Popeye's 2014 Annual Report Download - page 83

Popeyes Louisiana Kitchen, Inc.
Notes to Consolidated Financial Statements
For Fiscal Years 2014, 2013, and 2012 — (Continued)
65
The components of income tax expense were as follows:
(in millions) 2014 2013 2012
Current income tax expense:
Federal $ 17.4 $ 12.8 $ 12.2
Foreign 1.6 1.4 1.3
State 2.4 1.7 1.6
21.4 15.9 15.1
Deferred income tax expense:
Federal 1.7 4.1 2.0
State 0.7 0.4 0.2
2.4 4.5 2.2
$ 23.8 $ 20.4 $ 17.3
In the fourth quarter 2014, the Company recorded a $0.5 million out-of-period adjustment to correct an error related to the
measurement of its deferred tax liability associated with its indefinite lived intangible assets as discussed in Note 2. The adjustment
is included as a component of state deferred income tax expense.
Applicable foreign withholding taxes are generally deducted from royalties and certain other revenues collected from
international franchisees. Foreign taxes withheld are generally eligible for credit against the Company’s U.S. income tax liabilities.
Reconciliations of the Federal statutory income tax rate to the Company’s effective tax rate are presented below:
2014 2013 2012
Federal income tax rate 35.0 % 35.0 % 35.0 %
State taxes, net of federal benefit 2.3 % 1.9 % 1.5 %
Valuation allowance 1.3 % 0.9 % 0.8 %
Provision to return adjustments 0.4 % (0.3)% (0.1)%
Adjustments to estimated tax reserves (0.1)% 0.1 % (1.2)%
Other items, net (0.4)% (0.2)% 0.3 %
Effective income tax rate 38.5 % 37.4 % 36.3 %
Provision to return adjustments include the effects of the reconciliation of income tax amounts recorded in our
Consolidated Statements of Operations to amounts reflected on our tax returns.
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities
are presented below: