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Income Taxes | 12 Months Ended
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Dec. 31, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES On December 22, 2017, the Tax Act was enacted into law. The Tax Act impacted the Company by, among other things, reducing its 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 its previously deferred foreign earnings. The Company recorded a provisional net income tax benefit of $27.3 million during the fourth quarter of 2017 as a result of the Tax Act. As of December 31, 2018, the Company finalized certain estimates and tax positions used in the analysis of the provisional net income tax benefit and recorded an additional $1.5 million income tax benefit, which is included in the provision for income taxes in fiscal 2018. The adjustment to the provisional net income tax benefit was primarily a result of changes in interpretations and assumptions the Company made as a result of implementation guidance issued by the Internal Revenue Service during 2018. Components of the provision for income taxes and the income to which it relates for the years ended December 31, 2018, 2017 and 2016 consist of the following (in thousands):
| Year Ended December 31,
| 2018 |  | 2017 |  | 2016
Income before income taxes (1): |  |  |  |  |
Domestic | $ | 125,056 |  |  | $ | 93,365 |  |  | $ | 30,804 |
Foreign | 80,253 |  |  | 78,947 |  |  | 62,643 |
Income before income taxes | $ | 205,309 |  |  | $ | 172,312 |  |  | $ | 93,447 |
Current income taxes: |  |  |  |  |
Federal (2) | $ | 18,751 |  |  | $ | 15,995 |  |  | $ | 1,419 |
Foreign | 23,231 |  |  | 23,340 |  |  | 18,787 |
State and local | 2,506 |  |  | 968 |  |  | 1,139 |
Current provision for income taxes | 44,488 |  |  | 40,303 |  |  | 21,345 |
Deferred provision (benefit) for income taxes: |  |  |  |  |
Federal (3) | 7,621 |  |  | (11,509 | ) |  | 11,826 |
Foreign | (566 | ) |  | (1,079 | ) |  | (528 | )
State and local | 560 |  |  | 705 |  |  | 677 |
Total deferred provision (benefit) for income taxes | 7,615 |  |  | (11,883 | ) |  | 11,975 |
Provision for income taxes | $ | 52,103 |  |  | $ | 28,420 |  |  | $ | 33,320 |
(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 a provisional $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. The year ended December 31, 2018 includes a $1.5 million income tax benefit as a result of the Company’s finalization of certain estimates and tax positions used to record the 2017 provisional tax expense and $0.8 million of income tax expense relating to the global intangible low-taxed income (GILTI) inclusion.
(3) | The year ended December 31, 2017 includes a provisional $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. During fiscal 2018, the Company finalized certain estimates and tax positions used in the analysis of the 2017 provisional tax benefit resulting in no adjustments.
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, 2018, the cumulative amount of indefinitely reinvested earnings of foreign subsidiaries was $204.7 million, which would not be subject to additional U.S. taxes if the earnings were repatriated into the U.S. The principal deferred tax assets and liabilities consist of the following (in thousands):
| As of December 31,
| 2018 |  | 2017
Deferred tax assets: |  |  |
Property and equipment in foreign jurisdictions | $ | 8,073 |  |  | $ | 6,752 |
Accrued fees on forfeited pawn loans | 7,489 |  |  | 7,002 |
Deferred cost of goods sold deduction | 3,494 |  |  | 2,058 |
Accrued compensation and employee benefits | 1,912 |  |  | 1,749 |
State net operating losses | 6,430 |  |  | 6,219 |
Other | 6,027 |  |  | 5,459 |
Total deferred tax assets | 33,425 |  |  | 29,239 |
Deferred tax liabilities: |  |  |
Intangible assets | 66,734 |  |  | 55,121 |
Property and equipment in domestic jurisdictions | 1,668 |  |  | 1,054 |
Other | 1,807 |  |  | 2,645 |
Total deferred tax liabilities | 70,209 |  |  | 58,820 |
Net deferred tax liabilities before valuation allowance | (36,784 | ) |  | (29,581 | )
Valuation allowance | (6,430 | ) |  | (6,219 | )
Net deferred tax liabilities | $ | (43,214 | ) |  | $ | (35,800 | )
Reported as: |  |  |
Deferred tax assets | $ | 11,640 |  |  | $ | 11,237 |
Deferred tax liabilities | (54,854 | ) |  | (47,037 | )
Net deferred tax liabilities | $ | (43,214 | ) |  | $ | (35,800 | )
The Company has a valuation allowance of $6.4 million and $6.2 million as of December 31, 2018 and 2017, respectively, 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 following is a reconciliation of income taxes calculated at the U.S. federal statutory rate to the provision for income taxes (dollars in thousands):
| Year Ended December 31,
| 2018 |  | 2017 |  | 2016
U.S. federal statutory rate | 21 | % |  | 35 | % |  | 35 | %
Tax at the U.S. federal statutory rate | $ | 43,115 |  |  | $ | 60,309 |  |  | $ | 32,706 |
State income tax, net of federal tax benefit of $644, $586 and $636, respectively | 2,422 |  |  | 1,087 |  |  | 1,181 |
Net incremental income tax expense (benefit) from foreign earnings (1) | 6,031 |  |  | (5,442 | ) |  | (3,642 | )
Net tax benefit resulting from the enactment of the Tax Act | (1,494 | ) |  | (27,269 | ) |  | — |
Nondeductible compensation expense | 1,827 |  |  | — |  |  | — |
Nondeductible transaction related costs | — |  |  | — |  |  | 2,659 |
Other taxes and adjustments, net | 202 |  |  | (265 | ) |  | 416 |
Provision for income taxes | $ | 52,103 |  |  | $ | 28,420 |  |  | $ | 33,320 |
Effective tax rate | 25.4 | % |  | 16.5 | % |  | 35.7 | %
(1) | Includes a $3.3 million, $4.0 million and $1.5 million foreign permanent tax benefit related to an inflation index adjustment allowed under Mexico tax law for the years ended December 31, 2018, 2017 and 2016, 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, El Salvador and Colombia are generally 30%, 25%, 30% and 37%, 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, 2018 and 2017, 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, 2018, 2017 and 2016. The Company files federal income tax returns in the U.S., Mexico, Guatemala, El Salvador, Colombia 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 2015. The Company’s U.S. state income tax returns are not subject to examination for the tax years prior to 2015 with the exception of six states, which are not subject to examination for tax years prior to 2014. With respect to federal tax returns in Mexico, Guatemala, El Salvador, Colombia and the Netherlands, the tax years prior to 2013 are closed to examination. There are no state income taxes in Mexico, Guatemala, El Salvador, Colombia 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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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