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PART II
These items were partially offset by the following:
• an increase of approximately 90 basis points due to the unfavorable impact of foreign currency translation and foreign currency
transaction losses.
See “Segment Review – Latin America” in this MD&A for a further discussion of the tax benefits in Brazil.
Impairment of Goodwill and Intangible Assets
During the third quarter of 2013, we recorded a non-cash impairment charge of approximately $42 for goodwill and intangible assets
associated with our China business. See Note 16, Goodwill and Intangible Assets on pages F-49 through F-51 of our 2014 Annual Report for
more information on China.
See “Segment Review” in this MD&A for additional information related to changes in operating margin by segment.
Other Expense
Interest expense decreased by 8% compared to the prior-year period, primarily due to lower outstanding debt balances partially offset by
higher average interest rates.
Loss on extinguishment of debt in 2013 is comprised of approximately $71 for the make-whole premium and the write-off of debt issuance
costs associated with the prepayment of our Private Notes (as defined below in “Liquidity and Capital Resources”) and approximately $2 for
the write-off of debt issuance costs associated with the early repayment of the $380 of outstanding principal amount of the term loan
agreement (as defined below in “Liquidity and Capital Resources”), which occurred in the first quarter of 2013. In addition, in the second
quarter of 2013, we recorded a loss on extinguishment of debt of approximately $13 for the make-whole premium and the write-off of debt
issuance costs, partially offset by a deferred gain associated with the January 2013 interest-rate swap agreement termination, associated
with the prepayment of our 2014 Notes (as defined below in “Liquidity and Capital Resources”). See Note 5, Debt and Other Financing on
pages F-17 through F-20 of our 2014 Annual Report, and “Liquidity and Capital Resources” in this MD&A for more information.
Interest income decreased by approximately $11 compared to the prior-year period, primarily impacted by $12 for interest income that
benefited the fourth quarter of 2013, due to an out-of-period adjustment related to judicial deposits in Brazil.
Other expense, net, increased by approximately $56 compared to the prior-year period, primarily due to higher foreign exchange losses.
Foreign exchange losses increased by approximately $41 compared to the prior-year period, with the most significant impact due to the
weakening of the Russian ruble. In addition, the increase in other expense, net was also due to a more significant impact, approximately $54
in 2014 as compared to approximately $34 in 2013, from the devaluations of the Venezuelan currency on monetary assets and liabilities in
conjunction with highly inflationary accounting. See “Segment Review – Latin America” in this MD&A for a further discussion of Venezuela.
Effective Tax Rate
The effective tax rate for 2014 was 334.4%, compared to 100.6% for 2013.
The effective tax rate in 2014 was negatively impacted by a non-cash income tax charge of approximately $405. This was largely due to a
valuation allowance, recorded in the fourth quarter of 2014, against deferred tax assets of approximately $384 which is primarily due to the
strengthening of the U.S. dollar against currencies of some of our key markets. The approximate $384 includes the valuation allowance
recorded against U.S. deferred tax assets of approximately $367, as well as approximately $17 associated with other foreign subsidiaries. The
effective tax rates in 2014 and 2013 were impacted by the devaluation of the Venezuelan currency in conjunction with highly inflationary
accounting discussed further within “Segment Review – Latin America” in this MD&A. The effective tax rate in 2013 was also negatively
impacted by the $89 accrual for the settlements related to the FCPA investigations, the non-cash impairment charges for goodwill and
intangible assets associated with our China business of approximately $42, and a valuation allowance for deferred tax assets related to
China in the third quarter of approximately $9 and Venezuela in the fourth quarter of approximately $42.
The Adjusted effective tax rate for 2014 was 39.9%, compared to 30.3% for 2013. The higher 2014 Adjusted effective tax rate is primarily
due to an adjustment to the carrying value of our state deferred tax balances due to changes in the expected tax rate, valuation allowances
for deferred taxes, including the impact of legislative changes, and out-of-period adjustments of approximately $6 and approximately $6
recorded in the second and fourth quarters of 2014, respectively.