Coca Cola 2013 Annual Report Download - page 61

A reconciliation of the statutory U.S. federal tax rate and our effective tax rate is as follows:
Year Ended December 31, 2013 2012 2011
Statutory U.S. federal tax rate 35.0% 35.0% 35.0%
State and local income taxes — net of federal benefit 1.0 1.1 0.9
Earnings in jurisdictions taxed at rates different from the statutory U.S. federal rate (10.3)1,2,3 (9.5)6,7 (9.5)10,11,12
Reversal of valuation allowances —(2.4)8—
Equity income or loss (1.4)4(2.0) (1.4)13
Other operating charges 1.2 0.490.314
Other — net (0.7)50.5 (0.8)15,16,17,18
Effective tax rate 24.8% 23.1% 24.5%
1Includes a tax benefit of $26 million (or a 0.2 percent impact on our effective tax rate) related to amounts required to be recorded for changes to
our uncertain tax positions, including interest and penalties, in various international jurisdictions.
2Includes a tax expense of $279 million on pretax net gains of $501 million (or a 0.9 percent impact on our effective tax rate) related to the
deconsolidation of our Brazilian bottling operations upon their combination with an independent bottler and a loss due to the merger of four of
the Company’s Japanese bottling partners. Refer to Note 2 and Note 17 of Notes to Consolidated Financial Statements.
3Includes a tax expense of $3 million (or a 0.5 percent impact on our effective tax rate) related to a charge of $149 million due to the devaluation of
the Venezuelan bolivar. Refer to Note 19 of Notes to Consolidated Financial Statements.
4Includes an $8 million tax benefit on a pretax charge of $159 million (or a 0.4 percent impact on our effective tax rate) related to our
proportionate share of unusual or infrequent items recorded by our equity method investees. Refer to Note 17 of Notes to Consolidated Financial
Statements.
5Includes a tax benefit of $175 million on pretax charges of $877 million (or a 1.2 percent impact on our effective tax rate) primarily related to
impairment charges recorded on certain of the Company’s intangible assets and charges related to the Company’s productivity and reinvestment
program as well as other restructuring initiatives. Refer to Note 17 and Note 18 of Notes to Consolidated Financial Statements.
6Includes a tax expense of $133 million (or a 1.1 percent impact on our effective tax rate) related to amounts required to be recorded for changes to
our uncertain tax positions, including interest and penalties, in various international jurisdictions.
7Includes a tax expense of $57 million on pretax net gains of $76 million (or a 0.3 percent impact on our effective tax rate) related to the following:
a gain recognized as a result of the merger of Andina and Polar; a gain recognized as a result of Coca-Cola FEMSA issuing additional shares of its
own stock at a per share amount greater than the carrying value of the Company’s per share investment; the loss recognized on the pending sale of
a 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 of Notes to Consolidated
Financial Statements.
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 of Notes to Consolidated Financial Statements.
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 of Notes to Consolidated Financial Statements.
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 Arca and Contal; the gain recognized on the sale of our investment in Embonor; and gains the Company
recognized as a result of Coca-Cola FEMSA 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 of Notes to Consolidated Financial Statements.
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 of Notes
to Consolidated Financial Statements.
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 of Notes to Consolidated Financial Statements.
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