Mondelez 2014 Annual Report Download - page 101

Table of Contents
See Note 2, Divestitures and Acquisitions , for information on taxes presented as part of discontinued operations related to the
resolution of the Starbucks arbitration and the Spin-Off of Kraft Foods Group.
During 2014, we recorded out-of-period adjustments of $31 million net expense that had an immaterial impact on the annual
provision for income taxes. In addition, during the fourth quarter of 2014, we recorded a tax benefit of $43 million associated with
the lapse of a statute of limitations that related to the third quarter of 2014. The out-of-period adjustments were not material to the
consolidated financial statements for any prior period.
The effective income tax rate on pre-tax earnings differed from the U.S. federal statutory rate for the following reasons:
Our 2014 effective tax rate of 13.8% was favorably impacted by the mix of pre-tax income in various non-U.S. tax jurisdictions and
net tax benefits from $206 million of discrete one-time events. The discrete net tax benefits primarily related to favorable tax audit
settlements and expirations of statues of limitations in several jurisdictions.
Our 2013 effective tax rate of 2.5% was favorably impacted by the mix of pre-tax income in various non-U.S. tax 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 non-U.S. tax
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.
98
For the Years Ended December 31,
2014
2013
2012
U.S. federal statutory rate
35.0%
35.0%
35.0%
Increase / (decrease) resulting from:
State and local income taxes, net of federal tax benefit excluding
IRS audit impacts
0.3%
(0.5%
)
(1.6%
)
Foreign rate differences
(14.5%
)
(16.3%
)
(20.6%
)
Reversal of other tax accruals no longer required
(10.5%
)
(9.6%
)
(4.3%
)
Indemnification resolution
–
(
4.7%
)
–
Tax legislation
–
(
2.2%
)
(3.9%
)
Divestitures
–
(
2.1%
)
0.6%
Venezuela devaluation
1.7%
1.0%
–
Non-deductible expenses
1.5%
1.1%
3.6%
Other
0.3%
0.8%
0.7%
Effective tax rate
13.8%
2.5%
9.5%