Snapple 2011 Annual Report Download - page 98

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DR PEPPER SNAPPLE GROUP, INC.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
78
The following is a reconciliation of provision for income taxes computed at the U.S. federal statutory tax rate to the
provision for income taxes reported in the Consolidated Statements of Income (in millions):
Statutory federal income tax of 35%
State income taxes, net
U.S. federal domestic manufacturing benefit
Impact of non-U.S. operations
Indemnified taxes(1)
Other(2)
Total provision for income taxes
Effective tax rate
For the Year Ended December 31,
2011
$ 324
25
(30)
(5)
11
(5)
$ 320
34.6%
2010
$ 287
30
(18)
(8)
10
(7)
$ 294
35.8%
2009
$ 304
30
(9)
(14)
17
(13)
$ 315
36.3%
____________________________
(1) Amounts represent tax expense recorded by the Company for which Kraft is obligated to indemnify DPS under the Tax
Indemnity Agreement.
(2) Included in other items was $3 million and $(5) million of non-indemnified tax expense (benefit) the Company recorded in
the years ended December 31, 2010 and 2009, respectively, driven by separation related transactions. There was no non-
indemnified tax expense or benefit recorded for the year ended December 31, 2011.
The effective tax rates for 2011 and 2010 were 34.6% and 35.8%, respectively. The decrease in the effective tax rate for the
year ended December 31, 2011 was primarily driven by certain state and federal income tax benefits, principally the domestic
manufacturing deduction, related to the PepsiCo and Coca-Cola licensing agreements executed in 2010. The impact of these
benefits decreased the provision for income taxes and the effective tax rate by $19 million and 2.1%, respectively. These benefits
will not recur beyond 2011. The provision for income taxes for the year ended December 31, 2010 included a $14 million benefit
due to a favorable change of Mexican tax law.
Deferred income taxes reflect the tax consequences on future years of temporary differences between the tax basis of assets
and liabilities and their financial reporting basis using enacted tax rates in effect for the year in which the temporary differences
are expected to reverse.