Snapple 2009 Annual Report Download - page 110

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addition, pursuant to the terms of the Tax Indemnity Agreement, if DPS breaches certain covenants or other
obligations or DPS is involved in certain change-in-control transactions, Cadbury may not be required to indemnify
the Company.
Kraft acquired Cadbury on February 2, 2010 and, therefore, assumes responsibility for Cadbury’s indemnity
obligations under the terms of the Tax Indemnity Agreement.
The following is a reconciliation of the changes in the gross balance of unrecognized tax benefits from
January 1, 2007 to December 31, 2009, (in millions):
Balance as of January 1, 2007 . .............................................. $ 70
Tax position taken in current period:
Gross increases ...................................................... 30
Tax position taken in prior periods:
Gross increases ...................................................... 11
Gross decreases ...................................................... (9)
Settlements with taxing authorities — cash paid ................................ (4)
Balance as of December 31, 2007 ............................................ 98
Tax position taken in current period:
Gross increases ...................................................... 396
Tax position taken in prior periods:
Gross increases ...................................................... 23
Gross decreases ...................................................... (27)
Lapse of applicable statute of limitations ..................................... (7)
Balance as of December 31, 2008 ............................................ 483
Tax position taken in current period:
Gross increases ...................................................... 5
Tax position taken in prior periods:
Gross increases ...................................................... 21
Gross decreases ...................................................... (14)
Settlements ........................................................... (4)
Lapse of applicable statute of limitations ..................................... (8)
Balance as of December 31, 2009 ............................................ $ 483
The gross balance of unrecognized tax benefits of $483 million excluded $49 million of offsetting state tax
benefits and timing adjustments. Depending on how associated issues are resolved, the net unrecognized tax
benefits of $434 million, if recognized, may reduce the effective income tax rate. It is reasonably possible that the
unrecognized tax benefits will be impacted by the resolution of some matters audited by various taxing authorities
within the next twelve months, but a reasonable estimate of such impact can not be made at this time.
The Company accrues interest and penalties on its uncertain tax positions as a component of its provision for
income taxes. The amount of interest and penalties recognized in the Consolidated Statements of Operations for
uncertain tax positions was $19 million and $18 million and $(2) million for 2009, 2008 and 2007, respectively. The
Company had a total of $51 million and $33 million accrued for interest and penalties for its uncertain tax positions
reported as part of other non-current liabilities as of December 31, 2009 and 2008, respectively.
90
DR PEPPER SNAPPLE GROUP, INC.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)