What was the value of Hardees' goodwill and other intangible assets related to deferred income tax liabilities at January 31, 2023?
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 value of goodwill and other intangible assets related to deferred income tax liabilities can be found in the table presenting intangible assets. As of January 31, 2023, the deferred income tax liabilities related to goodwill and other intangible assets were ($198,306). This indicates a liability, as represented by the negative value.
This deferred tax liability arises because the book value and tax basis of these assets differ. In simpler terms, Hardees is expected to pay taxes on these intangible assets in the future, creating a liability on the balance sheet. This is a common accounting practice and doesn't necessarily indicate poor financial health, but it's important for prospective franchisees to understand how these liabilities can impact the overall financial picture.
A potential Hardees franchisee should consider this deferred tax liability when evaluating the financial stability and future tax obligations of the franchise. It would be prudent to discuss with the franchisor or a financial advisor how these liabilities are managed and what impact they might have on the franchisee's profitability and tax planning.