	9,294

1 To reflect the expensing of previously capitalized direct lease cost out of Rental merchandise, net - On rent to Other store expenses

2 To reflect the adoption of ASC Topic 842 “Leases”

Unaudited condensed combined pro forma statement of operations for the nine months ended September 30, 2020 and year ended December 31, 2019

	Nine months ended September 30, 2020	Year ended December 31, 2019
(Dollars in thousands)
Other store expenses1	$ (308)	$ 500
Income tax expense (benefit)2	39,130	30,700

1 To reflect the expensing of previously capitalized direct lease cost out of Rental merchandise, net - On rent to Other store expenses

2 To reflect the change in tax structure of Acima to a taxable entity

Note 4 - Transaction accounting pro forma adjustments

(a) Reflects the decrease in cash for cash consideration of $1.24 billion transferred as part of the Transactions.

(b) Includes adjustments to record acquired assets at estimated acquisition-date fair values. The estimated fair values of these assets are based on the valuations performed for the preparation of the pro forma financial information and are subject to the final valuations to be performed. The respective net adjustments have been calculated as follows:

	Receivables	Prepaid expenses and other assets	Rental merchandise, net - On rent	Property assets	Operating lease right-of-use	Other intangible assets
(Dollars in thousands)
Fair value of acquired assets	$ 25,477	$ 648	$ 312,214	$ 181,519	$ 9,123	$ 440,000
Elimination of pre-acquisition assets	25,477	648	312,214	12,485	9,123	-
Net adjustment	$ -	$ -	$ -	$ 169,034	$ -	$ 440,000
	Goodwill
---	---
(Dollars in thousands)
Goodwill in purchase price allocation	$ 377,350
Elimination of Rent-A-Center's pre-acquisition goodwill	(70,217)
Net adjustment	$ 307,133

(c) Amounts allocated to Other intangible assets, net, as well as the estimated useful lives are based on fair value estimates and are subject to change. The estimated fair value and useful life of Other intangible assets, net acquired are as follows:

Asset class	Estimated fair value
(Dollars in thousands)
Trade name	40,000
Merchant relationships	380,000
Relationship with existing lessees	20,000
Estimated fair value of Other intangible assets, net	440,000

All values are in US Dollars.

Includes adjustments to amortization expense resulting from the change in the estimated fair value of Other intangible assets, net acquired in the Transactions. The net adjustment to amortization expense is presented within the unaudited condensed combined pro forma statements of operations as follows:

	Nine months ended September 30, 2020	Year ended<br><br>December 31, 2019
(Dollars in thousands)
Total depreciation and amortization	$ 32,786	$ 63,714
Elimination of pre-acquisition historical depreciation and amortization	-	-
Net adjustment to property assets, net of accumulated depreciation	$ 32,786	$ 63,714

(d) Amounts allocated to Property assets, net of accumulated depreciation, as well as the estimated useful lives are based on fair value estimates and are subject to change. The estimated fair value and useful life of Property assets, net of accumulated depreciation acquired are as follows:

Asset Class	Estimated Fair Value
(Dollars in thousands)
Developed technology	180,000
Estimated fair value of Property assets, net of accumulated depreciation	180,000

All values are in US Dollars.

Includes adjustments to depreciation expense resulting from the change in the estimated fair value of Property assets, net of accumulated depreciation acquired in the Transactions. The net adjustment to depreciation expense is presented within the unaudited condensed combined pro forma statements of operations as follows:

	Nine months ended September 30, 2020	Year ended December 31, 2019
(Dollars in thousands)
Total depreciation and amortization	$ 13,500	$ 18,000
Elimination of pre-acquisition historical Depreciation and amortization	(2,783)	(2,868)
Net adjustment to Other intangible assets, net	$ 10,717	$ 15,132

(e) Reflects a $103.5 million decrease to Deferred tax liability based on a blended federal and state statutory rate of approximately 25% multiplied by the fair value adjustments related stock-based compensation that qualifies as post combination expense in accordance with ASC 718.

(f) Reflects the extinguishment of the historical Acima debt of $152.5 million that was settled upon the consummation of the Transactions.

(g) Reflects the increase in shares of Rent-A-Center common shares and capital in excess of par resulting from the issuance of shares of Rent-A-Center to Acima unit holders.

(h) Reflects the elimination of Acima’s historical equity balances at September 30, 2020 of $184.0 million and property assets of $11.0 million in accordance with the acquisition method of accounting.

(i) Reflects the $30.4 million expense incurred as part of the execution of the Transactions which includes, among others, fees paid for financial advisors, legal services, and professional accounting services, and the related deferred tax asset of $7.6 million at a statutory rate of approximately 25%, which is presented as a decrease to Deferred tax liability.

(j) Reflects the pro forma adjustment for stock-based compensation related to the issuance of Rent-A-Center common shares to Class A and Class B Acima employee unit holders, which are subject to vesting over the continued employment, as follows:

	Nine months ended September 30, 2020	Year ended December 31, 2019
(Dollars in thousands)
General and administrative expenses	$ 103,515	$ 138,020

(k) Reflects tax effect of the Transactions accounting pro forma adjustments above at the blended federal and state statutory rate of approximately 25%, as follows:

	Nine months ended September 30, 2020	Year ended December 31, 2019
Income tax expense (benefit)	$ (10,876)	$ (27,312)

Note 5 - Other transaction accounting pro forma adjustments

Pro Forma Condensed Combined Balance Sheet as of September 30, 2020:

(l) As part of the acquisition of Acima, Rent-A-Center incurred approximately $1.49 billion in new debt financing. This debt consisted of three individual debt arrangements: (i) the ABL Credit Facility, (ii) the Term Loan Facility and (iii) the Unsecured Notes. Such debt had an assumed blended weighted average interest rate of 5.0% as of February 17, 2021, the closing date of the Merger. These financing arrangements were used to pay the aggregate cash component of the merger consideration, settle Acima’s pre-existing debt obligations of $152.5 million, and settle Rent-A-Center’s pre-existing debt obligations of $190.6 million, net of unamortized issuance discount and debt issuance costs of $7.4 million.

	As of September 30, 2020
(Dollars in thousands)
Proceeds from the ABL Credit Facility	$ 165,000
Proceeds from the Term Loan Facility	875,000
Proceeds from the Unsecured Notes	450,000
Total proceeds from Financing	1,490,000
Less: Debt issuance costs	(42,567)
Less: Elimination of historical debt	(190,599)
Net adjustment to Senior debt, net	$ 1,256,834

(m) Reflects the increase to debt (net of $42.6 million of debt issuance costs) of the three individual financing arrangements incurred as part of the Transactions, less the effects of refinancing of Rent-A-Center’s pre-existing debt obligation of $190.6 million, net of unamortized issuance discount and debt issuance costs, upon consummation of the Transactions.

A sensitivity analysis on incremental interest expense related to the ABL Credit Facility and the Term Loan Facility incurred for purposes of financing the transaction has been performed to assess the effects that a change of 0.125% of the hypothetical assumed interest rate would have on the interest expense related to the financing arrangements. The table below sets forth the impact that a 0.125% increase or decrease in the hypothetical assumed interest rate would have on interest expense for the relevant periods.

	Nine months ended September 30, 2020	Year ended December 31, 2019
(Dollars in thousands)
1/8% increase	$ 975	$ 1,300
1/8% decrease	(155)	(206)

Unaudited condensed combined pro forma statement of operations for the nine months ended September 30, 2020 and year ended December 31, 2019

(n) Reflects the net increase to interest resulting from interest on the new debt incurred to finance the acquisition of Acima, elimination of historical Acima and Rent-A-Center interest expense, loss on extinguishment of Acima’s pre-existing debt and the amortization of related debt issuance costs, as follows:

	Nine months ended September 30, 2020	Year ended<br><br>December 31, 2019
(Dollars in thousands)
Interest expense	$ 41,106	$ 39,020
Other (gains) and charges	-	2,698
Total adjustment	$ 41,106	$ 41,718

(o) Reflects tax effect of the Other transaction accounting pro forma adjustments above at the blended federal and state statutory rate of approximately 25% for the impact of the merger on Rent-A-Center, as follows:

	Nine months ended September 30, 2020	Year ended<br><br>December 31, 2019
(Dollars in thousands)
Income tax expense (benefit)	$ (10,277)	$ (10,430)