Mondelez 2013 Annual Report Download - page 33

Table of Contents
Tender Offer
On December 18, 2013, we completed a cash tender offer and retired $3.4 billion of our long-term U.S. dollar debt. We recorded a
$612 million loss on debt extinguishment and related expenses due primarily to the amount we paid to retire the debt in excess of
its carrying value and from recognizing unamortized discounts and deferred financing costs in earnings at the time of the debt
extinguishment. See Note 8, Debt and Borrowing Arrangements , for additional information.
Benefit from Indemnification Resolution
As part of our 2010 Cadbury acquisition, we became the responsible party for tax matters under the Cadbury Schweppes Plc and
Dr Pepper Snapple Group, Inc. (“DPSG”) Tax Sharing and Indemnification Agreement dated May 1, 2008 (“Tax Indemnity”) for
certain 2007 and 2008 transactions relating to the demerger of Cadbury’s Americas Beverage business. A U.S. federal tax audit of
DPSG for the 2006-2008 tax years was concluded with the IRS in August 2013. As a result, we recorded a favorable after-tax
impact of $363 million due to the reversal of the accrued liability in excess of the amount we paid to DPSG under the Tax
Indemnity. We recorded $336 million in selling, general and administrative expenses, $49 million in interest and other expense, net,
and $22 million of tax expense in the year ended December 31, 2013.
Provision for Income Taxes
Our income tax provision could be significantly affected by a shift in pre-tax income between foreign jurisdictions, from foreign
jurisdictions to the U.S. or by changes in foreign or U.S. tax laws and regulations that apply to the earnings of foreign subsidiaries
as well as other factors.
Our 2013 effective tax rate of 2.5% was favorably impacted by the mix of pre-tax income in various foreign jurisdictions, net tax
benefits from discrete one-time events and the non-taxable portion of the Cadbury acquisition related indemnification resolution,
partially offset by an unfavorable tax law change. The $299 million of discrete one-time events primarily related to favorable tax
audit settlements and expirations of statutes of limitations in several jurisdictions and the net reduction of U.K. deferred tax liabilities
resulting from tax legislation enacted during 2013 that reduced U.K. corporate income tax rates.
Our 2012 revised effective tax rate of 9.5% was favorably impacted by the mix of pre-tax income in various foreign jurisdictions and
net tax benefits from discrete one-time tax events, partially offset by non-deductible expenses. The $140 million of discrete one-
time events primarily related to the net reduction of U.K. deferred tax liabilities resulting from tax legislation enacted during 2012
that reduced U.K. corporate income tax rates and net favorable tax audit settlements.
Our 2011 revised effective tax rate of 6.2% was favorably impacted by the mix of pre-tax income in various foreign jurisdictions and
net tax benefits of $253 million from discrete one-time events, primarily from the net reduction of U.K. deferred tax liabilities
resulting from tax legislation enacted in 2011 that reduced U.K. corporate income tax rates, the net favorable impact from tax audit
developments during the year, the reversal of valuation allowances on certain foreign deferred tax assets that are now expected to
be realized and adjustments to taxes payable as a result of tax return filings.
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