Coca Cola 2013 Annual Report Download - page 117

majority ownership interest in our consolidated Philippine bottling operations to Coca-Cola FEMSA; and the expense recorded for the premium
the Company paid over the publicly traded market price to acquire an ownership interest in Mikuni. Refer to Note 17.
8Relates to a net tax benefit of $283 million associated with the reversal of valuation allowances in certain of the Company’s foreign jurisdictions.
9Includes a tax benefit of $95 million on pretax charges of $416 million (or a 0.4 percent impact on our effective tax rate) primarily related to the
Company’s productivity and reinvestment program as well as other restructuring initiatives; the refinement of previously established accruals related
to the Company’s 2008–2011 productivity initiatives; and the refinement of previously established accruals related to the Company’s integration of
CCE’s former North America business. Refer to Note 18.
10 Includes a tax benefit of $6 million related to amounts required to be recorded for changes to our uncertain tax positions, including interest and
penalties, in various international jurisdictions.
11 Includes a zero percent effective tax rate on pretax charges of $17 million due to the impairment of available-for-sale securities. Refer to Note 3
and Note 17.
12 Includes a tax expense of $299 million on pretax net gains of $641 million (or a 0.7 percent impact on our effective tax rate) related to the net gain
recognized as a result of the merger of Embotelladoras Arca, S.A.B. de C.V. (‘‘Arca’’) and Grupo Continental S.A.B. (‘‘Contal’’); the gain
recognized on the sale of our investment in Embonor; and gains the Company recognized as a result of Coca-Cola FEMSA, an equity method
investee, issuing additional shares of its own stock at per share amounts greater than the carrying value of the Company’s per share investment.
These gains were partially offset by charges associated with certain of the Company’s equity method investments in Japan. Refer to Note 17.
13 Includes a tax benefit of $7 million on pretax net charges of $53 million (or a 0.1 percent impact on our effective tax rate) related to our
proportionate share of asset impairments and restructuring charges recorded by certain of our equity method investees. Refer to Note 17.
14 Includes a tax benefit of $224 million on pretax charges of $732 million (or a 0.3 percent impact on our effective tax rate) primarily related to the
Company’s productivity, integration and restructuring initiatives; transaction costs incurred in connection with the merger of Arca and Contal; costs
associated with the earthquake and tsunami that devastated northern and eastern Japan; and costs associated with the flooding in Thailand. Refer
to Note 17.
15 Includes a tax benefit of $8 million on pretax charges of $19 million related to the amortization of favorable supply contracts acquired in
connection with our acquisition of CCE’s former North America business.
16 Includes a tax benefit of $3 million on pretax net charges of $9 million related to the repurchase and/or exchange of certain long-term debt
assumed in connection with our acquisition of CCE’s former North America business as well as the early extinguishment of certain other long-term
debt. Refer to Note 10.
17 Includes a tax benefit of $14 million on pretax charges of $41 million related to the impairment of an investment in an entity accounted for under
the equity method of accounting. Refer to Note 17.
18 Includes a tax benefit of $2 million related to amounts required to be recorded for changes to our uncertain tax positions, including interest and
penalties, in certain domestic jurisdictions.
Our effective tax rate reflects the tax benefits of having significant operations outside the United States, which are generally taxed
at rates lower than the U.S. statutory rate of 35 percent. As a result of employment actions and capital investments made by the
Company, certain tax jurisdictions provide income tax incentive grants, including Brazil, Costa Rica, Singapore and Swaziland. The
terms of these grants expire from 2015 to 2022. We expect each of these grants to be renewed indefinitely. Tax incentive grants
favorably impacted our income tax expense by $279 million, $280 million and $193 million for the years ended December 31, 2013,
2012 and 2011, respectively. In addition, our effective tax rate reflects the benefits of having significant earnings generated in
investments accounted for under the equity method of accounting, which are generally taxed at rates lower than the U.S. statutory
rate.
The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction and various state and foreign
jurisdictions. U.S. tax authorities have completed their federal income tax examinations for all years prior to 2005. With respect to
state and local jurisdictions and countries outside the United States, with limited exceptions, the Company and its subsidiaries are
no longer subject to income tax audits for years before 2002. For U.S. federal and state tax purposes, the net operating losses and
tax credit carryovers acquired in connection with our acquisition of CCE’s former North America business that were generated
between the years of 1990 through 2010 are subject to adjustments until the year in which they are actually utilized is no longer
subject to examination.
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