Cash America 2008 Annual Report Download - page 111

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
88
The components of the provision for income taxes and the income to which it relates for the years
ended December 31, 2008, 2007 and 2006 are shown below (in thousands):
2008 2007 2006
Income before income taxes............................................................ $ 132,803 $ 124,765 $ 96,168
Current provision:
Federal.......................................................................................... $ 37,709 $ 40,141 $ 36,582
Foreign ......................................................................................... 129 –– ––
State and local .............................................................................. 3,787 3,345 2,284
41,625 43,486 38,866
Deferred provision (benefit):
Federal.......................................................................................... 8,972 3,381 (3,203)
Foreign…………………………………………………………. 34 –– ––
State and local .............................................................................. 986 (1,448) (435)
9,992 1,933 (3,638)
Total provision .......................................................................... $ 51,617 $ 45,419 $ 35,228
The effective tax rate on income differs from the federal statutory rate of 35% for the following
reasons (dollars in thousands):
2008 2007 2006
Tax provision computed at the federal statutory income tax rate.. $ 46,481 $ 43,668 $ 33,659
Foreign, state and local income taxes, net of federal tax benefits . 3,102 1,232 1,203
Valuation allowance...................................................................... ʊ –– (65)
Nondeductible lobbying................................................................ 1,892 333 320
Other ............................................................................................. 142 186 111
Total provision........................................................................... $ 51,617 $ 45,419 $ 35,228
Effective tax rate ........................................................................... 38.9 % 36.4 % 36.6 %
As of December 31, 2008, the Company acquired foreign net operating losses of $18.1 million. The
amount was reduced to $17.9 million by an unrecognized tax benefit. Mexico allows a ten year
carryforward period and the Company expects to fully utilize the net operating losses prior to the expiration
dates in 2015, 2017, and 2018. Domestic income taxes have not been provided on undistributed earnings of
foreign subsidiaries because it is the Company’s intent to reinvest these earnings in the business activities of
the foreign subsidiaries for the foreseeable future. The Company estimates that no U.S. income tax would be
due on the amount of such earnings accumulated as of December 31, 2008.
The Company adopted the provisions of FIN 48 on January 1, 2007. The 2008 activity related to
unrecognized tax benefits is summarized below (in thousands):
Balance at January 1, 2008 $ ʊ
Increases related to prior years’ tax positions 1,523
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
Effect of change in foreign currency rates (67)
Balance at December 31, 2008 $ 1,456