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DR PEPPER SNAPPLE GROUP, INC.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
95
ESTIMATED FAIR VALUE OF LONG-TERM OBLIGATIONS
The estimated fair values of long-term obligations as of December 31, 2014 and 2013, are as follows (in millions):
December 31, 2014 December 31, 2013
Carrying
Amount Fair Value Carrying
Amount Fair Value
Long-term debt – 2016 Notes $ 500 $ 510 $ 500 $ 519
Long-term debt – 2018 Notes 724 835 724 856
Long-term debt – 2019 Notes(1) 250 253 248 252
Long-term debt – 2020 Notes(1) 245 244 241 236
Long-term debt – 2021 Notes(1) 249 255 241 241
Long-term debt – 2022 Notes(1) 265 244 247 226
Long-term debt – 2038 Notes(1) 272 363 252 317
____________________________
(1) The carrying amount includes the unamortized discounts on the issuance of debt and adjustments related to the change in the
fair value of interest rate swaps designated as fair value hedges on the 2019, 2020, 2021, 2022 and 2038 Notes. Refer to
Note 10 for additional information regarding derivatives.
Capital leases have been excluded from the calculation of fair value for both 2014 and 2013.
The fair value amounts of long term debt as of December 31, 2014 and 2013, were based on current market rates available
to the Company (Level 2 inputs). The difference between the fair value and the carrying value represents the theoretical net
premium or discount that would be paid or received to retire all debt at such date.
FAIR VALUE OF OTHER FINANCIAL INSTRUMENTS
The fair value amounts for cash and cash equivalents, accounts receivable, net, commercial paper, accounts payable and other
current liabilities approximate carrying amounts due to the short maturities of these instruments.
16. Stock-Based Compensation
Stock-based compensation expense is recorded in SG&A expenses in the Consolidated Statements of Income. The components
of stock-based compensation expense for the years ended December 31, 2014, 2013 and 2012 are presented below (in millions):
For the Year Ended December 31,
2014 2013 2012
Total stock-based compensation expense $ 48 $ 37 $ 35
Income tax benefit recognized in the income statement (17)(12)(12)
Stock-based compensation expense, net of tax $ 31 $ 25 $ 23
DPS is required to estimate forfeitures at the time of grant and revise those estimates in subsequent periods if actual forfeitures
differ from those estimates. The Company uses historical data to estimate pre-vesting option, RSU and PSU forfeitures and record
stock-based compensation expense only for those awards that are expected to vest.