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DR PEPPER SNAPPLE GROUP, INC.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
81
As of December 31, 2014 and 2013, undistributed earnings in non-U.S. subsidiaries for which no deferred taxes have been
provided totaled approximately $354 million and $291 million, respectively. Deferred income taxes have not been provided on
these earnings because the Company has either asserted indefinite reinvestment or outside tax basis exceeds book basis. It is not
practicable to estimate the amount of additional tax that might be payable on these undistributed foreign earnings.
The Company files income tax returns for U.S. federal purposes and in various state jurisdictions. The Company also files
income tax returns in various foreign jurisdictions, principally Canada and Mexico. The U.S. and most state income tax returns
for years prior to 2011 are closed to examination by applicable tax authorities. Canadian income tax returns are open for audit for
tax years 2008 and forward and Mexican income tax returns are generally open for tax years 2000 and forward. Canadian income
tax returns are under audit for the 2009-2013 tax years and Mexican income tax returns are under audit for the 2008 and 2009 tax
years.
The following is a reconciliation of the changes in the gross balance of unrecognized tax benefits for the years ended
December 31, 2014, 2013 and 2012 (in millions):
December 31, December 31, December 31,
2014 2013 2012
Beginning balance $ 14 $ 469 $ 480
Increases related to tax positions taken during the current year —1 —
Increases related to tax positions taken during the prior year 36 3
Decreases related to tax positions taken during the prior year (2)(432)(4)
Decreases related to settlements with taxing authorities (1)(27)(4)
Decreases related to lapse of applicable statute of limitations (1)(3)(6)
Ending balance $ 13 $ 14 $ 469
The total amount of unrecognized tax benefits that, if recognized, would reduce the effective tax rate is $9 million after
considering the federal impact of state income taxes. During the next twelve months, the Company does not expect a significant
change to its unrecognized tax benefits.
The Company accrues interest and penalties on its uncertain tax positions as a component of its provision for income taxes.
The Company did not recognize any interest and penalties for uncertain tax positions in the Consolidated Statements of Income
for the year ended December 31, 2014. For the year ended December 31, 2013, the Company recognized a benefit of $93 million
for interest and penalties previously recorded, primarily a result of the resolution of the 2006-2008 IRS audit. The amount of
interest and penalties recognized in the Consolidated Statements of Income was $16 million for the year ended December 31,
2012. The Company had a total of $5 million and $6 million accrued for interest and penalties for its uncertain tax positions
primarily reported as part of other non-current liabilities as of December 31, 2014 and 2013, respectively.