Coca Cola 2006 Annual Report Download - page 58

ownership interest in the total outstanding shares of CCE common stock from approximately 37 percent to
approximately 36 percent.
Income Taxes
Our effective tax rate reflects tax benefits derived from significant operations outside the United States,
which are generally taxed at rates lower than the U.S. statutory rate of 35 percent.
Our effective tax rate of approximately 22.8 percent for the year ended December 31, 2006, included the
following:
• a tax benefit of approximately 1.8 percent primarily related to the sale of a portion of our investments in
Coca-Cola Icecek and Coca-Cola FEMSA. The tax benefit was a result of the reversal of a valuation
allowance that covered certain deferred tax assets recorded on capital loss carryforwards. The reversal of
the valuation allowance was offset by a reduction of deferred tax assets due to the utilization of these
capital loss carryforwards. These capital loss carryforwards offset the taxable gain on the sale of a portion
of our investments in Coca-Cola Icecek and Coca-Cola FEMSA. Also included in this tax benefit is the
reversal of the deferred tax liability recorded for the differences between the financial reporting and tax
bases in the stock sold;
• an income tax benefit primarily related to the impairment of assets and investments in our bottling
operations, contract termination costs related to production capacity efficiencies and other restructuring
charges at a rate of approximately 16 percent;
• a tax charge of approximately $24 million related to the resolution of certain tax matters; and
• an income tax benefit related to our proportionate share of CCE’s charges recorded at a rate of
approximately 8.8 percent. Refer to Note 3 and Note 18 of Notes to Consolidated Financial Statements.
Our effective tax rate of approximately 27.2 percent for the year ended December 31, 2005, included the
following:
• an income tax benefit primarily related to the Philippines impairment charges at a rate of approximately
4 percent;
• an income tax benefit of approximately $101 million related to the reversal of previously accrued taxes
resulting from the favorable resolution of various tax matters; and
• a tax provision of approximately $315 million related to repatriation of previously unremitted foreign
earnings under the Jobs Creation Act.
Our effective tax rate of approximately 22.1 percent for the year ended December 31, 2004, included the
following:
• an income tax benefit of approximately $128 million related to the reversal of previously accrued taxes
resulting from the favorable resolution of various tax matters;
• an income tax benefit on ‘‘Other Operating Charges,’’ discussed above, at a rate of approximately
36 percent;
• an income tax provision of approximately $75 million related to the recording of a valuation allowance on
deferred tax assets of CCEAG; and
• an income tax benefit of approximately $50 million as a result of the realization of certain tax credits
related to the Jobs Creation Act.
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