What was the total value of Hardees' deferred income tax assets in 2024?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
| \$ 11,248 |
| State | 2,449 | 3,066 | | Foreign | 6,404 | 5,926 | | | 16,135 | 20,240 | | Deferred: | | | | Federal | (8,988) | (4,512) | | State | (2,857) | 714 | | Foreign | (24) | 60 | | | (11,869) | (3,738) | | Total income tax expense | $ 4,266 | $ 16,502 |
The following is a reconciliation of income tax expense at the federal statutory rate of 21.0% to our income tax expense for fiscal 2025 and 2024, respectively:
| Income tax expense at statutory rate | $ | 5,262 | $ 12,942 |
|---|---|---|---|
| State income taxes, net of federal income tax effect | (322) | 2,986 | |
| Nondeductible share-based compensation | 93 | 446 | |
| General business credits | (379) | (640) | |
| Nondeductible foreign losses | 2,010 | 230 | |
| Uncertain tax positions | (383) | 591 | |
| Foreign derived intangible income deduction | (1,975) | (2,003) | |
| Other, net | (40) | 1,950 | |
| Total income tax expense | $ | 4,266 | $ 16,502 |
Deferred income tax liabilities, net consisted of the following at January 31, 2025 and 2024:
| | 2025
Source: Item 21 — Financial Statements (FDD pages 84–85)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, the total deferred income tax assets for 2024 amounted to $174,636. This figure represents the sum of various components, including operating lease liabilities ($115,175), financing method sale-leaseback obligations ($32,229), interest limitation carryforward ($13,345), reserves and allowances ($5,546), franchise fees ($7,803), net operating loss carryforwards ($4,749), and federal and state tax credits ($4,536), offset by a valuation allowance of ($8,747).
Deferred income tax assets arise from temporary differences between the financial reporting and tax bases of assets and liabilities, as well as from net operating loss and tax credit carryforwards. These assets reflect the future tax benefits that Hardees expects to realize. However, the valuation allowance indicates that Hardees has determined it is more likely than not that a portion of these assets may not be realized. This could be due to uncertainties about future profitability or changes in tax laws.
For a prospective Hardees franchisee, understanding these deferred tax assets and liabilities is crucial for assessing the overall financial health and tax position of the company. While deferred tax assets can be a source of future tax benefits, the valuation allowance suggests a degree of uncertainty about their realization. Franchisees should consider these factors when evaluating the long-term financial prospects of the franchise and consult with a financial advisor to understand the implications for their investment.
It is also important to note that these figures are based on Hardees' consolidated financial statements, which include the Hardee's National Advertising Fund and local co-operative advertising funds. The financial performance of these entities can impact the overall tax position of Hardees, and franchisees should be aware of these interdependencies.