Pepsi 2005 Annual Report Download - page 62

60
Note 5 — Income Taxes
2005 2004 2003
Income before income taxes — continuing operations
U.S.................................................................................................................................................... $3,175 $2,946 $3,267
Foreign.............................................................................................................................................. 3,207 2,600 1,725
$6,382 $5,546 $4,992
Provision for income taxes — continuing operations
Current: U.S. Federal....................................................................................................................... $1,638 $1,030 $1,326
Foreign .............................................................................................................................. 426 256 341
State ................................................................................................................................. 118 69 80
2,182 1,355 1,747
Deferred: U.S. Federal....................................................................................................................... 137 11 (274)
Foreign .............................................................................................................................. (26) 5 (47)
State ................................................................................................................................. 11 1 (2)
122 17 (323)
$2,304 $1,372 $1,424
Tax rate reconciliation — continuing operations
U.S. Federal statutory tax rate.......................................................................................................... 35.0% 35.0% 35.0%
State income tax, net of U.S. Federal tax benefit.............................................................................. 1.4 0.8 1.0
Taxes on AJCA repatriation................................................................................................................ 7.0 ––
Lower taxes on foreign results.......................................................................................................... (6.5) (5.4) (5.5)
Settlement of prior years’ audit........................................................................................................ –(4.8) (2.2)
Other, net.......................................................................................................................................... (0.8) (0.9) 0.2
Annual tax rate................................................................................................................................. 36.1% 24.7% 28.5%
Deferred tax liabilities
Investments in noncontrolled affiliates ............................................................................................ $ 993 $ 850
Property, plant and equipment ......................................................................................................... 772 857
Pension benefits ............................................................................................................................... 863 669
Intangible assets other than nondeductible goodwill....................................................................... 135 153
Zero coupon notes ............................................................................................................................ 35 46
Other................................................................................................................................................. 169 157
Gross deferred tax liabilities............................................................................................................. 2,967 2,732
Deferred tax assets
Net carryforwards ............................................................................................................................. 608 666
Stock-based compensation............................................................................................................... 426 402
Retiree medical benefits................................................................................................................... 400 402
Other employee-related benefits....................................................................................................... 342 379
Other................................................................................................................................................. 520 460
Gross deferred tax assets ................................................................................................................. 2,296 2,309
Valuation allowances........................................................................................................................ (532) (564)
Deferred tax assets, net.................................................................................................................... 1,764 1,745
Net deferred tax liabilities ................................................................................................................ $1,203 $ 987
Deferred taxes included within:
Prepaid expenses and other current assets.................................................................................. $231 $229
Deferred income taxes .................................................................................................................. $1,434 $1,216
Analysis of valuation allowances
Balance, beginning of year............................................................................................................... $564 $438 $487
(Benefit)/provision........................................................................................................................ (28) 118 (52)
Other (deductions)/additions........................................................................................................ (4) 83
Balance, end of year......................................................................................................................... $532 $564 $438