INCOME TAXES (AS RESTATED)

The following table shows the significant components of the income tax provision from continuing operations:



	Fiscal Year Ended September 30,
	2014			2013			2012
	As Restated (See Note 2)
	(in thousands)
Current:
Federal	$	21,928		$	39,641		$	58,736
State and foreign	(10,498		)	1,490			7,667
	11,430			41,131			66,403
Deferred:
Federal	(1,220		)	(17,689		)	1,894
State and foreign	(4,954		)	2,756			(632		)
	(6,174		)	(14,933		)	1,262
Total income tax expense	$	5,256		$	26,198		$	67,665

The following table shows a reconciliation of income taxes calculated at the statutory rate and the provision for income taxes attributable to continuing operations:



	Fiscal Year Ended September 30,
	2014			2013			2012
	As Restated (See Note 2)
	(in thousands)
Income taxes at the federal statutory rate	$	8,818		$	28,170		$	74,942
Non-deductible expense related to incentive stock options	—			—			(633		)
State income tax, net of federal benefit	(910		)	1,169			272
Change in valuation allowance	481			681			1,099
Federal tax credits	(124		)	(314		)	(923		)
Foreign tax credit	(2,174		)	(3,263		)	(4,342		)
Foreign rate differential	(445		)	85			(2,842		)
Other	(390		)	(330		)	92
Total income tax expense	$	5,256		$	26,198		$	67,665
Effective tax rate	21		%	33		%	32		%

Our effective tax rates were approximately 21%, 33% and 32% for the fiscal years ended September 30, 2014, 2013 and 2012, respectively.

The following table shows significant components of our deferred tax assets and liabilities:



	September 30,
	2014			2013
	As Restated (See Note 2)
	(in thousands)
Deferred tax assets:
Albemarle & Bond loss carryforward	$	4,067		$	15,020
Tax over book inventory	15,599			12,520
Accrued liabilities	16,536			15,340
Pawn service charges receivable	3,450			3,450
Tax over book depreciation	1,066			—
State and foreign net operating loss carry-forwards	198			659
Total deferred tax assets	40,916			46,989
Deferred tax liabilities:
Tax over book amortization	—			12,593
Foreign income and dividends	476			5,371
Tax over book depreciation	8,299			2,026
Stock compensation	875			1,442
Prepaid expenses	1,388			1,359
Total deferred tax liabilities	11,038			22,791
Net deferred tax asset	29,878			24,198
Valuation allowance	(164		)	(659		)
Net deferred tax asset	$	29,714		$	23,539

Deferred taxes are not provided for temporary differences of approximately $16.8 million representing earnings of non-U.S. subsidiaries intended to be permanently reinvested outside the U.S. We estimate that, upon distribution of our share of these earnings, we would be subject to U.S. income taxes of approximately $2.7 million as of September 30, 2014. At September 30, 2014 and 2013, we provided deferred income taxes on all undistributed earnings from Cash Converters International, and recorded dividends of approximately $5.1 million and $5.1 million, respectively. Any taxes paid to foreign governments on these earnings may be used in whole or in part as credits against the U.S. tax on any dividends distributed from such earnings.

Under FASB ASC 740-10-25 Accounting for Uncertainty in Income Taxes, a tax position must be more-likely-than-not to be sustained upon examination, based on the technical merits of the position to be recognized in the financial statements. In making the determination of sustainability, we must presume the appropriate taxing authority with full knowledge of all relevant information will examine tax positions. FASB ASC 740-10-25 also prescribes how the benefit should be measured, including the consideration of any penalties and interest. It requires that the standard be applied to the balances of tax assets and liabilities as of the beginning of the period of adoption and that a corresponding adjustment be made to the opening balance of equity.

We recognize interest and penalties related to unrecognized tax benefits as “Income tax expense” in our consolidated statements of operations, which were nominal during fiscal 2014, 2013 and 2012.

We are subject to U.S., Mexico, U.K. and Canada income taxes as well as to income taxes levied by various state and local jurisdictions. With few exceptions, we are no longer subject to examinations by tax authorities for years before the tax year ended September 30, 2009. Management believes that adequate provisions have been made for any adjustments that may result from tax examinations.