Snapple 2008 Annual Report Download - page 102
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The following is a reconciliation of income taxes computed at the U.S. federal statutory tax rate to the income
taxes reported in the consolidated statement of operations (in millions):
2008 2007 2006
For the Year Ended
December 31,
Statutory federal income tax of 35% ............................. $(131) $ 287 $ 283
State income taxes, net ....................................... (1) 26 28
Impact of non-U.S. operations ................................. (8) (2) (18)
Impact of impairments ....................................... 53 — —
Indemnified taxes(1)......................................... 19 27 —
Other(2) .................................................. 7 (16) 5
Total provision for income taxes .............................. $ (61) $ 322 $ 298
Effective tax rate ........................................... 16.3% 39.4% 37.0%
(1) Amounts represent tax expense recorded by the Company for which Cadbury is obligated to indemnify DPS
under the Tax Indemnity Agreement
(2) Included in other items is $16 million of non-indemnified tax expense the Company recorded in the year ended
December 31, 2008, driven by separation related transactions.
Deferred income taxes reflect the tax consequences on future years of temporary differences between the tax
basis of assets and liabilities and their financial reporting basis using enacted tax rates in effect for the year in which
the temporary differences are expected to reverse.
Deferred tax assets (liabilities), as determined under the provision of Statement of Financial Accounting
Standards No. 109, Accounting for Income Taxes, were comprised of the following as of December 31, 2008 and
2007 (in millions):
2008 2007
December 31,
Deferred income tax assets:
Pension and postretirement benefits ................................. $ 36 $ —
Accrued liabilities .............................................. 56 61
Compensation ................................................. 27 33
Other ....................................................... 85 77
$ 204 $ 171
Deferred income tax liabilities:
Intangible assets ............................................... (816) (1,269)
Fixed assets .................................................. (115) (124)
Other ....................................................... — (13)
(931) (1,406)
Valuation allowance .............................................. (21) —
Net deferred income tax asset (liability)................................ $(748) $(1,235)
The Company’s net deferred tax liability decreased by $487 million from December 31, 2007, driven
principally by the impairment of goodwill and intangible assets and separation related transactions. The impairment
78
DR PEPPER SNAPPLE GROUP, INC.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)