Cash America 2007 Annual Report Download - page 97

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
77
The effective tax rate on income from continuing operations differs from the federal statutory rate of
35% for the following reasons ($ in thousands):
2007 2006 2005
Tax provision computed at the federal statutory income tax rate. $ 43,668 33,659 24,809
State and local income taxes, net of federal tax benefits .............. 1,232 1,203 1,050
Valuation allowance ..................................................................... ʊ (65) (123)
Other............................................................................................. 519 431 325
Total provision .......................................................................... $ 45,419 35,228 26,061
Effective tax rate........................................................................... 36.4 % 36.6 % 36.8 %
As of December 31, 2006, the Company had net capital loss carryovers of $54,000 that were used to
net capital gains in 2007. A deferred tax valuation allowance was provided before 2005 to reduce deferred
tax benefits of capital losses that the Company did not expect to realize. During 2006 and 2005, the
Company reduced the valuation allowance by $65,000 and $123,000, respectively, as a result of capital
gains arising during those years or expected to arise in the carryforward years. The decrease in the valuation
allowance during 2005 includes $37,000 attributable to gains recognized on disposal of discontinued foreign
operations. The tax benefit resulting from that portion of the decrease reduced the tax provision on the gain
from disposal of discontinued foreign operations.
The Company adopted the provisions of FIN 48 on January 1, 2007. The 2007 activity related to
unrecognized tax benefits is summarized below (in thousands):
Balance at January 1, 2007 $ ʊ
Increases related to prior years’ tax positions ʊ
Increases related to current year tax positions ʊ
Decreases related to settlements with taxing authorities ʊ
Reductions as a result of expiration of applicable statutes of limitations ʊ
Balance at December 31, 2007 $ ʊ
No interest or penalties have been accrued in the consolidated financial statements related to
unrecognized tax benefits. The Company does not expect a significant increase in unrecognized tax benefits
during the next 12 months.
As of December 31, 2007, the Company’s 2004 through 2007 tax years were open to examination
by the Internal Revenue Service and major state taxing jurisdictions.
10. Commitments and Contingencies
Leases x The Company leases certain of its facilities under operating leases with terms ranging from 3 to 15
years and certain rights to extend for additional periods. Future minimum rentals due under non-cancelable
leases for continuing operations are as follows for each of the years ending December 31 (in thousands):
2008..................................................................................................................................... $ 36,461
2009..................................................................................................................................... 29,498
2010..................................................................................................................................... 19,688
2011..................................................................................................................................... 14,252
2012..................................................................................................................................... 8,886
Thereafter ............................................................................................................................ 23,856
Total ................................................................................................................................ $ 132,641