Snapple 2013 Annual Report Download - page 91

DR PEPPER SNAPPLE GROUP, INC.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
81
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 IRS audit of the federal income tax returns
for 2006, 2007 and 2008 has been effectively settled. The U.S. and most state income tax returns for years prior to 2006 and 2009
are closed to examination by applicable tax authorities. Canadian income tax returns are open for audit for tax years 2008 and
forward and Mexican income tax returns are generally open for tax years 2000 and forward. Canadian income tax returns are under
audit for the 2009-2012 tax years and Mexican income tax returns are under audit for the 2008 and 2009 tax years.
The following is a reconciliation of the changes in the gross balance of unrecognized tax benefits for the years ended
December 31, 2013, 2012 and 2011 (in millions):
December 31, December 31, December 31,
2013 2012 2011
Beginning balance $ 469 $ 480 $ 490
Increases related to tax positions taken during the current year 1— —
Increases related to tax positions taken during the prior year 63 1
Decreases related to tax positions taken during the prior year (432)(4)(7)
Decreases related to settlements with taxing authorities (27)(4) —
Decreases related to lapse of applicable statute of limitations (3)(6)(4)
Ending balance $ 14 $ 469 $ 480
The gross balance of unrecognized tax benefits of $14 million excluded $2 million of offsetting state tax benefits and temporary
difference adjustments. The net unrecognized tax benefits of $12 million, if recognized, will 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 cannot 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.
For the year ended December 31, 2013, the Company recognized a benefit of $93 million for interest and penalties previously
recorded, primarily a result of the resolution of the 2006-2008 IRS audit. The amount of interest and penalties recognized in the
Consolidated Statements of Income for uncertain tax positions for the years ended December 31, 2012 and 2011 was $16 million
and $21 million, respectively. The Company had a total of $6 million and $105 million accrued for interest and penalties for its
uncertain tax positions primarily reported as part of other non-current liabilities as of December 31, 2013 and 2012, respectively.
13. Other Expense (Income), Net
The table below details the components of other expense (income), net for the years ended December 31, 2013, 2012 and
2011 (in millions):
For the Year Ended December 31,
2013 2012 2011
$ 387 $(9) $ (11)
Other (4)—(1)
Other expense (income), net $ 383 $(9) $ (12)
The Company has historically recorded indemnification income from under the Tax Indemnity Agreement as other
expense (income), net in the Consolidated Statements of Income. During the year ended December 31, 2013, the IRS concluded
an audit which included separation-related items and, as a result, the Company recognized $430 million of other expense, net, as
DPS no longer anticipates collecting amounts from For the year ended December 31, 2013, this amount was partially
offset by a $38 million non-cash reduction of the Company's long-term liability to as a result of a bill enacted by the
Canadian government which reduced amounts amortized for income tax purposes. Refer to Note 12 for additional information on
the conclusion of the IRS audit.