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Income Taxes
12 Months Ended
Dec. 31, 2015
Income Tax Disclosure [Abstract]  
Income Tax Disclosure

10. Income Taxes

The components of the Company’s deferred tax assets and liabilities as of December 31, 2015 and 2014 were as follows (dollars in thousands):

 

 

 

As of December 31,

 

 

 

2015

 

 

2014

 

Deferred tax assets:

 

 

 

 

 

 

 

 

Loans and finance receivables, net

 

$

28,629

 

 

$

25,281

 

Compensation and benefits

 

 

4,210

 

 

 

507

 

Translation adjustments

 

 

3,898

 

 

 

3,956

 

Accrued rent and deferred finish out allowance

 

 

5,560

 

 

 

146

 

Foreign net operating loss carryforward

 

 

968

 

 

 

550

 

Other

 

 

1,785

 

 

 

842

 

Total deferred tax assets

 

$

45,050

 

 

$

31,282

 

Deferred tax liabilities:

 

 

 

 

 

 

 

 

Amortizable intangible assets

 

$

52,882

 

 

$

46,010

 

Property and equipment

 

 

11,359

 

 

 

6,794

 

Other

 

 

108

 

 

 

334

 

Total deferred tax liabilities

 

$

64,349

 

 

$

53,138

 

Net deferred tax liabilities before valuation

   allowance

 

$

(19,299

)

 

$

(21,856

)

Valuation allowance

 

 

(1,220

)

 

 

(670

)

Net deferred tax liabilities

 

$

(20,519

)

 

$

(22,526

)

Balance sheet classification:

 

 

 

 

 

 

 

 

Deferred tax assets

 

$

28,975

 

 

$

25,427

 

Deferred tax liabilities

 

 

(49,494

)

 

 

(47,953

)

Net deferred tax liabilities

 

$

(20,519

)

 

$

(22,526

)

 

The components of the provision for income taxes and the income to which it relates for the years ended December 31, 2015, 2014 and 2013 are shown below (dollars in thousands):

 

 

 

Year Ended December 31,

 

 

 

2015

 

 

2014

 

 

2013

 

Income before income taxes:

 

 

 

 

 

 

 

 

 

 

 

 

Domestic

 

$

70,519

 

 

$

176,494

 

 

$

119,974

 

International

 

 

 

 

 

5

 

 

 

1,658

 

Income before income taxes

 

$

70,519

 

 

$

176,499

 

 

$

121,632

 

Current provision:

 

 

 

 

 

 

 

 

 

 

 

 

Federal

 

$

25,601

 

 

$

51,144

 

 

$

37,639

 

International

 

 

114

 

 

 

46

 

 

 

56

 

State and local

 

 

2,211

 

 

 

1,753

 

 

 

682

 

Total current provision for income taxes

 

$

27,926

 

 

$

52,943

 

 

$

38,377

 

Deferred provision (benefit):

 

 

 

 

 

 

 

 

 

 

 

 

Federal

 

$

(1,360

)

 

$

11,363

 

 

$

5,122

 

International

 

 

 

 

 

 

 

 

 

State and local

 

 

(39

)

 

 

522

 

 

 

95

 

Total deferred provision (benefit) for income taxes

 

$

(1,399

)

 

$

11,885

 

 

$

5,217

 

Total provision for income taxes

 

$

26,527

 

 

$

64,828

 

 

$

43,594

 

 

The Company has no uncertain income tax positions as defined by ASC 740 for the years ended December 31, 2015, 2014 or 2013.

The effective tax rate on income differs from the federal statutory rate of 35% for the following reasons (dollars in thousands):

 

 

 

Year Ended December 31,

 

 

 

2015

 

 

2014

 

 

2013

 

Tax provision computed at the federal statutory income tax

   rate

 

$

24,682

 

 

$

61,781

 

 

$

42,571

 

State and local income taxes, net of federal tax benefits

 

 

1,408

 

 

 

1,329

 

 

 

505

 

Tax effect of Regulatory Penalty (1)

 

 

3

 

 

 

12

 

 

 

871

 

Valuation allowance

 

 

 

 

 

 

 

 

(457

)

Other

 

 

434

 

 

 

1,706

 

 

 

104

 

Total provision

 

$

26,527

 

 

$

64,828

 

 

$

43,594

 

Effective tax rate

 

 

37.6

%

 

 

36.7

%

 

 

35.8

%

 

(1)

Represents the tax effect of the $2.5 million CFPB penalty paid in 2013, which is nondeductible for tax purposes, in connection with the Regulatory Penalty. See Note 11 for further information.

As of December 31, 2012, a valuation allowance was established against deferred tax assets for net operating losses, totaling $0.5 million, related to its Mexico subsidiary which the Company did not expect to realize. In 2013, the $0.5 million valuation allowance was decreased due to the recognition of taxable income by the Mexico subsidiary, causing full utilization of the net operating losses.

The Company has foreign net operating loss carryforwards from Brazilian operations of $2.8 million as of December 31, 2015, $1.6 million as of December 31, 2014, and $0.5 million as of December 31, 2013. These net operating loss carryforwards are subject to annual limitations and have an unlimited carryforward period. The Company has recorded a full valuation allowance related to the foreign net operating loss carryforwards, as they are not more likely than not to be utilized.

The following table summarizes the valuation account activity for the years ended December 31, 2015, 2014 and 2013 (in thousands):

 

 

 

Year Ended December 31,

 

 

 

2015

 

 

2014

 

 

2013

 

Balance at beginning of period

 

$

670

 

 

$

171

 

 

$

457

 

Additions

 

 

550

 

 

 

499

 

 

 

171

 

Deductions

 

 

 

 

 

 

 

 

(457

)

Balance at end of period

 

$

1,220

 

 

$

670

 

 

$

171

 

 

As of December 31, 2015, tax years 2011 through 2014 remain open to examination by the Internal Revenue Service and major state taxing jurisdictions, and the 2012 through 2013 tax years of the Company’s Mexican subsidiary were open to examination by the Mexican taxing authorities. The IRS is currently examining the 2011 through 2013 tax years when the Company was included as part of consolidated tax returns with Cash America and its affiliated companies.