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DR PEPPER SNAPPLE GROUP, INC.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
68
2014 Impairment Analysis
Fair value is measured based on what each intangible asset or reporting unit would be worth to a third party market participant.
For the annual impairment analysis performed as of October 1, 2014, methodologies used to determine the fair values of the assets
included an income based approach, as well as an overall consideration of market capitalization and the Company's enterprise
value. Management's estimates of fair value, which fall under Level 3, are based on historical and projected operating performance.
Discount rates were based on a weighted average cost of equity and cost of debt and were adjusted with various risk premiums.
For 2014, discount rates ranged from 5.10% to 11.85%.
As of October 1, 2014, the results of the annual impairment tests indicated no impairment was required. The estimated fair
value of each reporting unit exceeded the carrying value for all of the Company's goodwill by at least 50%. The results of the
impairment test for brands are as follows (in millions):
Headroom Percentage Fair Value Carrying Value
0 - 10% $ — $ —
11 - 20% — —
21 - 50% 259 191
> 50% 14,050 2,458
$ 14,309 $ 2,649
2013 Impairment Analysis
For the annual impairment analysis performed as of October 1, 2013, methodologies used to determine the fair values of the
assets included an income based approach, as well as an overall consideration of market capitalization and the Company's enterprise
value. Management's estimates of fair value, which fall under Level 3, are based on historical and projected operating performance.
Discount rates were based on a weighted average cost of equity and cost of debt and were adjusted with various risk premiums.
For 2013, discount rates ranged from 8.00% to 13.25%.
As of October 1, 2013, the results of the annual impairment tests indicated no impairment was required. The estimated fair
value of each reporting unit exceeded the carrying value for all of the Company's goodwill by at least 50% except for DSD, which
was 7%. The results of the impairment test for brands are as follows (in millions):
Headroom Percentage Fair Value Carrying Value
0 - 10% $ — $ —
11 - 20% — —
21 - 50% 918 655
> 50% 11,034 1,997
$ 11,952 $ 2,652