Snapple 2011 Annual Report Download - page 100

Download and view the complete annual report

Please find page 100 of the 2011 Snapple annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 140

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140

DR PEPPER SNAPPLE GROUP, INC.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
80
Kraft acquired Cadbury on February 2, 2010 and, therefore, assumes responsibility for Cadbury's indemnity obligations under
the terms of the Tax Indemnity Agreement. Under the Tax Indemnity Agreement, Kraft will indemnify DPS for net unrecognized
tax benefits and other tax related items of $430 million. This balance increased by $11 million during 2011 and was offset by
indemnity income recorded as a component of other income, net in the Consolidated Statements of Income. In 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, Kraft may not be required to indemnify the Company.
The following is a reconciliation of the changes in the gross balance of unrecognized tax benefits for the three years ended
December 31, 2011, 2010 and 2009 (in millions):
Beginning Balance
Increases related to tax positions taken during the current year
Increases related to tax positions taken during the prior year
Decreases related to tax positions taken during the prior year
Decreases related to settlements with taxing authorities
Decreases related to lapse of applicable statute of limitations
Ending Balance
December 31,
2011
$ 490
—
1
(7)
—
(4)
$ 480
December 31,
2010
$ 483
3
18
(6)
—
(8)
$ 490
December 31,
2009
$ 483
5
21
(14)
(4)
(8)
$ 483
The gross balance of unrecognized tax benefits of $480 million excluded $38 million of offsetting state tax benefits and timing
adjustments. Depending on how associated issues are resolved, the net unrecognized tax benefits of $442 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 Income for uncertain tax positions was $21
million, $20 million and $19 million for 2011, 2010 and 2009, respectively. The Company had a total of $92 million and $71
million accrued for interest and penalties for its uncertain tax positions reported as part of other non-current liabilities as of
December 31, 2011 and 2010, respectively.