Cash America 2015 Annual Report Download - page 115

A reconciliation of income taxes for continuing operations with amounts computed at the statutory federal
rate is as follows (dollars in thousands):
YearEndedDecember31,
2015 2014 2013
Tax provision (benefit) computed at the federal statutory income tax rate $ 15,063 $ (2,922) $ 15,396
State and local income taxes, net of federal tax benefits (973) 818 1,883
Nondeductible lobbying 111 639 553
Foreign tax difference (1) 216 (221)
Investment in subsidiaries (a) —— (23,907)
Valuation allowance 1,142 (11,266) (8,915)
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 136 282 (168)
Total provision (benefit) $ 15,478 $ 2,041 $ (15,505)
Effective tax rate 36.0% (24.5)% (35.3)%
(a) RelatestotheCreazioneDeductionfortheyearendedDecember31,2013.
(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 liquidation of Creazione, these net operating losses are expected to expire unutilized. As a result, in 2014,
the Company wrote off Creazione’s remaining net deferred tax assets and the associated valuation allowance against
those deferred tax assets.
The Company had a valuation allowance of $1.1 million as of December 31, 2015, which was recorded in
2015 and related to the deferred assets associated with certain state net operating losses. In 2014, the Company, in
connection with its anticipated liquidation of Creazione, released a $12.5 million valuation allowance related to the
deferred tax assets at Creazione and also released a $1.3 million valuation allowance in connection with 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 Empeños.
See Note 1 for additional information on the Company’s evaluation of the recoverability of its deferred tax assets
and establishment of related valuation allowances.
TheaggregatechangeinthebalanceoftheunrecognizedtaxbenefitsfortheyearsendedDecember31,
2015, 2014 and 2013 is summarized below (dollars in thousands):
2015 2014 2013
BalanceasofJanuary1, $— $ — $ 1,021
Decrease due to lapse of statute of limitations —— (1,021)
BalanceasofDecember31, $— $—$—
During 2013, the statute of limitations expired related to the Mexico tax returns of Creazione for periods
before it was acquired by the Company (pre-2008). As a result, the Company released reserves established for
unrecognized tax benefits of $1.0 million and the related accrued interest and penalties of $1.9 million. Consistent
CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
111