|
INCOME TAXES (Tables)
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12 Months Ended |
|
Dec. 31, 2013
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| Income Taxes [Abstract] |
|
| Schedule of income before income taxes |
Income before income taxes consisted of the following (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
2013 |
|
|
2012 |
|
|
2011 |
|
United States |
$ |
2,451 |
|
|
$ |
3,526 |
|
|
$ |
3,029 |
|
International |
9,026 |
|
|
8,283 |
|
|
8,429 |
|
Total |
$ |
11,477 |
|
|
$ |
11,809 |
|
|
$ |
11,458 |
|
|
| Schedule of income tax expense (benefit) |
Income tax expense consisted of the following for the years ended December 31, 2013, 2012 and 2011 (in millions):
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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United States |
|
|
State and Local |
|
|
International |
|
|
Total |
|
2013 |
|
|
|
|
|
|
|
Current |
$ |
713 |
|
|
$ |
102 |
|
|
$ |
1,388 |
|
|
$ |
2,203 |
|
Deferred |
305 |
|
|
38 |
|
|
305 |
|
|
648 |
|
2012 |
|
|
|
|
|
|
|
Current |
$ |
602 |
|
|
$ |
74 |
|
|
$ |
1,415 |
|
|
$ |
2,091 |
|
Deferred |
936 |
|
|
33 |
|
|
(337 |
) |
|
632 |
|
2011 |
|
|
|
|
|
|
|
Current |
$ |
286 |
|
|
$ |
66 |
|
|
$ |
1,425 |
|
|
$ |
1,777 |
|
Deferred |
898 |
|
|
27 |
|
|
110 |
|
|
1,035 |
|
|
| 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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|
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|
|
|
|
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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 |
|
5 |
0.4 |
|
9 |
0.3 |
|
14 |
Other — net |
(0.7 |
) |
|
0.5 |
|
|
(0.8 |
) |
15,16,17,18 |
Effective tax rate |
24.8 |
% |
|
23.1 |
% |
|
24.5 |
% |
|
|
|
1 |
Includes 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.
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2 |
Includes 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.
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3 |
Includes 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.
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|
|
4 |
Includes 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.
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|
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5 |
Includes 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.
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6 |
Includes 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.
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7 |
Includes 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 Embotelladora Andina S.A. ("Andina") and Embotelladoras Coca-Cola Polar S.A. ("Polar"); a gain recognized as a result of Coca-Cola FEMSA, an equity method investee, 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.
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8 |
Relates to a net tax benefit of $283 million associated with the reversal of valuation allowances in certain of the Company's foreign jurisdictions.
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9 |
Includes 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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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| Reconciliation of the gross balance of unrecognized tax benefit |
A reconciliation of the changes in the gross balance of unrecognized tax benefit amounts is as follows (in millions):
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Year Ended December 31, |
2013 |
|
|
2012 |
|
|
2011 |
|
Beginning balance of unrecognized tax benefits |
$ |
302 |
|
|
$ |
320 |
|
|
$ |
387 |
|
Increases related to prior period tax positions |
1 |
|
|
69 |
|
|
9 |
|
Decreases related to prior period tax positions |
(7 |
) |
|
(15 |
) |
|
(19 |
) |
Increases related to current period tax positions |
8 |
|
|
23 |
|
|
6 |
|
Decreases related to current period tax positions |
— |
|
|
— |
|
|
(1 |
) |
Decreases related to settlements with taxing authorities |
(4 |
) |
|
(45 |
) |
|
(5 |
) |
Reductions as a result of a lapse of the applicable statute of limitations |
(59 |
) |
|
(36 |
) |
|
(46 |
) |
Increases (decreases) from effects of foreign currency exchange rates |
(11 |
) |
|
(14 |
) |
|
(11 |
) |
Ending balance of unrecognized tax benefits |
$ |
230 |
|
|
$ |
302 |
|
|
$ |
320 |
|
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| 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):
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|
|
|
|
|
|
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|
December 31, |
2013 |
|
|
2012 |
|
|
Deferred tax assets: |
|
|
|
|
Property, plant and equipment |
$ |
102 |
|
|
$ |
89 |
|
|
Trademarks and other intangible assets |
63 |
|
|
77 |
|
|
Equity method investments (including foreign currency translation adjustment) |
243 |
|
|
209 |
|
|
Derivative financial instruments |
50 |
|
|
116 |
|
|
Other liabilities |
1,102 |
|
|
1,178 |
|
|
Benefit plans |
1,237 |
|
|
1,808 |
|
|
Net operating/capital loss carryforwards |
790 |
|
|
782 |
|
|
Other |
225 |
|
|
320 |
|
|
Gross deferred tax assets |
$ |
3,812 |
|
|
$ |
4,579 |
|
|
Valuation allowances |
(586 |
) |
|
(487 |
) |
|
Total deferred tax assets1,2
|
$ |
3,226 |
|
|
$ |
4,092 |
|
|
Deferred tax liabilities: |
|
|
|
|
Property, plant and equipment |
$ |
(2,417 |
) |
|
$ |
(2,204 |
) |
|
Trademarks and other intangible assets |
(4,192 |
) |
|
(4,133 |
) |
|
Equity method investments (including foreign currency translation adjustment) |
(1,070 |
) |
|
(712 |
) |
|
Derivative financial instruments |
(147 |
) |
|
(140 |
) |
|
Other liabilities |
(69 |
) |
|
(144 |
) |
|
Benefit plans |
(473 |
) |
|
(495 |
) |
|
Other |
(810 |
) |
|
(929 |
) |
|
Total deferred tax liabilities3
|
$ |
(9,178 |
) |
|
$ |
(8,757 |
) |
|
Net deferred tax liabilities |
$ |
(5,952 |
) |
|
$ |
(4,665 |
) |
|
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|
1 |
Noncurrent deferred tax assets of $328 million and $403 million were included in the line item other assets in our consolidated balance sheets as of December 31, 2013 and 2012, respectively.
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|
|
2 |
Current deferred tax assets of $211 million and $244 million were included in the line item prepaid expenses and other assets in our consolidated balance sheets as of December 31, 2013 and 2012, respectively.
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|
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3 |
Current deferred tax liabilities of $339 million and $331 million were included in the line item accounts payable and accrued expenses in our consolidated balance sheets as of December 31, 2013 and 2012, respectively.
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| Deferred tax asset valuation allowances |
An analysis of our deferred tax asset valuation allowances is as follows (in millions):
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|
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|
|
|
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|
Year Ended December 31, |
2013 |
|
|
2012 |
|
|
2011 |
|
Balance at beginning of year |
$ |
487 |
|
|
$ |
859 |
|
|
$ |
950 |
|
Additions |
169 |
|
|
126 |
|
|
138 |
|
Decrease due to transfer to assets held for sale |
— |
|
|
(146 |
) |
|
— |
|
Deductions |
(70 |
) |
|
(352 |
) |
|
(229 |
) |
Balance at end of year |
$ |
586 |
|
|
$ |
487 |
|
|
$ |
859 |
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|