Pepsi 2015 Annual Report Download - page 114

Table of Contents
97
A rollforward of our reserves for all federal, state and foreign tax jurisdictions, is as follows:
2015 2014
Balance, beginning of year $ 1,587 $ 1,268
Additions for tax positions related to the current year 248 349
Additions for tax positions from prior years 122 215
Reductions for tax positions from prior years (261) (81)
Settlement payments (78) (70)
Statutes of limitations expiration (34) (42)
Translation and other (37) (52)
Balance, end of year $ 1,547 $ 1,587
Carryforwards and Allowances
Operating loss carryforwards totaling $10.9 billion at year-end 2015 are being carried forward in a number
of foreign and state jurisdictions where we are permitted to use tax operating losses from prior periods to
reduce future taxable income. These operating losses will expire as follows: $0.2 billion in 2016, $9.8 billion
between 2017 and 2035 and $0.9 billion may be carried forward indefinitely. We establish valuation
allowances for our deferred tax assets if, based on the available evidence, it is more likely than not that some
portion or all of the deferred tax assets will not be realized.
Undistributed International Earnings
As of December 26, 2015, we had approximately $40.2 billion of undistributed international earnings. We
intend to continue to reinvest earnings outside the U.S. for the foreseeable future and, therefore, have not
recognized any U.S. tax expense on these earnings. It is not practicable for us to determine the amount of
unrecognized U.S. tax expense on these reinvested international earnings.
Note 6 — Share-Based Compensation
Our share-based compensation program is designed to attract and retain employees while also aligning
employees’ interests with the interests of our shareholders. Stock options, restricted stock units (RSUs),
performance stock units (PSUs) and PepsiCo equity performance units (PEPunits) are granted to employees
under the shareholder-approved 2007 Long-Term Incentive Plan (LTIP). Each RSU represents our obligation
to deliver to the holder one share of PepsiCo common stock when the award vests at the end of the service
period. PSUs are awards where the number of shares delivered to the holder upon vesting at the end of the
service period depends on PepsiCo’s performance against specified targets. During the vesting period, RSUs
and PSUs accrue dividend equivalents that pay out in cash (without interest) if and when the applicable RSU
or PSU vests and becomes payable. PEPunits provide an opportunity to earn shares of PepsiCo common
stock with a value that adjusts based upon changes in PepsiCo’s absolute stock price as well as PepsiCo’s
Total Shareholder Return relative to the S&P 500 over a three-year performance period.
The Company may use authorized and unissued shares to meet share requirements resulting from the exercise
of stock options and the vesting of RSUs and PSUs as well as PEPunits.
As of December 26, 2015, 91 million shares were available for future share-based compensation grants.