The Company’s third quarter results include the impact of unfavorable foreign currency movements from the British Pound and Canadian Dollar, which decreased underlying pretax income by approximately $3 million.
Effective Income Tax Rates
The Company’s third quarter effective income tax rate was 17 percent on a reported basis and 18 percent on an underlying basis. Due to the acquisition, the Company now estimates that its underlying effective tax rate will be in the range of 15 percent to 19 percent for full year 2012, assuming no further changes in tax laws.
Total debt at the end of the third quarter was $4.7 billion, and cash and cash equivalents totaled $586 million, resulting in net debt of $4.1 billion.
Third Quarter Business Segment Results
Beginning July 1, 2012, our Central Europe export and license business (“Central Europe export”), which includes licensing arrangements in Russia and Ukraine and the export of Central Europe brands to approximately 30 countries globally, is reported in our MCI segment in accordance with how our Chief Executive Officer views our businesses. For periods prior to this date, this business was included with the Central Europe business, which we acquired on June 15, 2012. The impact of Central Europe export for the period from its acquisition through the end of the second quarter 2012 was immaterial and, therefore, previously reported segment results have not been reclassified.
The following are the Company’s third quarter 2012 results by business segment:
Canada underlying pretax income decreased 7.1 percent to $150.7 million in the quarter. Canada underlying income in local currency decreased 5 percent. Positive pricing and cost reductions were more than offset by the negative impact of lower volume, mix shift toward higher-cost products, pension expense and foreign currency. A 2.3 percent decline in the Canadian dollar versus the U.S. dollar drove an approximate $5 million negative impact.