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DR PEPPER SNAPPLE GROUP, INC.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
65
4. Inventories
Inventories as of December 31, 2014 and 2013 consisted of the following (in millions):
December 31, December 31,
2014 2013
Raw materials $ 92 $ 86
Spare parts 18 22
Work in process 54
Finished goods 126 122
Inventories at FIFO cost 241 234
Reduction to LIFO cost (37)(34)
Inventories $ 204 $ 200
Approximately $151 million and $154 million of the Company's inventory was accounted for under the LIFO method of
accounting as of December 31, 2014 and 2013, respectively. The reduction to LIFO cost reflects the excess of the current cost of
LIFO inventories as of December 31, 2014 and 2013, over the amount at which these inventories were valued on the Consolidated
Balance Sheets. For the year ended December 31, 2014, there was no LIFO inventory liquidation. For the year ended December
31, 2013, a LIFO inventory liquidation increased the Company's gross profit by $38 million.
5. Property, Plant and Equipment
Net property, plant and equipment consisted of the following as of December 31, 2014 and 2013 (in millions):
December 31, December 31,
2014 2013
Land $ 73 $ 73
Buildings and improvements 488 483
Machinery and equipment 1,389 1,302
Cold drink equipment 299 310
Software 244 221
Construction in progress 49 63
Gross property, plant and equipment 2,542 2,452
Less: accumulated depreciation and amortization (1,401)(1,279)
Net property, plant and equipment $ 1,141 $ 1,173
Buildings and improvements included $49 million of assets at cost under capital lease as of December 31, 2014 and 2013.
Machinery and equipment included $37 million and $7 million of assets at cost under capital lease as of December 31, 2014 and
2013, respectively. The net book value of assets under capital lease was $77 million and $50 million as of December 31, 2014 and
2013, respectively.
Depreciation expense amounted to $199 million, $196 million and $203 million for the years ended December 31, 2014, 2013
and 2012, respectively. Depreciation expense was comprised of $89 million, $86 million and $84 million in cost of sales on the
Consolidated Statements of Income in 2014, 2013 and 2012, respectively. Depreciation expense of $110 million in 2014 and 2013
and $119 million in 2012 was included in depreciation and amortization on the Consolidated Statements of Income. The depreciation
expense above also includes the charge to income resulting from amortization of assets recorded under capital leases.
Capitalized interest was $2 million during 2014 and 2012 and $1 million during 2013.