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Income Taxes | 12 Months Ended
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Dec. 31, 2017
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES On December 22, 2017, the Tax Act was enacted into law. The Tax Act significantly changes U.S. corporate income tax laws by, among other things, reducing the U.S. corporate income tax rate from 35% to 21% starting in 2018 and creating a territorial tax system with a one-time mandatory tax on previously deferred foreign earnings of U.S. corporations. As a result, the Company recorded a provisional net income tax benefit of $27.3 million during the fourth quarter of 2017. This amount, which is included in the provision for income taxes in the consolidated statements of income, consists of two components: (i) a $29.2 million income tax benefit resulting from the remeasurement of the Company’s domestic net deferred tax liabilities based on the new lower U.S. corporate income tax rate, and (ii) a $1.9 million U.S. tax expense relating to the one-time mandatory tax on previously deferred earnings of the Company’s foreign subsidiaries, which will be paid over an eight-year period. While the Company has substantially completed its provisional analysis of the income tax effects of the Tax Act and recorded a reasonable estimate of such effects, the $27.3 million net income tax benefit may differ due to, among other things, further refinement of the Company’s calculations, changes in interpretations and assumptions the Company made, implementation guidance from the Internal Revenue Service and clarifications of state law. Once the Company finalizes certain estimates and tax positions when it files its 2017 U.S. and state tax returns, it will be able to conclude whether any further adjustments are required to its domestic net deferred tax liability balance as of December 31, 2017, as well as to the liability associated with the one-time mandatory tax on previously deferred foreign earnings. Any adjustments to these provisional amounts will be included in provision for income taxes in the reporting period in which any such adjustments are determined, which will be no later than the fourth quarter of 2018. Components of the provision for income taxes and the income to which it relates for the years ended December 31, 2017, 2016 and 2015 consist of the following (in thousands):
| Year Ended December 31,
| 2017 |  | 2016 |  | 2015
Income before income taxes (1): |  |  |  |  |
Domestic | $ | 93,365 |  |  | $ | 30,804 |  |  | $ | 27,599 |
Foreign | 78,947 |  |  | 62,643 |  |  | 60,082 |
Income before income taxes | $ | 172,312 |  |  | $ | 93,447 |  |  | $ | 87,681 |
Current income taxes: |  |  |  |  |
Federal (2) | $ | 15,995 |  |  | $ | 1,419 |  |  | $ | 7,933 |
Foreign | 23,340 |  |  | 18,787 |  |  | 18,763 |
State and local | 968 |  |  | 1,139 |  |  | 705 |
Current provision for income taxes | 40,303 |  |  | 21,345 |  |  | 27,401 |
Deferred provision (benefit) for income taxes: |  |  |  |  |
Federal (3) | (11,509 | ) |  | 11,826 |  |  | 931 |
Foreign | (1,079 | ) |  | (528 | ) |  | (1,414 | )
State and local | 705 |  |  | 677 |  |  | 53 |
Total deferred provision (benefit) for income taxes | (11,883 | ) |  | 11,975 |  |  | (430 | )
Provision for income taxes | $ | 28,420 |  |  | $ | 33,320 |  |  | $ | 26,971 |
(1) | Includes the allocation of certain administrative expenses and the payment of royalties between domestic and foreign subsidiaries.
(2) | The year ended December 31, 2017 includes an estimated $1.9 million income tax expense relating to the one-time mandatory tax on previously deferred earnings of the Company’s foreign subsidiaries as a result of the Tax Act.
(3) | The year ended December 31, 2017 includes an estimated $29.2 million income tax benefit resulting from the remeasurement of the Company’s domestic net deferred tax liabilities based on the new lower corporate income tax rate as a result of the Tax Act.
The Company does not include foreign subsidiaries in its consolidated U.S. federal income tax return and it is the Company’s intent to indefinitely reinvest the earnings of these subsidiaries outside the U.S. At December 31, 2017, the cumulative amount of indefinitely reinvested earnings of foreign subsidiaries is $155.1 million, a portion of which has been included in the Company’s computation of the one-time mandatory tax on previously deferred earnings as a result of the Tax Act discussed above. The principal deferred tax assets and liabilities consist of the following at December 31, 2017 and 2016 (in thousands):
| December 31,
| 2017 |  | 2016
Deferred tax assets: |  |  |
Property and equipment in foreign jurisdictions | $ | 6,752 |  |  | $ | 5,604 |
Accrued fees on forfeited pawn loans | 7,002 |  |  | 8,221 |
Deferred cost of goods sold deduction | 2,058 |  |  | 1,674 |
Cash America nonqualified savings plan (see Note 15) | — |  |  | 4,685 |
Accrued compensation and employee benefits | 1,749 |  |  | 3,626 |
Accrued Merger severance and retention | — |  |  | 2,718 |
State net operating losses (1) | 6,219 |  |  | — |
Other | 5,459 |  |  | 8,024 |
Total deferred tax assets | 29,239 |  |  | 34,552 |
Deferred tax liabilities: |  |  |
Intangible assets | 55,121 |  |  | 75,998 |
Property and equipment in domestic jurisdictions | 1,054 |  |  | 7,716 |
Other | 2,645 |  |  | 2,406 |
Total deferred tax liabilities | 58,820 |  |  | 86,120 |
Net deferred tax liabilities before valuation allowance | (29,581 | ) |  | (51,568 | )
Valuation allowance (1) | (6,219 | ) |  | — |
Net deferred tax liabilities | $ | (35,800 | ) |  | $ | (51,568 | )
Reported as: |  |  |
Deferred tax assets | $ | 11,237 |  |  | $ | 9,707 |
Deferred tax liabilities | (47,037 | ) |  | (61,275 | )
Net deferred tax liabilities | $ | (35,800 | ) |  | $ | (51,568 | )
(1) | The state net operating losses and related valuation allowance relate primarily to entities assumed in conjunction with the Merger and were identified during fiscal 2017 as a result of the Company’s finalization of the fair value of assets acquired and liabilities assumed during the twelve month measurement period from the date of the Merger, as required by applicable accounting guidance.
The Company has a valuation allowance of $6.2 million as of December 31, 2017 related to the deferred tax assets associated with its state net operating losses. The Company has evaluated the nature and timing of its other deferred tax assets and concluded that no additional valuation allowance is necessary. The effective rate on net income differs from the U.S. federal statutory rate of 35%. The following is a reconciliation of such differences (dollars in thousands):
| Year Ended December 31,
| 2017 |  | 2016 |  | 2015
Tax at the U.S. federal statutory rate | $ | 60,309 |  |  | $ | 32,706 |  |  | $ | 30,688 |
State income taxes, net of federal tax benefit of $586, $636 and $265, respectively | 1,087 |  |  | 1,181 |  |  | 493 |
Rate benefit from foreign earnings (1) | (5,442 | ) |  | (3,642 | ) |  | (3,531 | )
Net tax benefit resulting from the enactment of the Tax Act | (27,269 | ) |  | — |  |  | — |
Nondeductible transaction related costs | — |  |  | 2,659 |  |  | — |
Other taxes and adjustments, net | (265 | ) |  | 416 |  |  | (679 | )
Provision for income taxes | $ | 28,420 |  |  | $ | 33,320 |  |  | $ | 26,971 |
Effective tax rate | 16.5 | % |  | 35.7 | % |  | 30.8 | %
(1) | Includes a $4.0 million, $1.5 million and $1.4 million foreign permanent tax benefit related to an inflation index adjustment allowed under Mexico tax law for the years ended December 31, 2017, 2016 and 2015, respectively.
The Company’s foreign operating subsidiaries are owned by a wholly-owned subsidiary located in the Netherlands. The foreign operating subsidiaries are subject to their respective foreign statutory rates, which differ from the U.S. federal statutory rate. The statutory tax rates in Mexico, Guatemala and El Salvador are 30%, 25% and 30%, respectively. The statutory tax rate in the Netherlands is 0% on eligible dividends received from its foreign subsidiaries. The Company reviews the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. The Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. Interest and penalties related to income tax liabilities that could arise would be classified as interest expense in the Company’s consolidated statements of income. As of December 31, 2017 and 2016, the Company had no unrecognized tax benefits and, therefore, the Company did no t have a liability for accrued interest and penalties and no such interest or penalties were incurred for the fiscal years ended December 31, 2017, 2016 and 2015. The Company does not believe its unrecognized tax benefits will significantly change over the next twelve months. The Company files federal income tax returns in the U.S., Mexico, Guatemala, El Salvador and the Netherlands, as well as multiple state and local income tax returns in the U.S. The Company’s U.S. federal returns are not subject to examination for tax years prior to 2014. The Company’s U.S. state income tax returns are not subject to examination for the tax years prior to 2014 with the exception of six states, which are not subject to examination for tax years prior to 2013. With respect to federal tax returns in Mexico, Guatemala, El Salvador and the Netherlands, the tax years prior to 2012 are closed to examination. There are no state income taxes in Mexico, Guatemala, El Salvador or the Netherlands.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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