Cash America 2014 Annual Report Download - page 127

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
112
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,
2014 2013 2012
Continuing operations
2,041
(15,505
)
46,275
Discontinuing operations
62,933
46,259
38,381
Total
64,974
30,754
84,656
A reconciliation of income taxes for continuing operations with amounts computed at the statutory federal
rate follows (dollars in thousands):
Year Ended December 31,
2014 2013 2012
Tax provision computed at the federal statutory income tax rate $
(2,922
)$15,396 $28,479
State and local income taxes, net of federal tax benefits
818
1,883 2,829
Nondeductible lobbying
639
553 758
Foreign tax difference
216
(221)1,934
Investment in subsidiaries (a)
—
(23,907)
(9,218
)
Valuation allowance
(11,266
)(8,915)21,390
Non-recoverable foreign net deferred tax assets
12,042
—
—
Non-deductible goodwill
2,232
—
—
Tax effect of Regulatory Penalty(b)
—
895
—
Change in reserve for uncertain tax benefits, net
—
(1,021)
—
Other
282
(168)103
Total provision (benefit) $
2,041
$
(15,505
) $ 46,275
Effective tax rate
(24.5
)% (35.3
)%
56.9
%
(a) Relates to the Creazione Deduction for the years ended December 31, 2013 and 2012.
(b) Represents the tax effect of the $2.5 million penalty paid to the CFPB, which is nondeductible for tax purposes, in connection with the
Regulatory Penalty. See Note 13.
As of December 31, 2013, the Company had net operating losses totaling $58.6 million related to its
Mexico subsidiary, Creazione. Mexico allows a ten-year carryforward period, and, if unutilized, these net operating
losses will expire in varying amounts beginning in 2018. Due to the Company’s withdrawal of operations in Mexico
and the anticipated liquidation of Creazione, these net operating losses are expected to expire unutilized.
The Company performs an evaluation of the recoverability of its deferred tax assets on a quarterly basis.
The Company establishes a valuation allowance if it is more-likely-than-not (greater than 50 percent) that all or
some portion of the deferred tax asset will not be realized. The Company analyzes several factors, including the
nature and frequency of operating losses, the Company’s carryforward period for any losses, the reversal of future
taxable temporary differences, the expected occurrence of future income or loss and the feasibility of available tax
planning strategies to protect against the loss of deferred tax assets.
The Company recorded a valuation allowance against its gross deferred tax assets of $13.8 million as of
December 31, 2013. In 2014, the Company released a $12.5 million valuation allowance related to the deferred tax
assets at Creazione and $1.3 million upon the sale of Empeños. In 2013, the Company released a $9.3 million
valuation allowance related to the deferred tax asset associated with the Company’s excess tax basis over its basis
for financial reporting purposes in the stock of Creazione and recorded an additional $1.3 million valuation
allowance related to deferred tax assets at its Mexico subsidiaries.