Cash America 2015 Annual Report Download - page 114

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For the year ended December 31, 2015, the Company recorded income tax expense of $15.5 million on a
pre-tax income of $43.0 million, compared to income tax expense of $2.0 million on a pre-tax loss of $8.3 million
fortheyearendedDecember31,2014.Despiteincurringapre-taxloss,incometaxexpensewasrecordedin2014
primarily as a result of the tax impact of the write-off of non-deductible goodwill associated with the sale of the
Company’s Mexico-based pawn operations and an additional valuation allowance associated with the 2014 losses in
Mexico. An income tax benefit was recorded in 2013 primarily due to the recognition of a $33.2 million tax benefit
in 2013 associated with the Creazione Deduction (as defined and explained below), as well as the release of reserves
established for unrecognized tax benefits associated with the Company’s Mexico operations.
In January 2013, the Company’s Mexico-based pawn operations that were owned by Creazione Estilo, S.A.
de C.V., a Mexican sociedad anónima de capital variable (“Creazione”), and operated under the name Prenda Fácil
were sold by Creazione to another wholly-owned subsidiary of the Company, CA Empeños Mexico, S. de R.L. de
C.V. (“Empeños”), and began operating exclusively under the name “Cash America casa de empeño.” As of
December31,2013,Creazione’sassetshadbeenliquidatedandithadenteredintoformalliquidationproceedings.
In connection with the liquidation of Creazione, the Company included a deduction on its 2013 federal income tax
return for its tax basis in the stock of Creazione and recognized an income tax benefit of $33.2 million as a result of
the deduction (the “Creazione Deduction”). The Company believes that it met the requirements for this deduction
and that it should be treated as an ordinary loss, which reduced the Company’s cash taxes paid in 2013. The
Company obtained a private letter ruling from the Internal Revenue Service with respect to one of the various
factors that it considered in making this determination.
Income tax expense included in the Company’s income (loss) from continuing and discontinued operations,
respectively, is as follows (dollars in thousands):
YearEndedDecember31,
2015 2014 2013
Continuing operations $ 15,478 $ 2,041 $ (15,505)
Discontinued operations —62,933 46,259
Total $ 15,478 $ 64,974 $ 30,754
CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
110