Snapple 2011 Annual Report Download - page 99

DR PEPPER SNAPPLE GROUP, INC.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
79
Deferred tax assets (liabilities), as determined under U.S. GAAP, were comprised of the following as of December 31, 2011
and 2010 (in millions):
Deferred income tax assets:
Deferred revenue
Accrued liabilities
Net operating loss and credit carryforwards
Compensation
Pension and postretirement benefits
Inventory
Other
Deferred income tax liabilities:
Intangible assets
Fixed assets
Other
Valuation allowance
Net deferred income tax liability
December 31,
2011
$ 580
88
32
22
14
14
67
817
(942)
(197)
(5)
(1,144)
(32)
$(359)
December 31,
2010
$ 13
73
18
23
4
11
53
195
(888)
(164)
(9)
(1,061)
(16)
$(882)
The Company recorded a significant U.S. deferred tax asset of $568 million during 2011 with respect to the PepsiCo and
Coca-Cola deferred revenue balance as of December 31, 2011. This deferred revenue was recognized in total in 2011 for income
tax purposes, while it is being amortized into revenue over the the remaining estimated life of the customer relationship under
U.S. GAAP. Conversely, the income tax recognition of this deferred revenue significantly increased our current tax expense and
taxes payable. The majority of the Company's income taxes payable at December 31, 2011 will be paid in the first quarter of 2012.
The Company's Canadian deferred tax assets included a separation related balance of $118 million that was offset by a liability
due to Cadbury of $109 million driven by the Tax Indemnity Agreement. Anticipated legislation in Canada could result in a future
partial write down of tax assets which would be offset to some extent by a partial write down of the liability due to Cadbury.
As of December 31, 2011, the Company had $32 million in tax effected credit carryforwards and net operating loss
carryforwards. Net operating loss and credit carryforwards will expire in periods beyond the next five years.
The Company had a deferred tax valuation allowance of $32 million and $16 million as of December 31, 2011 and 2010,
respectively. A valuation allowance of $13 million relates to a foreign operation and was established as part of the separation
transaction. The remaining $19 million valuation allowance relates to foreign tax credits generated in 2011. The Company provided
a full valuation allowance on the deferred tax asset related to the foreign tax credits as the Company does not believe that the
benefits will be realized in future years.
As of December 31, 2011 and 2010, undistributed earnings considered to be permanently reinvested in non-U.S. subsidiaries
totaled approximately $244 million and $203 million, respectively. Deferred income taxes have not been provided on this income
as the Company believes these earnings to be permanently reinvested. It is not practicable to estimate the amount of additional
tax that might be payable on these undistributed foreign earnings.
The Company files income tax returns for U.S. federal purposes and in various state jurisdictions. The Company also files
income tax returns in various foreign jurisdictions, principally Canada and Mexico. The U.S. and most state income tax returns
for years prior to 2006 are considered closed to examination by applicable tax authorities. Federal income tax returns for 2006,
2007 and 2008 are currently under examination by the Internal Revenue Service. Canadian income tax returns are open for audit
for tax years 2008 and forward and Mexican income tax returns are open for tax years 2000 and forward.