TO OUR STOCKHOLDERS At Dr Pepper Snapple Group, our unmatched portfolio is a flavor powerhouse packed with well-loved brands that have been in people’s lives for hundreds of years, and we are certain they will have a place there for many more. What gives us this confidence? It’s simple – we’re innovative, we’re nimble and we remain focused on our priorities to build our brands, execute with excellence and provide shareholder value. In 2013, we continued to deliver successfully against our priorities in a difficult environment that included ongoing economic pressures on consumers as well as challenges to carbonated soft drinks (CSDs). Despite the headwinds facing our industry, we gained volume share and held dollar share in the CSD category across measured channels. Our juices and teas continued to attract consumers as we grew Mott’s and Snapple volume 3 and 2 percent, respectively. In the grocery channel, we increased Mott’s all-commodity volume (ACV) by 3.1 percentage points and Snapple ACV by 3.0 percentage points in measured channels in 2013, putting these products closer at hand for shoppers. Our targeted investments behind our products coupled with efforts to increase the distribution and availability of our key brands and packages has led to positive results across multiple channels. In 2013, we gained additional shelf space for CSDs in convenience and gas, thereby increasing ACV by 0.3 percentage points in measured channels. Capitalizing on the success of our TEN rollout, we grew CSD volume in the drugstore channel by 8.4 percent, outpacing the category by more than 2 percentage points. We also continued to build on our consistent track record of creating value for our shareholders. Our core earnings of $3.20 per diluted share is an increase of 10 percent compared to 2012. Additionally, in 2013, we returned $702 million to shareholders, including $400 million in share repurchases and $302 million in dividends. In 2014, we also announced a 7.9 percent increase to our dividend, our sixth increase since going public in 2008, and our annual payout is now $1.64 per share. Additional highlights from 2013 include: ............... ......................................................................................................... ............... ............... ............... 2 2013 FINANCIAL HIGHLIGHTS 2013 PRIMARY SOURCES AND FINANCIAL SNAPSHOTSNAPSHOT USES OFPRIMARY CASH SOURCES (In(In Millions,Millions, Except Except Earnings Earnings Per Per Share) Share) (Five-Year Cumulative& USES Total OF 2009-2013) CASH (Five-Year Cumulative Total 2009-2013) 2012 | $5,995 flat NET SALES 2013 | $5,997 $5.6 Billion $5.7 Billion SEGMENT 2012 | $1,364 flat Pepsi/Coke OPERATING Licensing 2013 | $1,364 $1,614 Share PROFIT Agreements $2,435 Repurchases CORE 2012 | $2.92 +10% EARNINGS Dividends 2013 | $3.20 $1,031 PER SHARE* Operations $3,917 Net Repayment $1,063$1,163 of Credit Facility and Notes *2013 core earnings per share (EPS) excludes unrealized *2013 core earnings per share (EPS) excludes separation-related commodity-related mark-to-market losses, separation- $1,163 Net Capital Spending charges,related ancharges, adjustment an adjustment to a previously to a previously disclosed disclosed legal provision, legal *Other, provision,restructuring restructuring charges andcharges a non-cash and a non-cash charge relatedcharge torelated our Net: $95 * withdrawalto our intention from the to Localwithdraw 710 frommultiemployer the Local 710pension multi-employer plan, which SOURCES USES decreasedpension plan, EPS which by 15 decreasedcents per share.reported 2012 EPS core by EPS15 cents excludes per unrealizedshare. 2012 commodity-related core EPS excludes mark-to-market unrealized commodity-related gains and a depre - ciationmark-to-market adjustment gains on capital and a leasesdepreciation and certain adjustment tax-related on capital items, leases andwhich certain decreased separation-related EPS by 4 cents tax-related per share. items, which increased reported EPS by 4 cents per share. ......................................................................................................... RETURNING CASH RETURNINGTO SHAREHOLDERS CASH TO SHAREHOLDERSOVER TIME OVER TIME (In Millions) (In Millions) Dividends Paid ANNUALIZED TOTAL $1,307* Share Repurchases SHAREHOLDER RETURN (2009-2013) $773** $1,113 $684** $702** $522 $400 $400 DPS 28% S&P 500 15% PEER GROUP INDEX 11% $284 $302 $194 $251 ‘10 ‘11 ‘12 ‘13 *One-time*One-time payments payments of ofmore more than than $1.6$1.6 billion billion from from The Coca-ColaThe Coca-Cola Co. and Co. and Compound annual growth rate includes changes in stock price PepsiCo. Inc.PepsiCo, in 2010 Inc. helped in 2010 fund helped additional fund additional share repurchases. share repurchases. since Dec. 31, 2008, and reinvestment of dividends. The Peer Group Index comprises: The Coca-Cola Co., PepsiCo. Inc., Monster **DPS**DPS made made tax tax payments payments of $54$54 million million in 2011in 2011 and $531 and million $531 in million 2012 related in 2012 Beverage Corp., The Cott Corp. and National Beverage Corp. related to theto the PepsiCo. PepsiCo, Inc. Inc. and and The The Coca-Cola Coca-Cola Co.Co. licensing agreements. agreements. 3 BUILDING OUR BRANDS There’s no doubt that consumers love our flavors, and our brand CORE 4 AND RC TEN ARE strength scores reflect just that. Our flagship brand, Dr Pepper, DRIVING CATEGORY GROWTH continues to score well among consumers for its likeability, uniqueness and value, performing well in brand relevance, brand strength and brand equity among CSD consumers in 2013. Clearly our brands are strong individually, and it’s the strength of our entire portfolio that allows us to provide consumers with the flavor variety they crave in the Consumers Switching from 13% packaging options they want and with the range of calorie options that Still Water Consumers fits their lifestyles. Switching from Non-CSDs* 33% We’re pleased with last year’s launch of the 10-calorie versions of our Consumers Drinking 6% Core 4 flavors – 7UP TEN, A&W TEN, Sunkist TEN soda and Canada Dry more CSDs TEN – which helped Core 4 volume outperform the CSD category by 3 percentage points in 2013. With 52 percent of Core 4 and RC TEN 52 percent of volume for Core 4 and RC TEN volume incremental to the CSD category, the TEN lineup is successfully was incremental to the CSD category in 2013. bringing back lapsed consumers who had previously stopped drinking *The non-CSD category excludes still water in the chart above. soft drinks or were drinking fewer servings. Creating excitement from the first sip, our TEN products have consumers returning for more. In 2013, repeat purchases of these innovative products were more than three times higher than trial rates, proving that trial drives repeat purchases. In 2014, we will continue to drive trial and promote the TEN products as a group, as demonstrated in January by the Anti- Resolution series of videos featuring Chelsea Handler, the host of “Chelsea Lately” on the E! network. Our efforts to continue the expansion of the Canada Dry trademark earned it recognition as the fastest-growing CSD in the category and increased trademark volume more than 6 percent over 2012. Canada Dry Sparkling Seltzer Waters saw positive growth in measured channels – up 13 percent – and outpaced the unsweetened sparkling water segment. To build upon this success, we’re adding a new flavor to the brand’s lineup – Canada Dry Peach Mango Sparkling Seltzer Water – as well as new graphics to emphasize the all-natural aspects of these unsweetened and calorie-free products. We love our brands like a mom loves her kids, so we understand wanting the best for them. That’s why we’re pleased that we can provide mom with Mott’s, the No. 1 branded juice and sauce trademark, and plenty of packaging options to accommodate her family’s MOTT’S is the No. 1 lifestyle. Building on Mott’s trademark volume growth of 3 percent in 2013, the brand #1 branded juice is poised to grow again in 2014 as we make three popular applesauce flavors – Granny and sauce Smith, mixed berry and mango peach – available in pouches, and add a new juice line with 40 percent less sugar than fruit juices and no artificial sweeteners. Building our brands isn’t limited to new flavors and innovation – we’re also being more efficient with our marketing spend by investing in platforms where we will see the most positive results, thereby improving our marketing return on investment. For example, we redirected a portion of our Snapple marketing spend toward digital media in 2013, resulting in a significant increase in consumer engagement on Facebook. We continued to expand our reach into new categories in 2013 by leveraging our allied brands, earning more than 37 percent volume growth in Vita Coco and signing new distribution agreements with Bai and Sparkling Fruit20. In 2014, Neuro will add new flavors to its Bliss, Sleep and Sonic functional platforms, and Vita Coco will launch Vita Coco Lemonade to bring new consumers to the coconut water category through a more mainstream flavor. In 2014, we will continue building upon our key base brands, including Dr Pepper, 7UP, Canada Dry and Snapple, through powerful marketing programs focused on increasing relevance with consumers and conversion with our shoppers. 4 DRIVING EXECUTIONAL EXCELLENCE We’re working closely with our partners and retail customers to create and execute programs that drive sales. In 2013, we teamed up with Sam’s Club and our bottling partners to offer new and exclusive Dr Pepper packages in more than 40 Sam’s Clubs in Texas, increasing Dr Pepper trademark volume nearly 4 percent at this retailer. The dollar channel continues to be one of the fastest-growing channels for liquid refreshment beverages (LRB), and we’re leveraging that explosive growth for the benefit of our brands. In 2013, we increased the availability of our flavor lineup VOLUME across a large dollar retailer, driving a volume increase of more than 14 percent in the account.