TRIARC COMPANIES INC - 10-K Annual Report

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TRIARC COMPANIES, INC.

FORM 10-K

FOR THE FISCAL YEAR ENDED

DECEMBER 28, 2003

________________________________________________________________________________

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K

(MARK ONE)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 28, 2003.

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

FOR THE TRANSITION PERIOD FROM ________________ TO ________________.

COMMISSION FILE NUMBER 1-2207

-------------------

TRIARC COMPANIES, INC.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

-------------------

DELAWARE 38-0471180
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)

280 PARK AVENUE 10017
NEW YORK, NEW YORK (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 451-3000

-------------------

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

None

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [x] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [x]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2). Yes [x] No [ ]

The aggregate market value of the registrant's common equity held by
non-affiliates of the registrant as of June 29, 2003 was approximately
$399,142,571. As of March 1, 2004, there were 20,156,862 shares of the
registrant's Class A Common Stock and 40,327,237 shares of the registrant's
Class B Common Stock, Series 1, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Items 10, 11, 12, 13 and 14 of Part III of this Form 10-K incorporate
information by reference from an amendment hereto or to the registrant's
definitive proxy statement, in either case which will be filed no later than
120 days after December 28, 2003.
_______________________________________________________________________________

PART I

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND PROJECTIONS

Certain statements in this Annual Report on Form 10-K, including statements
under 'Item 1. Business' and 'Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations,' that are not historical facts,
including, most importantly, information concerning possible or assumed future
results of operations of Triarc Companies, Inc. and its subsidiaries, and those
statements preceded by, followed by, or that include the words 'may,'
'believes,' 'expects,' 'anticipates,' or the negation thereof, or similar
expressions, constitute 'forward-looking statements' within the meaning of the
Private Securities Litigation Reform Act of 1995. All statements that address
operating performance, events or developments that are expected or anticipated
to occur in the future, including statements relating to revenue growth,
earnings per share growth or statements expressing general optimism about future
operating results, are forward-looking statements within the meaning of the
Reform Act. These forward-looking statements are based on our current
expectations, speak only as of the date of this Form 10-K and are susceptible to
a number of risks, uncertainties and other factors. Our actual results,
performance and achievements may differ materially from any future results,
performance or achievements expressed or implied by such forward-looking
statements. For those statements, we claim the protection of the safe harbor for
forward-looking statements contained in the Reform Act. Many important factors
could affect our future results and could cause those results to differ
materially from those expressed in the forward-looking statements contained
herein. Such factors include, but are not limited to, the following:

o competition, including pricing pressures, the potential impact of
competitors' new units on sales by Arby's'r' restaurants and consumers'
perceptions of the relative quality, variety and value of the food
products offered;

o success of operating initiatives;

o development costs;

o advertising and promotional efforts;

o brand awareness;

o the existence or absence of positive or adverse publicity;

o new product and concept development by the Company and its competitors,
and market acceptance of such new product offerings and concepts;

o changes in consumer tastes and preferences, including changes resulting
from concerns over nutritional or safety aspects of beef, poultry,
french fries or other foods or the effects of food-borne illnesses such
as 'mad cow disease' and avian influenza, or 'bird flu';

o changes in spending patterns and demographic trends;

o the business and financial viability of key franchisees;

o the timely payment of franchisee obligations due to the Company;

o availability, location and terms of sites for restaurant development by
the Company and its franchisees;

o the ability of franchisees to open new restaurants in accordance with
their development commitments, including the ability of franchisees to
finance restaurant development;

o delays in opening new restaurants or completing remodels;

o anticipated or unanticipated restaurant closures by the Company and its
franchisees;

o the ability to identify, attract and retain potential franchisees with
sufficient experience and financial resources to develop and operate
Arby's restaurants;

o changes in business strategy or development plans, and the willingness
of franchisees to participate in the Company's strategy;

o business abilities and judgment of the Company's and franchisees'
management and other personnel;

o availability of qualified restaurant personnel to the Company and to
franchisees;
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o availability, terms (including changes in interest rates) and
deployment of capital;

o changes in commodity (including beef), labor, supplies and other
operating costs and availability and cost of insurance;

o the Company's ability, if necessary, to secure alternative distribution
of supplies of food, equipment and other products to Arby's restaurants
at competitive rates and in adequate amounts, and the potential
financial impact of any interruptions in such distribution;

o changes in national, regional and local economic, market, business or
political conditions in the countries and other territories in which
the Company and its franchisees operate;

o changes in government regulations, including franchising laws,
accounting standards, environmental laws, minimum wage rates and
taxation rates;

o the costs, uncertainties and other effects of legal, environmental and
administrative proceedings;

o the impact of general economic conditions on consumer spending,
including a slower consumer economy and the effects of war or terrorist
activities;

o adverse weather conditions;

o our ability to identify appropriate acquisition targets in the future
and to successfully integrate any future acquisitions into our existing
operations; and

o other risks and uncertainties affecting the Company and its
subsidiaries referred to in this Form 10-K (see especially 'Item 1.
Business -- Risk Factors' and 'Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations') and in our
other current and periodic filings with the Securities and Exchange
Commission, all of which are difficult or impossible to predict
accurately and many of which are beyond our control.

We will not undertake and specifically decline any obligation to publicly
release the result of any revisions that may be made to any forward-looking
statements to reflect events or circumstances after the date of such statements
or to reflect the occurrence of anticipated or unanticipated events. In
addition, it is our policy generally not to make any specific projections as to
future earnings, and we do not endorse any projections regarding future
performance that may be made by third parties.

ITEM 1. BUSINESS.

INTRODUCTION

We are a holding company and, through our subsidiaries, the franchisor of
the Arby's restaurant system and, as of December 28, 2003, the owner of 236
Arby's restaurants located in the United States. Our corporate predecessor was
incorporated in Ohio in 1929. We reincorporated in Delaware in June 1994. Our
principal executive offices are located at 280 Park Avenue, New York, New York
10017 and our telephone number is (212) 451-3000. We make our annual reports on
Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and
amendments to such reports, available, free of charge, on our website as soon as
reasonably practicable after such reports are electronically filed with, or
furnished to, the Securities and Exchange Commission. Our website address is
www.triarc.com. Information contained on our website is not part of this Form
10-K.

BUSINESS STRATEGY

The key elements of our business strategy include (1) using our resources to
grow our restaurant franchising business and our restaurant operations, (2)
evaluating and making various acquisitions and business combinations, whether in
the restaurant industry or other industries, (3) building strong operating
management teams for each of our current and future businesses and (4) providing
strategic leadership and financial resources to enable these management teams to
develop and implement specific, growth-oriented business plans. The
implementation of this business strategy may result in increases in expenditures
for, among other things, acquisitions and, over time, marketing and advertising.
See 'Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.' It is our policy to publicly announce an

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acquisition or business combination only after an agreement with respect to such
acquisition or business combination has been reached.

Our consolidated cash, cash equivalents and investments (including
restricted cash, but excluding investments related to deferred compensation
arrangements) at December 28, 2003 totaled approximately $760 million. At such
date, our consolidated indebtedness was approximately $519 million, including
approximately $234 million of debt issued by a subsidiary of Arby's, Inc. and
$78.6 million of debt issued by Sybra, Inc. None of the debt of the Arby's
subsidiary or Sybra has been guaranteed by Triarc. Our cash, cash equivalents
and investments (other than approximately $30.5 million of restricted cash) do
not secure such debt. We are reviewing our options to deploy our substantial
liquidity, through, among other things, acquisitions, additional share
repurchases and investments, with the goal of further increasing stockholder
value.

SHELF REGISTRATION STATEMENT

On December 4, 2003 we filed a 'shelf' registration statement with the
Securities and Exchange Commission in connection with the possible future offer
and sale, from time to time, of up to $2 billion aggregate amount of our common
stock, preferred stock, debt securities and warrants to purchase any of these
types of securities. These securities, which may be offered in one or more
offerings and in any combination, in each case would be offered pursuant to a
separate prospectus supplement issued at the time of the particular offering
that will describe the specific types, amounts, prices and terms of the offered
securities. The shelf registration statement was declared effective on December
22, 2003. We have not, at this time, made any decision to issue any specific
securities under the shelf registration statement.

STOCK DISTRIBUTION

On September 4, 2003 we made a stock distribution of two shares of newly
designated Class B Common Stock, Series 1, referred to as our Class B Common
Stock, for each share of our Class A Common Stock issued as of August 21, 2003.
Our Class B Common Stock is entitled to one-tenth of a vote per share and to
receive regular quarterly cash dividends per share of at least 110% of any
regular quarterly cash dividends declared and paid on our Class A Common Stock
on or before September 4, 2006. Thereafter, our Class B Common Stock will
participate equally on a per share basis with our Class A Common Stock in any
cash dividends. In addition, our Class B Common Stock has a $.01 per share
preference in the event of any liquidation, dissolution or winding up of Triarc
and, after each share of our Class A Common Stock also receives $.01 per share
in any such liquidation, dissolution or winding up, our Class B Common Stock
would thereafter participate equally on a per share basis with our Class A
Common Stock in any remaining assets of Triarc. See 'Item 5. Market for
Registrant's Common Equity and Related Stockholder Matters.'

CONVERTIBLE NOTES

On May 19, 2003 we completed the sale of $175 million principal amount of
5.0% convertible notes due 2023 pursuant to Rule 144A under the Securities Act
of 1933. The notes are unsecured and unsubordinated and rank on parity with our
other existing and future unsecured and unsubordinated indebtedness. Upon the
occurrence of certain events, a holder may convert $1,000 principal amount of a
note into 25 shares of our Class A Common Stock and 50 shares of our Class B
Common Stock, subject to adjustment in certain circumstances. On or after May
20, 2010, the notes may be redeemed in whole or in part for cash at par plus
accrued and unpaid interest, if any. A registration statement covering resales
of the notes and covering the shares of our Class A Common Stock and our Class B
Common Stock issuable upon conversion of the notes has been declared effective.

SALE OF BEVERAGE BUSINESS

On October 25, 2000 we completed the sale of our beverage business by
selling all of the outstanding capital stock of Snapple Beverage Group, Inc. and
Royal Crown Company, Inc. to affiliates of Cadbury Schweppes plc. The purchase
and sale agreement for the transaction provided for a post-closing adjustment,
the amount of which was in dispute. An arbitrator was selected by Triarc and
Cadbury to determine the amount of the post-closing adjustment. On October 21,
2002, Cadbury filed a submission with the arbitrator in which it stated that it
believed that it was entitled to receive from us a post-closing adjustment of
approximately $23.2
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million, plus interest from the closing date. In response, on December 3, 2002,
we filed a reply submission in which we stated that we believed that neither
party was entitled to a post-closing adjustment. The arbitrator issued a report,
dated December 12, 2003, requiring us to pay Cadbury a post-closing adjustment
of approximately $11.4 million plus interest. On December 19, 2003, we paid
Cadbury approximately $11.3 million plus approximately $2.6 million of interest.
The parties have agreed that no additional amounts are owed.

FISCAL YEAR

We use a 52/53 week fiscal year convention for Triarc and our subsidiaries
whereby our fiscal year ends each year on the Sunday that is closest to December
31 of that year. Each fiscal year generally is comprised of four 13 week fiscal
quarters, although in some years one quarter represents a 14 week period.

BUSINESS SEGMENT

RESTAURANT FRANCHISING AND OPERATIONS (ARBY'S)

THE ARBY'S RESTAURANT SYSTEM

Through our subsidiaries, we participate in the quick service restaurant
segment of the restaurant industry as the franchisor of the Arby's restaurant
system and, as of December 28, 2003, the owner of 236 Arby's restaurants.
Arby's, Inc. (which does business as Triarc Restaurant Group), through its
subsidiaries, is the franchisor of the Arby's restaurant system. Our
company-owned Arby's restaurants are owned and operated through our subsidiary
Sybra, Inc., which we acquired on December 27, 2002 and at the time was the
second largest franchisee of the Arby's brand. There are over 3,400 Arby's
restaurants in the United States and Canada and Arby's is the largest restaurant
franchising system specializing in the roast beef sandwich segment of the quick
service restaurant industry. According to Nation's Restaurant News, Arby's is
the 10th largest quick service restaurant chain in the United States. As of
December 28, 2003, there were 236 company-owned Arby's restaurants and 3,214
Arby's restaurants owned by franchisees. As of December 28, 2003, 475
franchisees operated the 3,214 restaurants, of which 3,067 operated within the
United States and 147 operated outside the United States.

Arby's also owns the T.J. Cinnamons'r' concept, which consists of gourmet
cinnamon rolls, gourmet coffees and other related products, and the Pasta
Connection'r' concept, which includes pasta dishes with a variety of different
sauces. Some Arby's franchisees multi-brand with T.J. Cinnamons or Pasta
Connection within their Arby's restaurants. 260 domestic Arby's restaurants are
multi-branded locations that sell T.J. Cinnamons products and 38 are
multi-branded locations that sell Pasta Connection products. At December 28,
2003, T.J. Cinnamons gourmet coffees were also sold in approximately 950
additional Arby's restaurants. Arby's is not currently offering to sell any
additional Pasta Connection franchises.

In addition to various slow-roasted roast beef sandwiches, Arby's offers an
extensive menu of chicken, turkey and ham sandwiches, side dishes and salads. In
2001, Arby's introduced its Market Fresh'r' line of turkey, ham, chicken and
roast beef premium sandwiches on a nationwide basis. Arby's recently developed a
line of Market Fresh Salads, which we expect to introduce on a nationwide basis
in 2004. In response to the recent trend toward offering menu choices low in
carbohydrates, Arby's also has developed new Market Fresh wrap sandwiches, which
we expect will be available nationwide, at franchisees' options, in 2004, and
some franchisees are offering a new low carbohydrate item called Low Carbys'TM'.

During 2003, our franchisees opened 121 new Arby's restaurants and closed 71
Arby's restaurants. In addition, during 2003, Arby's franchisees opened 27 and
closed 33 T.J. Cinnamons units located in Arby's units. As of December 28, 2003,
franchisees have committed to open 468 Arby's restaurants over the next eight
years. You should read the information contained in 'Item 1. Business --
Risk Factors -- Arby's is dependent on restaurant revenues and openings'
and ' -- The Number of Arby's restaurants that open may not meet expectations.'

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OVERVIEW

As the franchisor of the Arby's restaurant system, Arby's, through its
subsidiaries, licenses the owners and operators of independent businesses to use
the Arby's brand name and trademarks in the operation of Arby's restaurants.
Arby's provides its franchisees with services designed to increase both the
revenue and profitability of their Arby's restaurants. The more important of
these services are providing strategic leadership for the brand, quality control
services, operational training and counseling regarding, and approval of, site
selection.

Prior to the acquisition of Sybra, the Company and its subsidiaries derived
all of their revenues from two principal sources: (1) franchise royalties
received from all Arby's restaurants; and (2) up-front franchise fees from its
restaurant operators for each new unit opened. As a result of the acquisition of
Sybra, the Company and its subsidiaries now derive a significant portion of
their revenues from sales at company-owned restaurants.

On November 21, 2000, our subsidiary Arby's Franchise Trust completed an
offering of $290 million of 7.44% fixed rate insured notes due 2020 pursuant to
Rule 144A of the Securities Act. In connection with the financing, Arby's
engaged in a corporate restructuring pursuant to which it formed a wholly-owned
Delaware statutory business trust, Arby's Franchise Trust, which became the
franchisor of the Arby's restaurant system in the United States and Canada.
Arby's contributed its U.S. and Canadian franchise agreements, development
agreements, license option agreements and the rights to the revenues from those
agreements to Arby's Franchise Trust. Arby's also formed a new wholly-owned
Delaware statutory business trust, Arby's IP Holder Trust, and contributed to it
all of the intellectual property, including the Arby's trademark, necessary to
operate the Arby's franchise system in the United States and Canada. Arby's IP
Holder Trust has granted Arby's Franchise Trust a 99-year exclusive license to
use such intellectual property. As a result of the financing and related
restructuring, Arby's continues to service the franchise agreements relating to
U.S. franchises, and Arby's of Canada, Inc., a wholly-owned subsidiary of
Arby's, services the franchise agreements relating to Canadian franchises with
the assistance of Arby's. The servicing functions are performed pursuant to
separate servicing agreements with Arby's Franchise Trust pursuant to which the
servicers receive servicing fees from Arby's Franchise Trust equal to their
expenses, subject to a specified cap for any 12-month period. Any residual cash
flow received by Arby's Franchise Trust, after taking into account all required
monthly payments under the notes, including interest and targeted principal
repayments, may be distributed by Arby's Franchise Trust to Arby's. See Note 10
to our Consolidated Financial Statements.

ARBY'S RESTAURANTS

Arby's opened its first restaurant in Youngstown, Ohio in 1964. As of
December 28, 2003, the Company and its franchisees operated Arby's restaurants
in 49 states and five foreign countries. As of December 28, 2003, the six
leading states by number of operating units were: Ohio, with 277 restaurants;
Indiana, with 179 restaurants; Michigan, with 176 restaurants; Florida, with 159
restaurants; Georgia, with 160 restaurants; and Texas, with 158 restaurants. The
country outside the United States with the most operating units is Canada with
130 restaurants.

Arby's restaurants in the United States and Canada typically range in size
from 2,500 square feet to 3,000 square feet. Restaurants in other countries
typically are larger than U.S. and Canadian restaurants. At December 28, 2003,
more than 96% of freestanding Arby's restaurants (including more than 98% of the
Company's freestanding Arby's restaurants) feature drive-thru windows.
Restaurants typically have a manager, at least one assistant manager and as many
as 30 full and part-time employees. Staffing levels, which vary during the day,
tend to be heaviest during the lunch hours.

The following table sets forth the number of Arby's restaurants at the
beginning and end of each year from 2001 to 2003:

5

During the period from January 1, 2001 through December 28, 2003, 368 new
Arby's restaurants were opened and 237 Arby's restaurants (generally,
underperforming restaurants) were closed. We believe that closing
underperforming Arby's restaurants has contributed to an increase in the average
annual unit sales volume of the Arby's system, as well as to an improvement of
the overall brand image of Arby's.

As of December 28, 2003, the Company operated 236 domestic Arby's
restaurants. Of such 236 restaurants, 210 were free-standing units, 13 were
located in shopping malls, eight were in food courts and five were in strip
center locations.

FRANCHISE NETWORK

Arby's seeks to identify potential franchisees that have experience in
owning and operating quick service restaurant units, have a willingness to
develop and operate Arby's restaurants and have sufficient net worth. Arby's
identifies applicants through targeted mailings, maintaining a presence at
industry trade shows and conventions, existing customer and supplier contacts
and regularly placed advertisements in trade and other publications. Prospective
franchisees are contacted by an Arby's sales agent and complete an application
for a franchise. As part of the application process, Arby's requires and reviews
substantial documentation, including financial statements and documents relating
to the corporate or other business organization of the applicant. Franchisees
that already operate one or more Arby's restaurants must satisfy certain
criteria in order to be eligible to enter into additional franchise agreements,
including capital resources commensurate with the proposed development plan
submitted by the franchisee, a commitment by the franchisee to employ trained
restaurant management and to maintain proper staffing levels, compliance by the
franchisee with all of its existing franchise agreements, a record of operation
in compliance with Arby's operating standards, a satisfactory credit rating and
the absence of any existing or threatened legal disputes with Arby's. The
initial term of the typical 'traditional' franchise agreement is 20 years.
Arby's does not offer any financing arrangements to its franchisees.

During 2003, Arby's franchisees opened five new restaurants in one foreign
country and closed 11 restaurants in four foreign countries. As of December 28,
2003, Arby's also had territorial agreements with international franchisees in
Canada, pursuant to which these international franchisees have the exclusive
right to open Arby's restaurants in specific regions of Canada.

Arby's offers franchises for the development of both single and multiple
'traditional' restaurant locations. Both new and existing franchisees may enter
into either a master development agreement, which requires the franchisee to
develop two or more Arby's restaurants in a particular geographic area within a
specified time period, or a license option agreement that grants the franchisee
the option, exercisable for a one year period, to build an Arby's restaurant on
a specified site. All franchisees are required to execute standard franchise
agreements. Arby's standard U.S. franchise agreement for new franchises
currently requires an initial $37,500 franchise fee for the first franchised
unit and $25,000 for each subsequent unit and a monthly royalty payment equal to
4.0% of restaurant sales for the term of the franchise agreement. Franchisees
typically pay a $10,000 commitment fee, which is credited against the franchise
fee during the development process for a new restaurant. Because of lower
royalty rates still in effect under earlier agreements, the average royalty rate
paid by U.S. franchisees was approximately 3.4% in both 2002 and 2003.

Franchised restaurants are required to be operated under uniform operating
standards and specifications relating to the selection, quality and preparation
of menu items, signage, decor, equipment, uniforms, suppliers, maintenance and
cleanliness of premises and customer service. Arby's monitors franchisee
operations and inspects restaurants periodically to ensure that company
practices and procedures are being followed.

ADVERTISING AND MARKETING

Arby's advertises locally primarily through regional television, radio and
newspapers. Payment for advertising time and space is made mostly by local
advertising cooperatives in which owners of local franchised restaurants and the
Company, to the extent that it owns local restaurants, participate. Some
franchisees spend amounts on advertising in addition to contributions made to a
local advertising cooperative. Other franchisees who operate in areas where
there is no local advertising cooperative handle their own advertising. The
Company and Arby's franchisees contribute 0.7% of net sales of their Arby's
restaurants to AFA Service Corporation, a not-for-profit entity controlled by
the franchisees that produces advertising and promotional materials for the

6

system. The Company and Arby's franchisees are also required to spend a
reasonable amount, but not less than 3% of monthly net sales of their Arby's
restaurants, for local advertising. This amount is divided between the
individual local market advertising expense and the expenses of a cooperative
area advertising program with the Company operated restaurants and those
franchisees who are operating Arby's restaurants in that area. Contributions to
the cooperative area advertising program are determined by the participants in
the program and are generally in the range of 3% to 5% of monthly net sales.

Pursuant to an agreement between Arby's and AFA Service Corporation, Arby's
provided support for two flights of national advertising in 2001, three flights
of national advertising in 2002 and three flights of national advertising in
2003. Under the agreement, Arby's contributed $8.2 million over the three-year
period ($3.1 million of which was expensed in 2002 and $3.1 million of which was
expensed in 2003) for the eight flights. Arby's and AFA Service Corporation have
entered into a new agreement pursuant to which Arby's will contribute $3.0
million in each of 2004 and 2005 for four additional flights of national
advertising in each of those years. The Company and Arby's franchisees are also
required to contribute incremental dues to AFA Service Corporation equal to 0.5%
of net sales of their Arby's restaurants (bringing their total contribution to
advertising and marketing to 1.2% of net sales) to help fund the program. In
addition, from 2001 through 2003, AFA Service Corporation voluntarily
contributed an additional $5.4 million to the program.

PROVISIONS AND SUPPLIES

As of December 28, 2003, three independent meat processors supplied all of
Arby's roast beef in the United States. Franchise operators are required to
obtain roast beef from approved suppliers. ARCOP, Inc., a not-for-profit
purchasing cooperative, negotiates contracts with approved suppliers on behalf
of the Company and Arby's franchisees. One of the three suppliers, which
furnished less than 10% of the Arby's system's beef requirements, ceased to be a
supplier effective February 29, 2004 due to differences over pricing. ARCOP is
currently working to replace that supplier. Arby's believes that satisfactory
arrangements will be made to replace that supplier and, if necessary, any of the
current roast beef suppliers on a timely basis.

On December 23, 2003 the United States Department of Agriculture ('USDA')
confirmed that a single cow from a farm in the State of Washington had tested
presumptive positive for Bovine Spongiform Encephalopathy ('BSE', also know as
'mad cow disease'). Arby's is confident that all Arby's products remain
unaffected by this recent case of BSE. The company in Washington State that has
been named as the source of the infected cow is not a supplier of Arby's beef.
The infected cow was what is referred to as a 'downer' cow. The purchase of
downer cattle for Arby's beef supply is strictly prohibited by the Arby's system
and Arby's obtains certifications from vendors and suppliers as to their
compliance with this requirement. The Arby's system also prohibits the purchase
of beef generated from advanced meat recovery systems, systems that can scrape
meat from spinal cords, one of the areas where the protein that causes mad cow
disease is believed to reside. In addition, Arby's restaurants use only 100%
muscle meat in their roast beef, which meat has not been found to contain mad
cow disease.

As a result of the BSE incident in Washington State, Canada has banned the
importation of beef from the United States. Until this ban is lifted, our
Canadian franchisees are prohibited from obtaining beef from suppliers in the
United States. A single supplier with one processing facility in Canada has
supplied our Canadian franchisees with beef since the implementation of the ban.
We cannot predict how long the ban will last, but we believe that the Canadian
supplier will be able to adequately fulfill the beef requirements of our
Canadian franchisees until the ban is lifted.

Franchisees may obtain other products, including food, beverage,
ingredients, paper goods, equipment and signs, from any source that meets Arby's
specifications and approval. Suppliers to the Arby's system must comply with
USDA and United States Food and Drug Administration regulations governing the
manufacture, packaging, storage, distribution and sale of all food and packaging
products. Through ARCOP, the Company and Arby's franchisees purchase food,
proprietary paper and operating supplies through national contracts employing
volume purchasing. You should read the information contained in 'Item 1.
Business -- Risk Factors -- Arby's is dependent on restaurant revenues and
openings.'
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QUALITY ASSURANCE

Arby's has developed a quality assurance program designed to maintain
standards and uniformity of the menu selections at all Arby's restaurants.
Arby's assigns a full-time quality assurance employee to each of the four
independent processing facilities that processes roast beef for Arby's domestic
restaurants. The quality assurance employee inspects the roast beef for quality
and uniformity and to assure compliance with quality and safety specifications
of the United States Department of Agriculture and the United States Food and
Drug Administration. In addition, a laboratory at Arby's headquarters
periodically tests samples of roast beef from franchisees. Each year, Arby's
representatives conduct unannounced inspections of operations of a number of
franchisees to ensure that Arby's policies, practices and procedures are being
followed. Arby's field representatives also provide a variety of on-site
consulting services to franchisees. Arby's has the right to terminate franchise
agreements if franchisees fail to comply with quality standards.

GENERAL

TRADEMARKS

We own several trademarks that we consider to be material to our business,
including Arby's'r', T.J. Cinnamons'r', Arby's Market Fresh'r', Market Fresh'r'
and Sidekickers'r'.

Our material trademarks are registered or pending trademarks in the U.S.
Patent and Trademark Office and various foreign jurisdictions. Registrations for
such trademarks in the United States will last indefinitely as long as the
trademark owners continue to use and police the trademarks and renew filings
with the applicable governmental offices. There are no pending challenges to our
right to use any of our material trademarks in the United States.

COMPETITION

Arby's faces direct and indirect competition from numerous well-established
competitors, including national and regional quick service restaurant chains,
such as McDonald's, Burger King and Wendy's, and quick casual restaurant chains.
In addition, Arby's competes with locally owned restaurants, drive-ins, diners
and other similar establishments. Key competitive factors in the quick service
restaurant industry are price, quality of products, quality and speed of
service, advertising, name identification, restaurant location and
attractiveness of facilities.

Many of the leading restaurant chains have focused on new unit development
as one strategy to increase market share through increased consumer awareness
and convenience. This has led to increased competition for available development
sites and higher development costs for those sites. This has also led some
competitors to employ other strategies, including frequent use of price
promotions and heavy advertising expenditures. In 2002 and 2003, there was
increased price competition among national fast food hamburger chains. Continued
price discounting in the quick service restaurant industry could have an adverse
impact on Arby's and the Company.

Other restaurant chains have also competed by offering higher quality
sandwiches made with fresh ingredients and artisan breads. Recently, several
chains have sought to compete by capitalizing on the trend toward low
carbohydrate diets, offering menu items that are specifically identified as
being low in carbohydrates.

Additional competitive pressures for prepared food purchases have come more
recently from operators outside the restaurant industry. Several major grocery
chains now offer fully prepared food and meals to go as part of their deli
sections. Some of these chains also have in-store cafes with service counters
and tables where consumers can order and consume a full menu of items prepared
especially for that portion of the operation. Additionally, convenience stores
and retail outlets at gas stations frequently offer sandwiches and other foods.

Many of our competitors have substantially greater financial, marketing,
personnel and other resources than we do.

8

GOVERNMENTAL REGULATIONS

Various state laws and the Federal Trade Commission regulate Arby's
franchising activities. The Federal Trade Commission requires that franchisors
make extensive disclosure to prospective franchisees before the execution of a
franchise agreement. Several states require registration and disclosure in
connection with franchise offers and sales and have 'franchise relationship
laws' that limit the ability of franchisors to terminate franchise agreements or
to withhold consent to the renewal or transfer of these agreements. In addition,
the Company and Arby's franchisees must comply with the Fair Labor Standards Act
and the Americans with Disabilities Act (the 'ADA'), which requires that all
public accommodations and commercial facilities meet federal requirements
related to access and use by disabled persons, and various state and local laws
governing matters that include, for example, the handling, preparation and sale
of food and beverages, minimum wages, overtime and other working and safety
conditions. Compliance with the ADA requirements could require removal of access
barriers and non-compliance could result in imposition of fines by the U.S.
government or an award of damages to private litigants. Although we believe that
our facilities are substantially in compliance with all applicable government
rules and regulations, including requirements under the ADA, the Company may
incur additional costs to comply with the ADA. However, we do not believe that
any such costs would have a material adverse effect on the Company's
consolidated financial position or results of operations. We cannot predict the
effect on our operations, particularly on our relationship with franchisees, of
any pending or future legislation.

ENVIRONMENTAL MATTERS

Our past and present operations are governed by federal, state and local
environmental laws and regulations concerning the discharge, storage, handling
and disposal of hazardous or toxic substances. These laws and regulations
provide for significant fines, penalties and liabilities, sometimes without
regard to whether the owner or operator of the property knew of, or was
responsible for, the release or presence of the hazardous or toxic substances.
In addition, third parties may make claims against owners or operators of
properties for personal injuries and property damage associated with releases of
hazardous or toxic substances. We cannot predict what environmental legislation
or regulations will be enacted in the future or how existing or future laws or
regulations will be administered or interpreted. We similarly cannot predict the
amount of future expenditures which may be required to comply with any
environmental laws or regulations or to satisfy any claims relating to
environmental laws or regulations. We believe that our operations comply
substantially with all applicable environmental laws and regulations.
Accordingly, the environmental matters in which we are involved generally relate
either to properties that our subsidiaries own, but on which they no longer have
any operations, or properties that we or our subsidiaries have sold to third
parties, but for which we or our subsidiaries remain liable or contingently
liable for any related environmental costs. Our company-owned Arby's restaurants
have not been the subject of any material environmental matters. Based on
currently available information, including defenses available to us and/or our
subsidiaries, and our current reserve levels, we do not believe that the
ultimate outcome of the environmental matter discussed below or in which we are
otherwise involved will have a material adverse effect on our consolidated
financial position or results of operations. See 'Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations' below.

In 2001, a vacant property owned by Adams Packing Association, Inc., an
inactive, indirect subsidiary of ours, was listed by the U.S. Environmental
Protection Agency on the Comprehensive Environmental Response, Compensation and
Liability Information System, which we refer to as CERCLIS, list of known or
suspected contaminated sites. The CERCLIS listing appears to have been based on
an allegation that a former tenant of Adams Packing conducted drum recycling
operations at the site from some time prior to 1971 until the late 1970s. The
business operations of Adams Packing were sold in December 1992. In February
2003, Adams Packing and the Florida Department of Environmental Protection,
which we refer to as the Florida DEP, agreed to a consent order that provides
for development of a work plan for further investigation of the site and limited
remediation of the identified contamination. In May 2003, the Florida DEP
approved the work plan submitted by Adams Packing's environmental consultant
and, as of December 28, 2003, the work at the site has been substantially
completed. Adams Packing is in the process of completing its contamination
assessment report and expects to submit such report to the Florida DEP in late
March 2004. To date, Adams Packing has expended approximately $1.4 million with
respect to the project. Based on a cost estimate for completion of the
9

work plan developed by Adams Packing's environmental consultant, and after
taking into consideration various legal defenses available to us, including
Adams Packing, the remaining costs of the remediation at the site are not
expected to have a material adverse effect on our consolidated financial
position or results of operation. See 'Item 7. Management`s Discussion and
Analysis of Financial Condition and Results of Operations -- Legal and
Environmental Matters.'

SEASONALITY

Our consolidated results are not significantly impacted by seasonality,
however, our restaurant franchising royalty revenues and our restaurant sales
are somewhat lower in our first quarter.

EMPLOYEES

As of December 28, 2003, we had 5,091 employees, including 518 salaried
employees and 4,573 hourly employees. As of December 28, 2003, none of our
employees were covered by a collective bargaining agreement. We believe that
employee relations are satisfactory.

RISK FACTORS

We wish to caution readers that in addition to the important factors
described elsewhere in this Form 10-K, the following important factors, among
others, sometimes have affected, or in the future could affect, our actual
results and could cause our actual consolidated results during 2004, and beyond,
to differ materially from those expressed in any forward-looking statements made
by us or on our behalf.

A SUBSTANTIAL AMOUNT OF OUR SHARES OF CLASS A COMMON STOCK AND CLASS B
COMMON STOCK ARE CONCENTRATED IN THE HANDS OF CERTAIN STOCKHOLDERS.

As of March 1, 2004, DWG Acquisition Group, L.P. owned directly or
indirectly approximately 29.9% of our outstanding Class A Common Stock, 24.8% of
our outstanding Class B Common Stock and 29.0% of our voting power. Nelson
Peltz, our Chairman and Chief Executive Officer, and Peter May, our President
and Chief Operating Officer, as the sole general partners of DWG Acquisition,
beneficially own all of the Class A Common Stock and Class B Common Stock owned
by DWG Acquisition. In addition, Messrs. Peltz and May each individually
beneficially own certain additional shares of Class A Common Stock and Class B
Common Stock (including shares issuable upon the exercise of options exercisable
within 60 days of March 1, 2004), which, when combined with the shares owned
through DWG Acquisition, collectively constituted approximately 47.3% of our
Class A Common Stock, 42.8% of our Class B Common Stock and 46.5% of our voting
power as of March 1, 2004.

DWG Acquisition and Messrs. Peltz and May may from time to time acquire
additional shares of Class A Common Stock, including by exchanging some or all
of their shares of Class B Common Stock for shares of Class A Common Stock.
Additionally, the Company may from time to time repurchase shares of Class A
Common Stock or Class B Common Stock. Such transactions could result in Messrs.
Peltz and May together owning more than a majority of our outstanding voting
power. As a result, Messrs. Peltz and May would be able to determine the outcome
of the election of members of our board of directors and the outcome of
corporate actions requiring majority stockholder approval, including mergers,
consolidations and the sale of all or substantially all of our assets. They
would also be in a position to prevent or cause a change in control of us. In
addition, to the extent we issue additional shares of our Class B Common Stock
for acquisitions, financings or compensation purposes, such issuances would not
proportionally dilute the voting power of existing stockholders, including
Messrs. Peltz and May.

OUR SUCCESS DEPENDS SUBSTANTIALLY UPON THE CONTINUED RETENTION OF CERTAIN
KEY PERSONNEL.

We believe that our success has been and will continue to be dependent to a
significant extent upon the efforts and abilities of our senior management team.
The failure by us to retain members of our senior management team could
adversely affect our ability to build on the efforts undertaken by our current
management to increase the efficiency and profitability of our businesses.
Specifically, the loss of Nelson Peltz, our Chairman and Chief Executive
Officer, or Peter May, our President and Chief Operating Officer, other

10

members of our senior management team or the senior management of our
subsidiaries could adversely affect us.

WE HAVE BROAD DISCRETION IN THE USE OF OUR SIGNIFICANT CASH, CASH
EQUIVALENTS AND INVESTMENTS.

At December 28, 2003, our consolidated cash, cash equivalents and
investments (including restricted cash, but excluding investments related to
deferred compensation arrangements) totaled approximately $760 million. We have
not designated any specific use for our significant cash, cash equivalents and
investment position. We are evaluating options to deploy our substantial
liquidity through, among other things, acquisitions, additional share
repurchases and investments. See 'Item 1. Business -- Business Strategy.'

ACQUISITIONS ARE A KEY ELEMENT OF OUR BUSINESS STRATEGY, BUT WE CANNOT
ASSURE YOU THAT WE WILL BE ABLE TO IDENTIFY APPROPRIATE ACQUISITION TARGETS
IN THE FUTURE AND THAT WE WILL BE ABLE TO SUCCESSFULLY INTEGRATE ANY FUTURE
ACQUISITIONS INTO OUR EXISTING OPERATIONS.

Acquisitions involve numerous risks, including difficulties assimilating new
operations and products. In addition, acquisitions may require significant
management time and capital resources. We cannot assure you that we will have
access to the capital required to finance potential acquisitions on satisfactory
terms, that any acquisition would result in long-term benefits to us or that
management would be able to manage effectively the resulting business. Future
acquisitions are likely to result in the incurrence of additional indebtedness
or the issuance of additional equity securities.

WE MAY HAVE TO TAKE ACTIONS THAT WE WOULD NOT OTHERWISE TAKE SO AS NOT TO BE
DEEMED AN 'INVESTMENT COMPANY.'

The Investment Company Act of 1940, as amended (the '1940 Act'), requires
the registration of, and imposes various restrictions on, companies that do not
meet certain financial tests regarding the composition of their assets and
source of income. Under certain circumstances, a company may be deemed to be an
investment company if it owns 'investment securities' with a value exceeding 40%
of its total assets (excluding government securities and cash items) on an
unconsolidated basis. We may be required to take actions that we would not
otherwise take so as not to be deemed an 'investment company' under the 1940
Act. Investment companies are subject to registration under, and compliance
with, the 1940 Act unless a particular exclusion or safe harbor provision
applies. Presently, the total amount of investment securities that we hold is
less than 40% of our total assets. If in the future we were to be deemed an
investment company, we would become subject to the requirements of the 1940 Act.
We intend to make acquisitions and other investments in a manner so as not to be
deemed an investment company. As a result, we may forego investments that we
might otherwise make or retain or dispose of investments or assets that we might
otherwise sell or hold.

IN THE FUTURE, WE MAY HAVE TO TAKE ACTIONS THAT WE WOULD NOT OTHERWISE TAKE
SO AS NOT TO BE SUBJECT TO TAX AS A 'PERSONAL HOLDING COMPANY.'

If at any time during the last half of our taxable year, five or fewer
individuals own or are deemed to own more than 50% of the total value of our
shares and if during such taxable year we receive 60% or more of our gross
income, as specially adjusted, from specified passive sources, we would be
classified as a 'personal holding company' for the U.S. federal income tax
purposes. If this were the case, we would be subject to additional taxes at the
rate of 15% on a portion of our income, to the extent this income is not
distributed to shareholders. We do not currently expect to have any liability
for tax under the personal holding company rules in 2004. However, we cannot
assure you that we will not become liable for such tax in the future. Because we
do not wish to be classified as a personal holding company or to incur any
personal holding company tax, we may be required in the future to take actions
that we would not otherwise take. These actions may influence our strategic and
business decisions, including causing us to conduct our business and acquire or
dispose of investments differently than we otherwise would.
11

OUR SUBSIDIARIES ARE SUBJECT TO VARIOUS RESTRICTIONS, AND SUBSTANTIALLY ALL
OF THEIR ASSETS ARE PLEDGED, UNDER CERTAIN DEBT AGREEMENTS.

Under our subsidiaries' debt agreements, substantially all of our
subsidiaries' assets, other than cash, cash equivalents and short-term
investments, are pledged as collateral security. The indenture relating to the
notes issued in the Arby's securitization and the agreements relating to debt
issued by Sybra contain financial covenants that, among other things, require
Arby's Franchise Trust (the borrower in the Arby's securitization) and Sybra, as
applicable, to maintain certain financial ratios and restrict their ability to
incur debt, enter into certain fundamental transactions (including sales of all
or substantially all of their assets and certain mergers and consolidations) and
create or permit liens. If either Arby's Franchise Trust or Sybra is unable to
generate sufficient cash flow or otherwise obtain the funds necessary to make
required payments of interest or principal under, or is unable to comply with
covenants of, its respective debt agreements, it would be in default under the
terms of such agreements, which would, under certain circumstances, permit the
insurer of the notes issued in the Arby's securitization or the lenders to
Sybra, as applicable, to accelerate the maturity of the balance of its
indebtedness. You should read the information in Note 10 to the Consolidated
Financial Statements.

ARBY'S IS DEPENDENT ON RESTAURANT REVENUES AND OPENINGS.

Franchise royalties and fees comprise a significant portion of our revenues
and earnings and the results of our restaurant business are highly dependent on
the gross revenues of Arby's franchisees' restaurants. Additionally, as a result
of the acquisition of Sybra, we derive revenues and earnings from restaurant
operations. Accordingly, the number of Arby's restaurants that we and Arby's
franchisees operate is important to us. It is possible that interruptions in the
distribution of supplies to Arby's restaurants could adversely affect sales at
company-owned restaurants and result in a decline in royalty fees that we
receive from Arby's franchisees.

THE NUMBER OF ARBY'S RESTAURANTS THAT OPEN MAY NOT MEET EXPECTATIONS.

Numerous factors beyond our control affect restaurant openings. These
factors include the ability of potential restaurant owners to obtain financing,
locate appropriate sites for restaurants and obtain all necessary state and
local construction, occupancy and other permits and approvals. Although as of
December 28, 2003, franchisees had signed commitments to open 468 Arby's
restaurants and have made or are required to make non-refundable deposits of
$10,000 per restaurant, we cannot assure you that these commitments will result
in open restaurants. See 'Item 1. Business -- Business Segment -- Restaurant
Franchising and Operations (Arby's) -- Franchise Network.' In addition, we
cannot assure you that our franchisees will successfully develop and operate
their restaurants in a manner consistent with our standards.

OUR FRANCHISE REVENUES DEPEND, TO A SIGNIFICANT EXTENT, ON OUR LARGEST
FRANCHISEE AND A DECLINE IN ITS REVENUE MAY INDIRECTLY ADVERSELY AFFECT US.

Our largest franchisee, RTM Restaurant Group, Inc. ('RTM'), accounted for
approximately 30% of our royalties and franchise and related fees in 2003. As of
December 28, 2003, RTM operated 807 Arby's restaurants. Our revenues could
materially decline from their present levels if RTM suffered a significant
decline in its business.

COMPETITION FROM RESTAURANT COMPANIES COULD ADVERSELY AFFECT US.

The business sectors in which owned and franchised Arby's restaurants
compete are highly competitive with respect to, among other things, price, food
quality and presentation, service, location, and the nature and condition of the
financed business unit/location, and are affected by changes in tastes and
eating habits, local, regional and national economic conditions, population and
traffic patterns, and health or safety concerns with respect to the consumption
of certain foods and the effects of food borne illnesses. Arby's restaurants
compete with a variety of locally-owned restaurants, as well as competitive
regional and national chains and franchises. Several of these chains are
competing by offering higher quality sandwiches and/or menu items that are
specifically identified as being low in carbohydrates. Moreover, new companies,
including operators outside the quick service restaurant industry, may enter our
market areas and target our sales audience. For example, additional competitive
pressures for prepared food purchases have come more recently from deli sections
and in-store cafes of several major grocery store chains, as well as from
convenience stores and casual dining outlets.

12

Such competition may have, among other things, lower operating costs, lower debt
service requirements, better locations, better facilities, better management,
more effective marketing and more efficient operations. All such competition may
adversely affect our revenues and profits and those of our owned and franchised
restaurants and could adversely affect the ability of our franchisees to make
franchise payments to us. Furthermore, we and our franchisees face competition
for competent employees and high levels of employee turnover, which also can
have an adverse effect on our operations and revenues and those of our
franchisees as well as on our franchisees' abilities to make franchise payments
to us. Many of Arby's competitors have substantially greater financial,
marketing, personnel and other resources than Arby's, which may give them a
competitive advantage. Accordingly, we cannot assure you that the level of gross
revenues of company-owned restaurants and of restaurants owned by Arby's
franchisees, upon which our royalty fees are dependent, will continue.

CHANGES IN CONSUMER TASTES AND PREFERENCES AND IN SPENDING PATTERNS AND
DEMOGRAPHIC TRENDS, AS WELL AS HEALTH AND SAFETY CONCERNS ABOUT FOOD
QUALITY, COULD RESULT IN A DECLINE IN SALES AT COMPANY-OWNED RESTAURANTS AND
IN THE ROYALTIES THAT WE RECEIVE FROM FRANCHISEES.

The quick service restaurant industry is often affected by changes in
consumer tastes, national, regional and local economic conditions, discretionary
spending priorities, demographic trends, traffic patterns and the type, number
and location of competing restaurants. Consumer preferences could also be
affected by health or safety concerns with respect to the consumption of beef,
poultry, french fries or other foods or with respect to the effects of
food-borne illnesses. Additional instances of mad cow disease or bird flu, in
particular, or other food-borne illness could adversely affect public
perceptions regarding the safety of eating beef, poultry or other meats.

As is generally the case in the restaurant franchise business, we and our
franchisees may, from time to time, be the subject of complaints or litigation
from customers alleging illness, injury or other food quality, health or
operational concerns. For example, the restaurant industry is currently under
scrutiny resulting from the perception that the practices of restaurant
companies have contributed to the obesity of their guests. Adverse publicity
resulting from these allegations may harm the reputation of Arby's restaurants,
even if the allegations are not valid, we are not found liable or the concerns
relate only to a single restaurant or a limited number of restaurants. Moreover,
complaints, litigation or adverse publicity experienced by one or more of our
franchisees could also adversely affect our business as a whole.

If our owned and franchised restaurants are unable to adapt to changes in
consumer preferences and trends, or we have adverse publicity due to any of
these concerns, we and our franchisees may lose customers and the resulting
revenues from company-owned restaurants and the royalties that Arby's receives
from its franchisees may decline.

ADDITIONAL INSTANCES OF MAD COW DISEASE OR OTHER FOOD-BORNE ILLNESSES, SUCH
AS BIRD FLU, COULD ADVERSELY AFFECT THE PRICE AND AVAILABILITY OF BEEF,
POULTRY OR OTHER MEATS.

As noted previously, there was a single incidence of mad cow disease in
Washington State in December 2003. See 'Item 1. Business -- Business
Segment -- Restaurant Franchising and Operations (Arby's) -- Provisions and
Supplies.' Additional instances of mad cow disease or other food-borne
illnesses, such as bird flu, could adversely affect the price and availability
of beef, poultry or other meats, including if additional incidents cause
consumers to shift their preferences to other meats. Therefore, in addition to a
reduction in sales due to adverse public perceptions, as discussed above, Arby's
restaurants could experience a significant increase in food costs if there are
additional instances of mad cow disease or other food-borne illnesses.

ARBY'S DOES NOT CONTROL ADVERTISING AND PURCHASING FOR THE ARBY'S RESTAURANT
SYSTEM, WHICH COULD ADVERSELY AFFECT SALES AND THE ARBY'S BRAND.

Arby's franchisees control the provision of advertising and marketing
services to one another through AFA Service Corporation, a not-for-profit entity
controlled by the franchisees. Subject to the Company's right to protect its
trademarks, and except to the extent that the Company participates in AFA
through its company-owned restaurants, AFA Service Corporation makes all
decisions regarding the marketing and advertising strategies and the creative
content of advertising for the Arby's system. In addition, the franchisees make
their
13

own decisions regarding local advertising expenditures, subject to spending the
required minimum. The Company's lack of control over advertising could have an
adverse effect on sales and on the Arby's brand.

Arby's franchisees also control the purchasing of food, proprietary paper
and other operating supplies through ARCOP, Inc., a not-for-profit entity
controlled by the franchisees. ARCOP negotiates national contracts for such food
and supplies. The Company has one representative on the Board of Directors of
ARCOP and participates in ARCOP through its company-owned restaurants, but
otherwise exercises no control over the decisions and activities of ARCOP except
to assure that all suppliers satisfy Arby's quality control standards. If ARCOP
does not properly estimate the needs of the Arby's system with respect to one or
more products, or otherwise makes poor purchasing decisions, system sales and
the financial condition of Arby's franchisees could be adversely affected.

WE MAY NOT BE ABLE TO ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY, WHICH
COULD HARM THE VALUE OF OUR BRANDS AND ADVERSELY AFFECT OUR BUSINESS.

Our intellectual property is material to the conduct of our business. We
rely on a combination of trademarks, copyrights, service marks, trade secrets
and similar intellectual property rights to protect our brands and other
intellectual property. The success of our business strategy depends, in part, on
our continued ability to use our existing trademarks and service marks in order
to increase brand awareness and further develop our branded products in both
domestic and international markets. If our efforts to protect our intellectual
property are not adequate, or if any third party misappropriates or infringes on
our intellectual property, either in print or on the Internet, the value of our
brands may be harmed, which could have a material adverse effect on our
business, including the failure of our brands to achieve and maintain market
acceptance.

We franchise our restaurant brands to various franchisees. While we try to
ensure that the quality of our brands is maintained by all of our franchisees,
we cannot assure you that these franchisees will not take actions that adversely
affect the value of our intellectual property or the reputation of the Arby's
restaurant system. We have registered certain trademarks and have other
trademark registrations pending in the U.S. and certain foreign jurisdictions.
The trademarks that we currently use have not been registered in all of the
countries outside of the United States in which we do business and may never be
registered in all of these countries.

We cannot assure you that all of the steps we have taken to protect our
intellectual property in the U.S. and foreign countries will be adequate. In
addition, the laws of some foreign countries do not protect intellectual
property rights to the same extent as the laws of the U.S.

WE, AND SOME OF OUR SUBSIDIARIES, REMAIN CONTINGENTLY LIABLE WITH RESPECT TO
CERTAIN OBLIGATIONS RELATING TO BUSINESSES THAT WE HAVE SOLD.

In 1997 we sold all of our then company-owned Arby's restaurants to
subsidiaries of RTM, Arby's largest franchisee. In connection with the sale, an
aggregate of approximately $55 million of mortgage and equipment notes were
assumed by subsidiaries of RTM, of which approximately $40.0 million remained
outstanding at December 28, 2003. RTM has guaranteed the payment of these notes
by its subsidiaries. Notwithstanding the assumption of this debt and guaranty,
we remain contingently liable as a guarantor of the notes. In addition, the
subsidiaries of RTM also assumed substantially all of the lease obligations
relating to the purchased restaurants (which aggregate a maximum of
approximately $59.0 million at December 28, 2003) and RTM has indemnified us for
any losses we might incur with respect to such leases. Notwithstanding such
assumption, Arby's and its subsidiaries remain contingently liable if RTM's
subsidiaries fail to make the required payments under those notes and leases.

In addition, in July 1999, we sold 41.7% of our then remaining 42.7%
interest in National Propane Partners, L.P. and a sub-partnership, National
Propane, L.P. to Columbia Energy Group, and retained less than a 1% special
limited partner interest in AmeriGas Eagle Propane, L.P. (formerly known as
National Propane, L.P. and as Columbia Propane, L.P.). As part of the
transaction, our subsidiary, National Propane Corporation, agreed that while it
remains a special limited partner of AmeriGas, it would indemnify the owner of
AmeriGas for any payments the owner makes under certain debt of AmeriGas
(aggregating approximately $138.0 million as of December 28, 2003), if AmeriGas
is unable to repay or refinance such debt, but only after recourse to the assets
of AmeriGas. Either National Propane Corporation or AmeriGas Propane, L.P., the
owner of AmeriGas, may require AmeriGas to repurchase the special limited
partner interest. However, we believe it is unlikely that either party would
require repurchase prior to 2009 as either AmeriGas Propane, L.P. would owe us
tax

14

indemnification payments or we would accelerate payment of deferred taxes, which
amount to approximately $39.4 million as of December 28, 2003, associated with
our sale of the propane business.

Although we believe that it is unlikely that we will be called upon to make
any payments under the guaranty, leases or indemnification described above, if
we are required to make such payments it could have a material adverse effect on
our financial position and results of operations. You should read the
information in 'Item. 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources' and in
Note 22 to the Consolidated Financial Statements.

CHANGES IN GOVERNMENTAL REGULATION MAY ADVERSELY AFFECT OUR ABILITY TO OPEN
NEW RESTAURANTS OR OTHERWISE ADVERSELY AFFECT OUR EXISTING AND FUTURE
OPERATIONS AND RESULTS.

Each Arby's restaurant is subject to licensing and regulation by health,
sanitation, safety and other agencies in the state and/or municipality in which
the restaurant is located. There can be no assurance that we, or our
franchisees, will not experience material difficulties or failures in obtaining
the necessary licenses or approvals for new restaurants, which could delay the
opening of such restaurants in the future. In addition, more stringent and
varied requirements of local and tax governmental bodies with respect to zoning,
land use and environmental factors could delay or prevent development of new
restaurants in particular locations. We, and our franchisees, are also subject
to the Fair Labor Standards Act, which governs such matters as minimum wages,
overtime and other working conditions, along with the Americans with
Disabilities Act, family leave mandates and a variety of other laws enacted by
the states that govern these and other employment law matters. We cannot predict
the amount of future expenditures that may be required in order to permit our
company-owned restaurants to comply with any changes in existing regulations or
to comply with any future regulations that may become applicable to our
business.

Certain of our current and past operations are or have been subject to
federal, state and local environmental laws and regulations concerning the
discharge, storage, handling and disposal of hazardous or toxic substances. Such
laws and regulations provide for significant fines, penalties and liabilities,
in certain cases without regard to whether the owner or operator of the property
knew of, or was responsible for, the release or presence of such hazardous or
toxic substances. In addition, third parties may make claims against owners or
operators of properties for personal injuries and property damage associated
with releases of hazardous or toxic substances. Although we believe that our
operations comply in all material respects with all applicable environmental
laws and regulations, we cannot predict what environmental legislation or
regulations will be enacted in the future or how existing or future laws or
regulations will be administered or interpreted. We cannot predict the amount of
future expenditures that may be required in order to comply with any
environmental laws or regulations or to satisfy any such claims. See 'Item 1.
Business -- Business Segment -- Restaurant Franchising and Operations
(Arby's) -- General -- Environmental Matters.'

OUR CERTIFICATE OF INCORPORATION CONTAINS CERTAIN ANTI-TAKEOVER PROVISIONS
AND PERMITS OUR BOARD OF DIRECTORS TO ISSUE PREFERRED STOCK WITHOUT
STOCKHOLDER APPROVAL.

Certain provisions in our certificate of incorporation are intended to
discourage or delay a hostile takeover of control of us. Our certificate of
incorporation authorizes the issuance of shares of 'blank check' preferred
stock, which will have such designations, rights and preferences as may be
determined from time to time by our board of directors. Accordingly, our board
of directors is empowered, without stockholder approval, to issue preferred
stock with dividend, liquidation, conversion, voting or other rights that could
adversely affect the voting power and other rights of the holders of our Class A
Common Stock and Class B Common Stock. The preferred stock could be used to
discourage, delay or prevent a change in control of us that is determined by our
board of directors to be undesirable. Although we have no present intention to
issue any shares of preferred stock, we cannot assure you that we will not do so
in the future.

ITEM 2. PROPERTIES.

We believe that our properties, taken as a whole, are generally well
maintained and are adequate for our current and foreseeable business needs. We
lease each of our material properties.
15

The following table contains information about our material facilities as of
December 28, 2003:

- ---------
* Approximately 1,140 square feet of this space is subleased from Arby's by a
third party.

Arby's also owns two and leases four properties that are leased or sublet
principally to franchisees. Our other subsidiaries also own or lease a few
inactive facilities and undeveloped properties, none of which are material to
our financial condition or results of operations.

At December 28, 2003, Sybra's 236 restaurants were located in the following
states: 75 were in Michigan, 65 in Texas, 38 in Pennsylvania, 21 in Florida, 14
in New Jersey, 10 in Maryland, 8 in Connecticut, 4 in Virginia and 1 in West
Virginia. In addition to its Arby's restaurant locations, Sybra also leases
office space in Ft. Lauderdale, Florida for its corporate and executive offices
and in Flint, Michigan, Sinking Spring, Pennsylvania, Plano, Texas and Temple
Terrace, Florida for its regional operations centers.

ITEM 3. LEGAL PROCEEDINGS.

In October 1998, a number of class actions were brought on behalf of our
stockholders in the Court of Chancery of the State of Delaware in connection
with a proposed 'going private' transaction involving the Company, which was
later terminated. These actions named Triarc, Messrs. Peltz and May and the
other then directors of Triarc as defendants. On March 26, 1999, four of the
plaintiffs in those actions filed a consolidated amended complaint alleging that
the defendants breached their fiduciary duties to our stockholders and failed to
disclose material information in connection with the 1999 'Dutch Auction'
self-tender offer. The amended complaint seeks, among other relief, rescission
of the tender offer and/or an award of monetary damages in an unspecified
amount. In October 2000, the plaintiffs agreed to stay this action pending
determination of a related action then pending in the U.S. District Court for
the Southern District of New York. Although the New York action was dismissed
with prejudice and, on February 28, 2003, the plaintiff in that case voluntarily
withdrew his appeal of the dismissal, there has been no further activity in the
Delaware action and such action remains stayed.

In addition to the legal matter described above and the environmental
matters described under 'Item 1. Business -- General -- Environmental Matters',
we are involved in other litigation and claims incidental to our business and
businesses that we have previously sold. We and our subsidiaries have reserves
for all of our legal and environmental matters aggregating $2.3 million as of
December 28, 2003. Although the outcome of these matters cannot be predicted
with certainty and some of these matters may be disposed of unfavorably to us,
based on our currently available information, including legal defenses available
to us and/or our subsidiaries, and given the aforementioned reserves, we do not
believe that the outcome of these legal and environmental matters will have a
material adverse effect on our consolidated financial position or results of
operations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

On June 3, 2003, Triarc held its Annual Meeting of Stockholders. As
previously announced, at the Annual Meeting Nelson Peltz, Peter W. May, Hugh L.
Carey, Clive Chajet, Joseph A. Levato, David E. Schwab II, Raymond S. Troubh and
Gerald Tsai, Jr. were elected to serve as Directors, and stockholders also
approved proposal 2, ratifying the appointment of Deloitte & Touche LLP as
Triarc's independent certified public accountants.

16

The voting on the above matters is set forth below:

Proposal 2 -- There were 18,691,788 votes for, 243,477 votes against and
15,436 abstentions.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

The principal market for our Class A Common Stock and Class B Common Stock
is the New York Stock Exchange (symbols: TRY and TRY.B, respectively). Our Class
B Common Stock began trading 'regular way' on the NYSE on September 5, 2003 in
connection with its distribution to our stockholders as described below. The
high and low market prices for our Class A Common Stock and Class B Common
Stock, as reported in the consolidated transaction reporting system and as
adjusted to reflect the distribution of our Class B Common Stock, are set forth
below:

On September 4, 2003 we made a stock distribution of two shares of our Class
B Common Stock for each share of our Class A Common Stock issued as of August
21, 2003. Our Class B Common Stock is entitled to one-tenth of a vote per share
and to receive regular quarterly cash dividends per share of at least 110% of
any regular quarterly cash dividends declared and paid on our Class A Common
Stock on or before September 4, 2006. Thereafter, our Class B Common Stock will
participate equally on a per share basis with our Class A Common Stock in any
cash dividends. In addition, our Class B Common Stock has a $.01 per share
preference in the event of any liquidation, dissolution or winding up of Triarc
and, after each share of our Class A Common Stock also receives $.01 per share
in any such liquidation, dissolution or winding up, our Class B Common Stock
would thereafter participate equally on a per share basis with our Class A
Common Stock in any remaining assets of Triarc.

We did not pay any dividends on our common stock in 2002. On each of
September 25, 2003 and December 16, 2003, we paid cash dividends of $0.065 and
$0.075 per share on our Class A Common Stock and Class B Common Stock,
respectively, to holders of record on September 15, 2003 and December 2, 2003,
respectively. The September 25, 2003 and December 16, 2003 dividends aggregated
approximately $4.2 million and $4.3 million, respectively. On February 12, 2004,
our board of directors declared cash dividends of $0.065 and $0.075 per share on
our Class A Common Stock and Class B Common Stock, respectively, payable
17

on March 16, 2004 to holders of record on March 4, 2004. Although we currently
intend to continue to declare and pay regular quarterly cash dividends, there
can be no assurance that any dividends will be declared or paid in the future or
the amount or timing of such dividends, if any. Future dividends will be made at
the discretion of our board of directors and will be based on such factors as
our earnings, financial condition, cash requirements, future prospects and other
factors. We have no class of equity securities currently issued and outstanding
except for our Class A Common Stock and our Class B Common Stock. However, we
are currently authorized to issue up to 100 million shares of preferred stock.

Because we are a holding company, our ability to meet our cash requirements,
including required interest and principal payments on our indebtedness, is
primarily dependent upon, in addition to our cash, cash equivalents and
short-term investments on hand, cash flows from our subsidiaries. Under the
terms of the indenture relating to the notes issued in the Arby's securitization
and the agreements relating to debt issued by Sybra (see 'Item 1.
Business -- Business Segment -- Restaurant Franchising and Operations
(Arby's) -- General'), there are restrictions on the ability of certain of our
subsidiaries to pay any dividends or make any loans or advances to us. The
ability of any of our subsidiaries to pay cash dividends or make any loans or
advances to us is also dependent upon the respective abilities of such entities
to achieve sufficient cash flows after satisfying their respective cash
requirements, including debt service, to enable the payment of such dividends or
the making of such loans or advances. In addition, in connection with the
acquisition of Sybra, Triarc agreed that Sybra would not pay dividends to it
prior to December 27, 2004. You should read the information in 'Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources' and Note 10 to our Consolidated
Financial Statements.

On January 18, 2001, our board of directors approved a stock repurchase
program that authorizes us, when and if market conditions warrant, to purchase
from time to time up to an aggregate of $50.0 million worth of our Class A
Common Stock. In connection with the approval of the distribution to
stockholders of our Class B Common Stock, the stock repurchase program was
amended to permit us to repurchase both Class A Common Stock and Class B Common
Stock under the program. The program, which initially was set to expire on
January 18, 2003, has since been extended until January 18, 2005. The amount
available under the program has been replenished from time to time to permit us
to repurchase up to a total of $50.0 million worth of our Class A Common Stock
and Class B Common Stock in addition to amounts previously spent under the
program. As of December 28, 2003, there was approximately $48.6 million of
availability under the program.

During 2003, pursuant to the stock repurchase program, we repurchased
1,625,000 shares of our Class A Common Stock, at an average cost of
approximately $8.72 per share (including commissions and as adjusted to reflect
the distribution of our Class B Common Stock), for an aggregate cost of
approximately $43.1 million. We did not repurchase any shares of our Class B
Common Stock during 2003. We cannot assure you that we will repurchase any
additional shares pursuant to the program.

As of March 1, 2004, there were approximately 3,038 holders of record of our
Class A Common Stock and 2,968 holders of record of our Class B Common Stock.

18

ITEM 6. SELECTED FINANCIAL DATA (1)

- ---------
(1) Selected Financial Data for the years ended on or prior to December 29,
2002 have been reclassified to conform with the current year's
presentation.

(2) The Company reports on a fiscal year consisting of 52 or 53 weeks ending on
the Sunday closest to December 31. In accordance with this method, each of
the Company's fiscal years presented above contained 52 weeks. All
references to years relate to fiscal years rather than calendar years.

(3) Selected Financial Data for the years ended on or prior to December 31,
2000 reflect the discontinuance of the Company's beverage businesses sold
in October 2000 and for the year ended January 2, 2000 reflect the
discontinuance of the Company's propane business sold in July 1999.
Selected Financial Data for the years ended on or prior to December 31,
2000 reflect the reclassification of charges for early extinguishment of
debt previously reported as extraordinary charges to either income (loss)
from continuing operations or income (loss) from discontinued operations,
as applicable, in accordance with Statement of Financial Accounting
Standards No. 145, 'Rescission of Statements No. 4, 44 and 64, amendment of
FASB Statement No. 13 and Technical Corrections.'

(footnotes continued on next page)

19

(footnotes continued from previous page)

(4) Income (loss) per share amounts have been retroactively adjusted for the
effect of a stock distribution (the 'Stock Distribution') on September 4,
2003 of two shares of a newly designated series 1 of the Company's
previously authorized Class B common stock for each share of the Company's
Class A common stock issued as of August 21, 2003, as if the Stock
Distribution had occurred at the beginning of the year ended January 2,
2000. For the purposes of calculating income per share, any net income
subsequent to the date of the Stock Distribution is allocated between the
Class A common shares and Class B common shares based on the actual
dividend payment ratio to the extent of any dividends paid during the year
with any excess allocated giving effect to the minimum stated dividend
participation rate of 110% for the Class B common shares compared with the
Class A common shares. Net income for years prior to the Stock Distribution
was allocated equally among each share of Class A common stock and Class B
common stock since there were no dividends declared or contractually
payable during those years. Net loss for any year was also allocated
equally.

(5) The weighted average shares outstanding have been retroactively adjusted
for the effect of the Stock Distribution. The number of shares used in the
calculation of diluted income (loss) per share of Class A common stock for
the years 1999 and 2001 are 26,943,000 and 22,692,000, respectively. The
number of shares used in the calculation of diluted income (loss) per share
of Class B common stock for the years 1999 and 2001 are 53,886,000 and
45,384,000, respectively. These shares used for the calculation of diluted
income (loss) per share for the years 1999 and 2001 consist of the weighted
average common shares outstanding for each class of common stock and
potential common shares reflecting the effect of dilutive stock options of
818,000 and 1,160,000, respectively, for Class A common stock and 1,636,000
and 2,320,000, respectively, for Class B common stock and, for the year
1999, the effect of a dilutive forward purchase obligation for common stock
of 110,000 shares of Class A common stock and 220,000 shares of Class B
common stock. The number of shares used in the calculation of diluted
income (loss) per share are the same as basic income (loss) per share for
the years 2000, 2002 and 2003 since all potentially dilutive securities
would have had an antidilutive effect based on the loss from continuing
operations for each of those years.

The shares of Class A common stock for the years ended on or prior to
December 30, 2001 as reported herein include shares of a former Class B
common stock since the former Class B common stock participated in income
or losses equally per share with the Class A common stock. In 1999 the
Company repurchased for treasury 3,805,015 shares of its Class A common
stock and 1,999,208 shares of its former Class B common stock and recorded
a forward purchase obligation for two future purchases of the former
Class B common stock that occurred on August 10, 2000 and on August 10,
2001 each for 1,999,207 former class B common shares. These shares are
before the effect of the Stock Distribution. These transactions resulted in
reductions of 3,376,000, 2,038,000, 1,994,000 and 1,214,000 shares in the
reported weighted-average Class A common shares outstanding, respectively,
in the years 1999, 2000, 2001 and 2002 and 6,752,000, 4,076,000, 3,988,000
and 2,428,000 shares in the reported weighted-average Class B common shares
outstanding, respectively, in the years 1999, 2000, 2001 and 2002.

(6) Reflects certain significant charges and credits recorded during 1999 as
follows: $2,126,000 charged to operating profit representing a capital
structure reorganization related charge related to equitable adjustments
made to the terms of outstanding stock options for stock of a former
subsidiary held by corporate employees; $4,262,000 credited to income from
continuing operations representing (1) $5,127,000 of release of excess
reserves for income taxes in connection with the completion of examinations
of the Company's Federal income tax returns for prior years by the Internal
Revenue Service (the 'IRS') and (2) $3,052,000 of reversal of excess
interest expense accruals for interest due the IRS in connection with the
completion of their examinations of the Company's Federal income tax
returns, both partially offset by (1) a $2,351,000 charge from the early
extinguishment of debt and (2) the aforementioned $2,126,000 charged to
operating profit, plus $560,000 of income tax benefit relating to the
aggregate of the above net credits; and $3,897,000 credited to net income
representing (1) the aforementioned $4,262,000 credited to income from
continuing operations and (2) $15,102,000 of gain on disposal of
discontinued operations, both less $15,467,000 of charges reported in loss
from operations of the discontinued businesses consisting of (a) a
$16,757,000 charge from the early extinguishment of debt,

(footnotes continued on next page)

20

(footnotes continued from previous page)

(b) a $3,348,000 capital structure reorganization related charge, similar
to the charge in continuing operations, relating to options holders who
were employees of the sold businesses, (c) $411,000 of provision for
interest due the IRS associated with the discontinued businesses in
connection with the completion of their examination of the Company's
Federal income tax returns, all less $7,651,000 of related income tax
benefit and (d) $2,602,000 of provision for income taxes in connection with
the completion of IRS examinations of the Company's Federal income tax
returns.

(7) Reflects certain significant charges and credits recorded during 2000 as
follows: $36,432,000 charged to operating loss representing (1) a
$26,010,000 charge for capital market transaction related compensation and
(2) a $10,422,000 charge resulting from the Company's repurchase of
1,045,834 shares of its class A common stock from certain of the Company's
officers and a director within six months after exercise of the related
stock options by the officers and director; $32,914,000 charged to loss
from continuing operations representing the aforementioned $36,432,000 less
$3,518,000 of related income tax benefit; and $427,352,000 credited to net
income representing $460,266,000 of the then estimated gain on disposal of
the Company's former beverage businesses credited to income from
discontinued operations, which is net of a $20,680,000 after-tax charge
from the early extinguishment of debt of the discontinued businesses, less
the aforementioned $32,914,000 charged to loss from continuing operations.

(8) Reflects certain significant credits recorded during 2001 as follows:
$5,000,000 credited to operating profit representing the receipt of a
$5,000,000 note receivable from the Chairman and Chief Executive Officer
and the President and Chief Operating Officer (the 'Executives') of the
Company received in connection with the settlement of a class action
lawsuit involving certain awards of compensation to the Executives;
$3,200,000 credited to income from continuing operations representing the
aforementioned $5,000,000 less $1,800,000 of related provision for income
taxes; and $46,650,000 credited to net income representing the
aforementioned $3,200,000 credited to income from continuing operations and
$43,450,000 of additional gain on disposal of the Company's beverage
businesses resulting from the realization of $200,000,000 of proceeds from
the purchaser of the Company's former beverage businesses, net of income
taxes, for the Company electing during 2001 to treat certain portions of
the sale of the Company's beverage businesses as an asset sale in lieu of a
stock sale under the provisions of Section 338(h)(10) of the United States
Internal Revenue Code, partially offset by additional accruals relating to
an estimated post-closing sales price adjustment (the 'Post-Closing
Adjustment').

(9) Reflects a significant credit recorded during 2002 as follows: $11,100,000
credited to net income representing adjustments to the previously
recognized gain on disposal of the Company's beverage businesses due to the
release of reserves for income taxes associated with the discontinued
beverage operations in connection with the receipt of related income tax
refunds.

(10) Reflects certain significant charges and credits recorded during 2003 as
follows: $22,000,000 charged to operating loss representing an impairment
of goodwill; $11,799,000 charged to loss from continuing operations
representing the aforementioned $22,000,000 partially offset by (1) a
$5,834,000 gain on sale of business arising principally from the sale by
the Company of a portion of its investment in an equity investee and a
non-cash gain to the Company from the public offering by the investee of
its common stock and (2) $4,367,000 of income tax benefit relating to the
above net charges; and $9,554,000 charged to net loss representing the
aforementioned $11,799,000 charged to loss from continuing operations
partially offset by a $2,245,000 credit to income from discontinued
operations principally resulting from the release of reserves, net of
income taxes, in connection with the settlement of the Post-Closing
Adjustment.

21

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

INTRODUCTION AND EXECUTIVE OVERVIEW

We currently operate solely in the restaurant business through our
franchised and Company-owned Arby's restaurants.

On December 27, 2002, we completed the acquisition of Sybra, Inc., the
second largest franchisee of Arby's restaurants, in a transaction we refer to as
the Sybra Acquisition. As of December 28, 2003 Sybra owns and operates 236
Arby's restaurants in nine states. As a result of the Sybra Acquisition, our
consolidated results of operations and cash flows for fiscal 2003 and for the
last two days of fiscal 2002 include Sybra's results and cash flows but do not
include royalties and franchise and related fees from Sybra which are eliminated
in consolidation. Our consolidated results of operations and cash flows for
fiscal 2002 prior to the Sybra Acquisition and fiscal 2001, however, include
royalties and franchise and related fees from Sybra but do not include Sybra's
results and cash flows. Sybra's results for the last two days of fiscal 2002
have been reported in 'Other income, net' in the accompanying consolidated
statement of operations for the year ended December 29, 2002 for convenience
since the results for that two-day period were not material to our consolidated
income before income taxes.

We derive our revenues in the form of royalties and franchise and related
fees and, as a result of the Sybra Acquisition, from sales by our Company-owned
restaurants. While approximately 60% of our existing royalty agreements and all
of our new domestic royalty agreements provide for royalties of 4% of franchise
revenues, our average royalty rate was 3.4% in fiscal 2003. We also derive
investment income from our investments.

We intend to enhance the value of our company by increasing the revenues of
the Arby's restaurant business and by pursuing business acquisitions that we
believe have the potential to create significant value to our stockholders. We
are adding new Arby's menu items such as salads and other low carbohydrate
offerings, continuing to focus on growing the number of restaurants in the
Arby's system and implementing new operational initiatives targeted at service
levels and convenience. In 2003 we evaluated a number of business acquisition
opportunities and we intend to continue our disciplined search for potential
business acquisitions in 2004 and beyond.

As discussed below under 'Liquidity and Capital Resources,' we continue to
evaluate our options for the use of our significant cash, cash equivalent and
investment position, including additional business acquisitions as referred to
above, repurchases of our common shares and investments. We have increased
capital expenditures to support our recently acquired Company-owned restaurants.

Beginning with fiscal 2003, we now report cost of sales as a result of the
Sybra Acquisition. Our royalties and franchise and related fees continue to have
no associated cost of sales.

In recent years our restaurant business has experienced the following
trends:

o Continued growth of food consumed away from home as a percentage of
total food-related spending;

o Increases in the cost and overall difficulty of developing new units in
many areas of the country, primarily as a result of increased
competition among quick service restaurant competitors and other retail
food operators for available development sites, higher development
costs associated with those sites and continued tightening in the
lending markets typically used to finance new unit development;

o Increased price competition in the quick service restaurant industry,
particularly as evidenced by the value menu concept which offers
comparatively lower prices on some menu items, the combination meals
concept which offers a combination meal at an aggregate price lower
than the individual food and beverage items, couponing and other price
discounting;

o The continuing proliferation of competitors in the higher end of the
sandwich category, many of whom are competing with Arby's by offering
higher-priced sandwiches with perceived higher levels of freshness,
quality and customization;

o Competition from new product choices, offering a variety of options
which include low calorie, low carbohydrate and/or low fat as a result
of a greater consumer awareness on nutrition;

22

o Additional competitive pressures for prepared food purchases from
operators outside the quick service restaurant industry such as deli
sections and in-store cafes of several major grocery store chains,
convenience stores and casual dining outlets;

o The addition of selected higher-priced quality items to menus, which
appeal more to adult tastes and offer an opportunity to recover some of
the dollar margins lost in the discounting of other menu items;

o Increases in beef prices resulting from reduced supplies and increased
demand; and

o Legislative activity on both the Federal and state level, which could
result in higher wages, fringe benefits, health care and other
insurance and packaging costs.

We experience the effects of these trends directly to the extent they affect
the operations of our Company-owned restaurants and indirectly to the extent
they affect sales by our franchisees and, accordingly, impact the royalties and
franchise fees we receive from them.

PRESENTATION OF FINANCIAL INFORMATION

This 'Management's Discussion and Analysis of Financial Condition and
Results of Operations' of Triarc Companies, Inc., which we refer to as Triarc,
and its subsidiaries should be read in conjunction with our consolidated
financial statements included elsewhere herein. Certain statements we make under
this Item 7 constitute 'forward-looking statements' under the Private Securities
Litigation Reform Act of 1995. See 'Special Note Regarding Forward-Looking
Statements and Projections' in 'Part I' preceding 'Item 1.'

We report on a fiscal year consisting of 52 or 53 weeks ending on the Sunday
closest to December 31. Each of our 2001, 2002 and 2003 fiscal years contained
52 weeks. Our 2001 fiscal year commenced on January 1, 2001 and ended on
December 30, 2001, our 2002 fiscal year commenced on December 31, 2001 and ended
on December 29, 2002, and our 2003 fiscal year commenced on December 30, 2002
and ended on December 28, 2003. Our 2004 fiscal year will commence on
December 29, 2003 and end on January 2, 2005 and will contain 53 weeks.
Accordingly, our results of operations for fiscal 2004 will contain one more
week than 2003. All references to years relate to fiscal years rather than
calendar years.

Certain amounts presented in this 'Management's Discussion and Analysis of
Financial Condition and Results of Operations' for 2001 and 2002 have been
reclassified to conform with the current year's presentation.

23

RESULTS OF OPERATIONS

Presented below is a table that summarizes our results of operations and
compares the amount and percent of the change between (1) 2001 and 2002, which
we refer to as the 2002 Change, and (2) 2002 and 2003, which we refer to as the
2003 Change. We consider certain percentage changes between years to be not
measurable or not meaningful, and we refer to these as 'n/m.' The percentage
changes used in the following discussion have been rounded to the nearest whole
percent.

- ---------
(a) Includes royalties and franchise and related fees from Sybra of $7.4 million
in each of 2001 and 2002, whereas the royalties and franchise and related
fees of $7.1 million in 2003 were eliminated in consolidation.

24

2003 COMPARED WITH 2002

Net Sales

Our net sales of $201.5 million in 2003 resulted entirely from Company-owned
Arby's restaurants acquired in the Sybra Acquisition.

We expect positive sales growth for our Company-owned restaurants in 2004.
As previously disclosed, our 2004 fiscal year will include 53 weeks compared
with 52 weeks in our 2003 fiscal year. Aside from this fact, we expect that
same-store sales of Company-owned restaurants for the first 52 weeks of 2004
will exceed 2003. When we refer to same-store sales, we mean only sales of those
restaurants which were open during the same months in both of the comparable
periods. We expect that this sales growth will result from the introduction of
salads and other low carbohydrate menu offerings, new operational initiatives
targeted at service levels and convenience, an increased focus on remodeling of
restaurants with solid sales growth potential and a planned restaurant opening.
Further, the same-store sales comparisons during 2004 will be favorably impacted
by the weak same-store sales comparison of 2003. We do not presently expect to
open any new Company-owned restaurants during 2004 besides the one disclosed
above and will evaluate whether to close any underperforming restaurants. We
specifically have fourteen restaurants where the facilities leases either expire
or are scheduled for renewal in 2004 and we will review the performance of each
of these restaurants in connection with the decision to renew or extend these
leases. However, we currently anticipate the renewal or extension of most of
these leases.

A single case of Bovine Spongiform Encephalopathy, commonly referred to as
'BSE' or 'mad cow disease,' was confirmed in the United States in late December
2003. All indications suggest this is an isolated case that is not expected to
have a material impact on domestic beef consumption or the revenues of our
restaurant business. Additional instances of mad cow disease, avian influenza,
commonly referred to as 'bird flu,' or other food-borne illnesses could
adversely affect public perceptions regarding the safety of eating beef, poultry
or other meats and also affect the price and availability of those meats.

Royalties and Franchise and Related Fees

Our royalties and franchise and related fees, which were generated entirely
from franchised restaurants, were reduced by $5.7 million, or 6%, to
$92.1 million in 2003 from $97.8 million in 2002. This reduction reflects that
we no longer include royalties and franchise and related fees from the
restaurants we acquired in the Sybra Acquisition whereas we included
$7.4 million of royalties and franchise and related fees from Sybra in 2002.
Aside from the effect of the Sybra Acquisition, royalties and franchise and
related fees increased $1.7 million in 2003 compared with 2002 reflecting a
$1.8 million, or 2%, increase in royalties partially offset by a $0.1 million
decrease in franchise and related fees. The increase in royalties consisted of a
$3.5 million improvement resulting from the royalties from the 121 restaurants
opened in 2003, with generally higher than average sales volumes, replacing the
royalties from the 71 generally underperforming restaurants closed in 2003,
partially offset by a $1.7 million reduction due to a 2% decline in same-store
sales of franchised restaurants during 2003 compared with 2002. Franchise and
related fees decreased due to a $0.3 million decrease in franchised restaurant
license renewal fees principally due to renewals in 2003 no longer including any
older licenses which provided for higher renewal fees, partially offset by a
$0.2 million increase in franchise fees from the opening of 5 additional
franchised restaurants in 2003 compared with 2002.

The 2% decline in same-store sales of franchised restaurants in 2003
continued the trend which commenced in the fourth quarter of 2002. For the
fourth quarter of 2003, same-store sales were approximately flat versus the weak
same-store sales comparisons of the fourth quarter of 2002. We believe the
decline experienced in 2003 was due to price discounting, new product offerings
of competitors in the quick service restaurant industry, the continuing effect
of a sluggish economy and, for the first nine months of 2003, strong same-store
sales of the prior-year comparable period. We faced stiff competition from the
entry into the market of salads and other low calorie, low carbohydrate and low
fat product offerings by our competitors. However, we expect to experience
positive same-store sales growth in 2004 due to the increase in our product
development of new salads and other low carbohydrate menu offerings, new
operational initiatives targeted at service levels and convenience and weak
same-store sales comparisons of 2003. Additionally, as explained more fully
above, our 2004 fiscal year will include 53 weeks compared with 52 weeks in our
2003 fiscal year, resulting in an additional week of royalties and franchise and
related fees being reported in our 2004 results of operations.
25

Cost of Sales, Excluding Depreciation and Amortization

Our cost of sales, excluding depreciation and amortization, of $151.6
million for 2003 resulted entirely from the Company-owned Arby's restaurants
acquired in the Sybra Acquisition. Our Company-owned restaurants have
experienced increases in the costs of roast beef, the largest component of our
menu offerings, resulting from decreased supplies and increased demand which
adversely affected our cost of sales during the second half of 2003. We expect
these higher roast beef costs will continue into 2004 and estimate that the
increased costs will adversely affect our 2004 cost of sales by between
approximately $2.0 million and $3.0 million. However, these increases should be
partially offset by improved operating efficiencies later in 2004 that we
anticipate from the planned implementation of new restaurant systems and
technology.

Our royalties and franchise fees have no associated cost of sales.

Advertising and Selling

Our advertising and selling expenses increased $13.1 million principally
reflecting $13.5 million of advertising expenses of Sybra.

General and Administrative

Our general and administrative expenses increased $18.1 million principally
reflecting $15.8 million of general and administrative expenses related to Sybra
and a $2.0 million increase in deferred compensation expense. Deferred
compensation expense, which increased to $3.4 million in 2003 from $1.4 million
in 2002, represents the increase in the fair value of investments in two
deferred compensation trusts, which we refer to as the Deferred Compensation
Trusts, for the benefit of our Chairman and Chief Executive Officer and
President and Chief Operating Officer, whom we refer to as the Executives, as
explained in more detail below under 'Loss From Continuing Operations Before
Income Taxes and Minority Interests.'

Depreciation and Amortization, Excluding Amortization of Deferred Financing
Costs

Our depreciation and amortization, excluding amortization of deferred
financing costs, increased $7.5 million principally due to depreciation and
amortization related to Sybra of $7.4 million. Depreciation and amortization
related to Sybra includes a $0.4 million impairment loss on certain restaurants
to reduce the carrying value of their properties to estimated fair value
resulting principally from a deterioration in their operating performance
compared with the prior year pre-acquisition period of Sybra.

Goodwill Impairment

We test the goodwill of our restaurant business for impairment annually as
of the fourth quarter in conjunction with our annual budgeting and long range
forecasting process. Although we treat our Company-owned restaurants and our
franchising of restaurants as one business segment and acquired Sybra to enhance
the value of the Arby's brand, our Company-owned restaurants are considered to
be a separate reporting unit for purposes of measuring goodwill impairment under
Statement of Financial Accounting Standards No. 142. Accordingly, goodwill is
tested for impairment at the Sybra level based on its separate cash flows
independent of our strategic reasons for owning restaurants. During 2003, our
newly acquired restaurants faced stiff competition from new product choices in
the marketplace. Additionally, our restaurants experienced higher than expected
cost increases in roast beef, our largest component for menu offerings, a trend
that is continuing in 2004. Consequently, our resulting sales, operating profit
and cash flows were adversely impacted in 2003. In light of the increased
competitive pressures and recognizing the unfavorable trend in roast beef costs
versus historical averages, we determined that in evaluating Sybra on a
stand-alone basis, the expected cash flows at the Sybra level were not
sufficient to fully support the carrying value of its goodwill. Accordingly, a
goodwill impairment charge of $22.0 million was recognized in our fourth quarter
of 2003 representing the excess of the carrying value of the goodwill relating
to Sybra over the implied fair value of such goodwill.

Further, we are evaluating whether the value of our restaurant business
would be enhanced by, from time to time, the sale of certain of our
Company-owned restaurants to secure multiple unit development agreements within
its territories. Therefore, we may decide to pursue sales at prices that Sybra
would not otherwise consider on a stand-alone basis, even if the sales could
result in impairment charges at the Sybra level to

26

properties, goodwill or both. Moreover, we may conclude that the long-term
benefit to the Arby's brand may warrant pursuing certain strategies even though
the expected future results under such strategies may not result in positive
cash flows for Sybra or for us on a consolidated basis.

Interest Expense

Interest expense increased $11.0 million principally reflecting
$8.7 million of interest expense of Sybra and $6.0 million of interest expense,
including related amortization of deferred financing costs, on the
$175.0 million principal amount of our 5% convertible notes, which we refer to
as the Convertible Notes, issued on May 19, 2003. This increase was partially
offset principally by decreases in interest expense of $1.6 million due to lower
outstanding balances of our 7.44% insured non-recourse securitization notes,
which we refer to as the Securitization Notes and $1.0 million related to the
change in fair value of an interest rate swap agreement on one of our term
loans.

Investment Income, Net

The following table summarizes and compares the major components of
investment income, net:

Our other than temporary unrealized losses are dependent upon the underlying
economics and/or volatility in the value of our investments in available-
for-sale securities and cost-basis investments and may or may not recur in
future periods. The significant other than temporary losses of $14.5 million in
2002 related primarily to the recognition of (1) $8.0 million of impairment
charges, before minority interests of $3.4 million, related to three underlying
non-public investments, held by our now 57.9%-owned consolidated subsidiary,
280 BT Holdings LLC, including $3.3 million related to Scientia Health Group
Limited, a non-public company which we refer to as Scientia, and (2) a $3.9
million impairment charge based on the significant decline in market value of
one of our available-for-sale investments in a large public company. The three
underlying investments of 280 BT Holdings for which we recognized impairment
charges were determined to be no longer viable or significantly impaired due to
either liquidity problems or the entity ceasing business operations. Our
recognized net gains include realized gains and losses on sales of our
available-for-sale securities and cost-basis investments and unrealized gains
and losses on changes in the fair values of our trading securities and our
securities sold short with an obligation to repurchase. The increase in our
recognized net gains was primarily due to an increase in the volume of our
available-for-sale securities sold in 2003. These gains and losses may vary
significantly in future periods depending upon the timing of the sales of our
investments or the changes in the value of our investments, as applicable. The
decrease in interest income is due to a decline in average rates of our
interest-bearing investments partially offset by higher average amounts of these
investments. Average rates on our interest-bearing investments declined from
1.8% in 2002 to 1.4% in 2003 principally due to the general decline in the money
market and short-term interest rate environment. The average amount of our
interest-bearing investments increased principally due to the investment of a
portion of the net proceeds from the May 2003 issuance of the Convertible Notes.
In response to the continued low interest rate environment, we began in the
latter part of 2003 to invest in higher yielding, but more risk-inherent, debt
securities with the objective of improving the overall return on our
interest-bearing investments.

As of December 28, 2003, we had pretax unrealized holding gains and (losses)
on available-for-sale marketable securities of $4.0 million and $(2.0) million,
respectively, included in accumulated other comprehensive income. We presently
believe that the unrealized losses are not other than temporary. Should either
(1) we decide to sell any of these investments with unrealized losses or
(2) any of the unrealized losses continue such that we believe they have become
other than temporary, we would recognize the losses on the
27

related investments at that time. In addition, through 280 BT Holdings, we
continue to hold a $1.4 million cost-basis investment in Scientia representing
original cost less adjustments for unrealized losses in investments made by
Scientia that were deemed to be other than temporary. The amount of this
investment is before related minority interests of $0.6 million. In addition, as
of December 28, 2003 we have notes receivable from management officers and
employees relating to a portion of their investments in 280 BT Holdings of which
$0.8 million is non-recourse, less an allowance of $0.5 million for
uncollectible amounts. If the value of Scientia declines further and,
accordingly, we recognize additional other than temporary losses, we would also
provide additional allowances of up to a maximum of $0.3 million relating to the
non-recourse notes receivable.

Gain (Costs) Related to Proposed Business Acquisitions Not Consummated

The gain related to proposed business acquisitions not consummated of
$2.1 million in 2003 represents a payment received by us for the use of due
diligence materials related to a proposed business acquisition we had previously
decided not to continue to pursue and did not consummate, net of our costs
incurred in connection with this proposed acquisition. The $2.2 million of costs
related to proposed business acquisitions not consummated in 2002 were primarily
for a business acquisition proposal we submitted but was not accepted.

Gain (Loss) on Sale of Businesses

The $5.8 million gain on sale of businesses in 2003 arose in connection with
an offering of common stock of Encore Capital Group, Inc., an equity investee of
ours which we refer to as Encore, completed in October 2003 for both newly
issued shares and shares held by certain existing stockholders, including us and
certain of our officers. This gain principally consists of (1) $3.3 million
related to the sale of a portion of our investment in Encore and (2) $2.4
million related to a non-cash gain from our equity in the net proceeds to Encore
in the Encore offering over the portion of our carrying value in Encore
allocable to the decrease in our ownership percentage. We recognized the
non-cash gain in accordance with our accounting policy under which we recognize
a gain or loss upon sale by an equity method investee of any previously unissued
stock to third parties to the extent of the decrease in our ownership of the
investee.

The loss on sale of businesses of $1.2 million in 2002 represents a
reduction of a gain related to a business previously sold due to a charge for
estimated environmental clean-up and related costs.

Other Income, Net

The increase in other income, net is principally due to a $1.8 million
increase in our equity in earnings of Encore reflecting $0.7 million of income
in 2003 resulting from acquisitions of Encore common stock, $0.3 million of
equity in earnings of Encore in 2003 relating to a litigation settlement and
$0.7 million of equity in losses of Encore in 2002, which did not recur in 2003,
relating to Encore losses in years prior to 2002. The $0.7 million relating to
acquisitions of Encore common stock arose from the conversion of Encore
preferred stock and exercise of Encore common stock warrants at costs below the
related underlying equity in the assets of Encore which could not be allocated
to the assets of Encore as if Encore were a consolidated subsidiary. The
$0.7 million of equity in prior year losses was recognized in 2002 upon our
investment of $0.9 million in then newly-issued convertible preferred stock of
Encore. The equity in these losses had not been previously recorded as we had
previously reduced our investment in Encore to zero.

Loss From Continuing Operations Before Income Taxes and Minority Interests

Our loss from continuing operations before income taxes and minority
interests decreased $2.0 million to $14.6 million in 2003 from $16.6 million in
2002 due to the effect of the variances explained in the captions above.

As discussed above, we recognized deferred compensation expense of
$3.4 million in 2003 and $1.4 million in 2002, within general and administrative
expenses, for the increase in the fair value of investments in the Deferred
Compensation Trusts. Under accounting principles generally accepted in the
United States of America, we are permitted to recognize investment income for
any interest or dividend income on investments in the Deferred Compensation
Trusts and realized gains on sales of investments in the Deferred Compensation
Trusts, but are unable to recognize any investment income for unrealized
increases in the fair value of the

28

investments in the Deferred Compensation Trusts because these investments are
accounted for under the cost method. Accordingly, we did not recognize any
investment income on the investments in the Deferred Compensation Trusts during
2002 since we did not have any interest or dividends on the investments in the
Deferred Compensation Trusts or any realized gains on sales of the cost-method
investments in the Deferred Compensation Trusts. We recognized investment income
of $0.9 million in 2003 consisting entirely of realized gains from the sale of
certain cost-method investments in the Deferred Compensation Trusts, which
includes increases in value of $0.7 million prior to 2003. The cumulative
disparity between deferred compensation expense and net recognized investment
income will reverse in future periods as either (1) additional investments in
the Deferred Compensation Trusts are sold and previously unrealized gains are
recognized without any offsetting increase in compensation expense or (2) the
fair values of the investments in the Deferred Compensation Trusts decrease
resulting in the recognition of a reversal of compensation expense without any
offsetting losses recognized in investment income.

Benefit From Income Taxes

The benefit from income taxes represented effective rates of 9% in 2003 and
20% in 2002 on the respective loss from continuing operations before income
taxes and minority interests. The effective benefit rate is lower in 2003
principally due to the effect of the impairment charge for non-deductible
goodwill in 2003 which did not occur in 2002 partially offset by a lesser effect
of minority interests in the loss of 280 BT Holdings, which is included in the
loss from continuing operations before income taxes and minority interests, due
to the significant charges recorded in 2002 which did not recur in 2003 for
other than temporary losses relating to three underlying investments held by 280
BT Holdings.

Minority Interests in Loss of a Consolidated Subsidiary

The minority interests in loss of a consolidated subsidiary of $0.1 million
in 2003 and $3.5 million in 2002 principally reflect provisions for unrealized
losses by 280 BT Holdings on its cost-method investments deemed to be other than
temporary.

Gain on Disposal of Discontinued Operations

The gain on disposal of discontinued operations of $2.3 million in 2003
resulted principally from the release of excess reserves, net of income taxes,
of $1.6 million in connection with the settlement by arbitration of a
post-closing sales price adjustment. The post-closing sales price adjustment
related to the sale in 2000 of our former beverage businesses, consisting of
Snapple Beverage Group, Inc. and Royal Crown Company, Inc., to affiliates of
Cadbury Schweppes plc, which we refer to as Cadbury, in a transaction we refer
to as the Snapple Beverage Sale. The gain in 2002, which resulted entirely from
adjustments to the previously recognized gain on the Snapple Beverage Sale, was
due to the release of reserves for income taxes in connection with the receipt
of related income tax refunds.

2002 COMPARED WITH 2001

Royalties and Franchise and Related Fees

Our royalties and franchise and related fees, which were generated entirely
from franchised restaurants, increased $5.0 million, or 5%, to $97.8 million in
2002 from $92.8 million in 2001 reflecting a $5.7 million, or 6%, increase in
royalties partially offset by a $0.7 million, or 17%, decrease in franchise and
related fees. The increase in royalties consisted of (1) a $3.3 million
improvement resulting from the royalties from the 116 restaurants opened in
2002, with generally higher than average sales volumes, replacing the royalties
from the 64 generally underperforming restaurants closed in 2002, (2) a
$1.7 million improvement due to a 2% increase in same-store sales of franchised
restaurants and (3) a $0.7 million improvement due to an increase in the average
royalty rate to 3.4% in 2002 from 3.3% in 2001. The decrease in franchise and
related fees was principally due to a decrease in the amount of revenues
recognized from forfeited deposits upon the termination of commitments to open
new franchised restaurants and the opening of 15 fewer franchised restaurants in
2002 compared with 2001, partially offset by an increase in franchise license
renewal fees and a decrease in franchise fee credits earned by franchisees under
our remodeling incentive program. Although that remodeling incentive
29

program was discontinued in 2000, there remain $0.1 million of available credits
as of December 28, 2003 which, to the extent unused by franchisees, expire in
2004.

Our royalties and franchise fees have no associated cost of sales.

General and Administrative

Our general and administrative expenses decreased $1.9 million, or 3%,
principally reflecting (1) a $5.3 million decrease in incentive compensation
costs, (2) a $0.7 million decrease in legal fees, (3) a $0.5 million decrease in
deferred compensation expense and (4) a $0.5 million decrease in costs related
to a coffee marketing program. The $5.3 million decrease in incentive
compensation was principally due to lower executive bonuses relating to 2002 as
compared with 2001. Deferred compensation expense, which decreased to
$1.4 million in 2002 from $1.9 million in 2001, represents the increase in the
fair value of investments in the Deferred Compensation Trusts, for the benefit
of the Executives, as explained in more detail below under 'Income (Loss) From
Continuing Operations Before Income Taxes and Minority Interests.' These
decreases were partially offset by a $5.0 million reduction in compensation
expense in 2001 which did not recur in 2002 related to a note that we received
from the Executives in partial settlement of a class action shareholder lawsuit
which effectively represented an adjustment of prior period compensation
expense.

Interest Expense

Interest expense decreased $4.2 million, or 14%, principally reflecting
(1) interest of $3.1 million recorded in 2001 which did not recur in 2002 on the
estimated income tax liability paid with the filing of our election in June 2001
to treat certain portions of the Snapple Beverage Sale as an asset sale for
income tax purposes, as explained below under 'Gain on Disposal of Discontinued
Operations,' and (2) a $1.4 million decrease in interest expense due to lower
outstanding balances of the Securitization Notes. These decreases were partially
offset by a $0.6 million increase in interest expense due to the full period
effect in 2002 of a term loan and related interest rate swap agreement used to
finance the purchase of an airplane in July 2001.

Investment Income, Net

The following table summarizes and compares the major components of
investment income, net:

The decrease in interest income is due to lower average interest rates and,
to a lesser extent, lower average amounts of cash equivalents and
interest-bearing short-term investments during 2002 compared with 2001. Average
rates on our interest-bearing investments declined from 4.8% in 2001 to 1.8% in
2002 principally due to the general decline in the money market and short-term
interest rate environment which continued into 2003. The average amount of our
interest-bearing investments declined principally due to our payment in
mid-March 2001 of $239.3 million of estimated income taxes related to the
Snapple Beverage Sale in October 2000. The significant components of the
$14.5 million of other than temporary losses in 2002 and the nature of our
recognized net gains have been explained in the comparison of 2003 with 2002.

Costs Related to Proposed Business Acquisitions Not Consummated

The $2.2 million of costs related to proposed business acquisitions not
consummated in 2002 were primarily for a business acquisition proposal we
submitted but was not accepted. The $0.6 million of costs in 2001 were for other
proposed business acquisitions not consummated.

30

Gain (Loss) on Sale of Businesses

The loss on sale of businesses of $1.2 million in 2002 represents a
reduction of a gain related to a business previously sold due to a charge for
estimated environmental clean-up and related costs. The gain on sale of
businesses of $0.5 million in 2001 reflects the release of sales tax accruals no
longer necessary due to the expiration of statutory audit periods.

Other Income, Net

Other income, net decreased $8.8 million principally due to $8.3 million of
interest income recorded in 2001, which did not recur in 2002, related to our
election in June 2001 to treat certain portions of the Snapple Beverage Sale as
an asset sale for income tax purposes, as explained in more detail below under
'Gain on Disposal of Discontinued Operations.'

Income (Loss) From Continuing Operations Before Income Taxes and Minority
Interests

Our income (loss) from continuing operations before income taxes and
minority interests decreased $34.0 million to a loss of $16.6 million in 2002
from income of $17.4 million in 2001 due to the effect of the variances
explained in the captions above.

As discussed above, we recognized deferred compensation expense of $1.4
million in 2002 and $1.9 million in 2001, within general and administrative
expenses, for the increase in the fair value of the investments in the Deferred
Compensation Trusts. Under accounting principles generally accepted in the
United States of America, we are permitted to recognize investment income for
any interest or dividend income on investments in the Deferred Compensation
Trusts and realized gains on sales of investments in the Deferred Compensation
Trusts, but are unable to recognize any investment income for unrealized
increases in the fair value of the investments in the Deferred Compensation
Trusts because these investments are accounted for under the cost method.
Accordingly, as previously explained in more detail in the comparison of 2003
with 2002, we did not recognize any investment income on the investments in the
Deferred Compensation Trusts during 2002. During 2001, we recognized investment
income of $0.2 million on investments in the Deferred Compensation Trusts,
consisting entirely of interest income, and we did not have any dividends from
or realized gains on sales from the investments in the Deferred Compensation
Trusts.

(Provision For) Benefit From Income Taxes

The effective benefit rate of 20% in 2002 is lower than the United States
Federal statutory rate of 35% principally due to (1) the tax provision related
to minority interests in loss of 280 BT Holdings, (2) state income taxes, net of
Federal income tax benefit, due to the differing mix of pretax income or loss
among the consolidated entities which file state returns on an individual
company basis and (3) the effect of non-deductible compensation costs. The
effective provision rate of 50% in 2001 was higher than the 35% rate principally
due to (1) the effect of non-deductible compensation costs and (2) state income
taxes.

Minority Interests in Loss of a Consolidated Subsidiary

The minority interests in loss of a consolidated subsidiary of $3.5 million
in 2002 and $0.3 million in 2001 principally reflect provisions for unrealized
losses by 280 BT Holdings on its cost-method investments deemed to be other than
temporary.

Gain on Disposal of Discontinued Operations

The gain on disposal of discontinued operations, which resulted entirely
from adjustments to the previously recognized gain on the Snapple Beverage Sale,
was $11.1 million in 2002 compared with $43.4 million in 2001. The adjustment to
the gain in 2002 was due to the release of reserves for income taxes in
connection with the receipt of related income tax refunds. The adjustment to the
gain in 2001 resulted from the realization of $200.0 million of proceeds from
Cadbury for our electing in June 2001 to treat certain portions of the Snapple
Beverage Sale as an asset sale in lieu of a stock sale under the provisions of
Section 338(h)(10) of the United States Internal Revenue Code, net of estimated
income taxes, partially offset by additional accruals relating to an estimated
post-closing sales price adjustment.
31

LIQUIDITY AND CAPITAL RESOURCES

Cash Flows from Continuing Operating Activities

Our consolidated operating activities from continuing operations used cash
and cash equivalents, which we refer to in this discussion as cash, of
$30.2 million during 2003 reflecting (1) net operating investment adjustments of
$37.1 million, (2) a loss from continuing operations of $13.1 million, (3) cash
used by changes in operating assets and liabilities of $9.1 million and (4) the
reclassification of the $3.3 million cash portion of the $5.8 million gain on
sale of business to investing activities, all partially offset by (1) net
non-cash charges of $30.7 million and (2) the collection of a litigation
settlement receivable of $1.7 million.

The net operating investment adjustments of $37.1 million principally
reflected $30.5 million of net purchases of trading securities in excess of
sales and $6.3 million of net recognized gains, principally on
available-for-sale securities. The cash used by changes in operating assets and
liabilities of $9.1 million principally reflected an $8.8 million reduction in
Sybra's accounts payable and accrued expenses, principally to satisfy a portion
of Sybra's net negative working capital assumed as contemplated as part of the
Sybra Acquisition. The net non-cash charges of $30.7 million principally relate
to (1) goodwill impairment of $22.0 million and (2) depreciation and
amortization of $16.4 million, both partially offset by (1) a deferred income
tax benefit of $3.6 million and (2) the $2.5 million non-cash portion of the
gain on sale of business.

Excluding the effect of net purchases of trading securities noted above,
which represent the discretionary investment of excess cash, and the effect of
liquidating the Sybra pre-acquisition accounts payable and accrued expenses as
noted above, cash flows from continuing operating activities during 2003 would
have been positive by $9.1 million. We expect positive cash flows from
continuing operating activities during 2004, excluding the effect, if any, of
similar net purchases of trading securities.

Working Capital and Capitalization

Working capital, which equals current assets less current liabilities, was
$610.6 million at December 28, 2003, reflecting a current ratio, which equals
current assets divided by current liabilities, of 4.8:1. Working capital
increased $101.1 million from $509.5 million at December 29, 2002 principally
due to the net proceeds of $126.7 million, after a related repurchase of
$41.7 million of our common stock, from our issuance on May 19, 2003 of
$175.0 million principal amount of the Convertible Notes, discussed below under
'Convertible Notes' and 'Treasury Stock Purchases,' less $43.2 million of
long-term debt repayments.

Our total capitalization at December 28, 2003 was $806.5 million consisting
of stockholders' equity of $287.6 million and long-term debt of $518.9 million,
including current portion. Our total capitalization increased $86.7 million from
$719.8 million at December 29, 2002 principally due to (1) the issuance of the
Convertible Notes of $175.0 million and (2) proceeds from stock option exercises
of $13.7 million, both partially offset by (1) repayments of long-term debt of
$43.2 million, (2) repurchases of our common stock for treasury of
$43.1 million, including $1.4 million purchased in 2003 that settled in 2004,
(3) the net loss of $10.8 million and (4) dividends paid of $8.5 million.

Contractual Obligations

The following table summarizes the expected payments under our outstanding
contractual obligations at December 28, 2003:

(footnotes on next page)
32

(footnotes from previous page)

(a) Excludes capitalized lease obligations, which are shown separately in the
table, and interest.

(b) Excludes interest on capitalized lease obligations.

(c) Represents the future minimum rental obligations including $11.4 million of
net unfavorable lease amounts and accruals for future scheduled rent
increases we have provided and which will not be included in rent expense in
future periods.

(d) Represents amounts due to the Executives in 2005, which can be settled
either by the payment of cash or transfer of the investments held in the
Deferred Compensation Trusts. The Executives may elect to defer receipt
beyond 2005.

(e) Includes funding commitment of $3.0 million per year in 2004 and 2005 as
part of an Arby's national cable television advertising campaign.

Stock Distribution

On September 4, 2003, we made a stock distribution, which we refer to as the
Stock Distribution, of two shares of a newly designated series 1 of our
previously authorized class B common stock for each share of our class A common
stock issued as of August 21, 2003 resulting in the issuance of 59.1 million
shares of class B common stock. The newly designated series of class B common
stock is entitled to one-tenth of a vote per share, has a $.01 per share
liquidation preference and is entitled to receive regular quarterly cash
dividends per share of at least 110% of any regular quarterly cash dividends per
share declared on the class A common stock and paid on or before September 4,
2006. Thereafter, the class B common stock will participate equally on a per
share basis with the class A common stock in any cash dividends.

Securitization Notes

We have outstanding, through our ownership of Arby's Franchise Trust,
Securitization Notes with a remaining principal balance of $234.1 million as of
December 28, 2003 which are due no later than December 2020. However, based on
current projections and assuming the adequacy of available funds, as defined
under the indenture for the Securitization Notes, which we refer to as the
Securitization Indenture, we currently estimate that we will repay
$22.3 million in 2004 with increasing annual payments to $37.4 million in 2011
in accordance with a targeted principal payment schedule. The Securitization
Notes are redeemable by Arby's Franchise Trust at an amount equal to the total
of remaining principal, accrued interest and the excess, if any, of the
discounted value of the remaining principal and interest payments over the
outstanding principal amount of the Securitization Notes.

Obligations under the Securitization Notes are insured by a financial
guarantee company and are collateralized by assets with an aggregate net book
value of $46.6 million as of December 28, 2003 consisting of cash and cash
equivalents of $9.5 million, a cash equivalent reserve account of $30.5 million
and royalty receivables of $6.6 million.

Sybra Notes

We have outstanding, through our ownership of Sybra, leasehold notes,
equipment notes and mortgage notes with a total remaining principal balance of
$78.1 million as of December 28, 2003. The leasehold notes have a remaining
principal balance of $69.9 million and are due in equal monthly installments
including interest through 2021, of which $5.3 million is due in 2004. The
leasehold notes are secured by restaurant leasehold improvements, equipment and
inventories with respective net book values of $29.0 million, $11.5 million and
$2.1 million as of December 28, 2003. The equipment notes have a remaining
principal of $5.0 million and are due in equal monthly installments including
interest through 2009, of which $1.4 million is due in 2004. The equipment notes
are secured by restaurant equipment with a net book value of $5.8 million as of
December 28, 2003. The mortgage notes have a remaining principal of
$3.2 million and are due in equal monthly installments including interest
through 2018, of which $0.1 million is due in 2004. The mortgage notes are
secured by land and buildings of restaurants with net book values of
$1.1 million and $1.0 million, respectively, as of December 28, 2003.
33

The loan agreements for most of the Sybra leasehold notes, mortgage notes
and equipment notes contain various prepayment provisions that provide for
prepayment penalties of up to 5% of the principal amount prepaid or are based
upon specified 'yield maintenance' formulas.

Convertible Notes

On May 19, 2003 we issued $175.0 million of 5% Convertible Notes due 2023,
which we refer to as the Offering. The Convertible Notes are convertible under
specified circumstances at a combined conversion rate of 25 shares of class A
common stock and 50 shares of class B common stock per $1,000 principal amount
of Convertible Notes, subject to adjustment in certain circumstances and after
giving effect to the Stock Distribution. This rate represents an aggregate
conversion price of $40.00 for every one share of class A common stock and two
shares of class B common stock. The Convertible Notes are redeemable at our
option commencing May 20, 2010 and at the option of the holders on May 15, 2010,
2015 and 2020 or upon the occurrence of a fundamental change, as defined,
relating to us, in each case at a price of 100% of the principal amount of the
Convertible Notes plus accrued interest. We used a portion of the
$175.0 million proceeds from the Offering to purchase 1,500,000 shares of our
class A common stock for treasury for $41.7 million and to pay estimated fees
and expenses associated with the Offering of $6.6 million. The balance of the
net proceeds from the Offering are being used by us for general corporate
purposes, which may include working capital, repayment of indebtedness,
acquisitions, additional share repurchases and investments.

Other Long-Term Debt

We have a secured bank term loan payable through 2008 with an outstanding
principal amount of $15.1 million as of December 28, 2003, of which
$3.2 million is due in 2004. We also have a secured promissory note payable
through 2006 with an outstanding principal amount of $11.5 million as of
December 28, 2003, of which $2.0 million is due in 2004. In addition, we have
mortgage notes payable through 2016 related to restaurants we sold in 1997 with
outstanding principal amounts totaling $2.9 million as of December 28, 2003, of
which $0.1 million is due in 2004.

Revolving Credit Facilities

We did not have any revolving credit facilities as of December 28, 2003.

Debt Repayments and Covenants

Our total scheduled long-term debt repayments in 2004 are $35.6 million
consisting principally of the $22.3 million expected to be paid under the
Securitization Notes, $6.8 million under Sybra's leasehold, equipment and
mortgage notes, $3.2 million under the secured bank term loan and $2.0 million
under the secured promissory note.

The various note agreements and indentures contain various covenants, the
most restrictive of which (1) require periodic financial reporting, (2) require
meeting certain debt service coverage ratio tests and (3) restrict, among other
matters, (a) the incurrence of indebtedness by certain of our subsidiaries,
(b) certain asset dispositions and (c) the payment of distributions by Arby's
Franchise Trust and Sybra. We were in compliance with all of these covenants as
of December 28, 2003.

In accordance with the Securitization Indenture, as of December 28, 2003
Arby's Franchise Trust had no amounts available for the payment of
distributions. However, on January 20, 2004, $0.3 million relating to cash flows
for the calendar month of December 2003 became available for the payment of
distributions by Arby's Franchise Trust through its parent to Arby's which, in
turn, would be available to Arby's to pay management service fees or Federal
income tax-sharing payables to Triarc or, to the extent of any excess, make
distributions to Triarc. Under the plan of reorganization of Sybra confirmed by
a United States Bankruptcy Court under which we acquired Sybra, we agreed that
Sybra would not pay any distributions prior to December 27, 2004.

Sybra is required to maintain a fixed charge coverage ratio under the
agreements for the leasehold notes and mortgage notes and Sybra was in
compliance with the minimum fixed charge coverage ratio as of December 28, 2003.

34

Guarantees and Commitments

Our wholly-owned subsidiary, National Propane Corporation, retains a less
than 1% special limited partner interest in our former propane business, now
known as AmeriGas Eagle Propane, L.P., which we refer to as AmeriGas Eagle.
National Propane agreed that while it remains a special limited partner of
AmeriGas Eagle, it would indemnify the owner of AmeriGas Eagle for any payments
the owner makes related to the owner's obligations under certain of the debt of
AmeriGas Eagle, aggregating approximately $138.0 million as of December 28,
2003, if AmeriGas Eagle is unable to repay or refinance such debt, but only
after recourse by the owner to the assets of AmeriGas Eagle. National Propane's
principal asset is an intercompany note receivable from Triarc in the amount of
$50.0 million as of December 28, 2003. We believe it is unlikely that we will be
called upon to make any payments under this indemnity. In August 2001, AmeriGas
Propane, L.P., which we refer to as AmeriGas Propane, purchased all of the
interests in AmeriGas Eagle other than National Propane's special limited
partner interest. Either National Propane or AmeriGas Propane may require
AmeriGas Eagle to repurchase the special limited partner interest. However, we
believe it is unlikely that either party would require repurchase prior to 2009
as either AmeriGas Propane would owe us tax indemnification payments if AmeriGas
Propane required the repurchase or we would accelerate payment of deferred
taxes, which would amount to $39.4 million as of December 28, 2003, associated
with our 1999 sale of the propane business if National Propane required the
repurchase. In the event the interest is not repurchased prior to 2009, we
estimate our actual related taxes payable to be $3.3 million during 2004 with
insignificant payments in 2005 through 2008 reducing the taxes payable in 2009
to approximately $35.8 million.

Triarc guarantees mortgage and equipment notes payable through 2015 of
approximately $40.0 million as of December 28, 2003 related to 355 restaurants
sold by us in 1997. The purchaser of the restaurants also assumed substantially
all of the associated lease obligations which extend through 2031, including all
then existing extension or renewal option periods, although Arby's remains
contingently liable if the purchaser does not make the required future lease
payments. Those lease obligations could total a maximum of approximately
$59.0 million as of December 28, 2003, assuming the purchaser has made all
scheduled payments under those lease obligations through that date.

Through October 2003 we guaranteed certain debt of Encore. We were relieved
of those guarantees in connection with the October 2003 repayment of that debt
by Encore.

Capital Expenditures

Cash capital expenditures amounted to $5.3 million in 2003. We expect that
cash capital expenditures will be approximately $13.7 million in 2004,
principally relating to Company-owned restaurants for (1) remodel and
maintenance capital expenditures, (2) computer hardware required for the
implementation of new restaurant systems and technology and (3) a planned
restaurant opening. There were $0.5 million of outstanding commitments for
capital expenditures as of December 28, 2003.

In addition, we expect to make cash expenditures of approximately $1.3
million in 2004 for computer software, principally relating to the new
restaurant systems and technology. There were $0.4 million of outstanding
commitments for computer software as of December 28, 2003.

Acquisitions and Investments

As of December 28, 2003, we have $743.3 million of cash, cash equivalents
and investments, including $37.4 million of investments classified as
non-current and net of $27.7 million of securities sold with an obligation for
us to purchase included in 'Accrued expenses and other current liabilities' in
our accompanying consolidated balance sheet. The cash equivalents and
non-current investments include $23.1 million of investments, at cost, in the
Deferred Compensation Trusts designated to satisfy deferred compensation. We
also had $39.7 million of restricted cash and cash equivalents including $30.5
million related to the Securitization Notes and $7.3 million held as collateral
for securities sold with an obligation for us to purchase. We continue to
evaluate strategic opportunities for the use of our significant cash and
investment position, including business acquisitions, repurchases of Triarc
common shares (see 'Treasury Stock Purchases' below) and investments.
35

Income Taxes

The Internal Revenue Service has commenced an examination of our Federal
income tax returns for the years ended December 31, 2000 and December 30, 2001.
We have not received any notices of proposed adjustments and, accordingly, the
amount of payments, if any, required as a result of this examination cannot be
determined. However, we do not currently believe any related tax payments will
be required in 2004. Moreover, should any income taxes or interest be assessed
as the result of this examination or any state examination for periods through
the October 25, 2000 date of the Snapple Beverage Sale, Cadbury has agreed to
pay up to $5.0 million of any resulting income taxes or associated interest
relating to the operations of the former beverage businesses.

Dividends

On September 25, 2003 and December 16, 2003, we paid regular quarterly cash
dividends of $0.065 and $0.075 per share on our class A and class B common
stock, respectively, aggregating $4.2 million and $4.3 million to holders of
record on September 15, 2003 and December 2, 2003, respectively. On
February 12, 2004 we declared regular quarterly cash dividends of $0.065 and
$0.075 per share on our class A and class B common stock, respectively, to
holders of record on March 4, 2004 and payable on March 16, 2004 aggregating
$4.3 million. We currently intend to continue to declare and pay quarterly cash
dividends, however, there can be no assurance that any dividends will be
declared or paid in the future or of the amount or timing of such dividends, if
any. If we pay quarterly cash dividends for the remainder of 2004 at the same
rate as declared in our 2004 first quarter, based on the number of our class A
and class B common shares outstanding as of March 4, 2004, our total cash
requirement for dividends would be $17.3 million in 2004.

Treasury Stock Purchases

Our management is currently authorized, when and if market conditions
warrant and to the extent legally permissible, to repurchase through
January 18, 2005 up to a total of $48.6 million of our class A and class B
common stock as of December 28, 2003. We repurchased 1,625,000 shares of
class A common stock for a total cost of $43.1 million in 2003, including
1,500,000 shares for $41.7 million in connection with the issuance of the
Convertible Notes discussed above and an additional 125,000 shares for $1.4
million in a transaction which settled after our 2003 year-end. We cannot assure
you that we will repurchase any additional shares.

Discontinued Operations

The agreement relating to the Snapple Beverage Sale provided for a
post-closing sales price adjustment, the amount of which had been in dispute. In
December 2003 the dispute was settled by arbitration and we paid Cadbury a
post-closing sales price adjustment of $11.3 million plus interest of $2.6
million. The effect of this post-closing sales price adjustment on our results
of operations is explained in the comparison of 2003 with 2002 in 'Gain on
Disposal of Discontinued Operations' under 'Results of Operations' above.

Universal Shelf Registration Statement

In December 2003, the Securities and Exchange Commission declared effective
a Triarc universal shelf registration statement in connection with the possible
future offer and sale, from time to time, of up to $2 billion of our common
stock, preferred stock, debt securities and warrants to purchase any of these
types of securities. Unless otherwise described in the applicable prospectus
supplement relating to the offered securities, we anticipate using the net
proceeds of each offering for general corporate purposes, including financing of
acquisitions and capital expenditures, additions to working capital and
repayment of existing debt. We have not presently made any decision to issue any
specific securities under this universal shelf registration statement.

Cash Requirements

As of December 28, 2003, our consolidated cash requirements for continuing
operations for 2004, exclusive of operating cash flow requirements, consist
principally of (1) a maximum of $50.0 million of payments for repurchases of our
class A and class B common stock for treasury under our current stock repurchase
program, including the repurchase for $1.4 million which settled after our 2003
year-end,

36

(2) scheduled debt principal repayments aggregating $35.6 million, (3) regular
cash dividends of approximately $17.3 million, (4) capital expenditures of
approximately $13.7 million, (5) computer software expenditures of approximately
$1.3 million and (6) the cost of business acquisitions, if any. We anticipate
meeting all of these requirements through (1) the use of our aggregate $705.9
million of existing cash and cash equivalents and short-term investments, net of
$27.7 million of short-term investments sold with an obligation for us to
purchase, (2) cash flows from continuing operating activities to the extent not
used for net purchases of trading securities and (3) if necessary for any
business acquisitions and if market conditions permit, proceeds from sales, if
any, of up to $2.0 billion of our securities under the universal shelf
registration statement.

LEGAL AND ENVIRONMENTAL MATTERS

In 2001, a vacant property owned by Adams Packing Association, Inc., an
inactive subsidiary of ours, was listed by the United States Environmental
Protection Agency on the Comprehensive Environmental Response, Compensation and
Liability Information System, which we refer to as CERCLIS, list of known or
suspected contaminated sites. The CERCLIS listing appears to have been based on
an allegation that a former tenant of Adams Packing conducted drum recycling
operations at the site from some time prior to 1971 until the late 1970's. The
business operations of Adams Packing were sold in December 1992. In February
2003, Adams Packing and the Florida Department of Environmental Protection,
which we refer to as the Florida DEP, agreed to a consent order that provides
for development of a work plan for further investigation of the site and limited
remediation of the identified contamination. In May 2003, the Florida DEP
approved the work plan submitted by Adams Packing's environmental consultant
and, as of December 28, 2003, the work at the site has been substantially
completed. Adams Packing is in the process of completing its contamination
assessment report and expects to submit the report to the Florida DEP in late
March 2004. Based on an original cost estimate of approximately $1.0 million for
completion of the work plan developed by Adams Packing's environmental
consultant, and after taking into consideration various legal defenses available
to us, including Adams Packing, Adams Packing has provided for its estimate of
its liability for this matter, including related legal and consulting fees.

In 1998, a number of class action lawsuits were filed on behalf of our
stockholders. Each of these actions named us, the Executives and the other
members of our board of directors as defendants. In 1999, certain plaintiffs in
these actions filed a consolidated amended complaint alleging that our tender
offer statement filed with the Securities and Exchange Commission in 1999,
pursuant to which we repurchased 3,805,015 shares of our class A common stock
for $18.25 per share, failed to disclose material information. The amended
complaint seeks, among other relief, monetary damages in an unspecified amount.
In 2000, the plaintiffs agreed to stay this action pending determination of a
related stockholder action which was subsequently dismissed in October 2002 and
is no longer being appealed. Through December 28, 2003, no further action has
occurred with respect to the remaining class action lawsuit and such action
remains stayed.

In addition to the environmental matter and stockholder lawsuit described
above, we are involved in other litigation and claims incidental to our current
and prior businesses. We and our subsidiaries have reserves for all of our legal
and environmental matters aggregating $2.3 million as of December 28, 2003.
Although the outcome of these matters cannot be predicted with certainty and
some of these matters may be disposed of unfavorably to us, based on currently
available information, including legal defenses available to us and/or our
subsidiaries, and given the aforementioned reserves, we do not believe that the
outcome of these legal and environmental matters will have a material adverse
effect on our consolidated financial position or results of operations.

APPLICATION OF CRITICAL ACCOUNTING POLICIES

The preparation of our consolidated financial statements in conformity with
accounting principles generally accepted in the United States of America
requires us to make estimates and assumptions in applying our critical
accounting policies that affect the reported amounts of assets and liabilities
and the disclosure of contingent assets and liabilities at the date of the
consolidated financial statements and the reported amount of revenues and
expenses during the reporting period. Our estimates and assumptions concern,
among other things, contingencies for legal, environmental, tax and other
matters, the valuations of some of our investments and impairment of long-lived
assets. We evaluate those estimates and assumptions on an ongoing basis based on
historical experience and on various other factors which we believe are
reasonable under the circumstances.
37

We believe that the following represent our more critical estimates and
assumptions used in the preparation of our consolidated financial statements:

o Reserves for the resolution of income tax contingencies which are
subject to future examinations of our Federal and state income tax
returns by the Internal Revenue Service or state taxing authorities,
including remaining provisions included in 'Current liabilities
relating to discontinued operations' in our consolidated balance
sheets:

The Internal Revenue Service has commenced an examination of our
Federal income tax returns for the years ended December 31, 2000 and
December 30, 2001. We have not received any notices of proposed
adjustments. However, should any income taxes or interest be assessed
as the result of this examination or any state examination for periods
through the October 25, 2000 date of the Snapple Beverage Sale, Cadbury
has agreed to pay up to $5.0 million of any resulting income taxes or
associated interest relating to the operations of the discontinued
beverage businesses. We believe that adequate provisions have been made
in prior periods for any liabilities, including interest, that may
result from the completion of this examination. To the extent that any
estimated amount required to liquidate the related liability as it
pertains to the former beverage businesses is determined to be less
than or in excess of the aggregate of amounts reimbursable by Cadbury
and amounts included in the current liabilities relating to
discontinued operations, any such difference will be recorded at that
time as a component of gain or loss on disposal of discontinued
operations. To the extent that any estimated amount required to
liquidate the related liability as it pertains to our continuing
operations is determined to be less than or in excess of the amounts
included in our accrued and deferred income tax accounts, any such
difference will be recorded at that time as a component of results from
continuing operations.

o Reserves which total $2.3 million at December 28, 2003 for the
resolution of all of our legal and environmental matters as discussed
immediately above under 'Legal and Environmental Matters':

Should the actual cost of settling these matters, whether resulting
from an adverse judgment or otherwise, differ from the reserves we have
accrued, that difference will be reflected in our results of operations
in the fiscal quarter in which the matter is resolved or when our
estimate of the cost changes.

o Valuations of some of our investments:

Our investments in short-term available-for-sale and trading marketable
securities are valued based on quoted market prices or statements of
account received from investment managers which are principally based
on quoted market or brokered/dealer prices. Accordingly, we do not
anticipate any significant changes from the valuations of these
investments. Our investments in other short-term investments accounted
for under the cost method, which we refer to as Cost Investments, and
the majority of our non-current investments are valued almost entirely
based on statements of account received from the investment managers or
the investees which are principally based on quoted market or
brokered/dealer prices. To the extent that some of these investments,
including the underlying investments in investment limited
partnerships, do not have available quoted market or brokered/dealer
prices, we rely on third-party appraisals or valuations performed by
the investment managers or the investees in valuing those securities.
These valuations are subjective and thus subject to estimates which
could change significantly from period to period. Those changes in
estimates in Cost Investments would impact our earnings only to the
extent of losses which are deemed to be other than temporary. The total
carrying value of these investments was approximately $7.6 million as
of December 28, 2003. We also have $3.8 million of non-marketable Cost
Investments in securities for which it is not practicable to estimate
fair value because the investments are non-marketable and are in
start-up enterprises for which we currently believe the carrying amount
is recoverable.

o Provisions for unrealized losses on certain investments deemed to be
other than temporary:

We review all of our investments that have unrealized losses for any
that we might deem other than temporary. The losses we have recognized
were deemed to be other than temporary due to declines in the market
value of or liquidity problems associated with specific securities.
This includes the underlying investments of any of our investment
limited partnerships and similar

38

investment entities in which we have an overall unrealized loss. This
process is subjective and subject to estimation. In determining whether
an investment has suffered an other than temporary loss, we consider
such factors as the length of time the carrying value of the investment
was below its market value, the severity of the decline, the investee's
financial condition and the prospect for future recovery in the market
value of the investment. The use of different judgments and estimates
could affect the determination of which securities suffered an other
than temporary loss and the amount of that loss. We have aggregate
unrealized holding losses on our available-for-sale marketable
securities of $2.0 million as of December 28, 2003 which, if not
recovered, may result in the recognition of future losses. Also, should
any of our Cost Investments totaling approximately $59.0 million,
including $21.5 million held in the Deferred Compensation Trusts, as of
December 28, 2003 experience declines in value due to conditions that
we deem to be other than temporary, we may recognize additional other
than temporary losses. However, any market value declines on the
investments in the Deferred Compensation Trusts would also result in a
reduction of the corresponding deferred compensation payable and
related deferred compensation expense. We have permanently reduced the
cost basis component of the investments for which we have recognized
other than temporary losses of $3.5 million, $14.5 million and $0.4
million during 2001, 2002 and 2003, respectively. As such, recoveries
in the value of the investments, if any, will not be recognized in
income until the investments are sold.

o Provisions for impairment of goodwill and long-lived assets:

All of our goodwill relates to our restaurant business and we test the
goodwill of each of our two restaurant business reporting units for
impairment annually. We recognize a goodwill impairment charge for any
excess of the carrying amount of the respective goodwill over the
implied fair value of the goodwill. The implied fair value of the
goodwill was determined in the same manner as the existing goodwill was
determined substituting the fair value for the cost of the reporting
unit. The fair value of the reporting unit was estimated to be the
present value of the anticipated cash flows associated with the
reporting unit. As explained more fully in the comparison of 2003 with
2002 in 'Goodwill Impairment' under 'Results of Operations' above, we
recognized a $22.0 million goodwill impairment charge with respect to
the Company-owned restaurants we had purchased in the Sybra
Acquisition. The amount of the impairment was based on estimates we
made regarding the present value of the anticipated cash flows
associated with the Company-owned restaurant reporting unit. Those
estimates are subject to change as a result of many factors including,
among others, any changes in our business plans, changing economic
conditions and the competitive environment. Should actual cash flows
and our future estimates vary adversely from those estimates we used,
we may be required to recognize additional goodwill impairment charges
in future years. Further, fair value of the reporting unit can be
determined under several different methods, of which discounted cash
flows is one alternative. Had we utilized an alternative method, the
amount of the goodwill impairment charge might have differed
significantly from the charge reported. As of December 28, 2003, there
remains $45.4 million of goodwill associated with the Company-owned
restaurant reporting unit.

We review our long-lived assets, which exclude goodwill, for impairment
whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. If that review indicates an
asset may not be recoverable based upon forecasted, undiscounted cash
flows, an impairment loss is recognized for the excess of the carrying
amount over the fair value of the asset. The fair value is estimated to
be the present value of the associated cash flows. Our critical
estimates in this review process include (1) anticipated future cash
flows of each of our Company-owned restaurants used in assessing the
recoverability of their respective properties and (2) anticipated
future cash flows of one of our product lines to which a trademark
relates. As explained more fully in the comparison of 2003 with 2002 in
'Depreciation and Amortization' under 'Results of Operations' above, we
recognized a $0.4 million impairment loss on the properties of certain
restaurants which were determined to not be fully recoverable in order
to reduce the carrying value of those properties to their estimated
fair value. The fair value of the impaired assets was estimated to be
the present value of the cash flows associated with each affected
Company-owned restaurant. Those estimates are subject to change as a
result of many factors including, among others, changing economic
conditions and the competitive environment.
39

Should actual cash flows and our future estimates vary adversely from
those estimates we used, we may be required to recognize additional
impairment charges in future years. Further, fair value of the
long-lived assets can be determined under several different methods, of
which discounted cash flows is one alternative. Had we utilized an
alternative method, the amount of the impairment might have differed
significantly from the charge reported. As of December 28, 2003, the
net carrying value of that trademark and the Company-owned restaurant
properties were $3.9 million and $55.0 million, respectively.

Our estimates of each of these items historically have been adequate;
however we have not had any significant experience with impairment testing of
Company-owned restaurant assets or goodwill relating to the Sybra Acquisition
due to their relatively recent acquisition. Due to uncertainties inherent in the
estimation process, it is reasonably possible that the actual resolution of any
of these items could vary significantly from the estimate and, accordingly,
there can be no assurance that the estimates may not materially change in the
near term.

INFLATION AND CHANGING PRICES

We believe that inflation did not have a significant effect on our
consolidated results of operations during 2001, 2002 and 2003 since inflation
rates generally remained at relatively low levels.

SEASONALITY

Our continuing operations are not significantly impacted by seasonality.
However, our restaurant revenues are somewhat lower in our first quarter.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In May 2003, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 150, 'Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity.' Statement 150
establishes standards for classifying and measuring certain specific
freestanding financial instruments with characteristics of both liabilities and
equity. It requires a financial instrument that is within its scope which
companies have historically presented in their financial statements as either
equity or between the liabilities section and the equity section (sometimes
referred to as mezzanine reporting) to be classified as a liability (or an asset
in some circumstances). Financial instruments within the scope of Statement 150
include (1) mandatorily redeemable financial instruments, (2) obligations to
repurchase an issuer's equity shares by transferring assets and (3) certain
obligations to issue a variable number of shares. Unless otherwise specified by
Statement 150 or other generally accepted accounting principles, these financial
instruments must be initially valued at fair value and subsequently valued
either at (1) fair value, (2) the present value of the amount to be paid at
settlement or (3) the cash that would be paid if settlement occurred at the
reporting date, depending on the type of financial instrument. Subsequent
changes in the values of these financial instruments generally are to be
recognized in earnings, with changes in the present value of mandatorily
redeemable financial instruments and certain other instruments specifically
recognized in interest cost along with any amounts paid or to be paid to holders
of those contracts in excess of the initial measurement amount. Statement 150 is
already effective for all financial instruments covered by the statement, except
for mandatorily redeemable non-controlling interests in subsidiaries that would
not be liabilities under Statement 150 for the subsidiary itself, such as
minority interests in a consolidated subsidiary or partnership with a limited
life. Financial Accounting Standards Board Staff Position No. 150-3, 'Effective
Date, Disclosures and Transition for Mandatorily Redeemable Financial
Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable
Noncontrolling Interests Under FASB Statement No. 150,' deferred indefinitely
the effective date for applying the provisions of Statement 150 for these
mandatorily redeemable noncontrolling interests in subsidiaries described above.
If Statement 150 becomes effective with respect to the mandatorily redeemable
noncontrolling interests in subsidiaries, we will evaluate at that time whether
its application will have an effect on our consolidated financial position or
results of operations. We presently do not have any other financial instruments
with characteristics of both liabilities and equity and, accordingly, the
adoption of Statement 150 did not have any impact on our consolidated financial
position or results of operations.

40

In December 2003, the Financial Accounting Standards Board issued revised
Interpretation No. 46, 'Consolidation of Variable Interest Entities,' an
interpretation of Accounting Research Bulletin No. 51, 'Consolidated Financial
Statements.' Variable interest entities, some of which were formerly referred to
as special purpose entities, are generally entities for which their other equity
investors (1) do not provide significant financial resources for the entity to
sustain its activities, (2) do not have voting rights or (3) have voting rights
that are disproportionately high compared with their economic interests. Under
revised Interpretation No. 46, variable interest entities must be consolidated
by the primary beneficiary. The primary beneficiary is generally defined as
having the majority of the risks and rewards of ownership arising from the
variable interest entity. Revised Interpretation No. 46 also requires certain
disclosures if a significant variable interest is held but not required to be
consolidated. The effective date of revised Interpretation No. 46 varies but is
effective for us commencing with our first quarter ending March 28, 2004. Since
we do not presently have interests in any variable interest entities within the
scope of revised Interpretation No. 46, the application of revised
Interpretation No. 46 will not have any immediate effect on our consolidated
financial position or results of operations.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Certain statements we make under this Item 7A constitute 'forward-looking
statements' under the Private Securities Litigation Reform Act of 1995. See
'Special Note Regarding Forward-Looking Statements and Projections' in 'Part I'
preceding 'Item 1.'

We are exposed to the impact of interest rate changes, changes in the market
value of our investments and, to a lesser extent, foreign currency fluctuations.

Policies and procedures -- In the normal course of business, we employ
established policies and procedures to manage our exposure to changes in
interest rates, changes in the market value of our investments and fluctuations
in the value of foreign currencies using financial instruments we deem
appropriate.

Interest Rate Risk

Our objective in managing our exposure to interest rate changes is to limit
the impact of interest rate changes on earnings and cash flows. We have
historically used interest rate cap and/or interest rate swap agreements on a
portion of our variable-rate debt to limit our exposure to the effects of
increases in short-term interest rates on our earnings and cash flows. As of
December 28, 2003 we did not have any interest rate cap agreements outstanding.
However, we do have an interest rate swap agreement in connection with our
variable-rate bank term loan. The swap agreement effectively establishes a fixed
interest rate on this variable-rate debt, but with an embedded written call
option whereby the swap agreement will no longer be in effect if, and for as
long as, the one-month London Interbank Offered Rate, which we refer to as
LIBOR, is at or above the specified rate of 6.5%, which was 3% higher than the
one-month LIBOR at the time we entered into the swap agreement. This swap
agreement, therefore, does not fully protect us from exposure to significant
increases in interest rates due to the written call option. As of December 28,
2003, our long-term debt, including current portion, aggregated $518.9 million
and consisted of $503.8 million of fixed-rate debt, including $1.8 million of
capitalized leases, and $15.1 million of a variable-rate bank loan. The fair
market value of our fixed-rate debt will increase if interest rates decrease. In
addition to our fixed-rate and variable-rate debt, our investment portfolio
includes debt securities that are subject to interest rate risk with remaining
maturities which range from less than ninety days to twenty-nine years. The fair
market value of all of our investments in debt securities will decline if
interest rates increase.

Equity Market Risk

Our objective in managing our exposure to changes in the market value of our
investments is to balance the risk of the impact of these changes on earnings
and cash flows with our expectations for long-term investment returns. Our
primary exposure to equity price risk relates to our investments in equity
securities, equity derivatives, securities sold with an obligation for us to
purchase and investment limited partnerships and similar investment entities.
Our board of directors has established certain policies and procedures governing
the type and relative magnitude of investments we may make. We have a management
investment committee which supervises the investment of certain funds not
currently required for our operations but has delegated the discretionary
authority to our Chairman and Chief Executive Officer and President and Chief
Operating Officer
41

to make certain investments. In addition, our board of directors also delegated
authority to these two officers to direct the investment of a portion of our
funds.

Foreign Currency Risk

Our objective in managing our exposure to foreign currency fluctuations is
to limit the impact of these fluctuations on earnings and cash flows. Our
primary exposure to foreign currency risk relates to our investments in certain
investment limited partnerships and similar investment entities that hold
foreign securities. To a more limited extent, we have foreign currency exposure
when one of our investment funds buys or sells foreign currencies or financial
instruments denominated in foreign currencies. However, some of the investment
managers hedge the foreign currency exposure, thereby substantially mitigating
the risk. We monitor these exposures and periodically determine our need for the
use of strategies intended to lessen or limit our exposure to these
fluctuations. We also have a relatively limited amount of exposure to (1) an
investment in a foreign subsidiary and (2) export revenues and related
receivables denominated in foreign currencies, both of which are subject to
foreign currency fluctuations. Our foreign subsidiary exposures relate to
administrative operations in Canada and our export revenue exposures relate to
royalties earned from Arby's franchised restaurants in Canada. Foreign
operations and foreign export revenues for the years ended December 29, 2002 and
December 28, 2003 together represented only 2% and 3%, respectively, of our
total royalties and franchise and related fees and for the year ended
December 28, 2003 represented only 1% of our total revenues. Accordingly, an
immediate 10% change in foreign currency exchange rates versus the United States
dollar from their levels at December 29, 2002 and December 28, 2003 would not
have a material effect on our consolidated financial position or results of
operations.

Overall Market Risk

We balance our exposure to overall market risk by investing a portion of our
portfolio in cash and cash equivalents with relatively stable and risk-minimized
returns. We periodically interview and select asset managers to avail ourselves
of higher, but more risk-inherent, returns from the investment strategies of
these managers. We also seek to identify alternative investment strategies that
may earn higher returns with attendant increased risk profiles for a portion of
our investment portfolio. We periodically review the returns from each of our
investments and may maintain, liquidate or increase selected investments based
on this review and our assessment of potential future returns. In response to
the continued low interest rate environment, we began in the latter part of 2003
to invest in higher yielding, but more risk-inherent, debt securities with the
objective of improving the overall return on our interest-bearing investments.
In 2004, we are continuing to adjust our asset allocations to increase the
portion of our investments which offer the opportunity for higher, but more
risk-inherent, returns.

We maintain investment portfolio holdings of various issuers, types and
maturities. As of December 29, 2002 and December 28, 2003, these investments
consisted of the following (in thousands):

Our cash equivalents are short-term, highly liquid investments with
maturities of three months or less when acquired and consisted principally of
cash in bank and mutual fund money market accounts, United States government
debt securities, interest-bearing brokerage and bank accounts with a stable
value and commercial paper of high credit-quality entities. Our short-term
investments included $75.4 million and $13.4 million as of December 29, 2002 and
December 28, 2003, respectively, of United States government and government
agency debt securities with maturities ranging from 92 days to nearly five years
when acquired. The $75.4 million and $13.4 million together with our cash
equivalents were highly liquid investments that combined constituted over 78% of
our total cash equivalents and short-term investments at the end of each year
shown above.

42

At December 29, 2002 our investments were classified in the following
general types or categories (in thousands):

- ---------
(a) There can be no assurance that we would be able to sell certain of these
investments at these amounts.

At December 28, 2003 our investments were classified in the following
general types or categories (in thousands):

- ---------
(a) Includes $1,630,000 of cash equivalents held in deferred compensation
trusts.

(b) There can be no assurance that we would be able to sell certain of these
investments at these amounts.

Our marketable securities are reported at fair market value and are
classified and accounted for either as 'available-for-sale' or 'trading' with
the resulting net unrealized holding gains or losses, net of income taxes,
reported either as a separate component of comprehensive income or loss
bypassing net income or net loss or included as a component of net income or net
loss, respectively. Investment limited partnerships and similar investment
entities and other current and non-current investments in which we do not have
significant influence over the investee are accounted for at cost (see below).
Realized gains and losses on investment limited partnerships and similar
investment entities and other current and non-current investments recorded at
cost are reported as investment income or loss in the period in which the
securities are sold. Investment limited
43

partnerships and similar investment entities and other non-current investments
including a common stock investment in which we have significant influence over
the investee are accounted for in accordance with the equity method of
accounting under which our results of operations include our share of the income
or loss of each of the investees. We review all of our investments in which we
have unrealized losses and recognize investment losses currently for any
unrealized losses we deem to be other than temporary. The cost-basis component
of investments reflected in the tables above represents original cost less a
permanent reduction for any unrealized losses that were deemed to be other than
temporary.

SENSITIVITY ANALYSIS

For purposes of this disclosure, market risk sensitive instruments are
divided into two categories: instruments entered into for trading purposes and
instruments entered into for purposes other than trading. Our estimate of market
risk exposure is presented for each class of financial instruments held by us at
December 29, 2002 and December 28, 2003 for which an immediate adverse market
movement causes a potential material impact on our financial position or results
of operations. We believe that the rates of adverse market movements described
below represent the hypothetical loss to future earnings and do not represent
the maximum possible loss nor any expected actual loss, even under adverse
conditions, because actual adverse fluctuations would likely differ. In
addition, since our investment portfolio is subject to change based on our
portfolio management strategy as well as market conditions, these estimates are
not necessarily indicative of the actual results which may occur.

The following tables reflect the estimated market risk exposure as of
December 29, 2002 and December 28, 2003 based upon assumed immediate adverse
effects as noted below (in thousands):

TRADING PURPOSES:

The sensitivity analysis of financial instruments held for trading purposes
assumes (1) an instantaneous 10% decrease in the equity markets in which we are
invested and (2) an instantaneous increase in market interest rates of one
percentage point, each from their levels at December 29, 2002 and December 28,
2003, with all other variables held constant. The securities included in the
trading portfolio do not include any investments denominated in foreign currency
and, accordingly, there is no foreign currency risk.

The debt securities in our trading portfolio consisted of $13.4 million of
United States government debt securities with an average remaining maturity of
one and one half years as of December 28, 2003 and $0.6 million and $7.6 million
of convertible bonds as of December 29, 2002 and December 28, 2003,
respectively. The interest rate risk with respect to the United States
government debt securities reflects the effect of the assumed interest rate
increase on the fair value of those securities. The convertible bonds were
assumed to trade primarily on the conversion feature of those securities rather
than on the stated interest rate and, accordingly, are assumed to have equity
price risk but no interest rate risk.

44

OTHER THAN TRADING PURPOSES:

The sensitivity analysis of financial instruments held at December 29, 2002
and December 28, 2003 for purposes of other than trading assumes (1) an
instantaneous change in market interest rates of one percentage point, (2) an
instantaneous 10% decrease in the equity markets in which we are invested and
(3) an instantaneous 10% decrease in the foreign currency exchange rates versus
the United States dollar, each from their levels at December 29, 2002 and
December 28, 2003 and with all other variables held constant. The equity price
risk reflects the impact of a 10% decrease in the carrying value of our equity
securities, including those in 'Other investments' in the tables above. The
sensitivity analysis also assumes that the decreases in the equity markets and
foreign exchange rates are other than temporary. We have not reduced the equity
price risk for all available-for-sale investments and cost investments to the
extent certain of those investments have unrealized gains which would limit or
eliminate the effect of the indicated market risk on our results of operations
and, for cost investments, our financial position. For purposes of this
analysis, our debt investments

45

with interest rate risk had a range of remaining maturities and were assumed to
have weighted average remaining maturities as follows:

- ---------
(a) Information is not available for the underlying debt investments of these
entities.

The interest rate risk reflects, for each of these debt investments, the
impact on our results of operations. At the time these securities mature and,
assuming we reinvest in similar securities, the effect of the interest rate risk
of an increase of one percentage point above the existing levels would continue
beyond the maturities assumed. Our cash equivalents included $420.7 million and
$413.3 million as of December 29, 2002 and December 28, 2003, respectively, of
money market funds and interest-bearing brokerage and bank accounts which are
designed to maintain a stable value and, as a result, were assumed to have no
interest rate risk. Our restricted cash equivalents were invested in money
market funds and are assumed to have no interest rate risk since those funds are
designed to maintain a stable value.

The interest rate risk presented with respect to our long-term debt,
excluding capitalized lease obligations, relates only to our fixed-rate debt and
represents the potential impact a decrease in interest rates of one percentage
point has on the fair value of this debt and not on our financial position or
our results of operations. The fair value of our variable-rate debt approximates
the carrying value since the floating interest rate resets monthly. However, as
discussed above under 'Interest Rate Risk,' we have an interest rate swap
agreement but with an embedded written call option on our variable-rate debt. As
interest rates decrease, the fair market values of the interest rate swap
agreement and the written call option both decrease, but not necessarily by the
same amount. The interest rate risk presented with respect to the interest rate
swap agreement represents the potential impact the indicated change has on the
net fair value of the swap agreement and embedded written call option and on our
financial position and results of operations.

For investments in investment limited partnerships and similar investment
entities accounted for at cost and other non-current investments which trade in
public markets included in 'Other investments' in the tables above, the decrease
in the equity markets and the change in foreign currency were assumed for this
analysis to be other than temporary. To the extent such entities invest in
convertible bonds which trade primarily on the conversion feature of the
securities rather than on the stated interest rate, this analysis assumed equity
price risk but no interest rate risk. The foreign currency risk presented
excludes those investments where the investment manager has fully hedged the
risk.

46

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

47

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
TRIARC COMPANIES, INC.:
New York, New York

We have audited the accompanying consolidated balance sheets of Triarc
Companies, Inc. and subsidiaries (the 'Company') as of December 28, 2003 and
December 29, 2002, and the related consolidated statements of operations,
stockholders' equity, and cash flows for each of the three years in the period
ended December 28, 2003. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of the Company as of December 28,
2003 and December 29, 2002, and the results of its operations and its cash flows
for each of the three years in the period ended December 28, 2003 in conformity
with accounting principles generally accepted in the United States of America.

As discussed in Notes 1 and 9 to the consolidated financial statements,
effective December 31, 2001, the Company changed its method of accounting for
goodwill in accordance with Statement of Financial Accounting Standards
No. 142.

New York, New York
March 11, 2004

48

TRIARC COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE DATA)

See accompanying notes to consolidated financial statements.

49

TRIARC COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

- ---------

(A) Includes royalties and franchise and related fees from Sybra, Inc. of $7,441
and $7,433 for the years ended December 30, 2001 and December 29, 2002,
respectively, whereas the royalties and franchise and related fees from
Sybra, Inc. of $7,051 for the year ended December 28, 2003 were eliminated
in consolidation.

See accompanying notes to consolidated financial statements.

50

TRIARC COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)

51

TRIARC COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY -- CONTINUED
(IN THOUSANDS)

52

TRIARC COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY -- CONTINUED
(IN THOUSANDS)

See accompanying notes to consolidated financial statements.

53

TRIARC COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

54

TRIARC COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS -- CONTINUED
(IN THOUSANDS)

Due to their non-cash nature, the following transactions are not reflected
in the respective consolidated statements of cash flows (amounts in whole shares
and dollars):

In October 2001, the Company eliminated and effectively canceled the
previously authorized 25,000,000 shares of its former class B common stock, all
outstanding shares of which had been repurchased by the Company and were
included with class A common stock since the former class B common stock
participated in income or loss equally per share with the class A common stock.
As a result of the effective cancellation of the 5,997,622 shares of the former
class B common stock repurchased, the Company recorded an entry within
stockholders' equity which reduced 'Class A common stock' by $600,000,
'Additional paid-in capital' by $83,211,000, 'Retained earnings' by $43,325,000
and 'Common stock held in treasury' by $127,136,000. See Note 14 for further
disclosure of this transaction.

In December 2002, the Company purchased all of the voting equity interests
of Sybra, Inc. for $9,950,000 (initially estimated at $9,750,000), including
fees and expenses of $1,731,000. The purchase price, less cash of Sybra, Inc. of
$9,425,000, resulted in a net use of the Company's cash of $525,000. In
conjunction with the acquisition, liabilities were assumed as follows (in
thousands):

See Note 3 for further disclosure of this transaction.
55

TRIARC COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS -- CONTINUED

In April 2003, the Chairman and Chief Executive Officer and President and
Chief Operating Officer of the Company (the 'Executives') exercised an aggregate
1,000,000 stock options under the Company's equity plans and paid the exercise
price utilizing shares of the Company's class A common stock the Executives
already owned for more than six months. These exercises resulted in aggregate
deferred gains to the Executives of $10,160,000, represented by an additional
360,795 shares of the Company's class A common stock based on the market price
at the date of exercise. Such shares, along with 721,590 shares of class B
common stock issued as part of the stock distribution of two shares of a newly
designated series 1 of the Company's previously authorized class B common stock
for each share of its class A common stock issued as of August 21, 2003, are
being held in two deferred compensation trusts. The Executives had previously
elected to defer the receipt of the shares held in those deferred compensation
trusts until no earlier than January 2, 2005. The resulting non-cash obligation
of $10,160,000 was reported as the 'Deferred compensation payable in common
stock' component of 'Stockholders' equity' in the accompanying consolidated
balance sheet as of December 28, 2003 with an equal offsetting increase included
in 'Common stock held in treasury.' See Note 23 for further disclosure of this
transaction.

In September 2003, the Company made the stock distribution discussed above
resulting in the issuance of 59,101,326 shares of class B common stock. The
non-cash effect of this transaction was reflected in the accompanying
consolidated statement of stockholders' equity for the year ended December 28,
2003 as an increase in 'Class B common stock' and a corresponding decrease in
'Additional paid-in capital' of $5,910,000, representing the $.10 per share par
value of the class B common shares issued. See Note 14 for further disclosure of
this transaction.

In October 2003, Encore Capital Group, Inc. ('Encore'), an equity investee
of the Company, completed a public offering of its common stock (the 'Encore
Offering'). In connection therewith, the Company recorded a non-cash gain of
$2,362,000 included as a component of 'Gain (loss) on sale of businesses' in the
accompanying consolidated statement of operations for the year ended December
28, 2003 and a corresponding increase in the carrying value of the Company's
investment in Encore included in 'Investments' in the accompanying consolidated
balance sheet as of December 28, 2003. Such gain represents the excess of the
Company's equity in the net proceeds to Encore in the Encore Offering over the
portion of the Company's carrying value in Encore allocable to the decrease in
the Company's ownership percentage resulting from the Encore Offering. See Note
8 for further disclosure of this transaction.

See accompanying notes to consolidated financial statements.

56

TRIARC COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 28, 2003

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of Triarc
Companies, Inc. ('Triarc' and, collectively with its subsidiaries, the
'Company') and its subsidiaries. The principal operating subsidiaries of the
Company, each indirectly wholly-owned as of December 28, 2003, are (1) Arby's,
Inc. ('Arby's'), which, in turn, indirectly owns 100% of Arby's Franchise Trust
('Arby's Trust'), and (2) Sybra, Inc. ('Sybra') which was acquired on December
27, 2002. The Company's other wholly-owned subsidiaries at December 28, 2003
that are referred to herein include National Propane Corporation ('National
Propane'); SEPSCO, LLC ('SEPSCO'); Citrus Acquisition Corporation which owns
100% of Adams Packing Association, Inc. ('Adams'); and Triarc Consumer Products
Group, LLC ('TCPG'). TCPG owned (1) 100% (99.9% prior to October 25, 2000) of
Snapple Beverage Group, Inc. ('Snapple Beverage Group') and (2) 100% of Royal
Crown Company, Inc. ('Royal Crown'), prior to the October 25, 2000 sale of such
companies. All significant intercompany balances and transactions have been
eliminated in consolidation. See Notes 3 and 18 for further disclosure of the
acquisition and disposition referred to above.

FISCAL YEAR

The Company reports on a fiscal year consisting of 52 or 53 weeks ending on
the Sunday closest to December 31 and each of its 2001, 2002 and 2003 fiscal
years contained 52 weeks. Such periods are referred to herein as (1) 'the year
ended December 30, 2001' or '2001,' which commenced on January 1, 2001 and ended
on December 30, 2001, (2) 'the year ended December 29, 2002' or '2002,' which
commenced on December 31, 2001 and ended on December 29, 2002 and (3) 'the year
ended December 28, 2003' or '2003' which commenced on December 30, 2002 and
ended on December 28, 2003. December 29, 2002 and December 28, 2003 are referred
to herein as 'Year-End 2002' and 'Year-End 2003,' respectively. All references
to years and year-ends herein relate to fiscal years rather than calendar years.

CASH EQUIVALENTS

All highly liquid investments with a maturity of three months or less when
acquired are considered cash equivalents. The Company's cash equivalents
principally consist of cash in bank and mutual fund money market accounts,
United States government debt securities, interest-bearing brokerage and bank
accounts with a stable value and commercial paper of high credit-quality
entities.

INVESTMENTS

Short-Term Investments

Short-term investments include debt securities and marketable equity
securities with readily determinable fair values and other short-term
investments, including investments in limited partnerships and similar
investment entities, which are not readily marketable, and assignments of
commercial term loans. The Company's debt and marketable equity securities are
classified and accounted for either as 'available-for-sale' or 'trading' and are
reported at fair market value with the resulting net unrealized holding gains or
losses, net of income taxes, reported as a separate component of comprehensive
income (loss) bypassing net income or included as a component of net income,
respectively. The cost or the amount reclassified out of accumulated other
comprehensive income (deficit) into earnings or loss of securities sold for all
marketable securities is determined using the specific identification method.
Other short-term equity investments that are not readily marketable as of
December 28, 2003 consist entirely of investments in which the Company does not
have significant influence over the investees ('Cost Investments'). Cost
Investments are accounted for under the cost method (the 'Cost Method'). Prior
to the year ended December 28, 2003, the Company also had short-term
57

TRIARC COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 28, 2003

investments in which the Company had significant influence over the operating
and financial policies of the investees ('Equity Investments').

Non-Current Investments

The Company's non-current investments consist of Equity Investments which
are accounted for in accordance with the equity method (the 'Equity Method') and
Cost Investments which are accounted for under the Cost Method. Under the Equity
Method each such investment is reported at cost plus the Company's proportionate
share of the income or loss or other changes in stockholders' equity of each
such investee since its acquisition. The consolidated results of operations
include such proportionate share of income or loss.

See Note 8 for further disclosure of the Company's non-current investments.

Equity Investments

The difference, if any, between the carrying value of the Company's Equity
Investments and its underlying equity in the net assets of each investee (the
'Carrying Value Difference') is accounted for as if the investee were a
consolidated subsidiary. Prior to December 31, 2001, any Carrying Value
Difference was amortized on a straight-line basis over 15 years. Effective
December 31, 2001, the Company adopted Statement of Financial Accounting
Standards ('SFAS') No. 142 ('SFAS 142'), 'Goodwill and Other Intangible Assets.'
Accordingly, for acquisitions of Equity Investments after December 30, 2001, the
Carrying Value Difference is amortized over the estimated lives of the assets of
the investee to which such difference would have been allocated if the Equity
Investment were a consolidated subsidiary. To the extent the Carrying Value
Difference represents goodwill, it is no longer amortized. Where the Carrying
Value Difference represents an excess of the Company's interest in the
underlying net assets of an investee over the carrying value of the Company's
Equity Investment, such excess is allocated as a reduction of the Company's
proportionate share of certain assets of the investee with any unallocable
portion recognized in results of operations.

Securities Sold With an Obligation to Purchase

Securities sold with an obligation to purchase are reported at fair market
value with the resulting net unrealized gains or losses included as a component
of net income or loss.

All Investments

The Company reviews all of its investments in which the Company has
unrecognized unrealized losses and recognizes an investment loss for any such
unrealized losses deemed to be other than temporary ('Other Than Temporary
Losses') with a corresponding permanent reduction in the cost basis component of
the investments. With respect to available-for-sale securities, the effect of
the permanent reduction in the cost basis is an increase in the unrealized gain
or a decrease in the unrealized loss on the available-for-sale investments
component of 'Comprehensive income (loss).' The Company considers such factors
as the length of time the carrying value of an investment has been below its
market value, the severity of the decline, the financial condition of the
investee and the prospect for future recovery in the market value of the
investment.

Gain on Issuance of Investee Stock

The Company recognizes a gain or loss upon sale of any previously unissued
stock by an Equity Investment to third parties to the extent of the decrease in
the Company's ownership of the investee. However, a gain is recognized only when
realization of the gain by the Company is reasonably assured.

58

TRIARC COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 28, 2003

INVENTORIES

The Company's inventories are stated at the lower of cost or market with
cost determined in accordance with the first-in, first-out method.

PROPERTIES AND DEPRECIATION AND AMORTIZATION

Properties are stated at cost less accumulated depreciation and
amortization. Depreciation and amortization of properties is computed
principally on the straight-line basis using the estimated useful lives of the
related major classes of properties: 3 to 15 years for office, restaurant and
transportation equipment and 25 years for buildings. Leased assets capitalized
and leasehold improvements are amortized over the shorter of their estimated
useful lives or the terms of the respective leases.

AMORTIZATION OF INTANGIBLES AND DEFERRED COSTS

Goodwill, representing the costs in excess of net assets of acquired
companies, was amortized on the straight-line basis over 15 to 40 years until
December 30, 2001, after which such amortization ceased upon the adoption of
SFAS 142. Other intangible assets are amortized on the straight-line basis using
the estimated useful lives of the related classes of intangibles: 15 years for
trademarks and distribution rights; 3 years for computer software costs; and the
terms of the respective leases, including extensions, for favorable leases. A
non-compete agreement, which became fully amortized during 2001, was amortized
over 5 years.

Deferred financing costs and original issue debt discount are being
amortized as interest expense over the lives of the respective debt using the
interest rate method.

See Note 9 for further information with respect to the Company's goodwill
and other intangible assets.

IMPAIRMENTS

Goodwill

Through the year ended December 30, 2001, the amount of impairment, if any,
in unamortized goodwill was measured based on projected future operating
performance. As the future operating performance of the enterprise (Arby's) to
which the goodwill related through the period such goodwill was being amortized
was sufficient to absorb the related amortization, the Company deemed there to
be no impairment of goodwill.

Effective December 31, 2001, the Company adopted SFAS 142 which requires
goodwill impairment, if any, to be measured by the excess, if any, of the
carrying amount of the unamortized goodwill over its implied fair value. The
Company reviews its goodwill for impairment at least annually.

Long-Lived Assets

The Company reviews its long-lived assets, which excludes goodwill, for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. If such review indicates an
asset may not be recoverable, an impairment loss is recognized for the excess of
the carrying amount over the fair value of an asset to be held and used or over
the fair value less cost to sell of an asset to be disposed.

See Note 15 for further disclosure related to the Company's impairment
charges.

DERIVATIVE FINANCIAL INSTRUMENTS

The Company's derivatives consist of (1) the conversion component of
short-term investments in corporate convertible debt securities which are
accounted for as trading securities, (2) put and call options on equity and
corporate debt securities which are accounted for as trading securities and (3)
an interest rate swap agreement in
59

TRIARC COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 28, 2003

connection with a secured bank term loan. In addition, the Company's derivatives
prior to February 8, 2003 included a written call option on Triarc's common
stock with physical settlement and prior to August 10, 2001 included a forward
purchase obligation for Triarc's common stock with cash settlement. The
conversion component of corporate convertible debt securities, put and call
options on equity and corporate debt securities, the interest rate swap
agreement and the call option on Triarc's common stock with physical settlement
are or were recorded at fair value with changes in fair value recorded in the
Company's results of operations. The forward purchase obligation for Triarc's
common stock with cash settlement was recorded at the cash redemption amount.
See Notes 11 and 18 for further disclosure related to the Company's derivative
financial instruments.

STOCK-BASED COMPENSATION

The Company measures compensation costs for its employee stock-based
compensation under the intrinsic value method rather than the fair value method.
Accordingly, compensation cost for the Company's stock options is measured as
the excess, if any, of the market price of the Company's common stock at the
date of grant, or at any subsequent measurement date as a result of certain
types of modifications to the terms of its stock options, over the amount an
employee must pay to acquire the stock. Such amounts are amortized as
compensation expense over the vesting period of the related stock options. Any
compensation cost is recognized as expense only to the extent it exceeds
compensation expense previously recognized for such stock options. Compensation
cost for stock appreciation rights, if any, is recognized currently based on the
change in the market price of the Company's common stock during each period.

A summary of the effect on net income (loss) and net income (loss) per share
in each year presented as if the fair value method had been applied to all
outstanding and unvested stock options that were granted commencing January 1,
1995 is as follows (in thousands except per share data):

See Note 14 for disclosure of the adjustments, methods and significant
assumptions used to estimate the fair values of stock options granted in 2001
through 2003 reflected in the table above.

TREASURY STOCK

Common stock held in treasury is stated at cost. The cost of issuances of
shares from treasury stock is determined at average cost.

60

TRIARC COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 28, 2003

COSTS OF BUSINESS ACQUISITIONS

The Company defers any costs incurred relating to the pursuit of business
acquisitions while the potential acquisition process is ongoing. Whenever the
acquisition is successful, such costs are included as a component of the
purchase price of the acquired entity. Whenever the Company decides it will no
longer pursue a potential acquisition, any related deferred costs are written
off at that time.

FOREIGN CURRENCY TRANSLATION

Financial statements of a foreign subsidiary are prepared in its respective
local currency and translated into United States dollars at the current exchange
rates for assets and liabilities and at an average rate for the year for
revenues, costs and expenses. Net gains or losses resulting from the translation
of foreign financial statements are charged or credited directly to the
'Currency translation adjustment' component of 'Accumulated other comprehensive
income (deficit)' in the accompanying consolidated statements of stockholders'
equity.

INCOME TAXES

The Company files a consolidated Federal income tax return with all of its
subsidiaries. Deferred income taxes are provided to recognize the tax effect of
temporary differences between the bases of assets and liabilities for tax and
financial statement purposes.

REVENUE RECOGNITION

Net sales of Company-owned restaurants are recognized upon delivery of food
to the customer. Royalties from franchised restaurants are based on a percentage
of net sales of the franchised restaurant and are recognized as earned. Initial
franchise fees are recognized as revenue when a franchised restaurant is opened
since all material services and conditions related to the franchise fee have
been substantially performed by the Company upon the restaurant opening.
Franchise fees for multiple area development agreements represent the aggregate
of the franchise fees for the number of restaurants in the area being developed
and are recognized as revenue when each restaurant is opened in the same manner
as franchise fees for individual restaurants. Renewal franchise fees are
recognized as revenue when the license agreements are signed and the fee is paid
since there are no material services and conditions related to the renewal
franchise fee. Franchise commitment fee deposits are forfeited and recognized as
revenue upon the termination of the related commitments to open new franchised
restaurants. Franchise fee credits under a discontinued restaurant remodel
incentive program are recognized as a reduction of franchise fee revenue when a
franchisee earns the available credits by opening new restaurants within the
time frame allowed under the remodel program since the Company has not incurred
any obligation until the new restaurant is opened and the use of the credit will
not result in any loss to the Company.

ADVERTISING COSTS

The Company accounts for contributions made related to the Company-owned
restaurants to advertising cooperatives as expense when the net sales creating
those obligations are recognized. In addition, the Company makes contributions
to one of the advertising cooperatives, which are not dependent on net sales,
specifically as part of a national cable television advertising campaign which
are expensed the first time the related advertising takes place. All other
advertising costs are expensed as incurred. Substantially all of the
'Advertising and selling' in the accompanying consolidated statements of
operations for 2001, 2002 and 2003 represent advertising costs.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 28, 2003

RECLASSIFICATIONS

Certain amounts included in the accompanying prior years' consolidated
financial statements and footnotes thereto have been reclassified to conform
with the current year's presentation.

(2) SIGNIFICANT RISKS AND UNCERTAINTIES

NATURE OF OPERATIONS

The Company operates solely in the restaurant business through franchised
and, effective with the acquisition of Sybra on December 27, 2002 (see Note 3),
Company-owned Arby's'r' quick service restaurants specializing in slow-roasted
roast beef sandwiches. Arby's restaurants also offer an extensive menu of
chicken, turkey, ham and submarine sandwiches, side dishes and salads including
Arby's Market Fresh'TM' sandwiches. Some of the Arby's system-wide restaurants
are multi-branded with the Company's T.J. Cinnamons'r' product line and/or, to a
lesser extent, the Pasta Connection'r' product line. However, the Company is no
longer offering any new Pasta Connection franchises. The franchised restaurants
are principally throughout the United States and, to a much lesser extent,
Canada. The Company's owned restaurants are located in nine states, primarily
Michigan, Texas, Pennsylvania and Florida. Information concerning the number of
Arby's franchised and Company-owned restaurants is as follows:

USE OF ESTIMATES

The preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the consolidated financial statements and the
reported amount of revenues and expenses during the reporting period. Actual
results could differ from those estimates.

SIGNIFICANT ESTIMATES

The Company's significant estimates which are susceptible to change in the
near term relate to (1) provisions for the resolution of income tax
contingencies subject to future examinations of the Company's Federal and state
income tax returns by the Internal Revenue Service ('IRS') or state taxing
authorities, including remaining provisions included in 'Current liabilities
relating to discontinued operations,' (see Note 13), (2) provisions for the
resolution of legal and environmental matters (see Note 24), (3) the valuation
of investments which are not publicly traded (see Note 12), (4) provisions for
Other Than Temporary Losses (see Note 16) and (5) estimates of impairment of the
carrying values of long-lived assets of the restaurant business (see Notes
1 and 15). The Company's estimates of each of these items historically have been
adequate; however, the Company has not had any significant experience with
impairment testing of Company-owned restaurant assets or goodwill relating to
the acquisition of Sybra due to their relatively recent acquisition. Due to
uncertainties inherent in the estimation process, it is reasonably possible that
the actual resolution of any of these items could vary significantly from the
estimate and, accordingly, there can be no assurance that the estimates may not
materially change in the near term.

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TRIARC COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 28, 2003

CERTAIN RISK CONCENTRATIONS

The Company believes its vulnerability to risk concentrations in its cash
equivalents and investments is mitigated by (1) the Company's policies
restricting the eligibility, credit quality and concentration limits for its
placements in cash equivalents, (2) the diversification of its investments and
(3) to the extent the cash equivalents and investments are held in brokerage
accounts, insurance from the Securities Investor Protection Corporation of up to
$500,000 per account as well as supplemental private insurance coverage
maintained by the brokerage firms covering substantially all of the Company's
accounts. The Company has one significant franchisee which accounted for 27%,
27% and 9% of consolidated revenues and 27%, 27% and 30% of royalties and
franchise and related fees in 2001, 2002 and 2003, respectively. The loss of
this franchisee would have a material adverse impact on the Company's business.
The Company's restaurant business could also be adversely affected by changing
consumer preferences resulting from concerns over nutritional or safety aspects
of beef, poultry, french fries or other foods or the effects of food-borne
illnesses. The Company believes that its vulnerability to risk concentrations
related to significant vendors and sources of its raw materials for itself and
its franchisees is not significant, although increases in the cost of beef
during 2003 due to marketwide supply and demand factors adversely affected
profit margins of the Company-owned restaurants in 2003 and are expected to have
a continuing effect on profit margins in 2004. The Company also believes that
its vulnerability to risk concentrations related to geographical concentration
is mitigated since the Company and its franchisees generally operate throughout
the United States and have minimal foreign exposure.

(3) BUSINESS ACQUISITION

On December 27, 2002, the Company completed the acquisition of all of the
voting equity interests of Sybra (the 'Sybra Acquisition') from I.C.H.
Corporation ('ICH') under a plan of reorganization confirmed by a United States
Bankruptcy Court. In February 2002, ICH and Sybra had filed for protection under
Chapter 11 of the United States Bankruptcy Code (the 'Sybra Bankruptcy') in
order to restructure their financial obligations. Sybra owns and operates Arby's
restaurants, 239 as of the date of the Sybra Acquisition, in nine states and,
prior to the acquisition, was the second largest franchisee of Arby's
restaurants. The Company acquired Sybra with the expectation of strengthening
and increasing the value of its Arby's brand. The aggregate purchase price paid
for Sybra by the Company was $9,950,000 (initially estimated at $9,750,000 as of
December 29, 2002), consisting of $8,219,000 of payments to ICH's creditors and
$1,731,000 of fees and expenses.

The allocation of the purchase price of Sybra to the assets acquired and
liabilities assumed at the date of acquisition and a reconciliation to 'Cost of
business acquisition less cash acquired' in the accompanying consolidated
statements of cash flows are summarized in the following table (in thousands):

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TRIARC COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 28, 2003

Current assets.............................................. $ 18,014
Properties.................................................. 59,050
Goodwill.................................................... 67,424
Other intangible assets..................................... 3,371
Deferred income tax benefit................................. 13,504
Deferred costs and other assets............................. 398
--------
Total assets acquired................................... 161,761
--------
Current liabilities......................................... 30,631
Long-term debt, including current portion................... 103,242
Unfavorable lease liability................................. 15,475
Other liabilities and deferred income....................... 2,463
--------
Total liabilities assumed............................... 151,811
--------
Net assets acquired................................. 9,950
Less cash acquired.......................................... 9,425
--------
Cost of business acquisition less cash acquired............. $ 525
--------
--------

The fair values of properties, other intangible assets and unfavorable lease
liability were determined in accordance with an independent appraisal. The Sybra
Acquisition resulted in $67,424,000 of goodwill (see Note 9), of which
$56,705,000 is estimated to be deductible for income tax purposes. The amount of
goodwill estimated to be deductible increased from the $17,723,000 estimated
amount as of December 29, 2002 as a result of the Company's election during the
year ended December 28, 2003 to treat the Sybra Acquisition as an asset purchase
in lieu of a stock purchase under the provisions of Section 338(h)(10) of the
United States Internal Revenue Code (the 'Sybra 338(h)(10) Election'). Arby's
restaurants typically have relatively low levels of receivables and inventories,
as is the case with the Arby's restaurants owned by Sybra, and Sybra has
financed substantially all of its land and buildings, including those buildings
reported in leasehold improvements. As such, Sybra had net liabilities on its
historical financial statements before the allocation of the purchase price to
the assets acquired and liabilities assumed despite the substantial value of the
restaurants. This excess of the purchase price over the net tangible assets
acquired relates in part to the fair value of the franchise agreements; however,
since the Company is the franchisor of the acquired restaurants, that value is
included in goodwill in the Company's consolidated balance sheets. The only
other significant identifiable intangible asset in accordance with the
independent appraisal is $3,265,000 of favorable leases which are amortizable
over the lives of the leases, including extensions, with a weighted average
remaining useful life of 18 years.

A reconciliation of the change in goodwill from the preliminary estimated
allocation of the purchase price of Sybra as reported in the Company's
consolidated financial statements as of December 29, 2002 with the final
allocation as reported in the accompanying consolidated balance sheet as of
December 28, 2003 and as set forth in the preceding table, is summarized as
follows (in thousands):

Goodwill in estimated preliminary allocation of purchase
price..................................................... $71,960
Decrease in properties for revision of preliminary estimated
appraisal................................................. 1,027
Increase in deferred income tax benefit (a)................. (5,177)
Increase in current liabilities for adjustment to accrued
income taxes (a).......................................... 1,085
Decrease in historical current liabilities for reversal of
accrual for future scheduled rent increases............... (1,494)
Increase in the original estimated purchase price........... 200
Other net adjustments....................................... (177)
-------
Goodwill in final allocation of purchase price.......... $67,424
-------
-------

- ---------

(a) Adjustments to deferred and accrued income taxes relate principally to the
Sybra 338(h)(10) Election discussed above.

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TRIARC COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 28, 2003

Sybra's results of operations and cash flows have been included in the
accompanying consolidated statements of operations and cash flows for the year
ended December 28, 2003 and for the two-day period subsequent to the December
27, 2002 date of the Sybra Acquisition for the year ended December 29, 2002.
However, royalties and franchise and related fee revenues from Sybra, which are
no longer included in the accompanying consolidated statements of operations and
statements of cash flows subsequent to the Sybra Acquisition, were included in
such statements prior to the date of the Sybra Acquisition. For the year ended
December 29, 2002, Sybra's results of operations before income taxes were
reported in 'Other income, net' (see Note 18) for convenience since Sybra's
pretax income for the two-day period subsequent to the December 27, 2002
acquisition date was not material to the Company's consolidated loss from
continuing operations before income taxes and minority interests. The pretax
income of Sybra for that two-day period consisted of the following components
(in thousands):

Net sales and other income.................................. $933
Costs and expenses.......................................... 918
----
Income before income taxes.............................. $ 15
----
----

The following unaudited supplemental pro forma condensed consolidated
summary operating data (the 'As Adjusted for the Acquisition Data') of the
Company for 2002 has been prepared by adjusting the historical data as set forth
in the accompanying consolidated statement of operations to give effect to the
Sybra Acquisition as if it had been consummated on December 31, 2001 (in
thousands except per share amounts):

This As Adjusted for the Acquisition Data is presented for comparative
purposes only and does not purport to be indicative of the Company's actual
results of operations had the Sybra Acquisition actually been consummated on
such dates or of the Company's future results of operations. The 2002 historical
results of Sybra were impacted by a $6,403,000 pretax charge representing
expenses incurred by Sybra directly relating to the Sybra Bankruptcy,
principally for legal fees and, to a much lesser extent, for other professional
fees.

(4) INCOME (LOSS) PER SHARE

Income (loss) per share amounts in the accompanying consolidated financial
statements and notes thereto have been retroactively adjusted for the effect of
a stock distribution (the 'Stock Distribution') on September 4, 2003 of two
shares of a newly designated series 1 of the Company's previously authorized
class B common stock (the 'Class B Common Stock' or 'Class B Common Shares') for
each share of the Company's class A common stock (the 'Class A Common Stock' or
'Class A Common Shares') issued as of August 21, 2003 (see Note 14), as if the
Stock Distribution had occurred at the beginning of 2001. For the purposes of
calculating income per share, any net income subsequent to the date of the Stock
Distribution is allocated between the Class A Common Shares and Class B Common
Shares based on the actual dividend payment ratio to the extent of any dividends
paid during the year with any excess allocated giving effect to the current
minimum stated dividend participation rate of 110% for the Class B Common Shares
compared with the Class A Common Shares (see Note 14). Net income for 2001 and
2002 was allocated equally among each share of Class A Common Stock

65

TRIARC COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 28, 2003

and Class B Common Stock since there were no dividends declared or contractually
payable during those years. Net loss for any year, including 2003, is also
allocated equally.

Basic income (loss) per share has been computed by dividing the allocated
income or loss for the Class A Common Shares and Class B Common Shares by the
weighted average number of shares of each class adjusted for the Stock
Distribution. The number of shares used in the calculation of basic income
(loss) per share of Class A Common Stock for 2001, 2002 and 2003 are 21,532,000,
20,446,000 and 20,003,000 respectively. The number of shares used in the
calculation of basic income (loss) per share of Class B Common Stock for 2001,
2002 and 2003 are 43,064,000, 40,892,000 and 40,010,000 respectively. The
weighted average shares of Class A Common Stock for 2001 include shares of a
former Class B common stock since the former Class B common stock participated
in income or loss equally per share with the Class A Common Stock (see
Note 14). The weighted average shares for each of the two classes of common
stock for 2003 include the weighted average effect commencing April 23, 2003 of
the shares held in the additional deferred compensation trusts (see Notes 14
and 23).

Diluted income per share for 2001 has been computed by dividing the
allocated income for the Class A Common Shares and Class B Common Shares by an
aggregate 22,692,000 shares and 45,384,000 shares, respectively. Such shares
include the potential common share effects of dilutive stock options, computed
using the treasury stock method, of 1,160,000 and 2,320,000 shares,
respectively. However, such shares exclude any effect of (1) a prior written
call option on Triarc's common stock with physical settlement (see Note 18) and
(2) a forward purchase obligation for Triarc's common stock through its final
settlement on August 10, 2001 since the effect of these on income per share from
continuing operations for 2001 would have been antidilutive (see Note 14). The
diluted and basic income (loss) per share for each of the Class A and Class B
Common Shares for 2002 and 2003 are the same since the Company reported a loss
from continuing operations and, therefore, the effect of all potentially
dilutive securities on the loss per share from continuing operations would have
been antidilutive.

The only remaining Company securities as of December 28, 2003 that could
dilute basic income per share for years subsequent to December 28, 2003 are
(1) outstanding stock options which are exercisable into 7,569,419 shares and
15,342,838 shares of the Company's Class A Common Stock and Class B Common
Stock, respectively, and (2) $175,000,000 of 5% convertible notes which are
convertible into 4,375,000 shares and 8,750,000 shares of the Company's Class A
Common Stock and Class B Common Stock, respectively (see Note 10).

(5) SHORT-TERM INVESTMENTS AND SECURITIES SOLD WITH AN OBLIGATION TO PURCHASE

SHORT-TERM INVESTMENTS

The Company's short-term investments are carried at fair market value,
except for Cost Investments and Equity Investments set forth in the table below
(see Note 1). The cost of available-for-sale debt securities represents
amortized cost. The cost of available-for-sale securities and other short-term
investments have also been reduced by any Other Than Temporary Losses (see
Note 16). The cost, gross unrealized holding gains and losses included in
accumulated other comprehensive income (deficit), fair value and carrying
amount, as appropriate, of the Company's short-term investments at December 29,
2002 and December 28, 2003 were as follows (in thousands):

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TRIARC COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 28, 2003

As of December 28, 2003, the Company had 11 available-for-sale securities,
consisting of 8 corporate debt securities and 3 marketable equity securities,
with unrealized holding losses due to declines in the market value of each of
the respective securities subsequent to their purchase by the Company. Each of
these securities has been in a continuous unrealized loss position for less than
12 months.

The maturities of corporate debt securities at December 28, 2003 which are
classified as available-for-sale at fair value, which is equal to their carrying
value, are as follows (in thousands):

After one year through four years........................... $ 9,557
Five years.................................................. 24,006
After five years through eight years........................ 13,815
-------
$47,378
-------
-------

Proceeds from sales and maturities of available-for-sale securities were
$288,584,000, $69,297,000 and $247,364,000 in 2001, 2002 and 2003, respectively.
Gross realized gains and gross realized losses on those sales are included in
'Investment income, net' in the accompanying consolidated statements of
operations (see Note 16) and are as follows (in thousands):

The net change in the unrealized holding gains or losses on
available-for-sale securities and the equity in unrealized gains on a retained
interest and available-for-sale securities of Encore Capital Group, Inc., an
Equity

67

TRIARC COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 28, 2003

Investment included in non-current investments (see Note 8), included in other
comprehensive income (loss) consisted of the following (in thousands):

The change in the net unrealized gain (loss) on trading securities resulted
in gains (losses) of $(2,033,000), $(883,000) and $5,205,000 in 2001, 2002 and
2003, respectively, which are included in 'Investment income, net' in the
accompanying consolidated statements of operations (see Note 16).

Other short-term investments represent (1) investments in limited
partnerships, limited liability companies and similar investment entities which
invest in securities that primarily consist of debt securities, common and
preferred equity securities, convertible preferred equity and debt securities,
stock warrants and rights and stock options and (2) assignments of commercial
term loans. These investments are focused on both domestic and foreign
securities. Certain of these investments that were sold during 2002 and 2003
were accounted for under the Equity Method.

Debt securities and marketable equity securities with an aggregate carrying
value of $35,143,000 as of December 28, 2003 are pledged as collateral
principally for securities sold with an obligation to purchase.

SECURITIES SOLD WITH AN OBLIGATION TO PURCHASE

The Company also enters into short sales of debt and equity securities as
part of its portfolio management strategy. Short sales are commitments to sell
debt and equity securities not owned at the time of sale that require purchase
of the debt and equity securities at a future date. These short sales resulted
in proceeds of $30,449,000, $36,418,000 and $47,536,000 in 2001, 2002 and 2003,
respectively. The change in the net unrealized gains (losses) on securities sold
with an obligation to purchase resulted in income of $2,180,000 in 2001 and
losses of $(1,020,000) and $(4,578,000) in 2002 and 2003, respectively, which
are included in 'Investment income, net' (see Note 16). The fair value and the
carrying value of the liability for securities sold with an obligation to
purchase were $9,168,000 and $27,728,000 at December 29, 2002 and December 28,
2003, respectively, and are included in 'Accrued expenses and other current
liabilities' (see Note 6).

(6) BALANCE SHEET DETAIL

CASH

Cash includes cash and cash equivalents aggregating $9,201,000 and
$9,495,000 as of December 29, 2002 and December 28, 2003, respectively, pledged
as collateral for the Company's insured securitization notes (see Note 10).
Although such balances were pledged as collateral, the indenture pursuant to
which the securitization notes were issued permits the usage of such balances
during the following month.

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TRIARC COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 28, 2003

RECEIVABLES

The following is a summary of the components of receivables (in thousands):

- ---------

(a) Represents the then current portion of a note receivable from the Chairman
and Chief Executive Officer and the President and Chief Operating Officer
of the Company (the 'Executives') pursuant to a litigation settlement, the
last installment of which was received in March 2003 (see Note 23).

The following is an analysis of the allowance for doubtful accounts (in
thousands):

- ---------

(a) Represents the reversal upon realization in 2002 and 2003 of collections
related to fully-reserved notes receivable from two franchisees.

Certain trade receivables with an aggregate net book value of $6,623,000 as
of December 28, 2003 are pledged as collateral for the Company's insured
securitization notes (see Note 10).

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TRIARC COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 28, 2003

INVENTORIES

Inventories consist principally of food, beverage and paper inventories and
are classified entirely as raw materials. Certain inventories aggregating
$2,076,000 as of December 28, 2003 are pledged as collateral for certain debt
(see Note 10).

PROPERTIES

The following is a summary of the components of properties (in thousands):

Properties with a net book value of $94,463,000 as of December 28, 2003 are
pledged as collateral for certain debt (see Note 10).

DEFERRED COSTS AND OTHER ASSETS

The following is a summary of the components of deferred costs and other
assets (in thousands):

- ---------

(a) The initial allowance for non-current doubtful accounts of $569,000, net of
a related write-off of $50,000, was provided in 2002. During 2003, the
allowance was increased by a $67,000 additional provision and was reduced
by $194,000 in connection with the write-off of certain uncollectible
accounts which were forgiven in accordance with their terms. See Note 23
for more detailed disclosure.

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TRIARC COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 28, 2003

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

The following is a summary of the components of accrued expenses and other
current liabilities (in thousands):

The obligation for securities sold with an obligation to purchase as of
December 28, 2003 is secured by debt securities and marketable equity securities
with an aggregate carrying value of $35,143,000 and cash, included in
'Restricted cash, prepaid expenses and other current assets' in the accompanying
consolidated balance sheet, of $7,267,000.

OTHER LIABILITIES, DEFERRED INCOME AND MINORITY INTERESTS IN A CONSOLIDATED
SUBSIDIARY

Other liabilities, deferred income and minority interests in a consolidated
subsidiary includes minority interests of $718,000 and $599,000 as of
December 29, 2002 and December 28, 2003, respectively, in 280 BT Holdings LLC
('280 BT') a consolidated subsidiary with a respective 42.6% and 42.1% minority
interest comprised principally of certain of the Company's management (see
Note 23).

(7) RESTRICTED CASH EQUIVALENTS

The following is a summary of the components of non-current restricted cash
equivalents (in thousands):

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TRIARC COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 28, 2003

(8) INVESTMENTS

The following is a summary of the carrying value of investments classified
as non-current (in thousands):

The Company's consolidated equity in the earnings (losses) of investees
accounted for under the Equity Method and classified as non-current and included
as a component of 'Other income, net' (see Note 18) in the accompanying
consolidated statements of operations consisted of the following components (in
thousands):

The Company and certain of its officers have invested in Encore Capital
Group, Inc. ('Encore'), with the Company owning 9.1% and certain present
officers, including entities controlled by them, collectively owning 15.4% of
Encore's issued and outstanding common stock (the 'Encore Common Stock') as of
December 28, 2003. Encore is a financial services company specializing in the
collection, restructuring and resale of consumer receivable portfolios acquired
at deep discounts from their face value. The Company accounts for its investment
in Encore under the Equity Method, though it directly owns less than 20% of the
voting stock of Encore, because of the Company's ability to exercise significant
influence over operating and financial policies of Encore through the Company's
greater than 20% representation on Encore's board of directors. In their
capacity as directors, the Company's representatives consult with the management
of Encore with respect to various operational and financial matters of Encore
and approve the selection of Encore's senior officers.

During 2001 the investment in Encore was reduced to zero due to losses of
Encore. The Company reduced to zero the unrealized gain on a retained interest
of Encore which had been included in accumulated other comprehensive income and
ceased to apply the Equity Method to its equity in additional losses of Encore
(see Note 5).

During 2002 the Company, certain of its then officers, including entities
controlled by them, and other significant stockholders of Encore invested an
aggregate $5,000,000 in newly issued convertible preferred stock of Encore (the
'Encore Preferred Stock') in which the Company invested $873,000, and the
officers invested $1,427,000. As a result, the Company in 2002 recognized its
cumulative unrecorded equity in losses of Encore of $744,000 through December
30, 2001 and resumed applying the Equity Method recognizing $1,004,000 of equity
in the 2002 earnings of Encore. Accordingly, the net equity in earnings of
Encore amounted to $260,000 during 2002. Also during 2002 the outstanding
principal amount of senior notes of Encore was reduced from $10,000,000 to
$7,250,000 as the lender forgave $2,750,000 of principal and $2,573,000 of
related accrued interest upon the investment in the Encore Preferred Stock. In
connection with this forgiveness,

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TRIARC COMPANIES, INC. AND SUBSIDIARIES
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DECEMBER 28, 2003

Encore recorded an increase in its additional paid-in capital of $4,665,000
representing the aggregate $5,323,000 of debt forgiven less $658,000 of related
unamortized debt discount and deferred loan costs. Accordingly, the Company
recorded its equity of $393,000 in such amount as an increase in 'Additional
paid-in capital' during 2002. The effect of the debt forgiveness was recorded by
Encore as a capital contribution since it was facilitated by the Company and
other significant equity holders of Encore Preferred Stock and through the
Company's relationship with the lender resulting from prior investment banking
and financial advisory services rendered to the Company by the lender and its
affiliates.

In connection with a public offering of Encore Common Stock in October 2003
(the 'Encore Offering'), all of the outstanding Encore Preferred Stock was
converted into 10,000,000 shares of Encore Common Stock and certain stock
warrants, including warrants owned by the Company, and employee stock options
for Encore Common Stock were exercised. The Company received 1,745,660 shares
and 101,275 shares of Encore Common Stock upon conversion of its Encore
Preferred Stock and exercise of warrants, respectively. Immediately prior to
these conversions and exercises, the Company owned 535,609 shares, or 7.2%, of
the outstanding Encore Common Stock. As a result of these conversions and
exercises, the Company owned 13.0% of the outstanding Encore Common Stock before
giving effect to the Encore Offering. In the Encore Offering, 5,750,000 shares
of Encore Common Stock were sold at a price of $11.00 per share, before fees and
expenses of $0.96 per share. The Encore Offering included 3,000,000 newly issued
shares and 2,750,000 shares offered by certain existing stockholders, including
the Company and certain of the Company's officers, of which the Company sold
379,679 shares (the 'Company's Sale'). The Company's ownership percentage in
Encore was reduced to 9.4% after giving effect to the Encore Offering and was
further reduced to 9.1% as of December 28, 2003 as a result of additional
exercises of Encore stock options and warrants by third parties.

The Company recorded a $5,810,000 gain included in 'Gain (loss) on sale of
businesses' (see Note 17) in the accompanying consolidated statement of
operations for the year ended December 28, 2003 relating to the Company's Sale
and the effect of the Encore Offering. Such gain consisted of (1) $3,292,000
arising from the Company's Sale and (2) $2,518,000 representing non-cash gains
consisting of $2,362,000 from the Encore Offering for the Company's equity in
the excess of the $10.04 net per share proceeds to Encore in the Encore Offering
over the Company's carrying value per share and the decrease in the Company's
ownership percentage and $156,000 from the exercises of Encore stock options and
warrants, as referred to in the preceding paragraph, not participated in by the
Company.

The Company's ownership interest in Encore increased in October 2003 as a
result of additional acquisitions of Encore Common Stock (the '2003 Encore
Acquisition') from the conversion and the warrant exercise. Since each of those
transactions also involved the contribution of capital to Encore's common equity
from other third parties, the Company recorded its $540,000 equity interest in
those capital contributions as a component of the $552,000 increase in
'Additional paid-in capital' reported as 'Equity in additions to paid-in capital
of an equity investee' in the accompanying consolidated statement of
stockholders' equity for the year ended December 28, 2003. The cost of the 2003
Encore Acquisition was $1,026,000 less than the additional underlying equity in
the net assets of Encore, excluding the aforementioned third party
contributions. The Company's proportionate share of the Encore assets to which
such difference could be allocated as a reduction of the Company's proportionate
share of those assets as if Encore were a consolidated subsidiary was $350,000.
The remaining $676,000 could not be allocated to Encore assets and, since such
amount was not material in relation to net loss, was included in the equity in
the earnings of Encore of $2,052,000 as set forth in the preceding table. The
carrying value of the Company's investment in the common stock of Encore at
December 28, 2003 is $478,000 less than its underlying equity interest in
Encore, net of accumulated amortization, comprised of (1) $266,000 related to
the Company's original investment in Encore Common Stock prior to 2001 and (2)
$212,000 remaining from the $350,000 effectively allocated to Encore's assets,
net of amortization and other reductions.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 28, 2003

SUMMARY FINANCIAL INFORMATION OF EQUITY INVESTMENTS

Presented below is summary financial information of Encore as of and for the
year ended December 31, 2003, Encore's year-end. Summary information is not
presented for the year ended December 30, 2001 and as of and for the year ended
December 29, 2002 because the Company's Equity Investments, including Equity
Investments classified as 'Short-term investments' (see Note 5), were not
significant to the Company's consolidated total assets or consolidated income
(loss) from continuing operations before income taxes and minority interests in
2001 and 2002. The summary financial information is as follows (in thousands):

(9) GOODWILL AND OTHER INTANGIBLE ASSETS

The following is a summary of the components of goodwill (in thousands):

Upon the adoption of SFAS 142 effective December 31, 2001, the Company no
longer amortizes goodwill, which relates entirely to the Company's restaurant
operations. A summary of the changes in the carrying amount of goodwill for 2002
and 2003 is as follows (in thousands):

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TRIARC COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 28, 2003

A reconciliation of reported net income and net income per share adjusted on
a pro forma basis for the reversal of goodwill amortization, net of related
income taxes, as though SFAS 142 had been in effect as of December 31, 2000 and
for the Stock Distribution is as follows (in thousands except per share
amounts):

The following is a summary of the components of other intangible assets, all
of which are subject to amortization (in thousands):

Aggregate amortization expense:
Actual:
2002.................................................. $ 689
2003.................................................. 991
Estimate for fiscal year:
2004.................................................. $1,097
2005.................................................. 1,089
2006.................................................. 974
2007.................................................. 774
2008.................................................. 773

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
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(10) LONG-TERM DEBT

Long-term debt consisted of the following (in thousands):

Aggregate annual maturities of long-term debt were as follows as of December
28, 2003 (in thousands):

- ---------

(a) The Company, through Arby's Trust, has outstanding $234,139,000 of insured
non-recourse securitization notes (the 'Securitization Notes') as of
December 28, 2003 which are due no later than December 2020. However, based
on current projections and assuming the adequacy of available funds, as
defined under the indenture (the 'Securitization Indenture') pursuant to
which the Securitization Notes were issued, the Company currently estimates
it will repay $22,256,000 in 2004 with increasing annual payments to
$37,377,000 in 2011 in accordance with a targeted principal payment
schedule. The table of annual maturities of long-term debt above reflects
these targeted payments. The Securitization Notes are
(footnotes continued on next page)

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DECEMBER 28, 2003

(footnotes continued from previous page)
redeemable by Arby's Trust at an amount equal to the total of remaining
principal, accrued interest and the excess, if any, of the discounted value
of the remaining principal and interest payments over the outstanding
principal amount of the Securitization Notes.

Obligations under the Securitization Notes are insured by a financial
guarantee company and are collateralized by assets with an aggregate net
book value of $46,646,000 as of December 28, 2003 consisting of cash and
cash equivalents of $9,495,000, a cash equivalent reserve account of
$30,528,000 and royalties receivable of $6,623,000.

(b) On May 19, 2003 the Company issued (the 'Offering') $175,000,000 of 5%
convertible notes due 2023 (the 'Convertible Notes'). The Company used a
portion of the $175,000,000 proceeds from the Offering to purchase
1,500,000 shares of its Class A Common Stock for treasury for $41,700,000
(the 'Treasury Stock Purchase') and to pay fees and expenses associated
with the Offering of $6,638,000. The balance of the net proceeds from the
Offering are being used by the Company for general corporate purposes,
which may include working capital, repayment of indebtedness, acquisitions,
additional share repurchases and investments.

The Convertible Notes are convertible under specified circumstances into an
aggregate 4,375,000 shares and 8,750,000 shares of the Company's Class A
Common Stock and Class B Common Stock, respectively, at a combined
conversion rate of 25 shares of Class A Common Stock and 50 shares of Class
B Common Stock per $1,000 principal amount of Convertible Notes, subject to
adjustment in certain circumstances and after giving effect to the Stock
Distribution. This rate represents an aggregate conversion price of $40.00
for every one share of Class A Common Stock and two shares of Class B
Common Stock. The Convertible Notes are redeemable at the Company's option
commencing May 20, 2010 and at the option of the holders on May 15, 2010,
2015 and 2020 or upon the occurrence of a fundamental change, as defined,
of the Company, in each case at a price of 100% of the principal amount of
the Convertible Notes plus accrued interest. The indenture pursuant to
which the Convertible Notes were issued does not contain any significant
financial covenants.

(c) The leasehold notes (the 'Leasehold Notes') were assumed in the Sybra
Acquisition and are due in equal monthly installments including interest
through 2021 of which $5,260,000 is due in 2004. The Leasehold Notes bear
interest at rates ranging from 6.23% to 10.93% and are secured by
restaurant leasehold improvements, equipment and inventories with
respective net book values of $29,042,000, $11,544,000 and $2,076,000.

(d) The secured bank term loan (the 'Bank Term Loan') is due in equal amounts
of $3,227,000 in each year through 2007 and $2,152,000 in 2008. The Bank
Term Loan bears interest at variable rates (2.97% as of December 28, 2003),
determined at the Company's option, at the prime rate or the one-month
London Interbank Offered Rate ('LIBOR') plus 1.85%, reset monthly. The
Company also entered into an interest rate swap agreement (the 'Swap
Agreement') on the Bank Term Loan which commenced August 1, 2001 whereby it
effectively pays a fixed rate of 6.8% as long as the one-month LIBOR is
less than 6.5%, but with an embedded written call option whereby the Swap
Agreement will no longer be in effect if, and for as long as, the one-month
LIBOR is at or above 6.5% (see Note 11). Obligations under the Bank Term
Loan are secured by an airplane with a net book value of $20,613,000 as of
December 28, 2003.

(e) The secured promissory note (the 'Promissory Note') is due $2,033,000 in
2004 with increasing annual amounts to $7,204,000 in 2006. The Promissory
Note is secured by an airplane with a net book value of $25,301,000 as of
December 28, 2003.

(f) The equipment notes (the 'Equipment Notes') were assumed in the Sybra
Acquisition and are due in equal monthly installments including interest
through 2009 of which $1,358,000 is due in 2004. The Equipment Notes bear
interest at rates ranging from 8.50% to 11.64% and are secured by
restaurant equipment with a net book value of $5,816,000.
(footnotes continued on next page)

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DECEMBER 28, 2003

(footnotes continued from previous page)

(g) The mortgage notes (the 'Mortgage Notes') were assumed in the Sybra
Acquisition and are due in equal monthly installments including interest
through 2018 of which $149,000 is due in 2004. The Mortgage Notes bear
interest at rates ranging from 8.77% to 10.11% and are secured by land and
buildings of restaurants with net book values of $1,110,000 and $1,037,000,
respectively.

(h) The Company remains liable for $2,888,000 of mortgage notes payable as of
December 28, 2003, of which it is a co-obligor for notes aggregating
$428,000 as of December 28, 2003.

The loan agreements for most of the Leasehold Notes, Mortgage Notes and
Equipment Notes contain various prepayment provisions that provide for
prepayment penalties of up to 5% of the principal amount prepaid or are based
upon specified 'yield maintenance' formulas.

The various note agreements and indentures contain various covenants, the
most restrictive of which (1) require periodic financial reporting, (2) require
meeting certain debt service coverage ratio tests and (3) restrict, among other
matters, (a) the incurrence of indebtedness by certain of the Company's
subsidiaries, (b) certain asset dispositions and (c) the payment of
distributions by Arby's Trust and Sybra. The Company was in compliance with all
of such covenants as of December 28, 2003.

In accordance with the Securitization Indenture, as of December 28, 2003,
Arby's Trust had no amounts available for the payment of distributions. However,
on January 20, 2004, $303,000 relating to cash flows for the calendar month of
December 2003 became available for the payment of such distributions by Arby's
Trust, through its parent to Arby's which, in turn, would be available to Arby's
to pay management service fees or Federal income tax-sharing payables to Triarc
or, to the extent of any excess, make distributions to Triarc. In connection
with Sybra's reorganization, the Company agreed that Sybra would not pay any
distributions prior to December 27, 2004.

Sybra is required to maintain a fixed charge coverage charge ratio (the
'FCCR') under the agreements for the Leasehold Notes and Mortgage Notes and
Sybra was in compliance with the minimum FCCR as of December 28, 2003.

The following pro forma operating information (the 'As Adjusted for the
Offering' information) of the Company for the year ended December 28, 2003 has
been prepared by adjusting the historical information set forth in the
accompanying 2003 consolidated statement of operations to give effect to the
Offering and the Treasury Stock Purchase (which affects only the weighted
average number of common shares and the loss per share) prior to the May 19,
2003 Offering date as if such transactions had been consummated on December 30,
2002 and does not reflect incremental interest income or any other benefit of
the excess proceeds of the Offering (in thousands except per share amounts):

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TRIARC COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 28, 2003

This pro forma information is presented for information purposes only and
does not purport to be indicative of the Company's actual results of operations
had the Offering actually occurred on December 30, 2002 or of the Company's
future results of operations.

(11) DERIVATIVE INSTRUMENTS

The Company's derivative instruments, excluding those that may be settled in
its own stock and, accordingly, not subject to the guidance in SFAS No. 133,
'Accounting for Derivative Instruments and Hedging Activities,' during 2001,
2002 and 2003 are (1) the conversion component of short-term investments in
convertible debt securities, (2) put and call options on equity and corporate
debt securities which are accounted for as trading securities and (3) the Swap
Agreement entered into during 2001 (see Note 10 and below). The Company invests
in convertible debt securities, which are accounted for as trading securities
and had aggregate carrying values of $601,000 and $7,567,000 as of December 29,
2002 and December 28, 2003, respectively, and put and call derivatives as part
of its overall investment portfolio strategy. This strategy includes balancing
the relative proportion of its investments in cash equivalents with their
relative stability and risk-minimized returns with opportunities to avail the
Company of higher, but more risk-inherent, returns associated with other
investments, including convertible debt securities and put and call options. The
Swap Agreement effectively establishes a fixed interest rate on the
variable-rate Bank Term Loan, but with an embedded written call option whereby
the Swap Agreement will no longer be in effect if, and for as long as, the
one-month LIBOR is at or above a specified rate. On the initial date of the Swap
Agreement, the fair market value of the Swap Agreement and the embedded written
call option netted to zero but, as interest rates either increase(d) or
decrease(d), the fair market values of the Swap Agreement and written call
option have moved and will continue to move in the same direction but not
necessarily by the same amount. As of December 29, 2002 and December 28, 2003,
the net fair market value of the Swap Agreement and embedded written call option
had changed to payable positions of $1,229,000 and $826,000, respectively,
included in 'Other liabilities, deferred income and minority interests in a
consolidated subsidiary' in the accompanying consolidated balance sheets. The
changes in the net fair market value of the Swap Agreement and embedded written
call option resulted in charges of $651,000 and $578,000 in 2001 and 2002,
respectively, and a credit of $403,000 in 2003, all included in 'Interest
expense' in the accompanying consolidated statements of operations.

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DECEMBER 28, 2003

(12) FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts and estimated fair values of the Company's financial
instruments for which the disclosure of fair values is required were as follows
(in thousands):

(footnotes on next page)

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TRIARC COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 28, 2003

(footnotes from previous page)

(a) The carrying amounts approximated fair value due to the short-term
maturities of the cash equivalents or restricted cash equivalents.

(b) The fair values were based on quoted market prices or statements of account
received from investment managers or investees which are principally based
on quoted market or brokered/dealer prices.

(c) These consist of investments held in deferred compensation trusts and
certain other non-current Cost Investments. The fair values of these
investments were based almost entirely on statements of account received
from investment managers or investees which are principally based on quoted
market or brokered/dealer prices. To the extent that some of these
investments, including the underlying investments in investment limited
partnerships, do not have available quoted market or brokered/dealer
prices, we rely on third-party appraisals or valuations performed by the
investment managers or investees in valuing those investments.

(d) It was not practicable to estimate the fair value of these Cost Investments
because the investments are non-marketable and are in start-up enterprises.

(e) The fair values were determined by discounting the future scheduled
payments using an interest rate assuming the same original issuance spread
over a current Treasury bond yield for securities with similar durations.

(f) The fair value was based on the quoted asked price.

(g) The fair values at December 29, 2002 were based on an independent appraisal
as part of the Sybra Acquisition purchase accounting as of December 27,
2002. The fair values at December 28, 2003 were determined in the manner
described in note (e) above.

(h) The fair value approximated the carrying value due to the frequent reset,
on a monthly basis, of the floating interest rate.

(i) The fair value was equal to the fair value of the underlying investments
held by the Company in the related trusts which may be used to satisfy such
payable in full.

(j) The fair value was based on a quote provided by the bank counterparty.

(k) The fair values were assumed to reasonably approximate their carrying
amounts since the carrying amounts represent the fair value as of the
inception of the guarantee less subsequent amortization.

(l) The fair value was determined through an independent appraisal based on the
net present value of the probability adjusted payments which may be
required to be made by the Company.

(m) The fair value was determined through an independent appraisal based on the
net present value of the estimated interest payment differential between
the Encore revolving credit borrowings with and without the related
guarantee.

The carrying amounts of accounts receivable, accounts payable and accrued
expenses approximated fair value due to the related allowance for doubtful
accounts receivable and the short-term maturities of accounts payable and
accrued expenses and, accordingly, they are not required to be presented in the
table above.

(13) INCOME TAXES

Income (loss) from continuing operations before income taxes and minority
interests consisted of the following components (in thousands):

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TRIARC COMPANIES, INC. AND SUBSIDIARIES
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DECEMBER 28, 2003

The provision for (benefit from) income taxes from continuing operations
consisted of the following components (in thousands):

The net current deferred income tax benefit and the net non-current deferred
income tax (liability) resulted from the following components (in thousands):

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TRIARC COMPANIES, INC. AND SUBSIDIARIES
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DECEMBER 28, 2003

The decrease in the net deferred income tax liability from $45,033,000 at
December 29, 2002 to $37,413,000 at December 28, 2003, or a decrease of
$7,620,000 differs from the benefit for deferred income taxes of $3,585,000 for
2003. The difference of $4,035,000 is principally due to the effect of the Sybra
338(h)(10) Election.

A reconciliation of the difference between the reported provision for
(benefit from) income taxes and the provision (benefit) that would result from
applying the 35% Federal statutory rate to the income or loss from continuing
operations before income taxes and minority interests is as follows (in
thousands):

The IRS has commenced an examination of the Company's Federal income tax
returns for the years ended December 31, 2000 and December 30, 2001. The Company
has not received any notices of proposed adjustments. However, should any income
taxes or interest be assessed as a result of this examination or any state
examination for periods through the October 25, 2000 date of the sale of our
former beverage businesses (see Note 19), the purchaser has agreed to pay up to
$4,984,000 of any resulting income taxes or associated interest relating to the
operations of Snapple Beverage Group and Royal Crown. Management of the Company
believes that adequate aggregate provisions have been made in prior periods for
any liabilities, including interest, that may result from the completion of this
examination.

(14) STOCKHOLDERS' EQUITY

Class A Common Stock

The Company's Class A Common Stock has one vote per share. There were no
changes in the 100,000,000 shares authorized and the 29,550,663 shares issued of
Class A Common Stock throughout 2001, 2002 and 2003.

Class B Common Stock

Former

In October 2001, in connection with the authorization of new Class B Common
Stock (see 'Series 1' below), the Company eliminated and effectively canceled
the previously authorized 25,000,000 shares of its former non-voting class B
common stock (the 'Former Class B Common Stock'). All outstanding shares of the
Former Class B Common Stock, which were held by affiliates of Victor Posner (the
'Posner Entities'), had been repurchased by the Company, as disclosed in more
detail below under 'Treasury Stock' and were included with Class A Common Stock
in the accompanying consolidated financial statements since the Former Class B
Common Stock participated in income or loss equally per share with the Class A
Common Stock. Victor Posner was a former Chairman and Chief Executive Officer of
DWG Corporation, the former name of Triarc, prior to May 1993. As a result of
the effective cancellation of the 5,997,622 shares of the Former Class B Common
Stock, the Company recorded an entry in 2001 within stockholders' equity which
reduced 'Class A Common Stock' by $600,000, 'Additional paid-in capital' by
$83,211,000, 'Retained earnings' by $43,325,000 and 'Common stock held in
treasury' by $127,136,000.

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Series 1

In October 2001, the Company authorized 100,000,000 shares of new Class B
Common Stock. On September 4, 2003 the Company made the Stock Distribution of
two shares of a newly designated Series 1 of the Company's previously authorized
Class B Common Stock for each share of its Class A Common Stock issued as of
August 21, 2003 resulting in the issuance of 59,101,326 shares of Class B Common
Stock. The Company incurred $931,000 of costs in connection with the Stock
Distribution. As a result of the Stock Distribution, the Company in 2003
recorded an increase in 'Class B common stock' of $5,910,000, representing the
$.10 per share par value of the Class B Common Shares issued, and a decrease in
'Additional paid-in capital' of $6,841,000 consisting of the $5,910,000 par
value of Class B Common Shares issued plus the $931,000 of related costs. The
Class B Common Stock is entitled to one-tenth of a vote per share, has a $.01
per share liquidation preference and is entitled to receive regular quarterly
cash dividends per share of at least 110% of any regular quarterly cash
dividends per share declared on the Class A Common Stock and paid on or before
September 4, 2006. Thereafter, the Class B Common Stock will participate equally
on a per share basis with the Class A Common Stock in any cash dividends.

Dividends

On September 25, 2003 and December 16, 2003, the Company paid regular
quarterly cash dividends of $0.065 and $0.075 per share on its Class A Common
Stock and Class B Common Stock, respectively, aggregating $4,238,000 and
$4,277,000 to holders of record on September 15, 2003 and December 2, 2003,
respectively. On February 12, 2004 the Company declared regular quarterly cash
dividends of $0.065 and $0.075 per share on its Class A Common Stock and
Class B Common Stock, respectively, to holders of record on March 4, 2004 and
payable on March 16, 2004. The Company currently intends to continue to declare
and pay quarterly cash dividends, however, there can be no assurance that any
dividends will be declared or paid in the future or of the amount or timing of
such dividends, if any.

Preferred Stock

The Company increased the number of authorized preferred shares to
100,000,000 in October 2001 from 25,000,000, none of which were issued
throughout 2001, 2002 and 2003. The authorized preferred stock previously
included 5,982,866 shares designated as redeemable preferred stock until such
shares were retired on August 20, 2001. As a result, all of the authorized
100,000,000 shares of preferred stock are undesignated.

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Treasury Stock

A summary of the changes in the number of shares of Class A Common Stock,
Former Class B Common Stock and new Class B Common Stock held in treasury is as
follows (in thousands):

- ---------

(a) In August 1999 Triarc entered into a contract to repurchase in three
separate transactions the 5,997,622 shares of the Former Class B Common
Stock then held by the Posner Entities for an aggregate of $127,050,000.
Triarc completed the purchases of 1,999,207 shares of Former Class B Common
Stock (the 'Class B Repurchases') each on August 19, 1999, August 10, 2000
and August 10, 2001. The August 10, 2001 Class B Repurchase was for an
aggregate of $43,843,000 at a negotiated price of $21.93 per share. The
negotiated prices were based on the fair market value of the Class A Common
Stock of $20.44 per share at the time the transaction was negotiated. The
August 10, 2001 payment resulted in the reduction to zero of the 'Common
stock to be acquired' component of 'Stockholders' equity.'

(b) This treasury stock purchase for $1,381,000 was settled on December 30,
2003.

(c) On October 25, 2001, all of the previously authorized 25,000,000 shares of
the Former Class B Common Stock were eliminated and effectively canceled
(see Former Class B Common Stock above), which effectively retired all
5,997,622 shares of the Former Class B Common Stock then held in treasury.

Stock-Based Compensation

The Company maintains several equity plans (the 'Equity Plans') which
collectively provide or provided for the grant of stock options, tandem stock
appreciation rights and restricted shares of the Company's common stock to
certain officers, other key employees, non-employee directors and consultants
and shares of the Company's common stock pursuant to automatic grants in lieu of
annual retainer or meeting attendance fees to non-employee directors. In June
2002, the Company's stockholders approved the 2002 equity participation plan
which authorized an additional 5,000,000 Class A Common Shares for grants under
the Equity Plans. Following the Stock Distribution, each stock option
outstanding under the Equity Plans was adjusted so as to

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become exercisable for a package (the 'Package Options') consisting of one share
of Class A Common Stock and two shares of Class B Common Stock. Accordingly, an
additional 10,000,000 Class B Common Shares became available for grants under
the 2002 equity participation plan. All stock options that were granted during
2003 after the Stock Distribution (the 'Class B Options') are exercisable each
for one share of Class B Common Stock. As of December 28, 2003, there were
4,974,957 Class A shares and 9,745,914 Class B shares available for future
grants under the Equity Plans.

A summary of changes in outstanding Package Options and Class B Options
under the Equity Plans is as follows:

The weighted average grant date fair values calculated under the
Black-Scholes option pricing model (the 'Black-Scholes Model') of stock options
granted under the Equity Plans during 2001, 2002 and 2003, all of which were
granted at exercise prices equal to the market price of the common stock on the
grant date, were as follows:

None of the Class B Options were exercisable as of December 28, 2003. A
summary of exercisable Package Options is as follows:

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The following table sets forth information relating to stock options
outstanding at December 28, 2003 under the Equity Plans:

Stock options under the Equity Plans generally have maximum terms of ten
years and vest ratably over periods of generally three years but not exceeding
five years from date of grant. However, an aggregate 2,725,000 Package Options
outstanding at December 28, 2003 granted on April 21, 1994 to the Executives at
an exercise price of $20.125 per option vested on October 21, 2003.

During 2001, 2002 and 2003, there were certain modifications to the vesting
or exercise periods of stock options relating to certain terminated employees of
the Company. Such modifications resulted in aggregate compensation of $462,000,
$275,000 and $422,000 during 2001, 2002 and 2003, respectively, which was
credited to 'Additional paid-in capital' with an equal offsetting charge to
'General and administrative' expenses.

As disclosed in Note 1, the Company accounts for stock options in accordance
with the intrinsic value method and, accordingly, has not recognized any
compensation expense for those stock options granted at option prices equal to
the fair market value of the common stock at the respective dates of grant. The
pro forma net income (loss) and basic and diluted net income (loss) per share
set forth in Note 1 adjusts such data as set forth in the accompanying
consolidated statements of operations to reflect for the Equity Plans (1) the
reversal of stock-based employee compensation expense determined under the
intrinsic value method included in reported net income, (2) the recognition of
total stock-based employee compensation expense for all 1995 through 2003 stock
option grants determined under the fair value method and (3) the income tax
effects of each.

The fair value of stock options granted under the Equity Plans on the date
of grant was estimated using the Black-Scholes Model with the weighted average
assumptions set forth as follows:

- ---------

(a) The grants of Package Options occurred prior to the commencement of regular
quarterly cash dividends in 2003.

The Black-Scholes Model has limitations on its effectiveness including that
it was developed for use in estimating the fair value of traded options which
have no vesting restrictions and are fully transferable and that

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the model requires the use of highly subjective assumptions including expected
stock price volatility. The Company's stock-based awards to employees have
characteristics significantly different from those of traded options and changes
in the subjective input assumptions can materially affect the fair value
estimate. Therefore, in the opinion of the Company, the existing models do not
necessarily provide a reliable single measure of the fair value of its
stock-based awards to employees.

(15) IMPAIRMENT

PROPERTIES

The Company had determined that for the year ended December 29, 2002 all of
its long-lived assets that required testing for impairment were recoverable and
did not require the recognition of any associated impairment loss. However, for
the year ended December 28, 2003, the Company recorded an impairment loss of
$364,000 with respect to restaurant equipment and leasehold improvements of
certain of its Company-owned restaurants acquired in the Sybra Acquisition and
reported in 'Properties' in the accompanying consolidated balance sheet. This
impairment loss represents the excess of the carrying value over the fair value
of the affected assets and is included in 'Depreciation and amortization,
excluding amortization of deferred financing costs' in the accompanying
consolidated statement of operations for the year ended December 28, 2003. The
fair value of the impaired assets was estimated to be the present value of the
anticipated cash flows associated with each affected Company-owned restaurant.
The impairment loss resulted principally from a deterioration in operating
performance of these Company-owned restaurants compared with the prior year pre-
acquisition period of Sybra. Cash flows from operations during 2003 and
anticipated future cash flows have been adversely impacted principally due to a
combination of sales declines and higher beef costs.

GOODWILL

The Company had determined that for the year ended December 29, 2002 its
goodwill was recoverable and did not require the recognition of an impairment
loss. However, for the year ended December 28, 2003 the Company recorded an
impairment loss of $22,000,000 with respect to goodwill relating to Sybra, an
identified reporting unit one level below the restaurant business operating
segment, on a stand-alone basis. The impairment loss represented the excess of
the carrying value of the goodwill of this reporting unit over the implied fair
value of such goodwill. The implied fair value of the goodwill was determined by
allocating the current fair value of Sybra to all of the Sybra assets and
liabilities based on their estimated fair values with the excess fair value
representing goodwill. The current fair value of Sybra was estimated to be the
present value of the anticipated cash flows associated with the Company-owned
restaurant reporting unit. The impairment loss resulted from the effect of stiff
competition from new product choices in the marketplace and significant cost
increases in roast beef, the largest component for Sybra's menu offerings.
Consequently, the cash flows during 2003 and anticipated cash flows of the
Company-owned restaurant reporting unit have been adversely impacted in 2003. In
light of the increased competitive pressures and recognizing the unfavorable
trend in roast beef costs versus historical averages, the Company determined
that in evaluating the Company-owned restaurants as a separate reporting unit,
the expected cash flows were not sufficient to fully support the carrying value
of the goodwill associated with the Sybra Acquisition.

Although the Company reports its Company-owned restaurants and its
franchising of restaurants as one business segment and acquired Sybra with the
expectation of strengthening and increasing the value of its Arby's brand, its
Company-owned restaurants are considered to be a separate reporting unit for
purposes of measuring goodwill impairment under SFAS 142. Accordingly, goodwill
is tested for impairment at the Sybra level based on its separate cash flows
independent of the Company's strategic reasons for owning restaurants.

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(16) INVESTMENT INCOME, NET

Investment income, net consisted of the following components (in thousands):

- ---------

(a) The Company recognized Other Than Temporary Losses on certain securities
classified as available-for-sale, certain investments in limited
partnerships, including 280 BT, EBT Holding Company, LLC and 280 KPE
Holdings, LLC, and certain non-marketable common and preferred stocks and
reduced the cost basis of those investments. These unrealized losses were
before minority interests in 280 BT of $264,000, $3,448,000 and $112,000 in
2001, 2002 and 2003, respectively. The losses in 2002 of $14,531,000 related
primarily to the recognition of (1) $7,993,000 of impairment charges, before
minority interests of $3,448,000, related to three underlying non-public
investments held by 280 BT, including $3,315,000 related to Scientia Health
Group Limited and (2) a $3,906,000 impairment charge based on the
significant decline in market value of one of the Company's
available-for-sale investments in a large publicly-traded company. The three
underlying investments of 280 BT for which impairment charges were
recognized were determined to be no longer viable or significantly impaired
due to either liquidity problems or the entity ceasing business operations.

(17) GAIN (LOSS) ON SALE OF BUSINESSES

Gain (loss) on sale of businesses consisted of the following (in thousands):

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(18) OTHER INCOME, NET

Other income, net consisted of the following income (expense) components (in
thousands):

- ---------

(a) On October 25, 2000, the Company sold (the 'Snapple Beverage Sale') Snapple
Beverage Group and Royal Crown to affiliates of Cadbury Schweppes plc
('Cadbury'). The Company received $8,284,000 of interest income in 2001 on
a $200,000,000 payment by Cadbury for the Company electing (the 'Tax
Election') during 2001 to treat certain portions of the Snapple Beverage
Sale as an asset sale in lieu of a stock sale under the provisions of
Section 338(h)(10) of the United States Internal Revenue Code in accordance
with a Snapple Beverage Sale tax agreement. Such interest income was
recognized in 2001 when the Tax Election was made and was for the period
from December 9, 2000 (45 days after the October 25, 2000 Snapple Beverage
Sale date) through the date of payment of the $200,000,000 on June 14,
2001. The $183,000 in 2003 represents interest received on a state income
tax refund pursuant to the tax return for the year ended December 31, 2000
filed in 2001 related to the former beverage businesses.

(b) Prior to February 8, 2003, Cadbury had the right to cause the Company to
issue Class A Common Shares upon any conversion by the holders of Triarc's
zero coupon convertible subordinated debentures due 2018 (the 'Debentures')
assumed by Cadbury, which effectively established a written call option on
such stock (the 'Written Call Option'). Cadbury called the Debentures for
redemption in full with a redemption date of February 9, 2003 and the
Written Call Option terminated without any Class A Common Stock being
called under the option. The original fair value of the Written Call Option
of $1,476,000 as of October 25, 2000 was initially recorded as a reduction
of the gain on the Snapple Beverage Sale in 2000. In 2001 and 2002 the
Company recognized reductions in the fair value of the Written Call Option
of $793,000 and $30,000, respectively. The fair value of the Written Call
Option was determined by independent third-party consultants using the
Black-Scholes option pricing model.

(c) The Company received $1,461,000 of compensation in 2001 resulting from the
demutualization of the insurance company from which a group annuity
contract was purchased in July 1987 to provide for pension payments to
participants in connection with the settlement of certain pension
obligations associated with the termination of a pension plan effective
June 1985. Of such compensation, $506,000 related to continuing operations
and is included above in 'Other income, net' and $955,000 related to the
(footnotes continued on next page)

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(footnotes continued from previous page)

discontinued operations associated with the Snapple Beverage Sale and is
included, net of income taxes, in 'Gain on disposal of discontinued
operations' in 2001.

(19) DISCONTINUED OPERATIONS

Sale of Beverage Businesses

On October 25, 2000, the Company consummated the Snapple Beverage Sale (see
Note 18). Snapple Beverage Group represented the operations of the Company's
former premium beverage business and Royal Crown represented the operations of
the Company's former soft drink concentrate business. Snapple Beverage Group and
Royal Crown (collectively, the 'Former Beverage Businesses') have been accounted
for as discontinued operations (the 'Beverage Discontinued Operations') by the
Company. The Snapple Beverage Sale resulted in a then estimated after-tax gain
in the year ended December 31, 2000 of $480,946,000. In 2001, 2002 and 2003, the
Company recorded additional gains from the Snapple Beverage Sale of $43,450,000,
$11,100,000 and $1,565,000, respectively. The additional gain in 2001
principally resulted from the realization of $200,000,000 of proceeds from
Cadbury for the Tax Election (see Note 18), net of estimated income taxes,
partially offset by additional accruals relating to an estimated post-closing
sales price adjustment. The additional gain in 2002 resulted from the release of
reserves for income taxes in connection with the receipt of related income tax
refunds. The additional gain in 2003 principally resulted from the release of
excess reserves, net of income taxes, in connection with the settlement by
arbitration of a post-closing sales price adjustment. In December 2003 the
Company paid Cadbury a post-closing sales price adjustment of $11,262,000 plus
interest of $2,552,000 which had been provided for in 2001 to 2003 through
charges to 'Interest expense' included in income (loss) from continuing
operations.

Prior to 2001 the Company sold the stock or the principal assets of the
companies comprising SEPSCO's utility and municipal services and refrigeration
business segments (the 'SEPSCO Discontinued Operations') and substantially all
of its interests in a partnership and a subpartnership comprising the Company's
former propane business segment (the 'Propane Discontinued Operations'), all of
which have been accounted for as discontinued operations. There remain certain
obligations not transferred to the buyers of these discontinued businesses to be
liquidated. In 2003 the Company recognized an additional gain of $680,000 from
the SEPSCO and Propane Discontinued Operations resulting from adjustments to the
remaining liabilities yet to be liquidated.

The gain on disposal of discontinued operations consisted of the following
(in thousands):

Current liabilities relating to the discontinued operations as of
December 29, 2002 and December 28, 2003 consisted of the following (in
thousands):

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Accrued income taxes and other accrued expenses of the Beverage Discontinued
Operations as of December 28, 2003 represent remaining liabilities payable with
respect to the Beverage Discontinued Operations. The net liabilities of SEPSCO
and Propane Discontinued Operations principally represent liabilities that have
not been liquidated as of December 28, 2003. The Company expects that the
liquidation of the remaining liabilities associated with all of these
discontinued operations as of December 28, 2003 will not have any material
adverse impact on its financial position or results of operations. To the extent
any estimated amounts included in the current liabilities relating to the
discontinued operations are determined to be in excess of the requirement to
liquidate the associated liability, any such excess will be released at that
time as a component of 'Gain on disposal of discontinued operations.'

(20) RETIREMENT BENEFIT PLANS

The Company maintains two 401(k) defined contribution plans (the '401(k)
Plans') covering all of its employees who meet certain minimum requirements and
elect to participate, including employees of Sybra subsequent to December 27,
2002. Under the provisions of the 401(k) Plans, employees may contribute various
percentages of their compensation ranging up to a maximum of 20% (15% prior to
January 1, 2002) for one of the 401(k) Plans and 15% for the other plan, subject
to certain limitations. One of the 401(k) Plans provides for Company matching
contributions at 50% of employee contributions up to the first 6% thereof and
the participating employers make such contributions. The other plan permits
unspecified matching contributions; however, no such contributions have been
made. In addition, the 401(k) Plans permit discretionary annual Company
profit-sharing contributions to be determined by the employer regardless of
whether the employee otherwise elects to participate in the 401(k) Plans. In
connection with the matching and profit sharing contributions, the Company
provided $1,004,000, $1,174,000 and $1,232,000 as compensation expense in 2001,
2002 and 2003, respectively.

The Company maintains two defined benefit plans, the benefits under which
were frozen in 1992. After recognizing a curtailment gain upon freezing the
benefits, the Company has no unrecognized prior service cost related to these
plans. The measurement date used by the Company in determining amounts related
to its defined benefit plans is December 31 based on an actuarial report with a
one-year lag.

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DECEMBER 28, 2003

A reconciliation of the beginning and ending balances of the accumulated
benefit obligations and the fair value of the plans' assets and a reconciliation
of the resulting funded status of the plans to the net amount recognized are (in
thousands):

The net amount recognized in the consolidated balance sheets consisted of
the following (in thousands):

As of December 29, 2002 and December 28, 2003 each of the two plans have
accumulated benefit obligations in excess of the fair value of the assets of the
respective plan.

The components of the net periodic pension cost are as follows (in
thousands):

The unrecognized pension recoveries in 2001 and 2003, and the loss in 2002,
less related deferred income taxes, have been reported as 'Recovery of
unrecognized pension loss' and 'Unrecognized pension loss,'

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respectively, as components of comprehensive income (loss) reported in the
accompanying consolidated statements of stockholders' equity consisting of the
following (in thousands):

The actuarial assumptions used in measuring the net periodic pension cost
and accumulated benefit obligations are as follows:

The expected long-term rate of return on plan assets of 7.5% for 2003
reflects the Company's estimate of the average returns on plan investments and
amounts available for reinvestment. The rate was determined with consideration
given to the targeted asset allocation discussed below.

The effect of the decrease in the expected long-term rate of return on plan
assets from 2002 to 2003 resulted in an increase in the net periodic pension
cost of $18,000. The effect of the decrease in the discount rate used in
measuring the net periodic pension cost from 2001 to 2002 and from 2002 to 2003
resulted in a decrease in the net periodic pension cost of $6,000 in 2002 and an
increase of $12,000 in 2003. A change in the mortality table used in determining
the 2003 net periodic pension cost resulted in an increase of $47,000.

The weighted-average asset allocations of the two defined benefit plans by
asset category at December 29, 2002, and December 28, 2003 are as follows:

Since the benefits under the Company's defined benefit plans are frozen, the
strategy for the investment of plan assets is weighted towards capital
preservation. Accordingly, the target asset allocation is 60% of assets in debt
securities with intermediate maturities and 40% in large capitalization equity
securities.

The Company currently expects to contribute an aggregate $264,000 to its two
defined benefit plans in 2004.

(21) LEASE COMMITMENTS

The Company leases real property and transportation, restaurant and office
equipment. Some leases related to restaurant operations provide for contingent
rentals based on sales volume. Certain leases also provide for payments of other
costs such as real estate taxes, insurance and common area maintenance which are
not included in rental expense or the future minimum rental payments set forth
below.

Rental expense under operating leases, which increased in 2003 due to the
Sybra Acquisition, consisted of the following components (in thousands):

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The Company's (1) future minimum rental payments and (2) sublease rental
receipts, for noncancelable leases having an initial lease term in excess of one
year as of December 28, 2003 are as follows (in thousands):

As of December 28, 2003, the Company had $3,079,000 of 'Favorable leases,'
net of accumulated amortization, included in 'Other intangible assets' (see Note
9) and $13,778,000 of unfavorable leases included in 'Other liabilities,
deferred income and minority interests in a consolidated subsidiary,' resulting
in $10,699,000 of net unfavorable leases. The future minimum rental payments
have been reduced by (1) the $10,699,000 of net unfavorable leases, (2) the
lease obligations assumed by RTM Restaurant Group, Inc. in connection with the
May 1997 sale of restaurants (see Note 22) and (3) the lease obligations for
closed restaurants for which the fair value of those obligations, reduced by
estimated related sublease rental receipts, has already been recognized by the
Company. Sublease rental receipts have been reduced by those receipts relating
to the closed restaurants.

The present value of minimum capitalized lease payments is included either
with 'Long-term debt' or 'Current portion of long-term debt,' as applicable, in
the accompanying consolidated balance sheet as of December 28, 2003 (see Note
10).

(22) GUARANTEES

National Propane retains a less than 1% special limited partner interest in
its former propane business, now known as AmeriGas Eagle Propane, L.P.
('AmeriGas Eagle'). National Propane agreed that while it remains a special
limited partner of AmeriGas Eagle, National Propane would indemnify (the
'Indemnification') the owner of AmeriGas Eagle for any payments the owner makes
related to the owner's obligations under certain of the debt of AmeriGas Eagle,
aggregating approximately $138,000,000 as of December 28, 2003, if AmeriGas
Eagle is unable to repay or refinance such debt, but only after recourse by the
owner to the assets of AmeriGas Eagle. National Propane's principal asset is an
intercompany note receivable from Triarc in the amount of $50,000,000 as of
December 28, 2003. The Company believes it is unlikely that it will be called
upon to make any payments under the Indemnification. In August 2001, AmeriGas
Propane L.P. ('AmeriGas Propane') purchased all of the interests in AmeriGas
Eagle other than National Propane's special limited

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partner interest. Either National Propane or AmeriGas Propane may require
AmeriGas Eagle to repurchase the special limited partner interest. However, the
Company believes it is unlikely that either party would require repurchase prior
to 2009 as either AmeriGas Propane would owe the Company tax indemnification
payments if AmeriGas Propane required the repurchase or the Company would
accelerate payment of deferred taxes, which would amount to $39,400,000 as of
December 28, 2003, associated with the 1999 sale of the propane business if
National Propane required the repurchase.

Triarc has guaranteed obligations under mortgage and equipment notes payable
through 2015 (the 'Mortgage and Equipment Notes Guarantee') which were assumed
by subsidiaries of RTM Restaurant Group, Inc. ('RTM'), the largest franchisee in
the Arby's system, in connection with the 1997 sale of all 355 of the then
Company-owned restaurants to RTM (the 'Restaurant Sale'), of which approximately
$42,000,000 and $40,000,000 were outstanding as of December 29, 2002 and
December 28, 2003, respectively.

In connection with the Restaurant Sale, substantially all lease obligations
associated with the sold restaurants were also assumed by RTM. The Company
remains contingently liable if the future lease payments, which extend through
2031 including all then existing extension or renewal option periods, are not
made by RTM (the 'Lease Guarantee'). Such lease obligations could aggregate a
maximum of approximately $66,000,000 and $59,000,000 as of December 29, 2002 and
December 28, 2003, respectively, assuming RTM has made all scheduled payments
thereof through those dates.

Through October 2003 the Company guaranteed certain debt of Encore. As
disclosed in more detail in Note 23, the Company was relieved of those
guarantees in connection with the October 2003 repayment of such debt by Encore.

The carrying amounts of the Mortgage and Equipment Notes Guarantee, the
Lease Guarantee and, in 2002, the guarantee of Encore senior notes aggregated
$669,000 and $222,000 as of December 29, 2002 and December 28, 2003,
respectively (see Note 12). Such carrying amounts are included in 'Other
liabilities, deferred income and minority interests in a consolidated
subsidiary' in the accompanying consolidated balance sheets.

(23) TRANSACTIONS WITH RELATED PARTIES

Prior to 2001 the Company provided incentive compensation of $22,500,000 to
the Executives which was invested in January 2001 in two deferred compensation
trusts (the 'Deferred Compensation Trusts') for their benefit. Deferred
compensation expense of $1,856,000, $1,350,000 and $3,438,000 was recognized in
2001, 2002 and 2003, respectively, for increases in the fair value of the
investments in the Deferred Compensation Trusts. Under accounting principles
generally accepted in the United States of America, the Company is permitted to
recognize investment income for any interest or dividend income on investments
in the Deferred Compensation Trusts and realized gains on sales of investments
in the Deferred Compensation Trusts, but is unable to recognize any investment
income for unrealized increases in the fair value of the investments in the
Deferred Compensation Trusts because these investments are accounted for under
the Cost Method. Accordingly, the Company recognized investment income from
investments in the Deferred Compensation Trusts of $171,000 in 2001, none in
2002 and $958,000 in 2003. Such investment income consisted entirely of interest
income in 2001 and $9,000 of interest income and $949,000 of realized gains from
the sale of certain Cost Method investments in the Deferred Compensation Trusts
in 2003, which included increases in value of $668,000 prior to 2003. The
cumulative disparity between deferred compensation expense and net recognized
investment income will reverse in future periods as either (1) additional
investments in the Deferred Compensation Trusts are sold and previously
unrealized gains are recognized without any offsetting increase in compensation
expense or (2) the fair values of the investments in the Deferred Compensation
Trusts decrease resulting in the recognition of a reversal of compensation
expense without any offsetting losses recognized in investment income.
Recognized gains and interest income are included in 'Investment income, net'
and deferred compensation expense is included in 'General and administrative' in
the accompanying consolidated statements of operations. The obligation to the
Executives is reported as 'Deferred compensation payable to

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related parties' in the accompanying consolidated balance sheets. As of December
28, 2003, the assets in the Deferred Compensation Trusts consisted of
$21,496,000 included in 'Investments,' which does not reflect the unrealized
increase in the fair value of the investments, $1,630,000 included in 'Cash
(including cash equivalents)' and $495,000 included in 'Receivables' in the
accompanying consolidated balance sheet. As of December 29, 2002, such assets
consisted of $22,671,000 included in 'Investments.'

In April 2003 the Executives exercised an aggregate 1,000,000 stock options
under the Company's Equity Plans and paid the exercise price utilizing shares of
the Company's Class A Common Stock the Executives already owned for more than
six months. These exercises resulted in aggregate deferred gains to the
Executives of $10,160,000, represented by an additional 360,795 shares of the
Company's Class A Common Stock based on the market price at the date of
exercise. Such shares, along with 721,590 shares of Class B Common Stock issued
as part of the Stock Distribution, are being held in two additional deferred
compensation trusts. The Executives had previously elected to defer the receipt
of the shares held in the additional deferred compensation trusts until no
earlier than January 2, 2005. The resulting obligation of $10,160,000 is
reported as the 'Deferred compensation payable in common stock' component of
'Stockholders' equity' in the accompanying consolidated balance sheet as of
December 28, 2003. The Company does not record any income or loss from the
change in the fair market value of the 'Deferred compensation payable in common
stock' since the trusts are invested in the Company's own common stock. Related
accrued dividends of $155,000 are included in 'Accrued expenses and other
current liabilities' as of December 28, 2003.

A class action lawsuit relating to certain awards of compensation to the
Executives in 1994 through 1997 was settled effective March 1, 2001 whereby,
among other things, (1) the Company received an interest-bearing note (the
'Executives' Note') from the Executives, in the aggregate amount of $5,000,000,
which was received from the Executives in three equal installments in March
2001, 2002 and 2003 and (2) the Executives surrendered an aggregate of 775,000
stock options awarded to them in 1994 (see Note 14). The Company recorded the
$5,000,000 during 2001 as a reduction of compensation expense included in
'General and administrative' in the accompanying consolidated statement of
operations for the year ended December 30, 2001, since the settlement
effectively represented an adjustment of prior period compensation expense. The
Executives' Note bore interest initially at 6% per annum and, in accordance with
its terms, was adjusted on April 2, 2001 to 4.92% per annum and was again
adjusted on April 1, 2002 to 1.75%. The Company recorded interest income on the
Executives' Note of $148,000, $62,000 and $7,000 during 2001, 2002 and 2003,
respectively.

The Company's president and chief operating officer has an equity interest
in a franchisee that owns an Arby's restaurant. That franchisee is a party to a
standard Arby's franchise license agreement and pays to Arby's fees and royalty
payments that unaffiliated third-party franchisees pay. Under an arrangement
that pre-dated the Sybra Acquisition, Sybra manages the restaurant for the
franchisee and did not receive any compensation for its services during 2002 or
2003.

As part of its overall retention efforts, the Company has provided certain
of its management officers and employees, including its executive officers, the
opportunity to co-invest with the Company in certain investments and made
related loans to management through December 30, 2001. The Company did not enter
into any new co-investments or make any co-investment loans to management
officers or employees subsequent to 2001 and the co-investment policy no longer
permits any new loans. The co-investment and corporate opportunity policy
approved by the Company's audit committee previously provided that the Company
could make loans to management, not to exceed an aggregate of $5,750,000
principal amount outstanding, where the Company's portion of the aggregate
co-investment was at least 20%. Each loan could not exceed two-thirds of the
total amount to be invested by any member of management in a co-investment and
was to be evidenced by promissory notes, of which at least one-half were to be
recourse notes, secured by such member's co-investment shares. The promissory
notes were to mature no later than the lesser of (1) five years, (2) the sale of
the investment by the officer or employee or (3) the termination of employment
of the officer or employee; and bear interest at the prime rate payable
annually. The Company and certain of its management had entered into four

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co-investments in accordance with this policy: (1) EBT Holding Company, LLC
('EBT'), (2) 280 KPE Holdings, LLC ('280 KPE'), (3) K12 Inc. ('K12') and (4) 280
BT (see Note 6). EBT, 280 KPE and 280 BT are or were limited liability holding
companies principally owned by the Company and present and former company
management that, among other parties, invested in operating companies. The
investment in K12, however, is directly in the operating company. The underlying
investments held by EBT and 280 KPE became worthless in 2002 and 2001,
respectively, and EBT was dissolved in 2003.

Information pertaining to each of the co-investments is as follows (dollars
in thousands):

- ---------

(a) The provisions for uncollectible non-recourse notes were established due to
the worthlessness of the underlying investments held by EBT and 280 KPE and
either declines in value of the underlying investments of 280 BT or
settlements of related non-recourse notes described in (c) below. Such
provisions for uncollectible notes were included in 'General and
administrative' in the accompanying consolidated statements of operations.
The fully-reserved non-recourse notes relating to EBT and 280 KPE were
forgiven in 2003 and 2002, respectively. Accrued interest of $14,000 and
$5,000 in 2001 and 2002, respectively, on the fully-reserved non-recourse
notes was written off as a reduction of the 'Other interest income'
component of 'Other income, net' (see Note 18).

(b) The other reductions relate to the return of unused capital to the Company
which had not been used to make underlying investments.

(c) Includes the effect of the surrender by former Company officers of portions
of their respective co-investment interests in 280 BT to the Company in
settlement of non-recourse notes of $50,000 in 2002 and $17,000 in 2003,
which resulted in increases in the Company's ownership percentage to 57.9%
from 55.9%. Such settlements resulted in pretax gain (loss) to the Company
of $48,000 and $(10,000) in 2002 and 2003,
(footnotes continued on next page)

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(footnotes continued from previous page)

respectively, consisting of reductions of the minority interests in 280 BT
of$100,000 and $7,000, respectively, as a result of the Company now owning
the 1.5% and 0.5% surrendered interests, less charges of $52,000 and
$18,000, respectively, for the extinguishment of the non-recourse notes and
related accrued interest. The reductions of the minority interests were
included as credits to 'Minority interests in loss of a consolidated
subsidiary' and the charges for the extinguishment of the notes were
included in 'General and administrative' in the respective accompanying
consolidated statements of operations.

As indicated above, both the Company and certain of its management officers
made a co-investment in 280 BT in 2001, which was in addition to a cash-only
co-investment previously made in 1998. 280 BT invested all of such 2001 proceeds
in shares of Scientia Health Group Limited ('Scientia'). A former officer of the
Company could have indirectly benefited from a lower average cost of his
investment compared with that of the Company's investment. However, it is
unlikely the former officer has or would realize this benefit because of a
substantial decline in value of the Scientia shares principally during 2002.

In addition to the co-investments set forth in the preceding table, the
Company and certain of its officers, including entities controlled by them, have
invested in Encore, resulting in the Company owning 9.1% (see Note 8) and
certain present officers collectively owning 15.4% of Encore's issued and
outstanding common stock as of December 28, 2003. The Company and certain of its
then officers and employees had co-invested in Encore prior to an initial public
offering by Encore of its common stock in July 1999 (the 'Encore IPO'),
resulting in the Company acquiring an 8.4% share and certain of its then
officers acquiring a 15.7% collective share, as adjusted for the effect of the
Encore IPO. In October 2002 the Company made a restricted stock award of 90,000
shares of Encore Common Stock owned by it to an officer of the Company who is
not one of the Executives and who began serving on Encore's board of directors.
In connection with this award, the Company recorded the $72,000 fair market
value of the Encore shares as of the date of grant as accrued compensation which
is being amortized to expense ratably over the three-year vesting period of the
restricted stock award. An equal offsetting deferred gain is being amortized to
income included in 'Gain (loss) on sale of businesses' (see Note 17).

Prior to 2001 the Company had entered into a guarantee (the 'Note
Guarantee') of $10,000,000 principal amount of senior notes that were scheduled
to mature in January 2007 (the 'Encore Notes') issued by Encore to a major
financial institution. In consideration for the guarantee, the Company received
a fee of $200,000 and warrants to purchase 100,000 shares of Encore Common Stock
at $.01 per share with an estimated fair value on the date of grant of $305,000.
As disclosed in Note 8, during 2002 the outstanding principal amount of the
Encore Notes was reduced from $10,000,000 to $7,250,000. The $10,000,000
guaranteed amount had been reduced to $6,698,000 as of December 29, 2002. In
connection with the Encore Offering, the Encore Notes were repaid in 2003,
thereby relieving the Company of the Note Guarantee. The Company recorded a
pretax gain of $156,000 during 2003 representing the release of the remaining
unamortized carrying amount of the Note Guarantee which is reported in the
'Amortization of fair value of debt guarantees' component of 'Other income, net'
(see Note 18) in 2003. The present and former officers of the Company, including
entities controlled by them, who collectively owned 15.7% of Encore as of the
Encore IPO, were not parties to the Note Guarantee and could have indirectly
benefited from it.

In addition to the Note Guarantee, the Company and certain other
stockholders of Encore, including the present and former officers of the Company
who had invested prior to the Encore IPO, on a joint and several basis, had
entered into guarantees (the 'Bank Guarantees') and certain related agreements
to guarantee up to $15,000,000 of revolving credit borrowings of a subsidiary of
Encore. The Company would have been responsible for approximately $1,800,000
assuming the full $15,000,000 was borrowed and all of the parties, other than
the Company, to the Bank Guarantees and the related agreements fully performed
thereunder. In connection with the Encore Offering, the revolving credit line
was terminated, thereby relieving the Company of the Bank Guarantees.

99

TRIARC COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 28, 2003

The Company, the Company's officers who had invested in Encore prior to the
Encore IPO and certain other stockholders of Encore, through a then newly-formed
limited liability company, CTW Funding, LLC ('CTW'), provided a $2,000,000
revolving credit facility to Encore (the 'Encore Revolver') which expired unused
on December 31, 2001. The Company owned an 8.7% interest in CTW and, had any
borrowings under the Encore Revolver occurred, all members of CTW would have
been required to fund such borrowings in accordance with their percentage
interests. In return for its commitment, during 2001 CTW received warrants to
purchase a total of 200,000 shares of Encore common stock at $.01 per share with
an aggregate estimated fair value on the dates of grant of $84,000. During 2002
CTW exercised the warrants and was then liquidated, resulting in the Company
receiving 21,822 shares of Encore common stock. Such shares had a less than 0.1%
effect on the Company's ownership percentage of Encore because of the common
shares issued to other members of CTW upon CTW's exercise of the warrants and
liquidation.

The Company leased a helicopter until April 4, 2002 from a subsidiary of
Triangle Aircraft Services Corporation ('TASCO'), a company owned by the
Executives, under a dry lease which was scheduled to expire in September 2002.
The Company terminated its lease effective April 1, 2002 and paid $150,000 to
TASCO to be released from all of its remaining obligations under the lease,
including a then remaining rental obligation of $196,000. Under the terms of the
dry lease, the Company paid the operating expenses, including repairs and
maintenance, of the helicopter directly to third parties. The aggregate expense
attributable to lease related payments to TASCO aggregated $385,000 and $248,000
in 2001 and 2002, respectively.

The Company also has related party transactions disclosed in Note 14
consisting of the Class B Repurchases from the Posner Entities and stock-based
compensation.

(24) LEGAL AND ENVIRONMENTAL MATTERS

In 2001, a vacant property owned by Adams, an inactive subsidiary of the
Company, was listed by the United States Environmental Protection Agency on the
Comprehensive Environmental Response, Compensation and Liability Information
System ('CERCLIS') list of known or suspected contaminated sites. The CERCLIS
listing appears to have been based on an allegation that a former tenant of
Adams conducted drum recycling operations at the site from some time prior to
1971 until the late 1970's. The business operations of Adams were sold in
December 1992. In February 2003, Adams and the Florida Department of
Environmental Protection (the 'FDEP') agreed to a consent order that provides
for development of a work plan for further investigation of the site and limited
remediation of the identified contamination. In May 2003, the FDEP approved the
work plan submitted by Adams' environmental consultant and, as of December 28,
2003, the work at the site has been substantially completed. Adams is in the
process of completing its contamination assessment report and expects to submit
the report to the FDEP in late March 2004. Based on an original cost estimate of
approximately $1,000,000 for completion of the work plan developed by Adams'
environmental consultant and, after taking into consideration various legal
defenses available to the Company, including Adams, Adams provided for its
estimate of its liability for this matter, including related legal and
consulting fees. Such provision was made primarily during the year ended
December 29, 2002 principally as a component of 'Gain (loss) on sale of
businesses' in the accompanying consolidated statement of operations for the
year ended December 29, 2002 since the provision represented an adjustment to
the previously recorded gain on the sale of Adams.

In 1998, a number of class action lawsuits were filed on behalf of the
Company's stockholders. Each of these actions named the Company, the Executives
and the other members of the Company's board of directors as defendants. In
1999, certain plaintiffs in these actions filed a consolidated amended complaint
alleging that the Company's tender offer statement filed with the SEC in 1999,
pursuant to which the Company repurchased 3,805,015 shares of its Class A Common
Stock for $18.25 per share, failed to disclose material information. The amended
complaint seeks, among other relief, monetary damages in an unspecified amount.
In 2000, the plaintiffs agreed to stay this action pending determination of a
related stockholder action which was

100

TRIARC COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 28, 2003

subsequently dismissed in October 2002 and is no longer being appealed. Through
December 28, 2003, no further action has occurred with respect to the remaining
class action lawsuit and such action remains stayed.

In addition to the environmental matter and stockholder lawsuit described
above, the Company is involved in other litigation and claims incidental to its
current and prior businesses. Triarc and its subsidiaries have reserves for all
of their legal and environmental matters aggregating $2,300,000 as of
December 28, 2003. Although the outcome of such matters cannot be predicted with
certainty and some of these matters may be disposed of unfavorably to the
Company, based on currently available information, including legal defenses
available to Triarc and/or its subsidiaries, and given the aforementioned
reserves, the Company does not believe that the outcome of such legal and
environmental matters will have a material adverse effect on its consolidated
financial position or results of operations.

(25) QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

The table below sets forth summary unaudited consolidated quarterly
financial information for 2002 and 2003. As disclosed more fully in Note 3, on
December 27, 2002 the Company completed the Sybra Acquisition and, accordingly,
Sybra's results of operations subsequent to the December 27, 2002 date of the
Sybra Acquisition have been included in the Company's consolidated results of
operations. The Company's revenues prior to the Sybra Acquisition consisted
entirely of royalties and franchise and related fees and the Company did not
have any sales or related cost of sales.

101

TRIARC COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 28, 2003

- ---------

(a) Revenues for each of the four quarters in 2002 have been reclassified to
conform with the accompanying 2002 full year consolidated statement of
operations.

(b) Basic and diluted income (loss) per share have been retroactively adjusted
for the effect of the Stock Distribution and have been computed consistently
with the annual calculations explained in Note 4. Basic and diluted income
(loss) per share for each of the Class A and Class B Common Shares are the
same for each of the first three quarters of 2002 and for each of the first
two quarters and the fourth quarter of 2003 since all potentially dilutive
securities would have had an antidilutive effect based on the loss from
continuing operations in each of those quarters. The basic and diluted
income per share for each of the Class A and Class B Common Shares are the
same for the quarter ended September 28, 2003 since the difference is less
than one cent.

(c) The loss from continuing operations for the quarter ended December 28, 2003
was materially affected by (1) a goodwill impairment charge of $22,000,000
(see Note 15), or $15,591,000 after an income tax benefit of $6,409,000 and
(2) a gain on sale of business of $5,834,000 (see Notes 8 and 17), or
$3,792,000 after income tax provision of $2,042,000.

102

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

Not applicable.

ITEM 9a. CONTROLS AND PROCEDURES

Our management, including our Chairman and Chief Executive Officer and our
Chief Financial Officer, evaluated the effectiveness of our disclosure controls
and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under
the Securities Exchange Act of 1934, as amended (the 'Exchange Act')) as of the
end of the period covered by this annual report. Based upon that evaluation, our
Chairman and Chief Executive Officer and our Chief Financial Officer concluded
that, as of the end of such period, our disclosure controls and procedures are
effective to ensure that information required to be included in the reports we
file or submit under the Exchange Act is recorded, processed, summarized and
reported as and when required. No change in our internal control over financial
reporting was made during our most recent fiscal quarter that materially
affected, or is reasonably likely to materially affect, our internal control
over financial reporting.

PART III

ITEMS 10, 11, 12, 13 AND 14.

The information required by items 10, 11, 12, 13 and 14 will be furnished on
or prior to April 26, 2004 (and is hereby incorporated by reference) by an
amendment hereto or pursuant to a definitive proxy statement involving the
election of directors pursuant to Regulation 14A that will contain such
information. Notwithstanding the foregoing, information appearing in the
sections 'Executive Compensation Report of the Compensation Committee and
Performance Compensation Subcommittee' and 'Stock Price Performance Graph' shall
not be deemed to be incorporated by reference in this Form 10-K.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

(a) 1. Financial Statements:

See Index to Financial Statements (Item 8).

2. Financial Statement Schedules:

All schedules have been omitted since they are either not applicable or the
information is contained elsewhere in 'Item 8. Financial Statements and
Supplementary Data.'

3. Exhibits:

Copies of the following exhibits are available at a charge of $.25 per page
upon written request to the Secretary of Triarc at 280 Park Avenue, New York,
New York 10017.

103

104

105

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* Filed herewith

Instruments defining the rights of holders of certain issues of long-term
debt of Triarc and its consolidated subsidiaries have not been filed as
exhibits to this Form 10-K because the authorized principal amount of any
one of such issues does not exceed 10% of the total assets of Triarc and
its subsidiaries on a consolidated basis. Triarc agrees to furnish a copy
of each of such instruments to the Commission upon request.

(b) Reports on Form 8-K:

Triarc filed a report on Form 8-K on November 25, 2003, which included
information under Items 5 and 7 of such form.

(d) Separate financial statements of subsidiaries not consolidated and fifty
percent or less owned persons:

The consolidated financial statements of Encore Capital Group Inc.
(formerly known as MCM Capital Group, Inc.), an investment of the Company
accounted for in accordance with the equity method, are hereby incorporated
by reference from 'Item 8. Consolidated Financial Statements' of the Annual
Report on Form 10-K for the year ended December 31, 2003 of Encore Capital
Group, Inc. (SEC file no. 000-26489). A copy of the consolidated financial
statements incorporated by reference in this Item 15(d) is included as
Exhibit 99.1 to this Form 10-K.

106

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

TRIARC COMPANIES, INC.
(Registrant)

/s/ NELSON PELTZ
....................................
NELSON PELTZ
CHAIRMAN AND CHIEF EXECUTIVE OFFICER

Dated: March 12, 2004

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below on March 12, 2004 by the following persons on
behalf of the registrant in the capacities indicated.

107

STATEMENT OF DIFFERENCES
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The trademark symbol shall be expressed as.............................. 'TM'
The registered trademark symbol shall be expressed as................... 'r'