Income Taxes (Tables)

12 Months Ended

Sep. 30, 2018

Schedule of domestic and foreign income components

The following table presents the components of our income from continuing operations before income taxes, including inter-segment amounts:



	Fiscal Year Ended September 30,
	2018		2017		2016

	(in thousands)
Domestic*	$	29,001	$	29,740	$	(17	)
Foreign	28,075		13,499		380
	$	57,076	$	43,239	$	363


*	Includes the majority of our corporate administrative costs. See Note 15 for information pertaining to segment contribution.

Components of income tax provision

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



	Fiscal Year Ended September 30,
	2018			2017			2016

	(in thousands)
Current:
Federal	$	(26	)	$	1,092		$	11,120
State and foreign	9,470			6,359			3,193
	9,444			7,451			14,313
Deferred:
Federal*	9,076			5,190			(3,766		)
State and foreign	(371		)	(1,435		)	(1,186		)
	8,705			3,755			(4,952		)
Total income tax expense	$	18,149		$	11,206		$	9,361

The year ended September 30, 2018 includes a $2.1 million charge resulting from the remeasurement of our domestic net deferred tax assets based on the new corporate income tax rate as a result of the Act, as well as $2.6 million charge resulting from recording a valuation allowance against foreign tax credit carryforwards that do not meet the “more likely than not” threshold to be utilized as a result of tax law changes included in the Act.

Reconciliation of income taxes calculated at the statutory rate and the provision for income taxes

The following table presents 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,
	2018			2017			2016

	(in thousands)
Income tax expense at the federal statutory rate	$	14,000		$	15,134		$	128
State taxes, net of federal benefit	1,265			(714		)	2,476
Mexico inflation adjustment	(936		)	(1,286		)	(142		)
Non-deductible items	2,214			1,114			1,860
Tax credits	(615		)	(321		)	2,788
Foreign rate differential	1,405			(172		)	277
Change in net operating loss carryforward	—			1,180			—
Change in valuation allowance	3,986			(3,211		)	1,511
Stock compensation	—			(386		)	—
Uncertain tax positions	(4,808		)	674			—
Change in tax rate resulting from enactment of the Act	2,060			—			—
Other	(422		)	(806		)	463
Total income tax expense	$	18,149		$	11,206		$	9,361
Effective tax rate	32		%	26		%	2,579		%

Significant components of deferred tax assets and liabilities

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



	September 30,
	2018			2017

	(in thousands)
Deferred tax assets:
Cash Converters International	$	9,782		$	13,550
Tax over book inventory	8,803			10,094
Accrued liabilities	4,667			6,957
Pawn service charges receivable	4,512			8,687
Stock compensation	3,328			3,356
Foreign tax credit	2,638			3,132
Capital loss carryforward	3,006			5,010
State and foreign net operating loss carryforwards	15,215			13,671
Book over tax depreciation	972			2,678
Other	137			162
Total deferred tax assets before valuation allowance	53,060			67,297
Valuation allowance	(20,254		)	(17,860		)
Net deferred tax assets	32,806			49,437
Deferred tax liabilities:
Tax over book amortization	15,700			20,629
Note receivable discount	17,396			10,569
Prepaid expenses	1,362			1,383
Total deferred tax liabilities	34,458			32,581
Net deferred tax (liability) asset	$	(1,652	)	$	16,856

Schedule of unrecognized tax benefits

The following table presents a rollforward of unrecognized tax benefits:



	Fiscal Year Ended September 30,
	2018			2017		2016

	(in thousands)
Beginning balance	$	6,530		$	6,058	$	6,058
Increase for tax positions taken during a prior period	963			—		—
Increase for tax positions taken during the current period	—			472		—
Decrease for tax positions as a result of the lapse of the statute of limitations	(4,402		)	—		—
Ending balance	$	3,091		$	6,530	$	6,058