Pepsi 2014 Annual Report Download - page 108
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88
Deferred tax liabilities and assets are comprised of the following:
Deferred tax liabilities 2014 2013
Pension benefits $ — $ 84
Debt guarantee of wholly owned subsidiary 842 828
Property, plant and equipment 2,174 2,327
Intangible assets other than nondeductible goodwill 4,068 4,348
Other 264 361
Gross deferred tax liabilities 7,348 7,948
Deferred tax assets
Net carryforwards 1,329 1,485
Stock-based compensation 265 303
Retiree medical benefits 388 384
Other employee-related benefits 646 627
Pension benefits 263 —
Deductible state tax and interest benefits 158 155
Long-term debt obligations acquired 98 125
Other 1,002 959
Gross deferred tax assets 4,149 4,038
Valuation allowances (1,230) (1,360)
Deferred tax assets, net 2,919 2,678
Net deferred tax liabilities $ 4,429 $ 5,270
Deferred taxes are included within the following balance sheet accounts:
2014 2013
Assets:
Prepaid expenses and other current assets $ 875 $ 716
Liabilities:
Deferred income taxes $ 5,304 $ 5,986
A summary of our valuation allowance activity is as follows:
2014 2013 2012
Balance, beginning of year $ 1,360 $ 1,233 $ 1,264
(Benefit)/provision (25) 111 68
Other (deductions)/additions (105) 16 (99)
Balance, end of year $ 1,230 $ 1,360 $ 1,233
The Patient Protection and Affordable Care Act (PPACA), which was signed into law in the second quarter
of 2010, changed the tax treatment related to an existing retiree drug subsidy (RDS) available to sponsors
of retiree health benefit plans that provide a benefit that is at least actuarially equivalent to the benefits under
Medicare Part D. As a result of the PPACA, RDS payments became taxable in tax years beginning in 2013,
by requiring the amount of the subsidy received to be offset against our deduction for health care expenses.
In the first quarter of 2012, we began pre-paying funds within our 401(h) accounts intended to fully cover
prescription drug benefit liabilities for Medicare eligible retirees. As a result, the receipt of future Medicare
subsidy payments for prescription drugs will not be taxable and consequently we recorded a $55 million tax
benefit reflecting this change in the first quarter of 2012.
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