Upbound (UPBD) 8-K Rent-a-center, Inc. Provides Estimated Preliminary 2020 Results

Exhibit 99.3 

Unaudited pro forma condensed combined financial information

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 year ended December 31, 2019, the nine months ended September 30, 2020, the nine months ended September 30, 2019 and the twelve months ended September 30, 2020 are based on the individual historical consolidated financial statements of Rent-A-Center and Acima, respectively, included elsewhere or incorporated by reference in this offering memorandum. The unaudited pro forma condensed combined statements of operations give effect to the Transactions described under the section entitled “The Transactions” as if they had occurred on January 1, 2019, and for purposes of the pro forma condensed combined balance sheet, as if they had occurred on September 30, 2020.

The unaudited pro forma condensed combined financial information includes pro forma adjustments that are directly attributable to the Transactions and are factually supportable. 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 preliminary estimates of their respective fair value in accordance with purchase accounting;

· changes in depreciation and amortization expense resulting from the preliminary 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 estimated debt issuance costs;

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

· a preliminary estimate 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 consummation of the Transactions is subject to the satisfaction of customary closing conditions, including the absence of a material adverse change in the Rent-A-Center business or Acima business as set forth in the Merger Agreement. See the section entitled “The Transactions”.

The unaudited pro forma adjustments are based upon available information and certain assumptions that Rent-A-Center management believes are reasonable under the circumstances. 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 sections entitled “Risk factors,” “The Transactions,” “Use of proceeds,” “Summary historical consolidated financial information of Rent-A-Center,” “Summary historical consolidated financial information of Acima,” “Management’s discussion and analysis of financial condition and results of operations of Rent-A-Center,” “Management’s discussion and analysis of financial condition and results of operations of Acima,” as well as the audited and unaudited historical financial statements and related notes of each of Rent-A-Center and Acima included elsewhere or incorporated by reference in this offering memorandum. 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.

Unaudited pro forma condensed combined balance sheet
as of September 30, 2020
(Dollars in thousands)

	Historical					Transaction				Other transaction
	Rent-A- Center			Acima as presented (1)		accounting adjustments			Note	accounting adjustments		Note	Pro forma combined
ASSETS
Cash and cash equivalents	$	227,398		$	25,408	$	(1,246,263	)	3	$	1,234,491	4	$	241,034
Receivables, net of allowance for doubtful accounts		75,471			25,477		-				-			100,948
Prepaid expenses and other assets		40,172			851		(203	)	3		-			40,820
Rental merchandise, net
On rent		680,955			315,430		(3,216	)	3		-			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		3		-			326,817
Operating lease right-of-use		280,845			-		9,123		3		-			289,968
Deferred tax asset		14,889			-		-				-			14,889
Goodwill		70,217			-		308,678		3		-			378,895
Other intangible assets, net		8,130			-		440,000		3		-			448,130
Total assets	$	1,667,565		$	379,651	$	(322,847	)		$	1,234,491		$	2,958,860
LIABILITIES
Accounts payable - trade		176,304			1,241		-				-			177,545
Accrued liabilities		305,919			38,671		26,627		3		-			371,217
Operating lease liabilities		283,784			-		9,294		3		-			293,078
Deferred tax liability		168,622			-		(94,193	)	3		-			74,429
Senior debt, net		190,599			152,500		(152,500	)	3		1,234,491	4		1,425,090
Total liabilities	$	1,125,228		$	192,412	$	(210,772	)		$	1,234,491		$	2,341,359
STOCKHOLDERS' EQUITY
Common stock, $0.01 par value		1,103			-		27		3		-			1,130
Additional paid-in capital		878,965			-		102,137		3		-			981,102
Retained earnings		1,051,760			-		(27,000	)	3		-			1,024,760
Treasury stock at cost		(1,375,541	)		-		-				-			(1,375,541	)
Accumulated other comprehensive loss		(13,950	)		-		-				-			(13,950	)
Equity		-			187,239		(187,239	)	3		-			-
Total stockholders' equity	$	542,337		$	187,239	$	(112,075	)		$	-		$	617,501
Total liabilities and stockholders' equity	$	1,667,565		$	379,651	$	(322,847	)		$	1,234,491		$	2,958,860

(See the accompanying notes.)

2

Unaudited pro forma condensed combined statement of operations
for the year ended December 31, 2019
(Dollars in thousands)

	Historical					Transaction				Other transaction
	Rent-A- Center (1)			Acima as presented (2)		accounting adjustments			Note	accounting adjustments			Note	Pro forma combined
Revenues
Store
Rentals and fees	$	2,224,402		$	668,022	$	-			$	-			$	2,892,424
Merchandise sales		304,630			198,435		-				-				503,065
Installment sales		70,434			-		-				-				70,434
Other		4,795			-		-				-				4,795
Total store revenues		2,604,261			866,457		-				-				3,470,718
Franchise
Merchandise sales		49,135			-		-				-				49,135
Royalty income and fees		16,456			-		-				-				16,456
Total revenues		2,669,852			866,457		-				-				3,536,309
Cost of revenues
Store
Cost of rentals and fees		634,878			355,153		-				-				990,031
Cost of merchandise sold		319,006			254,893		-				-				573,899
Cost of installment sales		23,383			-		-				-				23,383
Total cost of store revenues		977,267			610,046		-				-				1,587,313
Franchise cost of merchandise sold		48,514			-		-				-				48,514
Total cost of revenues		1,025,781			610,046		-				-				1,635,827
Gross profit		1,644,071			256,411		-				-				1,900,482
Operating expenses
Store expenses
Labor		630,096			18,571		-				-				648,667
Other store expenses		617,106			88,088		500		3		-				705,694
General and administrative expenses		142,634			10,720		143,591		3		-				296,945
Depreciation and amortization		61,104			2,868		78,846		3		-				142,818
Other (gains) and charges		(60,728	)		-		-				2,698		4		(58,030	)
Total operating expenses		1,390,212			120,247		222,937				2,698				1,736,094
Operating profit		253,859			136,164		(222,937	)			(2,698	)			164,388
Debt refinancing charges		2,168			-		-				-				2,168
Interest expense		31,031			12,863		-				46,684		4		90,578
Interest income		(3,123	)		-		-				-				(3,123	)
Earnings before income taxes		223,783			123,301		(222,937	)			(49,382	)			74,765
Income tax expense (benefit)		50,237			-		4,239		3		(12,346	)	4		42,130
Net earnings	$	173,546		$	123,301	$	(227,176	)		$	(37,036	)		$	32,635

(See the accompanying notes.)

3

Unaudited pro forma condensed combined statement of operations
for the nine months ended September 30, 2020
(Dollars in thousands)

	Historical
	Rent-A- Center (1)			Acima as presented (2)		Transaction accounting adjustments			Note	Other transaction accounting adjustments			Note	Pro forma combined
Revenues
Store
Rentals and fees	$	1,682,310		$	672,539	$	-			$	-			$	2,354,849
Merchandise sales		300,693			241,573		-				-				542,266
Installment sales		48,970			-		-				-				48,970
Other		2,341			-		-				-				2,341
Total store revenues		2,034,314			914,112		-				-				2,948,426
Franchise
Merchandise sales		49,553			-		-				-				49,553
Royalty income and fees		13,833			-		-				-				13,833
Total revenues		2,097,700			914,112		-				-				3,011,812
Cost of revenues
Store
Cost of rentals and fees		489,606			341,284		-				-				830,890
Cost of merchandise sold		296,894			308,286		-				-				605,180
Cost of installment sales		16,830			-		-				-				16,830
Total cost of store revenues		803,330			649,570		-				-				1,452,900
Franchise cost of merchandise sold		49,632			-		-				-				49,632
Total cost of revenues		852,962			649,570		-				-				1,502,532
Gross profit		1,244,738			264,542		-				-				1,509,280
Operating expenses
Store expenses
Labor		434,216			16,514		-				-				450,730
Other store expenses		463,292			68,498		(308	)	3		-				531,482
General and administrative expenses		113,694			11,413		87,443		3		-				212,550
Depreciation and amortization		43,071			2,783		43,503		3		-				89,357
Other (gains) and charges		7,768			-		-				-				7,768
Total operating expenses		1,062,041			99,208		130,638				-				1,291,887
Operating profit		182,697			165,334		(130,638	)			-				217,393
Interest expense		11,958			9,121		-				46,855		4		67,934
Interest income		(561	)		-		-				-				(561	)
Earnings before income taxes		171,300			156,213		(130,638	)			(46,855	)			150,020
Income tax expense (benefit)		19,485			-		28,254		3		(11,714	)	4		36,025
Net earnings	$	151,815		$	156,213	$	(158,892	)		$	(35,141	)		$	113,995

(See the accompanying notes.)

4

Unaudited pro forma condensed combined statement of operations
for the nine months ended September 30, 2019
(Dollars in thousands)

	Historical
	Rent-A- Center (1)			Acima as presented (2)		Transaction accounting adjustments			Note	Other transaction accounting adjustments			Note	Pro forma combined
Revenues
Store
Rentals and fees	$	1,665,829		$	474,000	$	-			$	-			$	2,139,829
Merchandise sales		240,864			144,928		-				-				385,792
Installment sales		49,658			-		-				-				49,658
Other		2,962			-		-				-				2,962
Total store revenues		1,959,313			618,928		-				-				2,578,241
Franchise
Merchandise sales		30,307			-		-				-				30,307
Royalty income and fees		12,370			-		-				-				12,370
Total revenues		2,001,990			618,928		-				-				2,620,918
Cost of revenues
Store
Cost of rentals and fees		473,001			251,648		-				-				724,649
Cost of merchandise sold		250,000			184,209		-				-				434,209
Cost of installment sales		16,133			-		-				-				16,133
Total cost of store revenues		739,134			435,857		-				-				1,174,991
Franchise cost of merchandise sold		29,923			-		-				-				29,923
Total cost of revenues		769,057			435,857		-				-				1,204,914
Gross profit		1,232,933			183,071		-				-				1,416,004
Operating expenses
Store expenses
Labor		473,221			13,314		-				-				486,535
Other store expenses		463,385			61,734		(251	)	3		-				524,868
General and administrative expenses		105,822			7,484		87,443		3		-				200,749
Depreciation and amortization		45,788			2,068		59,218		3		-				107,074
Other (gains) and charges		(41,308	)		-		-				2,698		4		(38,610	)
Total operating expenses		1,046,908			84,600		146,410				2,698				1,280,616
Operating profit		186,025			98,471		(146,410	)			(2,698	)			135,388
Debt refinancing charges		2,168			-		-				-				2,168
Interest expense		26,214			9,929		-				31,791		4		67,934
Interest income		(2,956	)		-		-				-				(2,956	)
Earnings before income taxes		160,599			88,542		(146,410	)			(34,489	)			68,242
Income tax expense (benefit)		27,544			-		7,394		3		(8,622	)	4		26,316
Net earnings	$	133,055		$	88,542	$	(153,804	)		$	(25,867	)		$	41,926

(See the accompanying notes.)

5

Unaudited pro forma condensed combined statement of operations
for the last twelve months ended September 30, 2020
(Dollars in thousands)

	Historical
	Rent-A- Center(1)			Acima as presented (2)		Transaction accounting adjustments			Note	Other transaction accounting adjustments			Note	Pro forma combined
Revenues
Store
Rentals and fees	$	2,240,883		$	866,561	$	-			$	-			$	3,107,444
Merchandise sales		364,459			295,080		-				-				659,539
Installment sales		69,746			-		-				-				69,746
Other		4,174			-		-				-				4,174
Total store revenues		2,679,262			1,161,641		-				-				3,840,903
Franchise
Merchandise sales		68,381			-		-				-				68,381
Royalty income and fees		17,919			-		-				-				17,919
Total revenues		2,765,562			1,161,641		-				-				3,927,203
Cost of revenues											��
Store
Cost of rentals and fees		651,483			444,789		-				-				1,096,272
Cost of merchandise sold		365,900			378,970		-				-				744,870
Cost of installment sales		24,080			-		-				-				24,080
Total cost of store revenues		1,041,463			823,759		-				-				1,865,222
Franchise cost of merchandise sold		68,223			-		-				-				68,223
Total cost of revenues		1,109,686			823,759		-				-				1,933,445
Gross profit		1,655,876			337,882		-				-				1,993,758
Operating expenses
Store expenses
Labor		591,091			21,772		-				-				612,863
Other store expenses		617,013			94,854		(59	)			-				711,808
General and administrative expenses		150,506			14,649		116,591		3		-				281,746
Depreciation and amortization		58,387			3,583		63,131		3		-				125,101
Other (gains) and charges		(11,652	)		-		-				-				(11,652	)
Total operating expenses		1,405,345			134,858		179,663				-				1,719,866
Operating profit		250,531			203,024		(179,663	)			-				273,892
Interest expense		16,775			12,055		-				61,748		4		90,578
Interest income		(728	)		-		-				-				(728	)
Earnings before income taxes		234,484			190,969		(179,663	)			(61,748	)			184,042
Income tax expense (benefit)		42,178			-		31,974		3		(15,437	)	4		58,715
Net earnings	$	192,306		$	190,969	$	(211,637	)		$	(46,311	)		$	125,327

(See the accompanying notes.)

6

Notes to unaudited pro forma condensed combined financial information

Note 1- Basis of presentation

The Merger will be accounted for as an acquisition in accordance with ASC 805, Business Combinations (“ASC 805”) and the purchase price will be allocated to the fair value of Acima’s identifiable assets acquired and liabilities assumed.

The preliminary purchase price for the Merger is estimated as listed below, subject to certain closing adjustments. The preliminary purchase price includes $1.22 billion in cash, net of cash acquired and 2.6 million shares of Rent-A-Center common shares to be 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 a 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. The Rent-A-Center shares to be issued to Acima employees are subject to certain vesting conditions over a 36-month period and thus have been excluded from the purchase price and instead will be accounted for post-Merger as stock-based compensation expense subject to ASC Topic 718, “Stock-based Compensation” (“ASC 718”).

7

The preliminary 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 preliminary purchase price to acquired identifiable assets and assumed liabilities is based on the preliminary valuation of the tangible and identifiable intangible assets acquired and liabilities assumed used by management to prepare the unaudited pro forma condensed combined financial information. The preliminary purchase price and purchase price allocation are presented as follows:

(Dollars in thousands)	Purchase Price		Post-Combination Expense		Total
Cash consideration paid to unit holders	$	1,093,763			$	1,093,763
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		35,240				35,240
Equity subject to 12 month lock-up period		33,926				33,926
Equity subject to 18 month lock-up period		32,998				32,998
Equity consideration (subject to restricted stock agreement)				349,773		349,773
Total	$	1,348,427	$	349,773	$	1,698,200

¹ The estimated fair value of the equity consideration subject to the Lock-up Agreement has been determined based on the Rent-A-Center share price as of close on January 28, 2021 and discounted to reflect the timing of the release of the shares from the lock-up agreement.

The value of Rent-A-Center shares issued to non-Acima employees included in the purchase price will vary based on the market price of Rent-A-Center’s common shares upon closing of the Merger. Management of Rent-A-Center believes that a 10% fluctuation in the market price of its common stock is reasonably possible based on historical volatility, and the potential effect on purchase price would be:

8

	Rent-A-Center's Share Price		Purchase Price (Equity Portion)
As presented	$	43.20	$	102,164
10% increase		47.52		10,216
10% decrease		38.88		(10,216	)

Preliminary purchase consideration:
Estimated purchase price	$	1,323,019
Assets acquired:
Receivables, net of allowance for doubtful accounts		25,477
Prepaid expenses and other assets		648
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		968,981
Liabilities assumed:
Accounts payable – trade		1,241
Accrued liabilities		38,298
Operating lease liability		9,294
Deferred tax liability		(94,193	)
Total liabilities and redeemable noncontrolling interest assumed		(45,360	)
Net assets acquired, excluding goodwill		1,014,341
Goodwill (consideration transferred above net assets acquired)	$	308,678

Preliminary purchase price allocation:

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 expected to 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 and acquisition accounting will be determined at a later date and 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 are preliminary, 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. Rent-A-Center expects to finalize the purchase price allocation as soon as practicable after completing the Merger.

Additionally, the unaudited pro forma condensed combined statement of operations includes certain financing adjustments related to the ABL Credit Facility, the Term Loan Facility and the unsecured notes, each of which is expected to have 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.

Upon the consummation of the Merger, Acima’s accounting policies will be conformed to those of Rent-A-Center. Rent-A-Center and Acima have identified preliminary adjustments to conform Acima’s accounting policies 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 – Transaction accounting pro forma adjustments and accounting policy adjustments for additional information.

9

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 – Transaction accounting pro forma adjustments and accounting policy adjustments and the adjustments described in Note 2 – Reclassifications to reclassify certain balances presented in the historical financial statements of Acima to conform presentation to that of Rent-A-Center. Additional differences between the accounting policies of the two companies may be identified that, 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 historical” 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
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 historical” column in the unaudited condensed combined pro forma statement of operations for the year ended December 31, 2019, nine months ended September 30, 2020, nine months ended September 30, 2019, and 12 months ended September 30, 2020 have been reclassified to conform to that of Rent-A-Center as indicated in the table below:

10

Presentation in Acima historical financial statements	Presentation in unaudited pro forma combined financial statement	Year ended December 31, 2019		Nine months ended September 30, 2020		Nine months ended September 30, 2019		Twelve months ended September 30, 2020
Lease portfolio revenues, net	Rentals and fees	$	668,022	$	672,539	$	474,000	$	866,561
	Merchandise sales		198,435		241,573		144,928		295,080
Depreciation of leased assets	Cost of rentals and fees		348,023		334,435		246,559		435,899
	Cost of merchandise sold		254,893		308,286		184,209		378,970
	Other store expenses		66,161		49,852		45,683		70,330
Direct lease costs	Other store expenses		18,446		16,070		13,441		21,077
	Cost of rentals and fees		7,130		6,849		5,089		8,890
	Depreciation and amortization		2,582		2,473		1,853		3,202
Senior debt facility	Interest expense		12,382		8,861		9,538		11,705
Junior debt	Interest expense		481		260		391		350
Payroll costs, net	Labor		18,571		16,514		13,314		21,772
	General and administrative expenses		4,777		4,809		3,450		6,137
Equity-based compensation	General and administrative expenses		720		995		532		1,183
Other operating costs	General and administrative expenses		5,223		5,609		3,502		7,330
	Other store expenses		3,482		2,576		2,611		3,447
	Depreciation and amortization		286		310		214		382

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Note 3 - Transaction accounting pro forma adjustments and accounting policy alignments

(a) Accounting policy adjustments

As stated in Note 1 – Basis of Presentation, as part of preparing the unaudited pro forma condensed combined financial information, Rent-A-Center and Acima conducted an initial review of the accounting policies of Acima to determine if differences in accounting policies potentially require recasting of assets or liabilities to conform to Rent-A-Center’s accounting policies. Preliminarily 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	Nine months ended September 30, 2020
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 842 Leases

Unaudited condensed combined pro forma statement of operations for the year ended December 31, 2019, nine months ended September 30, 2020, nine months ended September 30, 2019, and 12 months ended September 30, 2020

	Year ended December 31, 2019		Nine months ended September 30, 2020			Nine months ended September 30, 2019			Twelve months ended September  30, 2020
Other store expenses1	$	500	$	(308	)	$	(251	)	$	(59	)
Income tax expense (benefit)2		30,700		39,130			22,199			47,757

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

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

(b) Reflects the decrease in cash for cash consideration of $1.25 billion transferred as part of the Transactions.

(c) Includes adjustments to record acquired assets at estimated acquisition-date fair values. The estimated fair values of these assets are based on the preliminary valuations performed for the preparation of the pro forma financial information and are subject to the final valuations that will be completed after consummation of the Transactions. 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
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
Goodwill in preliminary purchase price allocation	$	378,895
Elimination of Rent-A-Center's pre-acquisition goodwill		(70,217	)
Net adjustment	$	308,678

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(d) Amounts allocated to Other intangible assets, net, as well as the estimated useful lives are based on preliminary 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 preliminary fair value		Estimated remaining useful life (in years)
Trade name		40,000		7
Merchant relationships		380,000		10
Relationship with existing lessees		20,000		1
Estimated fair value of Other intangible assets, net	$	440,000

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:

	Year ended December 31, 2019		Nine months ended September 30, 2020		Nine months ended September 30, 2019		Twelve months ended September  30, 2020
Total depreciation and amortization	$	63,714	$	32,786	$	47,786	$	48,714
Elimination of pre-acquisition historical depreciation and amortization		-		-		-		-
Net adjustment to property assets, net of accumulated depreciation	$	63,714	$	32,786	$	47,786	$	48,714

(e) Amounts allocated to Property assets, net of accumulated depreciation, as well as the estimated useful lives are based on preliminary 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 Preliminary Fair Value		Estimated Remaining Useful Life (in years)
Developed technology	$	180,000		10
Estimated fair value of Property assets, net of accumulated depreciation		180,000

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:

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	Year ended December 31, 2019			Nine months ended September 30, 2020			Nine months ended September 30, 2019			Twelve months ended September  30, 2020
Total depreciation and amortization	$	18,000		$	13,500		$	13,500		$	18,000
Elimination of pre-acquisition historical Depreciation and amortization		(2,868	)		(2,783	)		(2,068	)		(3,583	)
Net adjustment to Other intangible assets, net	$	15,132		$	10,717		$	11,432		$	14,417

(f) Reflects a $87.4 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 Compensation – stock compensation.

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

(h) Reflects the estimated 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.

(i) 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.

(j) Reflects the $27.0 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 $6.8 million at a statutory rate of approximately 25%, which is presented as a decrease to Deferred tax liability.

(k) 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:

	Year ended December 31, 2019		Nine months ended September 30, 2020		Nine months ended September 30, 2019		Twelve months ended September  30, 2020
General and administrative expenses	$	116,591	$	87,443	$	87,443	$	116,591

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

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	Year ended December 31, 2019			Nine months ended September 30, 2020			Nine months ended September 30, 2019			Twelve months ended September  30, 2020
Income tax expense (benefit)	$	(26,462	)	$	(10,876	)	$	(14,805	)	$	(15,783	)

Note 4 - Other Transaction Accounting Pro Forma Adjustments

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

(n) As part of the acquisition of Acima, Rent-A-Center will incur approximately $1.468 billion in new debt financing. This debt will consist of three individual debt arrangements; (i) the ABL Credit Facility, (ii) the Term Loan Facility and (iii) the unsecured notes. The debt will have an assumed blended weighted average interest rate of 5.6%. These financing arrangements will be 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 obligation of $190.6 million, net of unamortized issuance discount and debt issuance costs of $7.4 million.

(dollars in thousands)	As of September 30, 2020
Proceeds from the ABL Credit Facility	$	143,200
Proceeds from the Term Loan Facility		875,000
Proceeds from the unsecured notes		450,000
Total proceeds from Financing		1,468,200
Less: Debt issuance costs		(43,110	)
Less: Elimination of historical debt		(190,599	)
Net adjustment to Senior debt, net	$	1,234,491

(o) Reflects the increase to debt (net of $43.1 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, the Term Loan Facility and the unsecured notes 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.

	Twelve months ended September 30, 2020			Nine months ended September 30, 2020			Nine months ended September 30, 2019			Year Ended December 31, 2019
1/8% increase		1,835			1,376			1,376			1,835
1/8% decrease		(741	)		(556	)		(556	)		(741	)

Unaudited condensed combined pro forma statement of operations for the year ended December 31, 2019, nine months ended September 30, 2020, nine months ended September 30, 2019, and 12 months ended September 30, 2020

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(p) Reflects the net increase to interest resulting from interest on the new debt 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:

	Year ended December 31, 2019		Nine months ended September 30, 2020		Nine months ended September 30, 2019		Twelve months ended September  30, 2020
Interest expense	$	46,684	$	46,855	$	31,791	$	61,748
Other (gains) and charges		2,698		-		2,698		-
Total adjustment	$	49,382	$	46,855	$	34,489	$	61,748

(q) 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:

	Year ended December 31, 2019			Nine months ended September 30, 2020			Nine months ended September 30, 2019			Twelve months ended September  30, 2020
Income tax expense (benefit)	$	(12,346	)	$	(11,714	)	$	(8,622	)	$	(15,437	)

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