INCOME TAXES (Tables)
|
12 Months Ended |
Dec. 31, 2016 |
|---|
| Income Taxes [Abstract] |
|
| Schedule of income before income taxes |
Income before income taxes consisted of the following (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
2016 |
|
|
2015 |
|
|
2014 |
|
United States |
$ |
113 |
|
1 |
$ |
1,801 |
|
|
$ |
1,567 |
|
International |
8,023 |
|
|
7,804 |
|
|
7,758 |
|
Total |
$ |
8,136 |
|
|
$ |
9,605 |
|
|
$ |
9,325 |
|
1 Includes $2,456 million in charges related to refranchising certain bottling territories in North America. Refer to Note 2.
|
| Schedule of income tax expense (benefit) |
Income tax expense consisted of the following for the years ended December 31, 2016, 2015 and 2014 (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States |
|
|
State and Local |
|
|
International |
|
|
Total |
|
2016 |
|
|
|
|
|
|
|
Current |
$ |
1,147 |
|
|
$ |
113 |
|
|
$ |
1,182 |
|
|
$ |
2,442 |
|
Deferred |
(838 |
) |
1 |
(91 |
) |
|
73 |
|
|
(856 |
) |
2015 |
|
|
|
|
|
|
|
Current |
$ |
711 |
|
|
$ |
69 |
|
|
$ |
1,386 |
|
|
$ |
2,166 |
|
Deferred |
120 |
|
|
45 |
|
|
(92 |
) |
|
73 |
|
2014 |
|
|
|
|
|
|
|
Current |
$ |
867 |
|
|
$ |
81 |
|
|
$ |
1,293 |
|
|
$ |
2,241 |
|
Deferred |
(97 |
) |
|
(21 |
) |
|
78 |
|
|
(40 |
) |
1 Includes the benefit from charges related to refranchising certain bottling territories in North America. Refer to Note 2.
|
| Reconciliation of the statutory U.S. federal tax rate and effective tax rates |
A reconciliation of the statutory U.S. federal tax rate and our effective tax rate is as follows:
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|
|
|
|
|
|
|
|
|
Year Ended December 31, |
2016 |
|
|
2015 |
|
|
2014 |
|
|
Statutory U.S. federal tax rate |
35.0 |
% |
|
35.0 |
% |
|
35.0 |
% |
|
State and local income taxes — net of federal benefit |
1.2 |
|
|
1.2 |
|
|
1.0 |
|
|
Earnings in jurisdictions taxed at rates different from the statutory U.S. federal rate |
(17.5 |
) |
1,2,3 |
(12.7 |
) |
9 |
(11.5 |
) |
14,15 |
Equity income or loss |
(3.0 |
) |
4 |
(1.7 |
) |
10 |
(2.2 |
) |
|
Other operating charges |
1.4 |
|
5,6 |
1.2 |
|
11,12 |
2.9 |
|
16,17 |
Other — net |
2.4 |
|
7,8 |
0.3 |
|
13 |
(1.6 |
) |
|
Effective tax rate |
19.5 |
% |
|
23.3 |
% |
|
23.6 |
% |
|
|
|
1 |
Includes a pretax charge of $72 million (or a 0.3 percent impact on our effective tax rate) related to charges resulting from remeasuring our net monetary assets denominated in Egyptian pounds. Refer to Note 17.
|
|
|
2 |
Includes a tax benefit of $68 million (or a 0.8 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 as well as tax settlements with various international jurisdictions.
|
|
|
3 |
Includes a tax charge of $189 million related to a pretax gain of $1,323 million (or a 3.4 percent impact on our effective tax rate) related to the deconsolidation of our German bottling operations and a net pretax gain of $18 million related to the disposal of our investment in Keurig, partially offset by a pretax loss of $21 million related to the deconsolidation of our South African bottling operations. This charge also includes the tax impact resulting from the accrual of tax on temporary differences related to the investment in foreign subsidiaries that are now expected to reverse in the foreseeable future. Refer to Note 2.
|
|
|
4 |
Includes an $11 million tax benefit on a pretax charge of $61 million (or a 0.1 percent impact on our effective tax rate) related to our proportionate share of significant operating and nonoperating items recorded by certain of our equity method investees. Refer to Note 17.
|
|
|
5 |
Includes a tax benefit of $74 million on pretax charges of $309 million (or a 0.4 percent impact on our effective tax rate) which primarily included $200 million in cash contributions to The Coca-Cola Foundation, a $76 million charge due to the write-down we recorded related to receivables from our bottling partner in Venezuela and a $32 million charge due to tax litigation expense. Refer to Note 17.
|
|
|
6 |
Includes a tax benefit of $338 million on pretax charges of $1,201 million (or a 1.0 percent impact on our effective tax rate) primarily related to the Company's productivity and reinvestment program as well as other restructuring initiatives. Refer to Note 18.
|
|
|
7 |
Includes a tax expense of $157 million (or a 1.9 percent impact on our effective tax rate) primarily related to amounts required to be recorded for changes to our uncertain tax positions, including interest and penalties in certain domestic jurisdictions.
|
|
|
8 |
Includes a tax expense of $753 million primarily on pretax charges of $2,456 million (or a 1.4 percent impact on our effective tax rate) related to the refranchising of certain bottling territories in North America. Refer to Note 2.
|
|
|
9 |
Includes a pretax charge of $27 million (or a 0.1 percent impact on our effective tax rate) due to the remeasurement of the net monetary assets of our local Venezuelan subsidiary into U.S. dollars using the SIMADI exchange rate. Refer to Note 1 and Note 17.
|
|
|
10 |
Includes a tax benefit of $5 million on a pretax charge of $87 million (or a 0.3 percent impact on our effective tax rate) related to our proportionate share of significant operating and nonoperating items recorded by certain of our equity method investees. Refer to Note 17.
|
|
|
11 |
Includes a tax benefit of $45 million on a pretax charge of $225 million (or a 0.3 percent impact on our effective tax rate) primarily due to an impairment of a Venezuelan trademark, a write-down of receivables from our bottling partner in Venezuela, a cash contribution to The Coca-Cola Foundation and charges associated with ongoing tax litigation. Refer to Note 1 and Note 17.
|
|
|
12 |
Includes a tax benefit of $259 million on pretax charges of $983 million (or a 0.9 percent impact on our effective tax rate) primarily related to the Company's productivity and reinvestment program as well as other restructuring initiatives. Refer to Note 18.
|
|
|
13 |
Includes tax expense of $150 million on pretax income of $77 million (or a 1.3 percent impact on our effective tax rate) primarily due to the gain related to the Monster Transaction, offset by charges related to the refranchising of certain bottling territories in North America and charges associated with the early extinguishment of long-term debt. Refer to Note 2 and Note 17.
|
|
|
14 |
Includes tax expense of $6 million on a pretax net charge of $372 million (or a 1.5 percent impact on our effective tax rate) due to the remeasurement of the net monetary assets of our local Venezuelan subsidiary into U.S. dollars using the SICAD 2 exchange rate. Refer to Note 1.
|
|
|
15 |
Includes tax expense of $18 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.
|
|
|
16 |
Includes tax expense of $55 million on a pretax charge of $352 million (or a 1.9 percent impact on our effective tax rate) primarily due to an impairment of a Venezuelan trademark, a write-down on receivables from our bottling partner in Venezuela, a charge associated with certain of the Company's fixed assets, and as a result of the restructuring and transition of the Company's Russian juice operations to an existing joint venture with an unconsolidated bottling partner. Refer to Note 1 and Note 17.
|
|
|
17 |
Includes a tax benefit of $191 million on pretax charges of $809 million (or a 1.0 percent impact on our effective tax rate) primarily related to the Company's productivity and reinvestment program as well as other restructuring initiatives. Refer to Note 18.
|
|
| Reconciliation of changes in the gross amount of unrecognized tax benefit |
A reconciliation of the changes in the gross amount of unrecognized tax benefits is as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
2016 |
|
|
2015 |
|
|
2014 |
|
Beginning balance of unrecognized tax benefits |
$ |
168 |
|
|
$ |
211 |
|
|
$ |
230 |
|
Increase related to prior period tax positions |
163 |
|
1 |
4 |
|
|
13 |
|
Decrease related to prior period tax positions |
— |
|
|
(9 |
) |
|
(2 |
) |
Increase related to current period tax positions |
17 |
|
|
5 |
|
|
11 |
|
Decrease related to settlements with taxing authorities |
(40 |
) |
1 |
(5 |
) |
|
(5 |
) |
Decrease due to lapse of the applicable statute of limitations |
— |
|
|
(23 |
) |
|
(32 |
) |
Increase (decrease) due to effect of foreign currency exchange rate changes |
(6 |
) |
|
(15 |
) |
|
(4 |
) |
Ending balance of unrecognized tax benefits |
$ |
302 |
|
|
$ |
168 |
|
|
$ |
211 |
|
|
|
1 |
The increase is primarily related to a change in judgment about one of the Company’s tax positions as a result of receiving notification of a preliminary settlement of a Competent Authority matter with a foreign jurisdiction, a portion of which became certain later in the year. This change in position did not have a material impact on the Company's consolidated statement of income during the year ended December 31, 2016, as it was partially offset by refunds to be received from the foreign jurisdiction. |
|
| Deferred tax assets and liabilities |
The tax effects of temporary differences and carryforwards that give rise to deferred tax assets and liabilities consist of the following (in millions):
|
|
|
|
|
|
|
|
|
December 31, |
2016 |
|
|
2015 |
|
Deferred tax assets: |
|
|
|
Property, plant and equipment |
$ |
144 |
|
|
$ |
192 |
|
Trademarks and other intangible assets |
114 |
|
|
68 |
|
Equity method investments (including foreign currency translation adjustment) |
684 |
|
|
694 |
|
Derivative financial instruments |
193 |
|
|
161 |
|
Other liabilities |
1,141 |
|
|
1,056 |
|
Benefit plans |
1,599 |
|
|
1,541 |
|
Net operating/capital loss carryforwards |
461 |
|
|
413 |
|
Other |
135 |
|
|
175 |
|
Gross deferred tax assets |
4,471 |
|
|
4,300 |
|
Valuation allowances |
(530 |
) |
|
(477 |
) |
Total deferred tax assets1,2
|
$ |
3,941 |
|
|
$ |
3,823 |
|
Deferred tax liabilities: |
|
|
|
Property, plant and equipment |
$ |
(1,176 |
) |
|
$ |
(1,887 |
) |
Trademarks and other intangible assets |
(2,694 |
) |
|
(3,422 |
) |
Equity method investments (including foreign currency translation adjustment) |
(1,718 |
) |
|
(1,441 |
) |
Derivative financial instruments |
(1,121 |
) |
|
(687 |
) |
Other liabilities |
(149 |
) |
|
(216 |
) |
Benefit plans |
(487 |
) |
|
(367 |
) |
Other |
(635 |
) |
|
(726 |
) |
Total deferred tax liabilities3
|
(7,980 |
) |
|
(8,746 |
) |
Net deferred tax liabilities |
$ |
(4,039 |
) |
|
$ |
(4,923 |
) |
|
|
1 |
Current deferred tax assets of $80 million and $151 million were included in the line item prepaid expenses and other assets in our consolidated balance sheets as of December 31, 2016 and 2015, respectively.
|
|
|
2 |
Noncurrent deferred tax assets of $326 million and $360 million were included in the line item other assets in our consolidated balance sheets as of December 31, 2016 and 2015, respectively.
|
|
|
3 |
Current deferred tax liabilities of $692 million and $743 million were included in the line item accounts payable and accrued expenses in our consolidated balance sheets as of December 31, 2016 and 2015, respectively.
|
|
| Deferred tax asset valuation allowances |
An analysis of our deferred tax asset valuation allowances is as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
2016 |
|
|
2015 |
|
|
2014 |
|
Balance at beginning of year |
$ |
477 |
|
|
$ |
649 |
|
|
$ |
586 |
|
Additions |
68 |
|
|
42 |
|
|
104 |
|
Decrease due to reclassification to assets held for sale |
(9 |
) |
|
(163 |
) |
|
— |
|
Deductions |
(6 |
) |
|
(51 |
) |
|
(41 |
) |
Balance at end of year |
$ |
530 |
|
|
$ |
477 |
|
|
$ |
649 |
|
|