Coca Cola 2005 Annual Report Download - page 110

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THE COCA-COLA COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 16: INCOME TAXES (Continued)
A reconciliation of the statutory U.S. federal tax rate and effective tax rates is as follows:
Year Ended December 31, 2005 2004 2003
Statutory U.S. federal rate 35.0 % 35.0 % 35.0 %
State and local income taxes — net of federal benefit 1.2 1.0 0.9
Earnings in jurisdictions taxed at rates different from the statutory U.S. federal
rate (12.1)1(9.4)5,6 (10.6)10
Equity income or loss (2.3) (3.1)7(2.4)11
Other operating charges 0.42(0.9)8(1.1)12
Other — net 0.33(0.5)9(0.9)
Repatriation under the Jobs Creation Act 4.74——
Effective rates 27.2 % 22.1 % 20.9 %
1Includes approximately $29 million (or 0.4 percent) tax benefit related to the favorable resolution of
certain tax matters in various international jurisdictions.
2Includes approximately $4 million tax benefit related to the Philippines impairment charges. Refer to
Note 5 and Note 17.
3Includes approximately $72 million (or 1.1 percent) tax benefit related to the favorable resolution of
certain domestic tax matters.
4Related to repatriation of approximately $6.1 billion of previously unremitted foreign earnings under
the Jobs Creation Act, resulting in a tax provision of approximately $315 million.
5Includes approximately $92 million (or 1.4 percent) tax benefit related to the favorable resolution of
certain tax matters in various international jurisdictions.
6Includes a tax charge of approximately $75 million (or 1.2 percent) related to the recording of a
valuation allowance on various deferred tax assets recorded in Germany.
7Includes an approximate $50 million (or 0.8 percent) tax benefit related to the realization of certain
foreign tax credits per provisions of the Jobs Creation Act.
8Includes a tax benefit of approximately $171 million primarily related to impairment of franchise rights
at CCEAG and certain manufacturing investments. Refer to Note 17.
9Includes an approximate $36 million (or 0.6 percent) tax benefit related to the favorable resolution of
various domestic tax matters.
10 Includes an approximate $50 million (or 0.8 percent) tax benefit related primarily to the favorable
resolution of certain tax matters in various international jurisdictions.
11 Includes the tax benefit of approximately $3 million related to the write-down of certain intangible
assets held by bottling investments in Latin America. Refer to Note 2.
12 Includes the tax benefit of approximately $186 million related to charges for streamlining initiatives.
Refer to Note 18.
Our effective tax rate reflects the tax benefits from having significant operations outside the United States
that are taxed at rates lower than the statutory U.S. rate of 35 percent.
Undistributed earnings of the Company’s foreign subsidiaries amounted to approximately $5.1 billion at
December 31, 2005. Those earnings are considered to be indefinitely reinvested and, accordingly, no U.S.
federal and state income taxes have been provided thereon. Upon distribution of those earnings in the form of
dividends or otherwise, the Company would be subject to both U.S. income taxes (subject to an adjustment for
foreign tax credits) and withholding taxes payable to the various foreign countries. Determination of the amount
of unrecognized deferred U.S. income tax liability is not practical because of the complexities associated with its
hypothetical calculation; however, unrecognized foreign tax credits would be available to reduce a portion of the
U.S. liability.
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