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Income Tax
9 Months Ended
Sep. 30, 2016
Income Tax Disclosure [Abstract]  
Income Tax
Income Tax
Our effective tax rates for the third quarter of 2016 and 2015 were approximately 9% and 182%, respectively. For the first nine months of 2016 and 2015, our effective tax rates were approximately 10% and 12%, respectively. Our effective tax rates deviated from the federal statutory rate of 35% primarily due to lower effective income tax rates applicable to our foreign businesses, driven by lower statutory income tax rates and tax planning impacts on statutory taxable income, as well as the impact of discrete items. The decrease in the effective tax rate during the third quarter and first nine months of 2016 versus 2015, is primarily driven by tax benefits recognized from transaction-related costs resulting from the Acquisition and favorable tax treatment associated with the sale of the Vancouver brewery in the current year, as well as the prior year impacts of brand impairment charges recorded in Europe during the third quarter of 2015. These drivers were partially offset by lower net discrete tax benefits in 2016. Specifically, our total net discrete tax benefit was $5.0 million and $17.2 million in the third quarter and first nine months of 2016, respectively, versus a $14.3 million and $18.6 million net discrete tax benefit recognized in the third quarter and first nine months of 2015, respectively. The net discrete tax benefit recognized in 2016 was primarily due to the release of certain valuation allowances and the recognition of $8.0 million of excess tax benefits related to share-based payment transactions, of which $4.1 million was recognized as a discrete item in the third quarter of 2016, resulting from our third quarter 2016 adoption of the FASB’s recently issued guidance related to the income tax accounting for these transactions. See Note 2, "New Accounting Pronouncements" for further discussion related to the adoption of this guidance. The net discrete tax benefit recognized in 2015 was driven by the release of unrecognized tax benefits, primarily from the expiration of certain statutes of limitations.
Our tax rate is volatile and may move up or down with changes in, among other things, the amount and source of income or loss, our ability to utilize foreign tax credits, excess tax benefits from share-based compensation, changes in tax laws, and the movement of liabilities established pursuant to accounting guidance for uncertain tax positions as statutes of limitations expire, positions are effectively settled, or when additional information becomes available. There are proposed or pending tax law changes in various jurisdictions that, if enacted, may have an impact on our effective tax rate. Additionally, our effective tax rates for the third quarter and first nine months of 2016 do not incorporate the effects of the completion of the Acquisition, which we expect will result in an increase to our effective tax rate on a go-forward basis beginning in the fourth quarter of 2016 as a result of the incremental 58% interest in the results of MillerCoors subject to U.S. federal and state income tax. See Note 16, "Acquisition" for further details.