PRG 10-K & 10-Q changes, risk factors and insider trading

In recent years, federalFederal regulatory authorities have increasingly focused onregulate alternative consumer financial services products, includingwhich includes certain consumer protection regulations within the subprime financial marketplace in which our businesses operate. For example, in April 2020, our Progressive Leasing business entered into a settlement with the FTC (the "FTC Settlement") to resolve allegations by the FTC that certain of Progressive Leasing's advertising and marketing practices violated the FTC Act, even though Progressive Leasing believed it was in compliance with the FTC Act, and thus, did not admit any violations of that act or any other laws. Under the FTC Settlement, Progressive Leasing paid $175 million to the FTC and agreed to enhance certain of its compliance-related activities, including augmenting disclosures to its customers and expanding its POS partner monitoring programs. If federal regulatory authorities continuepropose toor adopt new regulations or increase their focus on alternative consumer financial services products, including within the industries in which our businesses operate, this may result in increased compliance costs and the possibility of significant monetary penalties, remediation expenses and costly changes to the manner in which we conduct our businesses.

StateIn recent years, state regulatory authorities have also beenincreasingly focused on the subprime financial marketplace, including the lease-to-own industry.and BNPL industries. For example, in AugustDecember 2022,2025, attorneys general from seven states launched a complaintcoordinated wasinquiry filed byinto the PennsylvaniaBNPL Attorneyindustry, Generalsending againstletters to six BNPL providers (not including Four Technologies, the Company'sBNPL Progressivecompany Leasingwe businessown), alleging,which amongoutlined concerns that the companies' products may be violating state consumer protection laws and requested information on pricing and repayment structures, customer service, ability-to-repay determinations, credit reporting and other things,topics, thatas Progressivewell Leasingas hadcopies violatedof theconsumer Pennsylvania Rental Purchase Agreement Act by failing to disclose certain termscontracts and conditionsdisclosures. of rent-to-own ("RTO") transactions on "hang tags" physically attached to RTO merchandise. Although the Company believed the Pennsylvania Attorney General's claims were without merit, it entered into a settlement with the Pennsylvania Attorney General in January 2024, pursuant to which the Attorney General agreed to release its claims against Progressive Leasing. That settlement was approved by the court where the lawsuit was pending on January 26, 2024. Although no other states have alleged such claims against Progressive Leasing, we expect that certainIf state regulatory authorities will continue their increasedto focus on alternative consumer financial services products, and, as a result, businesses transacting with subprime consumers, for example,we may be held to higher standards of monitoring, disclosure and reporting, regardless of whether new laws or regulations governing our industry are proposed or adopted. This increased attention may significantly increase the compliance costs for our businesses, result in additional fines or monetary penalties or settlements due to future government investigations, and materially and adversely impact the manner in which they operate, which may be materially adverse to several aspects of our performance.

In addition, certain aspects of our businesses, such as the content of their advertising and other disclosures to customers about transactions, their respective data collection practices, the manner in which they may contact their customers, the decisioning process regarding whether to enter into a transaction with a potential customer, their credit reporting practices, and the manner in which they process and store certain customer, employee and other information are subject to federal and state laws and regulatory oversight. For example, California passed the California Consumer Privacy Act of 2018 (the "CCPA") gives residents of California expanded rights to access and delete their personal information, opt out of certain personal information sharing, and receive detailed information about how their personal information is used, and also provides for civil penalties for violations and private rights of action for data breaches. In addition, the California Privacy Rights Act ("CPRA"), which became effective on January 1, 2023, significantly modifiesexpanded the CCPA, including by expanding consumers'privacy rights of California residents with respect to certainthe collection and disclosure of their personal information and creatingcreated a new stateregulatory agency to overseeenforce implementationthese and enforcement efforts.regulations. The CCPA, CPRA,CPRA and other applicable state and federal privacy laws now require us to design, implement and maintain different types of privacy-related compliance controls and programs for our businesses simultaneously in multiple states, thereby further increasing the complexity and cost of compliance. In addition, certain states' laws limit the total cost that Progressive Leasing may charge a customer in order for the customer to achieve ownership of the leased merchandise at the end of the lease term.

We have incurred and will continue to incur substantial costs to comply with federal, state and local laws and regulations, including rapidly evolving expected consumer protection standards. In addition to compliance costs, we may continue to incur substantial expenses to respond to regulatory and other third-party investigations and enforcement actions, proposed fines and penalties, criminal or civil sanctions, and private litigation, as well as potential "headline risks" that may negatively impact our business and may adversely affect our share price. Consumer complaints with respect to our industry have resulted in, and may in the future result in, state, federal and local regulatory and other investigations. In addition, while we are not aware of any whistleblower claims regarding the specific practices of our businesses, suchthe number of these types of claims arehas onincreased thein riserecent generally.years. We believe these claims will likely continue,continue to occur, in part because of the provisions enacted by the Dodd-Frank Act that provide for cash awards to persons who report alleged wrongdoing to the U.S. Securities and Exchange Commission, and because competitors may use it as a method to weaken their competitors, and others, like former personnel or other constituencies, may use it as means to extract payment or otherwise retaliate.

Additionally, as we execute on our strategic plans, we may continue to expand into complementary businessesbusinesses, such as the voluntary employee benefit program business pursuant to our acquisition of Purchasing Power in January 2026, that engage in financial, consumer credit transactions or lending services, or lease-to-own or rent-to-rent transactions involving products that we do not currently offer our customers, or implement the use of new technologies in our existing businesses and products, such as machine learning and artificial intelligence-based technologies, all of which may be subject to a variety of statutes, laws and regulatory requirements in addition to those regulations currently applicable to our operations, which may impose significant costs, limitations or prohibitions on the manner in which we currently conduct our businesses as well as those we may acquire in the future.

Progressive Leasing offers lease-to-own solutions to subprime consumers through point-of-sale retail partners via in-store, mobile, and online solutions. While this model allows Progressive Leasing to address an underserved, credit-challenged segment of the population with an innovative lease-to-own solution that integrates seamlessly with the traditional and e-commerce retailers with whom Progressive Leasing partners (whom we refer to as our point of salepoint-of-sale or "POS" partners), it creates specific and unique risks including, among others:

•indemnification obligations to POS partners for losses stemming from, among other matters, Progressive Leasing's violation of federal, state or local laws or regulations or failure to take the appropriate steps to protect its POS partners' and customers' information from being accessed or stolen by unauthorized third parties through cyber-attacks or "hacking" or similar occurrences; and

We derive our revenue from the products and services offered by our businesses. Adverse macroeconomic conditions, such as persistent inflationary pressures, thea higher cost of living and elevated interest rates for extended periods, may continue to lead to declines in disposable income and/or discretionary spending levels which,and in turn, couldtherefore reduce demand for our products and services. Other factors outside our control, such as potentialcontinuing changes to federal immigration laws and policies (including federal immigration provisions contained in the One Big Beautiful Bill Act ("OBBBA")) and heightened enforcement practices related tothereto, existinguncertain federal immigrationtrade policies and/or modifiedsupply orchain newly adopted federal immigration policies,constraints may also negatively affect the subprime consumer population and therefore the demand for our products and services. Additionally, those and other adverse macroeconomic conditions or other factors outside of our control may unfavorably impact our customers' ability to make the payments they owe the Company which, in turn, could result in increased customer payment delinquencies, as well as increases in accounts receivable, lease merchandise write-offs, loan loss provisioning and loan write-offs. As a result, continued macroeconomic uncertainty, or other factors outside of our control, could result in lower revenue and negatively impact our businesses and the Company's overall financial results.

We believe our proprietary lease and loan decisioning processes to be a key to the success of our businesses. These decisioning processes assume behavior and attributes observed for prior customers, among other factors, are indicative of performance by our future customers. Unexpected changes in customer behavior caused by uncertain macroeconomic conditions, including, for example, persistent inflationary pressures, strained consumer liquidity or increases in unemployment levels may lead to increased incidences and costs related to lease merchandise write-offs. In addition, we believe that uncertain macroeconomic conditions such as these lead to general declines in discretionary spending levels and disproportionately negatively impact the customers we serve. As a result, our decisioning process has required, and may incontinue the futureto require, frequent adjustments (including tightening) and the application of greater management judgment in the interpretation of the results produced by our decisioning tools, which could have an unfavorable impact on our GMV, margins and earnings. These decisioning tools may be unable to accurately predict and respond to the impact of an uncertain macroeconomic environment or changes to customer behaviors in connection therewith, which in turn may limit the ability of our businesses to manage risk, avoid lease and loan charge-offs and may result in insufficient reserves to cover actual losses (which Progressive Leasing records as accounts receivable allowance and allowance for lease merchandise write-offs and VivePurchasing Power, Four, and FourMoneyApp record as provision for loan losses).

For example, during 2024,2025, we derived 52.6%54.8% of our consolidated revenues from customers of Progressive Leasing's top three POS partners, and 78.2%77.0% of our consolidated revenues from customers of Progressive Leasing's top ten POS partners. Any extended discontinuance of Progressive Leasing's relationship with any of those POS partners or other high visibility retailers, including as a result of such partners going out of business or otherwise being unable or unwilling to continue their relationships with Progressive Leasing, would have a material adverse impact on several aspects of our performance. For example, one of our former top ten POS partners, Big Lots, Inc., filed for Chapter 11 bankruptcy in September 2024,2024 whichand in December 2024 decided it would liquidate and close its stores. Those store closures negatively impacted our financial performance during 2025. In addition, in theNovember fourth2025, quarteranother retail partner, American Signature, Inc., owner of 2024American Signature Furniture and isValue expectedCity toFurniture, filed for bankruptcy and subsequently determined it would liquidate and close its stores. We expect those store closures will negatively impact our financial performance forduring 2025.2026.

In addition, in the event that Progressive Leasing enters into new or amended business or contractual terms or conditions with any of its largest POS partners that are less favorable than its current arrangements with those POS partners, including with respect to the prices it pays those POS partners for merchandise that it leases to consumers and/or exclusivity, rebate or other incentive payments it may make to those POS partners, our business and prospects may be materially and adversely effected.affected.

Our continued success is dependent on the ability of Progressive Leasing to maintain its relationship with its existing POS partners and grow its gross merchandise volume, or "GMV", (which we define as the retail price of merchandise acquired by Progressive Leasing, which we then lease to our customers) from those existing POS partners through their in-store and e-commerce platforms, and also to expand its POS partner base. Progressive Leasing's ability to retain and grow its relationships with POS partners depends on the willingness of POS partners to partner with it. TheFor example, Progressive Leasing depends on its POS partners to prominently present its virtual lease-to-own payment offering as an option to customers. Additionally, the attractiveness of Progressive Leasing's platform to POS partners depends upon, among other things: its brand and reputation; its ability to sustain its value proposition to POS partners for consumer acquisition; the attractiveness to POS partners of its virtual and data-driven platform; the services, products and customer decisioning standards offered by Progressive Leasing's competitorscompetitors, as compared to Progressive Leasing's; the amount of rebates or other incentive payments offered to those POS partners by Progressive Leasing, and its ability to perform under, and maintain, its POS partner agreements, mostwhich give our POS partners the right to terminate for cause in certain situations, and some of which have terms that do not exceed three years.years, especially with respect to our agreements with our regional POS partners.

In addition, competitionCompetition for smaller POS partners has intensified significantly in recent years, with many such POS partners simultaneously offering several products and services that compete directly with the products and services offered by Progressive Leasing. Having a diversified mix of POS partners is important to mitigate risk associated with changing consumer spending behavior, economic conditions and other factors that may affect a particular type of retailer. If Progressive Leasing fails to retain any of its larger POS partners or a substantial number of its smaller POS partners, if it does not acquire new POS partners, if it does not continually grow its GMV from its POS partners, or if it is not able to retain a diverse mix of POS partners, several aspects of our performance would be materially and adversely affected.

Although VivePurchasing Power and Four also serve subprime and near-prime consumers, as well as customers with limited credit histories and prime consumers, their business models differ significantly from Progressive Leasing's lease-to-own business, which means each of these businesses have different risk profiles.

ThroughPurchasing itsPower's Vivebusiness brandedmodel creditis cardspredicated on partnering with employers to offer their employees the opportunity to participate in Purchasing Power's voluntary benefit program which allows employees to purchase goods and otherservices privateand label credit card products, Vive offers POS partners a variety of revolving loanspay for subprimethose anditems near-primein consumers.installments via direct payroll deduction or allotment. Therefore, Vive'sPurchasing Power's business model has specific and unique risks that are different from Progressive Leasing's business,and Four's businesses, which may disrupt Vive'sPurchasing Power's business and/or have an unfavorable impact on Vive'sPurchasing Power's financial performance, including, among others:

The risks that are specific to VivePurchasing Power may also have a material and adverse effect on several aspects of our performance in the future.

In addition, through its BNPL offerings, Four's business model allows shoppers to pay for merchandise through four interest-free installments, with the first installment collected at the time of purchase and the remaining three installments scheduled over a defined repayment period, which enables its customers to purchase furniture, clothing, electronics, health and beauty, footwear, jewelry, and other consumer goods from retailers across the United States. As discussed above, BNPL offerings have become subject to enhanced regulatory scrutiny by federal and state regulatory authorities which allege several areas of perceived risks to consumers, including the risksrisk that borrowers will become overextended. For example, certainin states,May such as2025, New York,York have introducedenacted legislation to enhance regulations applicable to BNPL offerings, including regulations that limit the amount of fees BNPL businesses are permitted to charge consumers, require BNPL businesses to obtain licenses to conduct business in suchNew states,York, and require BNPL businesses to perform "ability-to-repay" analyses on their applicants. Other states have also increased regulatory activity with respect to BNPL businesses under existing statutes governing lending and banking practices. As a result, Four's regulatory compliance obligations appear to be evolving in certain jurisdictions, which creates unique risks that are different than those faced by more mature businesses, such as Progressive Leasing and Vive,Leasing, and which could be materially adverse to Four. In addition, our Four business faces third-party dependency risks unique to its direct-to-consumer business model, including reliance on third party "app stores" for customer acquisition and third-party payment card providers for the virtual payment cards that Four provides its customers for them to use in paying merchants. Unfavorable changes in the policies or practices of those third-party providers with respect to the BNPL industry or Four in particular could be materially adverse to Four's operations and financial results.

Our efforts to modernize and enhance certain enterprise-wide information management systems and invest in new technologies could adversely impact our businesses and operations.

We rely extensively on enterprise-wide information management systems and technologies to manage our businesses and, from time to time, we pursue opportunities to modernize and enhance these systems and technologies. For example, in fiscal 2025, we expect to beginbegan implementing a new enterprise resource planning system that is intended to streamline and optimize the Company's financial and accounting processes, asand wellwe asare beginin the process of implementing operational and technological enhancements to our lease decisioning and management systems that are intended to optimize performance, improve efficiency and enhance scalability. We also expect to migratemigrated a large portion of our enterprise-wide applications to a third-party cloud provider in order to further enhance our business continuity and disaster recovery plans. These efforts are expected to continue into 2026 and may take longer and may require greater financial and other resources than anticipated, may cause distraction of key personnel, may cause disruptions to our existing systems and our business, may adversely impact our ability to externally report timely and accurate consolidated financial information, may expose us to heightened cybersecurity risks and may not otherwise provide the anticipated benefits. In addition, our inability to improve, upgrade, integrate or expand such systems and technologies to meet our evolving business requirements could impair our ability to achieve critical strategic initiatives and could materially and adversely affect several aspects of our performance.

Our businesses collect, store, use, disclose, process and transfer (collectively, "process") a wide variety of information, including personally identifiable information, for various purposes, including to help ensure the integrity of their services and to provide features and functionality to their customerscustomers, POS partners and POS partners.employer-clients. The processing of the information they acquire in connection with their customers' andcustomers', POS partners' and employer-clients' use of their services is subject to numerous privacy, data protection, cybersecurity, and other laws and regulations. The automated nature of their businesses and their reliance on digital technologiestechnologies, such as AI tools, may make them an attractive target for, and potentially vulnerable to, cyber-attacks, computer malware, computer viruses, social engineering (including phishing and ransomware attacks), general hacking, physical or electronic break-ins, or similar disruptions. While they and their vendors have taken steps to protect the confidential, proprietary, and sensitive information to which they have access and to prevent data loss, their security measures or those of their vendors could be breached, including as a result of employee theft, exfiltration, misuse or malfeasance, their actions, omissions, or errors, third-party actions, omissions or errors, unintentional events, or deliberate attacks by cyber criminals, any of which may result in the loss of, or unauthorized access to, their or their customers' data, their intellectual property, or other confidential, proprietary, or sensitive business information. Any accidental or willful security breaches or other unauthorized access to their platforms or servicing systems may cause confidential, proprietary, or sensitive information to be stolen and used for criminal or other unauthorized purposes. Security breaches or unauthorized access to confidential information may also expose our businesses to liability related to the loss of the information, time-consuming and expensive litigation and government investigations, enforcement actions and negative publicity. If security measures are breached for any of these reasons, the relationships our businesses have with their customers may be damaged, and significant liability could be incurred. Although we work hard to detect security breaches or instances of unauthorized access to confidential information, there is no guarantee that our monitoring efforts will be effective.

Any actual or perceived failure to comply with legal and regulatory requirements applicable to our businesses, including those relating to information security, or any failure to protect the information that our businesses collect from their customers and POS partners,partners and from Purchasing Power's employer clients, including personally identifiable information, may result in, among other things, regulatory or governmental investigations, administrative enforcement actions, sanctions, criminal liability, private litigation, civil liability and constraints on our ability to continue to operate.

Our businessesWe operate in highly and increasingly competitive industries,industries and theirour inability to compete successfully would materially and adversely affect severalour aspectsresults of ouroperations, performance.financial condition and prospects.

If Progressivewe Leasing failsfail to maintain a consistently high level of customer satisfaction and trust in itsour brand,brands, or fail to promote, protect, and maintain our business,brands in a cost-effective manner, our businesses, results of operations, financial condition, and prospects wouldcould be materially and adversely affected.

Offering an additional option for Progressivecustomers Leasing'sof customersour businesses to obtain the big-ticket merchandise they need is critical to itsour success. If consumers do not trust theour Progressive Leasing brandbrands or do not have a positive experience,experience with our products and services, they will not use its productsthem, and services. If consumers do not use Progressive Leasing's products and services, itwe will not be ableunable to attract or retain POS partners.partners Asor aemployer result,clients Progressiveas Leasingapplicable. has invested heavily in both technology and its support team, including the utilization of third-party customer service call centers. If it is unable to consistently cultivate positive customer experiences, it will lose existing customers and POS partners. In addition, Progressive Leasing'sOur ability to attract newand consumersretain customers and POS partners is highly dependent on itsour reputation and on positive recommendations from its existing customers and POSpartners, partners.the effectiveness of our marketing efforts, and the quality and reliability of our technology and customer support, in which we continue to invest heavily. Additionally, our success depends on our ability to obtain, maintain, protect, and enforce trademark and other intellectual property protections for our brands. Any failure to consistently cultivate high-quality customer service,experiences - including as a result of actions or events beyond our controlcontrol- relatingor to thesuccessfully third-partyand callcost-effectively centerspromote weand utilize,protect our brands, or aany market perception that itwe doesdo not maintain high-quality customer service, wouldcould adversely affect itsour reputationreputation, damage our relationships with existing partners and thecustomers, numberand impair our ability to attract new partners and customers, any of positivewhich customercould referrals that it receives. Ashave a result,material adverse effect on our business,businesses, results of operations, financial condition, and prospects would be materially and adversely affected.prospects.

From time to time, the subprime financial marketplace in which our businesses generally operate garners the attention of federal, state and local government officials as well as consumer advocacy groups and the media. In addition, the business models and practices of other companies offering services similar to those we offer have become the subject of investigations and litigation by federal and state regulators. Legislative or regulatory proposals regarding our industry, or interpretations of them, may subject our businesses to "headline risks" that could negatively impact each of them in a particular market or in general and, therefore, may adversely affect our share price. In particular, and among other perceived concerns, advocacy groups have asserted (and are likely to continue asserting) that laws and regulations should be broader and more restrictive regarding lease-to-own transactions, such as those engaged in by Progressive Leasing.Leasing, as well as with respect to BNPL transactions. With respect to these transactions, consumer advocacy groups and media reports generally focus on the total cost to a consumer to acquire merchandise, which is often alleged to be higher than the interest typically charged by banks or similar lending institutions to consumers with better credit histories. This "cost-of-rental" amount, which is generally defined as lease fees paid in excess of the "retail" price of the merchandise, is from time to time characterized by consumer advocacy groups and media reports as predatory or abusive without discussing the benefits associated with lease-to-own programs. Moreover, they often allege noncompliance with current consumer protection regulations and violations of notions of fair dealing with consumers. With respect to BNPL transactions, such as those engaged in by Four, certain advocacy groups and government officials have increasingly asserted that laws and regulations related to ability-to-pay analyses, limits on fees, and enhanced consumer disclosures should apply.

Although we strongly disagree with these characterizations, if the negative characterization of these types of lease-to-own and BNPL transactions becomes increasingly accepted by consumers or Progressive Leasing's POS partners (in the case of Progressive Leasing) and others with whom itwe doesdo business, demand for itsProgressive Leasing's or Four's products and services may significantly decrease, which may have a material adverse effect on several aspects of our performance. Additionally, if the negative characterization of these types of transactions is accepted by government officials, Progressive Leasing and/or Four may become subject to more restrictive laws and regulations and more stringent enforcement of existing laws and regulations, any of which may have a material adverse effect on several aspects of our performance. The vast expansion and reach of technology, including social media platforms, has increased the risk that our businesses' reputations may be significantly impacted by negative characterizations in a relatively short amount of time. If Progressive Leasing or Four is unable to quickly and effectively respond to such characterizations, itthey may experience declines in customer loyalty and traffic and itsharm their relationships with itstheir POS partners may suffer,partners, which may have a material adverse effect on several aspects of our performance. Similarly, eitherProgressive ViveLeasing's or Four's inability to timely and effectively respond to such characterizations may harm itstheir relationships with its merchanttheir partners and customers, and result in declines in transactions and revenue. Additionally, any failure by Progressive Leasing or Four or by itstheir competitors, including smaller, regional competitors, for example, to comply with the laws and regulations applicable to the traditional and/or virtual lease-to-own or BNPL business models, or any actions by those competitors that are challenged by consumers, advocacy groups, the media or governmental agencies or entities as being abusive or predatory may result in our business being mischaracterized, by implication, as engaging in similar unlawful or inappropriate activities or business practices, even if our only association with such conduct is that we operate in the same general industries as one or more offenders.

In addition, both Progressive Leasing and ViveFour source certain information from third parties. For example, the decisioning engine utilized by Progressive Leasing and Vive is based on algorithms that evaluate a number of factors and currently depend on sourcing certain information from third parties, including consumer reporting agencies. In the event that any third-party from which theyeither sourceProgressive Leasing or Four sources information experiences a service disruption, whether as a result of maintenance, natural disasters, terrorism, or security breaches, whether accidental or willful, or other factors, the ability of the decisioning engine utilized by Progressive Leasing and ViveFour to make accurate lease and loan decisions and to process them correctly may be adversely impacted. For example, several years ago Progressive Leasing experienced a temporary interruption in certain data used in its algorithms, which resulted in incorrect decisions in certain specific instances and higher lease charge-offs. Additionally, there may be errors contained in the information provided by third parties. This may result in the inability to approve otherwise qualified applicants, which may adversely affect Progressive Leasing and/or ViveFour by negatively impacting their reputations and reducing their transaction volumes.

Our businesses maintain business continuity and disaster recovery plans that, as discussed above, are expected to bewere enhanced in 2025 by migrating a large portion of our enterprise-wide applications to a third-party cloud provider. However, in the event of a disruption in service on their platforms, including a disruption in service from a required vendor to those platforms or as a result of the expected enhancements, the business continuity and disaster recovery plans may not have sufficient capacity to recover all data and services in the event of an outage. For example, they may be unable to process transactions or post payments on their platforms, which could damage their brands and reputations, divert the attention of their employees, reduce our revenue, subject us and them to liability, and cause consumers or merchants to abandon their platforms. In addition, in the event of damage or interruption, our insurance policies may not adequately compensate us for any losses that we incur. The impact of any of these events may have a material and adverse effect on several aspects of our performance.

The platforms and internal systems utilized by our businesses rely on software that is highly technical and complex. In many cases, these systems are developed by internal and/or external resources and customized specifically for our businesses, resulting in a higher likelihood that they may have undetected errors, failures, bugs, or defects than other commercially available software and platforms. For example, each of the Progressive LeasingLeasing, Purchasing Power and ViveFour platforms and internal systems depend on the ability of such software to store, retrieve, process, and manage immense amounts of data. As a result, undetected errors, failures, bugs, or defects may be present in such software or occur in the future in such software.

While we take precautions to prevent fraud, including consumer identity fraud, it is possible that identity fraud may still occur or has occurred, which may adversely affect the performance of our businesses' lease and loan portfolios.

There is a risk of fraudulent activity associated with our businesses' virtual platforms.platforms, including consumer identity fraud and account takeover fraud. The technologies and fraud prevention tools employed by our businesses may be insufficient to accurately detect and prevent fraud, particularly if initiated by bad actors deploying sophisticated technological resources, such as evolving artificial intelligence tools. Our businesses ultimately bear the risk of consumer fraud in transactions and generally have no recourse to their respective POS partneror affiliate partners (as the case may be) to collect the amount owed by the customer. Significant amounts of fraudulent transactions may adversely affect our respective businesses. High profile fraudulent activity or significant increases in fraudulent activity may also lead to regulatory intervention, negative publicity, and the erosion of trust from our businesses' POS partners and/or employer-clients and, therefore, may materially and adversely affect several aspects of our performance.

Pursuant to the FTC Settlement, Progressive Leasing further agreed to submit compliance reports or produce other requested documents and information to the FTC upon written request by the FTC. As previously disclosed, during the third quarter of 2024, Progressive Leasing received a written request from the FTC to evidence Progressive Leasing's compliance with the FTC Settlement by providing the FTC with information and documents, including those related to customer complaints and advertising and marketing materials. The Company is fully cooperatingcooperated with the FTC in responding to the FTC's request for information and documents.

Supply chain interruptions and inventory shortages, increases in the costs of imported goods, and other factors affecting the performance of ourProgressive Leasing's and Four's retail partners and Purchasing Power's vendors may have a material and adverse effect on several aspects of our business.

The POS partners with whom ourProgressive businessesLeasing partnerpartners or vendors from whom Purchasing Power obtains the products that it sells to its customers are critical to our success. Any extended supply chain interruptions, inventory shortages, material increases to the prices of imported goods or other operational factors affecting the performance of any of ourthese POS partners or vendors may have a material adverse impact on our business. While Four's direct-to-consumer model does not depend on integrated POS partnerships, broader supply chain disruptions affecting the retail industry could indirectly have an unfavorable impact on the purchasing activity of Four's customers, and thus, on Four's performance. We depend on the abilities of our POS partners'partners abilitiesand vendors to deliver products to customers at the right time, in the right quantities and at the right price. Accordingly, it is important for our POS partners and vendors to obtain products at reasonable prices, maintain optimal levels of inventory and respond rapidly to shifting demands. For example, trade policies and related government actions, including the currentimposition, presidentialincrease, administrationor hasextension stated its intention to impose significantof tariffs on goods imported frominto Canada,the China,United MexicoStates and otherretaliatory countries if those countries do not take certain actions demandedtariffs by theforeign administration. Such tariffscountries, could increase prices for certain leasable products purchased by our POS partners, vendors and customers, and thus, may decrease the demand for those products by our customer base. International trade disputes such as this,disputes, as well as unstable foreign and domestic economic and political conditions, geopolitical conflicts, acts of terrorism, public health emergencies and other factors beyond our control, could result in supply chain disruptions, inventory shortages and/or material increases in the price of goods for our POS partners and vendors in future periods, which could adversely affect their sales and Progressiveour Leasing'sbusinesses' GMV, revenue and earnings.performance.

PROG Holdings, Inc. ("we," "our," "us," the "Company," or "PROG Holdings") is a financial technology holding company that provides transparent and competitive payment options to consumers. As of December 31, 2025, PROG Holdings has two reportable segments: (i) Progressive Leasing, an in-store, app-based, and e-commerce point-of-sale lease-to-own solutions provider; and (ii) Four Technologies, Inc. ("Four"), which offers Buy Now, Pay Later ("BNPL") payment options to consumers through the Four platform. Vive Financial ("Vive"), an omnichannel provider of second-look revolving credit products.products, had been an operating segment prior to October 20, 2025. On that date, the Company sold substantially all of Vive's loan receivables portfolio and began the process of discontinuing its remaining operations. Vive is presented as discontinued operations in the Company's consolidated financial statements.

Our Progressive Leasing segment provides consumers with lease-purchase solutions through its point-of-sale partner locations and e-commerce website partners (collectively, "POS partners"). It does so by purchasing merchandise from the POS partners desired by customers and, in turn, leasing that merchandise to the customers through a cancellable lease-to-own transaction. Progressive Leasing has no stores of its own, but rather offers lease-purchase solutions to the customers of traditional and e-commerce retailers. The Progressive Leasing segment comprised approximately 96% of our consolidated revenues from continuing operations for the year ended December 31, 2024.2025.

Four Technologies, Inc. ("Four"), is a Buy Now, Pay Later ("BNPL") company that allows shoppers to pay for merchandise through four interest-free installments. Four's proprietary platform capabilities and its base of customers and retailers expand PROG Holdings' ecosystem of financial technology offerings by introducing a payment solution that further diversifies the Company's consumer financial technology offerings. Shoppers use Four to purchase furniture, clothing, electronics, health and beauty products, footwear, jewelry, and other consumer goods from retailers across the United States. The average ticket size of a Four transaction is notsignificantly smaller than a reportabletransaction segmentwith forProgressive the year ended December 31, 2024 as its financial results are not significant to the Company's consolidated financial results. Four's financial results are reported within "Other" for segment reporting purposes.Leasing.

PROG Holdings also owns Build,MoneyApp, a creditmobile buildingapplication financialthat managementoffers tool.customers Buildinterest-free cash advances. MoneyApp is not a reportable segment in 20242025 as its financial results are not significant to the Company's consolidated financial results. Build'sMoneyApp's financial results are reported within "Other" for segment reporting purposes.

In lightanticipation of these macroeconomicchallenges, challengeswe andhave continued to align the cost structure of our business with our near-term revenue outlook,outlook theby Company executedexecuting on a number of cost reduction initiatives beginning in 2022 and continuing into 2024, to drive efficiencies and right-size variable costs, while attempting to minimize the negative impact on growth-related initiatives.

•We reported consolidated revenues of $2.5$2.4 billion in 2024,2025, an increase of 2.3%0.4% compared to 2023.2024. The increase in revenues was primarily due to ana significant increase in GMV at Four and Progressive Leasing in 20242025 compared to the prior year.year, offset by a decrease in GMV at Progressive Leasing.

•Earnings from continuing operations before income tax expense (benefit) expense decreasedincreased to $163.6$174.5 million compared to $196.2$163.4 million in 2023.2024. The decreaseincrease was primarily driven by higher revenues as a result of the growth of our Four segment, a decrease in provisions for lease merchandise write-offs andas loana losses,result moreof customersthe choosingsmaller tooverall exerciselease earlyportfolio buyoutsize options,in 2025, and increaseda restructuring$6.7 expensesmillion gain on the sale of charged-off receivables at Progressive Leasing in 2024 compared to 2023.2025. These decreasesincreases toin earnings from continuing operations before income taxestax expense (benefit) were partially offset by lowerhigher personnelprocessing costsfees resultingdue fromto Four's growth and higher professional fees related to our costtechnology reductionenhancement initiatives.efforts and the acquisition of Purchasing Power.

Gross Merchandise Volume. We believe GMV is a key performance indicator of our Progressive Leasing and ViveFour segments, as it provides the total value of new leases and loans written into our portfolio over a specified time period. GMV does not represent revenues earned by the Company, but rather is a leading indicator we use in forecasting revenues the Company may earn. Progressive Leasing's GMV is defined as the retail price of merchandise acquired by Progressive Leasing, which it then expects to lease to its customers. GMV for ViveFour and Other areis defined as gross loan originations.

Active Customer Count. Our active customer count represents the total number of customers that have an active lease agreement with Progressive Leasing, or an active loan with ViveFour or our other strategic operations. Active customer counts include customers that may have an active lease or loan agreement with more than one segment. The following table presents our active customer count from continuing operations for each segment and Other:

The number of customers for Progressive Leasing was higherlower in 2024,2025, compared to the prior year, due to favorablelower customerlease responsesapprovals toprimarily ouras strategica initiatives,result includingof enhancedthe marketing,bankruptcy e-commerceof integrationsBig with POS partners, customer experience technology improvements with certain POS partners,Lots and to a lesser extent, athe tightening of theour creditdecisioning supply above Progressive Leasing. The number of customers for Vive has remained essentially flat.posture. The increase in the number of customers for OtherFour was the result of continued growth in ouroriginations otherin strategicthat businesses.segment.

Key Components of Earnings from Continuing Operations Before Income Tax Expense (Benefit) Expense

Revenues. We separate our total revenues into two components: (i) lease revenues and fees and (ii) interestother and fees on loans receivable.revenues. Lease revenues and fees include all revenues derived from lease agreements from our Progressive Leasing segment. Lease revenues are recorded net of a provision for uncollectible renewal payments. InterestOther and fees on loans receivablerevenues represents merchanttransaction fees,income, financesubscription chargesrevenues, and annual and other fees earned onrelating outstandingto loans in our ViveFour segment and, to a lesser extent, fromand our Fourother business.strategic businesses.

Operating Expenses. Operating expenses include personnel costs, stock-based compensation expense, occupancy costs, advertising, decisioning expense, professional services expense, sales acquisition expense, computer software expense, bank servicecharges charges,and processing fees, the provision for loan losses, fixed asset depreciation expense, intangible asset amortization, and restructuring expense, among other expenses.

The increase in Progressive Leasing revenues was primarily the result of the 7.3% increase in GMV for 2024 as compared to the prior year, due to an increase in demand for our lease-to-own offerings and more customers choosing to exercise early buyout options. This increase was partially offset by having a smaller lease portfolio at the beginning of 2024 as compared to the beginning of 2023. Vive revenues declined primarily due to a smaller loan portfolio throughout 2024 as compared to 2023, as a result of lower demand for products offered by certain Vive POS partners.2023. The increase toin OtherFour revenue was primarily driven by a 198.3% increase in Four's GMV as compared to the2023. sameThe periodincrease in 2023,Other duerevenue towas increasedprimarily loandriven originations.by growth in the Company's other strategic operations.

2 Sales acquisition expense includes vendor incentives and rebates to POS partners, external sales commissions, amortization and write-offs of initial direct costs and amounts paid to various POS partners to be their exclusive provider of lease-to-own solutions.

The $14.7$13.3 million decrease in personnel costs was due to a decrease of $13.3 million at Progressive Leasing attributable to itsProgressive Leasing's reduction in the number of employees during the second half of 2023 and first quarter of 2024 as part of its restructuring and cost cutting initiatives. Personnel costs at Vive also decreased by $1.4 million compared to 2023.

Stock-based compensation increased $4.3$4.1 million compared to 2023, consisting of increases of $5.3 million at Progressive Leasing and $0.2 million at Vive,Leasing, partially offset by a decrease of $1.2 million at Four. The higher stock-based compensation in 2024 was the result of: (i) an increase in the grant date value of restricted stock units granted in 2024 compared to 2023; and (ii) an increase to the estimated payout of performance stock units granted in 2024 based on the Company's actual results, compared to a lower payout of performance stock units granted in 2023. The lower stock-based compensation at Four in 2024 compared to 2023, was a result of the Company determining in the second quarter of 2024 that performance stock units that had been granted to Four executives in 2021 and 2022 were no longer probable of being earned.

The provision for loan losses increased $15.2$14.0 million compared to 2023. The increase was primarily the result of a $14.0$9.5 million increase in the provision for loan losses forfrom our Four segment and an increase of $4.5 million from our Other operations, due to the continued growth of our Four business and our other strategic operations. The provision for loan losses at Vive also increased $1.2 million due to higher delinquencies compared to 2023.

Depreciation and amortization decreased $5.1$5.0 million compared to 2023, primarily due to a decrease of $5.7 million at Progressive Leasing and $0.1 million at Vive,Leasing, partially offset by an increase of $0.7 million at Four and other strategic businesses.Four. The decrease at Progressive Leasing was primarily attributable to a technology asset that was fully amortized during the second quarter of 2024, as well as assets that were impaired as part of the Company's restructuring activities during the first quarter of 2024. The increase at Four and other strategic businesses was due to an increase in depreciable assets as compared to 2023.

Special Note Regarding Forward-Looking Information: Except for historical information contained herein, the matters set forth in this Form 10-Q are forward-looking statements. These statements are based on management’s current expectations and plans, which involve risks and uncertainties. Such forward-looking statements generally can be identified by the use of forward-looking terminology such as "delivering," "driving," "advancing," "expectation," "target," "uncertainty," "outlook," "assumes" and similar expressions. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the filing date of this Quarterly Report and which involve risks and uncertainties that may cause actual results to differ materially from those set forth in these statements. These risks and uncertainties include factors that could cause our actual results and financial condition to differ materially from those expressed or implied in our forward-looking statements. Such risks and uncertainties include, among others, those discussed in "Item 1A. Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (the "2025 Annual Report") and in this Quarterly Report on Form 10-Q for the quarter ended MarchJune 31,30, 2026. Except as required by law, the Company undertakes no obligation to update these forward-looking statements to reflect subsequent events or circumstances after the filing date of this Quarterly Report.

The following discussion should be read in conjunction with the condensed consolidated financial statements as of and for the three and six months ended MarchJune 31,30, 2026 and 2025, including the notes to those statements, appearing elsewhere in this report. We also suggest that management's discussion and analysis appearing in this report be read in conjunction with the management's discussion and analysis and consolidated financial statements included in our 2025 Annual Report.

PROG Holdings, Inc. ("we," "our," "us," the "Company," or "PROG Holdings") is a financial technology holding company that provides transparent and competitive payment options to consumers. PROG Holdings has three reportable segments as of March 31, 2026: (i) Progressive Leasing, an in-store, app-based, and e-commerce point-of-sale lease-to-own solutions provider; (ii) Purchasing Power, a voluntary employee benefit program provider, allowing employees to purchase brand-name products and services from Purchasing Power and then pay for those purchases through either automatic payroll deductions or allotments; and (iii) Four Technologies, Inc. ("Four"), which offers Buy Now, Pay Later ("BNPL") payment options to consumers through the Four platform.

Our Progressive Leasing segment provides consumers with lease-purchase solutions through its point-of-sale partner locations and e-commerce website partners (collectively, "POS partners"), as well as through its direct-to-consumer app, PROG Marketplace. It does so by purchasing merchandise from the POS partners desired by customers and, in turn, leasing that merchandise to the customers through a cancellable lease-to-own transaction. Progressive Leasing has no stores of its own, but ratherrather, offers lease-purchase solutions to the customers of traditional and e-commerce retailers.

PROG Holdings also owns MoneyApp, a mobile application that offers customers interest-freeshort-term liquidity solutions through cash advances. MoneyApp is not a reportable segment in 2026 as its financial results are not expected to be significant to the Company's condensed consolidated financial results. MoneyApp's financial results are reported within "Other" for segment reporting purposes.

On January 2, 2026, we completed the acquisition of Purchasing Power for $424.2 million in cash. In addition, Purchasing Power had approximately $338.6 million of non-recourse funding debt that remained in place following the closing of the acquisition. The results of Purchasing Power are included in our condensed consolidated financial statements beginning on the acquisition date. Results for periods prior to the acquisition date are not included in this MD&A. See Note 2 of the condensed consolidated financial statements for additional information.

We believe the increased cost of living and recent rise in fuel costs has continued to have a disproportionate negative effect on our customers' disposable income, negatively affecting demand for many products offered by our businesses, as well as in customer payment performance. We believe theThe significant increase in inflation resulting from the war in Iran and related geopolitical disruption has further pressured our customers' budgets and unfavorably impacted consumer confidence within our customer base, resulting in a decrease in demand for the types of larger-ticket, durable consumer goods offered by many of our retail partners and by our Purchasing Power business.

Progressive Leasing entered 2026 with a smaller lease portfolio, as measured by its gross leased asset balance, compared to 2025, which resulted in a decrease in lease revenues when compared to the first quarter of 2025. The Company continues to operate in a challenging macroeconomic environment due to the factors described above. In addition, American Signature, Inc., one of Progressive Leasing's POS partners, filed for bankruptcy in November 2025, which will result in the permanent closure of many of its stores in 2026,2026. whichThose hasclosures have had and will continue to have an unfavorable impact on Progressive Leasing's GMV, revenue, and earnings from continuing operations before income tax in 2026.

We believe customer demand for the larger-ticket products and services sold by Purchasing Power also has been adversely impacted by the macroeconomic headwinds affecting Progressive Leasing's performance. However, we expect that Purchasing Power's recent focus on improving eligible employee-customer penetration, continuing to create new, attractive merchandising choices for its customers, and its addition of several new employer-clients, will help offset the impacts of such decreases in demand.

While customer payment delinquencies and write-offs for Purchasing Power are generally lower than those of Progressive Leasing due to Purchasing Power's payroll deduction and allotment repayment model, delinquencies on non-federal employee receivables were elevated in the recentsecond quarter of 2026, which resulted in a higher than estimated provision for credit losses. Delinquencies for federal government employee receivables have improved compared to the elevated delinquencies experienced in 2025 resulting from various workforce disruptions, including DOGE workforce reductions and multiple government shutdowns, have resulted in elevated delinquencies and write-offs with Purchasing Power's current and former federal government employee-customers.shutdowns. We continue to monitor these conditions, as well as anyincreased potentialturnover additional(both layoffsvoluntary impactingand involuntary) at Purchasing Power's customers,clients, as prolonged fiscal uncertainty at the federal government level or such layoffs could pose additional risk to Purchasing Power's receivables performance.

The following summarizes significant financial highlights from the three months ended MarchJune 31,30, 2026:

•We reported consolidated revenues of $742.7$719.7 million, which was ana 11.1%22.3% increase compared to the $668.4$588.5 million we reported for the firstsecond quarter of 2025. The increase in consolidated revenues was primarily due to the $107.1$130.4 million of total revenues contributed by Purchasing Power, which we acquired on January 2, 2026. Additionally, revenues at Four increased by $20.5$19.0 millionmillion, compared to the prior year period, due to continued growth in its BNPL transactions at Four.transactions. These increases were offset by a $54.7$19.8 million decrease in revenue at Progressive Leasing, which was driven primarily by a smaller gross leased asset balance throughout the firstsecond quarter of 2026 when compared to the same period in the prior year.

•GMV from Four increased by $160.1$165.5 million, due to an increase in Four loan originations in the firstsecond quarter of 2026 compared to the firstsecond quarter of 2025, as a result of the continued growth in that business. GMV decreasedincreased by $9.0$14.2 million for Progressive Leasing in the firstsecond quarter of 2026, compared to the same period in the prior year. The decreaseincrease in GMV for Progressive Leasing was due primarily to several$23.0 factors,million includingin theGMV tighteninggrowth offrom oure-commerce decisioningchannels. posture,This whichincrease was reflectedoffset for the full first quarter in 2026 compared to onlyby a portion of the first quarter in 2025. We believe the reduction in GMV wasdue alsoto driventhe by inflationary pressures, elevatedhigher cost of living andexperienced by our customer base, including increased fuel costs,prices, and an uncertain macroeconomic outlook, all of which have negatively impacted consumer confidence and demand for our lease-to-own offering. GMV relating to Purchasing Power was included$158.8 formillion and no GMV was reported in the firstprior time,year period, as the acquisition was completed on January 2, 2026.

Progressive Leasing's GMV decreasedincreased compared to the firstsecond quarter of 2025 due primarily to aincreases lowerin gross leased asset balance resultingGMV from tightenede-commerce decisioningchannels. E-commerce channels generated 25.6% of Progressive Leasing's GMV in 2025the andsecond retailquarter partnerof bankruptcies.2026 Wecompared believeto 20.9% in the second quarter of 2025. This increase was offset by a reduction in GMV was also driven by inflationary pressures, an elevated cost of living, and an uncertain macroeconomic outlook, all of which have negatively impacted consumer confidence and demand for our lease-to-own offering. E-commerce channels generated 25.7% of Progressive Leasing's GMV in the first quarter of 2026 compared to 16.8% in the first quarter of 2025. The increase in Four's GMV is primarily attributable to the continued expansion of the Four BNPL platform, reflecting growth andthrough higher transaction volumes and average order value from existing and new customers over the period.

The number of active customers for Progressive Leasing decreased due to the tightening of our decisioning posture, and a decrease in consumer demand for many of the durable leasable goods offered by our retail partners, due to the continued elevated costs of living and inflationary pressures facing our customers. The increase in the number of customers for Four was the result of continued growth in BNPL transactions, which have a significantly smaller transaction size, as compared to our Progressive Leasing business.

In this MD&A section, we discuss the key components of our condensed consolidated results. For the three and six months ended MarchJune 31,30, 2026 and the comparable prior year periods, some of the key revenue, cost and expense items that affected earnings before income taxes were as follows:

Revenues. We separate our total revenues into three components: (i) lease revenues and fees, (ii) product and service revenues and (iii) other revenues. Lease revenues and fees include all revenues derived from lease agreements from our Progressive Leasing segment. Lease revenues are recorded net of a provision for uncollectible renewal payments. Product and service revenues represent Purchasing Power's sales of products and the commissionrevenue earned relating to arranging for services,services that customers purchase from Purchasing Power, net of estimated returns. Other revenues represents transaction income, subscription revenues, and annual and other fees earned relating to loans in our Four segment and our other strategic businesses, as well as Progressive Leasing affiliate commissions and imputed interest income recognized on a portion of Purchasing Power's receivables portfolio.

Provision for lease merchandise write-offs. The provision for lease merchandise write-offs represents the estimated merchandise losses incurred but not yet identified by management and adjustments for changes in estimates for the allowance for lease merchandise write-offs.

Operating expenses. Operating expenses include primarily personnel costs, stock-based compensation, occupancy costs, advertising, decisioning expense, professional services expense, sales acquisition costs, computer software expense, bank charges and processing fees, fixed asset depreciation expense, intangible amortization expense, legal settlement expense and restructuring expenses, among other expenses.

Provision for credit losses. The provision for credit losses reflects the expected lifetime credit losses on Purchasing Power's, Four's and other strategic operations receivables, determined using the Current Expected Credit Losses ("CECL") framework and incorporating historical loss experience, current conditions, and reasonable and supportable forecasts. The provision for credit losses on Purchasing Power's receivables are net of estimated recoveries from its program of selling portfolios of charged-off receivables to third parties.third-parties.

Results of Operations – Three months ended MarchJune 31,30, 2026 and 2025

The decrease in leasing revenues was primarily due to a lower gross leased asset balance as a result of the tightening of our decisioning posture during 2025, and a decrease in demand for the durable leasable products offered by many of our retail partners. We believe the inflationary and other macroeconomic factors had a disproportionate negative effect on our customers' disposable income, negatively affecting demand for many products offered by our retail partners.

Gross margin is a key performance measure for our Progressive Leasing segment, which generates lease revenue from transactions that include associated depreciation of the merchandise on lease, making gross margin a meaningful indicator of profit. The increase in Progressive Leasing's gross margin percentage reflects a decline in customers' electing early purchase options, as macroeconomic conditions contributed to customers choosing to extendmake payments over the full contractual lease termsterm rather than exercising early purchase options, which generally result in lower margin realization.

The provision for lease merchandise write-offs decreasedincreased $4.4$3.9 million compared to the same period in 2025. The provision for lease merchandise write-offs as a percentage of lease revenues decreasedincreased to 7.3%8.4% during the firstsecond quarter of 2026 from 7.4%7.5% in the same period in 2025.2025, Theprimarily decreasereflecting washigher dueperiod-end todelinquency levels, as well as continued pressure on customer payment performance in a tighterchallenging decisioningmacroeconomic posture in 2026 as compared to the same period in 2025, as the Company tightened its decisioning during the first quarter of 2025.environment. Given the significant uncertainty regarding the impacts of the war in Iran and related geopolitical disruptions, inflation, tariffs, increased fuel prices, elevated interest rates, and unemployment rates on our business, and the potential effects of such developments on Progressive Leasing's POS partners, customers, and business going forward, a high level of estimation was involved in determining the allowance as of MarchJune 31,30, 2026. Actual lease merchandise write-offs could differ materially from the allowance for those write-offs.

Selling, general and administrative expense decreasedincreased resulting from the following:

In FebruaryJune 2026, Progressive Leasing sold a portfolio of charged-off lease receivables to a third-party for $6.5$4.7 million in cash and recognized a gain of $6.5$4.7 million as the carrying amount of the charged-off receivables had been reduced to zero. There were no similar sales during the three months ended MarchJune 31,30, 2025.

Interest expense, net for the three months ended MarchJune 31,30, 2026 was higher than the same period in 2025 due to an increase in debt used for the acquisition of Purchasing Power on January 2, 2026.

Selling, general and administrative expenses include $1.8$1.9 million of transaction and transition costs incurred related to the acquisition of Purchasing Power.

Selling, general and administrative expenses include $3.7 million of transaction and transition costs increasedincurred resultingrelated fromto the following:acquisition of Purchasing Power.