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DR PEPPER SNAPPLE GROUP, INC.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
91
Fair Value Measurements at December 31, 2013
Quoted Prices
in Active
Markets for
Identical
Assets
Significant
Other
Observable
Inputs
Significant
Unobservable
Inputs
Level 1 Level 2 Level 3
Commodity contracts $ — $ 1 $ —
Interest rate contracts — 17 —
Foreign exchange forward contracts — 3 —
Marketable securities - trading 21 — —
Total assets $ 21 $ 21 $ —
Commodity contracts $ — $ 13 $ —
Interest rate contracts — 34 —
Total liabilities $ — $ 47 $ —
The fair values of marketable securities are determined using quoted market prices from daily exchange traded markets based
on the closing price as of the balance sheet date and were classified as Level 1. The fair values of commodity forward and future
contracts, interest rate swap contracts and foreign currency forward contracts are determined based on inputs that are readily
available in public markets or can be derived from information available in publicly quoted markets. The fair value of commodity
forward and future contracts are valued using the market approach based on observable market transactions, primarily underlying
commodities futures or physical index prices, at the reporting date. Interest rate swap contracts are valued using models based
primarily on readily observable market parameters, such as LIBOR forward rates, for all substantial terms of the Company's
contracts and credit risk of the counterparties. The fair value of foreign currency forward contracts are valued using quoted forward
foreign exchange prices at the reporting date. Therefore, the Company has categorized these contracts as Level 2.
As of December 31, 2014 and 2013, the Company did not have any assets or liabilities measured on a recurring basis without
observable market values that would require a high level of judgment to determine fair value (Level 3).
There were no transfers of financial instruments between the three levels of fair value hierarchy during the years ended
December 31, 2014, 2013 and 2012.
FAIR VALUE OF PENSION AND POSTRETIREMENT PLAN ASSETS
The fair value hierarchy discussed above is not only applicable to assets and liabilities that are included in our consolidated
balance sheets, but is also applied to certain other assets that indirectly impact our consolidated financial statements. For example,
our Company sponsors and/or contributes to a number of pension and postretirement medical plans. Assets contributed by the
Company become the property of the individual plans. Even though the Company no longer has control over these assets, DPS is
indirectly impacted by subsequent fair value adjustments to these assets. The actual return on these assets impacts the Company's
future net periodic benefit cost, as well as amounts recognized in our consolidated balance sheets. Refer to Note 14 for additional
information regarding the Company's pension and postretirement medical plans. The Company uses the fair value hierarchy to
measure the fair value of assets held by our various pension and postretirement medical plans.