TRIARC COMPANIES INC - 10-K Annual Report

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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 JANUARY 2, 2005.

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
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TRIARC COMPANIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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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
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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. [ ]

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 27, 2004 was approximately
$353,146,591. As of March 1, 2005, there were 23,715,549 shares of the
registrant's Class A Common Stock and 41,856,533 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 January 2, 2005.

________________________________________________________________________________

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,' 'plans,' '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 and the potential impact of
competitors' new units on sales by Arby's'r' restaurants;

o consumers' perceptions of the relative quality, variety and value of
the food products we offer;

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 us and our 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 us;

o availability, location and terms of sites for restaurant development
by us and our franchisees;

o the ability of our 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 us and our
franchisees;

o our 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 our franchisees to participate in our strategy;

o business abilities and judgment of our and our franchisees' management
and other personnel;

o availability of qualified restaurant personnel to us and to our
franchisees;

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

o adverse weather conditions;

o significant reductions in our client assets under management (which
would reduce our advisory fee revenue), due to such factors as weak
performance of our investment products (either on an absolute basis or
relative to our competitors or other investment strategies),
substantial illiquidity or price volatility in the fixed income
instruments that we trade, loss of key portfolio management or other
personnel, reduced investor demand for the types of investment
products we offer, and loss of investor confidence due to adverse
publicity;

o increased competition from other asset managers offering similar types
of products to those we offer;

o pricing pressure on the advisory fees that we can charge for our
investment advisory services;

o difficulty in increasing assets under management, or efficiently
managing existing assets, due to market-related constraints on trading
capacity or lack of potentially profitable trading opportunities;

o our removal as investment manager of one or more of the collateral
debt obligation vehicles (CDOs) or other accounts we manage, or the
reduction in our CDO management fees because of payment defaults by
issuers of the underlying collateral;

o availability, terms (including changes in interest rates) and
deployment of capital;

o changes in legal or self-regulatory requirements, including
franchising laws, investment management regulations, accounting
standards, environmental laws, overtime rules, 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 or
securities investing, including a slower consumer economy and the
effects of war or terrorist activities;

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 us and our 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.

All future written and oral forward-looking statements attributable to us or
any person acting on our behalf are expressly qualified in their entirety by the
cautionary statements contained or referred to in this section. New risks and
uncertainties arise from time to time, and it is impossible for us to predict
these events or how they may affect us. We assume no obligation to update any
forward-looking statements after the date of this Form 10-K as a result of new
information, future events or developments, except as required by federal
securities laws. 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 January 2, 2005, the owner and operator
of 233 Arby's restaurants located in the United States. We also own an
approximate 64% capital interest in Deerfield & Company LLC, which, through its
wholly-owned

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subsidiary Deerfield Capital Management LLC, is a Chicago-based asset manager
offering a diverse range of fixed income strategies to institutional investors.
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 and asset management businesses, (2) evaluating and making
various acquisitions and business combinations, whether in the restaurant
industry, the asset management 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.' Unless circumstances dictate otherwise, it
is our policy to publicly announce an 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 January 2, 2005 totaled approximately $641 million. At such
date, our consolidated indebtedness was approximately $484 million, including
approximately $212 million of debt issued by a subsidiary of Arby's, LLC and $73
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.

DEERFIELD ACQUISITION

On July 22, 2004, we completed the acquisition of an approximate 64% capital
interest in Deerfield, representing in excess of 90% of the outstanding voting
interests, for a cash purchase price of approximately $95 million including fees
and expenses related to the transaction. Deerfield, through its wholly-owned
subsidiary Deerfield Capital Management LLC, is an alternative asset manager
offering a diverse range of fixed income strategies to institutional investors.
Deerfield currently provides asset management services for various types of
investment funds, such as collateralized debt obligation vehicles ('CDOs') and
'hedge' funds, as well as separate managed accounts. As of January 2, 2005,
Deerfield had approximately $8.7 billion of assets under management. Deerfield
represents a new business segment for us, which we refer to as the asset
management business.

JURLIQUE ACQUISITION

On July 8, 2004, we acquired a 25% equity interest in Jurlique International
Pty Ltd, a privately held Australian skin and health care products company, for
approximately $25 million. At the closing, we paid one-half of the purchase
price, with the remainder, plus interest, due in July 2005. Our interest
currently represents an approximate 14.3% voting interest in Jurlique. Jurlique
manufactures skin and health care products from natural, plant-based
ingredients. Jurlique's products are sold through a number of channels in
Australia and the United States, including company-owned stores, wholesale
accounts such as spas and beauty salons, department stores, franchised stores
and duty-free outlets, as well as through licensees and distributors in
locations other than Australia and the United States.

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NEGOTIATIONS WITH RTM RESTAURANT GROUP CONCERNING COMBINATION OF ARBY'S AND RTM

As previously reported on January 19, 2005, we are engaged in negotiations
to combine our Arby's restaurant business, including our franchising business
and our Company-owned restaurants, with RTM Restaurant Group, our largest
franchisee with 772 Arby's restaurants in the United States as of January 2,
2005. If consummated, it is expected that we would be the majority owner of the
combined entity. We do not anticipate making any further announcement concerning
the possible combination until a definitive agreement is reached or negotiations
are terminated. There can be no assurance that RTM, its owners or we will enter
into definitive agreements or that such a business combination will be
consummated.

FISCAL YEAR

We use a 52/53 week fiscal year convention for Triarc and most of 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. Triarc had 14 weeks in its 2004 fiscal fourth quarter. Deerfield
reports on a calendar year basis.

BUSINESS SEGMENTS

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 January 2, 2005, the owner and operator of 233 Arby's
restaurants. Arby's, LLC, 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 January 2, 2005, there were 233 company-owned
Arby's restaurants and 3,228 Arby's restaurants owned by franchisees. As of
January 2, 2005, 463 franchisees operated the 3,228 restaurants, of which 3,094
operated within the United States and 134 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 restaurants are multi-branded with T.J. Cinnamons or Pasta
Connection. 245 domestic Arby's restaurants are multi-branded locations that
sell T.J. Cinnamons products and 13 are multi-branded locations that sell Pasta
Connection products. At January 2, 2005, T.J. Cinnamons gourmet coffees were
also sold in approximately 931 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 premium sandwiches on a
nationwide basis. In 2003, Arby's developed a line of Market Fresh Salads, which
were introduced on a nationwide basis in 2004. In response to the recent trend
toward offering menu choices low in carbohydrates, Arby's also developed new
Market Fresh wrap sandwiches, which were introduced nationwide in 2004.

During 2004, our franchisees opened 93 new Arby's restaurants and closed 79
(generally underperforming) Arby's restaurants. In addition, during 2004, our
franchisees opened 15 and closed 32 T.J. Cinnamons units located in Arby's
units. As of January 2, 2005, franchisees have committed to open 437 Arby's
restaurants over the next seven years. You should read the information contained
in 'Item 1. Business -- Risk Factors -- Arby's is significantly dependent on new
restaurant openings, which may be interrupted by factors beyond our control.'

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OVERVIEW

As the franchisor of the Arby's restaurant system, Arby's, through its
subsidiaries, owns and licenses the right 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, product development, quality
control, operational training and counseling regarding site selection.

The revenues from our restaurant business are derived from three principal
sources: (1) franchise royalties received from all Arby's restaurants;
(2) up-front franchise fees from restaurant operators for each new unit opened;
and (3) 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 11
to our Consolidated Financial Statements.

ARBY'S RESTAURANTS

Arby's opened its first restaurant in Boardman, Ohio in 1964. As of
January 2, 2005, we and our franchisees operated Arby's restaurants in 48
states, the District of Columbia and four foreign countries. As of January 2,
2005, the six leading states by number of operating units were: Ohio, with 281
restaurants; Michigan, with 178 restaurants; Indiana, with 174 restaurants;
Florida, with 164 restaurants; Texas, with 158 restaurants; and Georgia, with
152 restaurants. The country outside the United States with the most operating
units is Canada with 125 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 January 2, 2005,
approximately 97% of freestanding system-wide restaurants (including
approximately 97% of freestanding company-owned 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 2002 to 2004:

During the period from December 31, 2001 through January 2, 2005, 331 new
Arby's restaurants were opened and 221 (generally underperforming) Arby's
restaurants were closed. We believe that closing

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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 January 2, 2005, the Company operated 233 domestic Arby's restaurants.
Of these 233 restaurants, 210 were freestanding units, 11 were located in
shopping malls, 7 were in food courts, 4 were in strip center locations and 1
was in a truckstop.

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 2004, Arby's franchisees opened one new restaurant in one foreign
country and closed 14 restaurants in four foreign countries. As of January 2,
2005, Arby's also had one territorial agreement with an international franchisee
in Canada, pursuant to which this franchisee has the exclusive right to open an
Arby's restaurant in a specific region 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 2003 and 3.5% in 2004.

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
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

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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
contributed $3.0 million in 2004 for four flights of national advertising and
will contribute $3.0 million in 2005 for five flights of national advertising.
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 AFA Service Corporation for
advertising and marketing to 1.2% of net sales) to help fund the program.

PROVISIONS AND SUPPLIES

As of January 2, 2005, two 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.

In December 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 remained
unaffected by that case of BSE. The company in Washington State identified as
the source of the infected cow was 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 in 2003, Canada banned
the importation of beef from 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. Canada now permits importation of beef from
the United States if the cattle is under 30 months old when it is slaughtered,
but management expects that the Canadian supplier will continue to fulfill all
of the beef requirements of our Canadian franchisees.

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 ('FDA') 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 does not control advertising and
purchasing for the Arby's restaurant system, which could hurt sales and the
Arby's brand.'

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 FDA. 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.

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TRADEMARKS

We own several trademarks that we consider to be material to our restaurant
business, including Arby's'r', Arby's Market Fresh'r', Market Fresh'r', T.J.
Cinnamons'r', Horsey Sauce'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 non-burger sandwich chains, such as
Panera Bread, Subway and Quiznos, as well as burger 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. We also
compete within the food service industry and the quick service restaurant sector
not only for customers, but also for personnel, suitable real estate sites and
qualified franchisees.

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 us.

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 recently
come 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.

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

8

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.

ASSET MANAGEMENT (DEERFIELD)

OVERVIEW

Deerfield Capital Management LLC ('DCM') is a Chicago-based asset manager
that offers clients a variety of investment products focused on fixed income
securities and related financial instruments. DCM is a Delaware limited
liability company that is wholly owned by Deerfield & Company LLC ('D&C'), an
Illinois limited liability company. We own an approximate 64% capital interest,
representing approximately 94% of the outstanding voting interests, in D&C,
which we acquired in July 2004. Senior managers of DCM own and control the
balance of the equity and voting interests in D&C. DCM (together with its
predecessor companies) has acted as an asset manager since 1993 and has been
registered with the Securities and Exchange Commission as an investment adviser
since 1997. As of January 2, 2005, the total net asset value of the accounts
managed by DCM was approximately $8.7 billion.

INVESTMENT MANAGEMENT SERVICES AND PRODUCTS

DCM's current focus is on managing investments in fixed income instruments
such as government securities, corporate bonds, bank loans and asset-backed
securities. DCM manages these investments for various types of clients,
including collateralized debt obligation vehicles ('CDOs'), private investment
funds (usually referred to as 'hedge' funds), a real estate investment trust (or
'REIT'), a structured loan fund, and managed accounts (separate, non-pooled
accounts established by clients). Except for the managed accounts, these clients
are collective investment vehicles that pool the capital contributions of
multiple investors, which are typically U.S. and non-U.S. high net worth
individuals and financial institutions, such as insurance companies, employee
benefits plans and 'funds of funds' (investment funds that in turn allocate
their assets to a variety of other investment funds). To the extent that, in the
future, DCM manages investment products offered to the public, investors in such
products could also include retail investors. DCM is organized into distinct
portfolio management teams, each of which focuses on a different category of
investments. For example, CDOs that invest in bank loans are managed by DCM's
bank loan team. The portfolio management teams are supported by various other
groups within DCM, such as risk management, systems, accounting, operations and
legal. DCM enters into an investment management agreement with each client,
pursuant to which the client grants DCM discretion to purchase and sell
securities and other financial instruments without the client's prior
authorization of the transaction.

INVESTMENT STRATEGIES

The various investment strategies and methodologies that DCM uses to manage
client accounts are developed internally by DCM. These approaches include
fundamental credit research (such as for the CDOs) and arbitrage trading
techniques (such as for some of the hedge funds). Arbitrage trading generally
involves seeking to generate trading profits from changes in the price
relationships between related financial instruments rather than from
'directional' price movements in particular instruments. Arbitrage trading
typically involves the use of substantial leverage, through borrowing of funds,
to increase the size of the market position being taken and therefore the
potential return on the investment. DCM intends to expand its asset management
activities by offering new trading strategies and investment products, which may
require the hiring of additional portfolio management and support personnel. The
investment accounts managed by DCM are generally considered 'alternative' as
distinguished from 'traditional' fixed income programs.

ASSETS UNDER MANAGEMENT

As of January 2, 2005, the total net asset value of the accounts managed by
DCM was approximately $8.7 billion, consisting of approximately $7.2 billion in
16 CDOs and a structured loan fund, $928 million in six hedge funds, $378
million in the REIT, and $192 million in five managed accounts.

9

Of the 16 CDOs, six (representing approximately $2.1 billion in total net
assets) are invested mainly in bank loans, five (representing approximately $3.4
billion in total net assets) are invested mainly in investment grade corporate
bonds, and five (representing approximately $1.5 billion in total net assets)
are invested mainly in asset-backed securities (such as mortgage-backed
securities). The structured loan fund (representing approximately $174 million
in net assets) is invested mainly in bank loans. Of the six hedge funds, DCM
manages four funds (representing approximately $637 million in total net assets)
mainly pursuant to arbitrage strategies, one fund (representing approximately
$184 million in net assets) mainly pursuant to a 'flight to quality' strategy,
and one fund (representing approximately $107 million in net assets) mainly
pursuant to opportunistic fixed income strategies. The arbitrage and flight to
quality strategy hedge funds invest mainly in government securities and related
instruments, such as interest rate swaps and futures contracts. The
opportunistic fund invests in a variety of fixed income instruments, such as
bank loans and government securities.

ADVISORY FEES

DCM's revenue consists predominantly of investment advisory fees from the
accounts it manages. DCM receives a periodic management fee from each account
that generally is based on the net assets of the account. This fee ranges from
approximately 0.15% to 0.65% per year of the net principal balance for CDOs,
1.0% to 1.5% per year of net assets for hedge funds, 1.75% per year of net
assets for the REIT, 0.50% per year of net assets for the structured loan fund,
and 0.15% to 0.30% per year of net assets for the managed accounts. DCM is also
entitled to a performance fee from many of its accounts, generally based upon a
percentage of the annual net profits generated by the account (in the case of
the hedge funds) or the internal rate of return of certain investors (in the
case of the CDOs). DCM also receives from certain CDOs a structuring fee, which
is a one-time fee for DCM's services in assisting in structuring the CDO,
payable upon formation of the CDO. DCM receives its advisory fees pursuant to
investment management agreements entered into with its clients. The terms of
these agreements vary, ranging from contracts that are continuous but terminable
by the client to those that have terms ranging from one to three years subject
to renewal upon expiration of the initial terms. In general, these agreements
are terminable by the clients, in most cases only for cause but in some
instances without cause.

MARKETING

DCM markets its CDO and REIT management services to institutions that
organize and act as selling or placement agents for CDOs and REITs. DCM markets
its hedge fund and separate account management services directly to existing and
prospective investors in the hedge funds and separate accounts. DCM also markets
its services through presentations to investment advisory consultants to pension
plans and other institutional investors. DCM's asset management services are
marketed privately rather than through general advertising or solicitation.

COMPETITION

The principal markets for DCM's asset management services are high net worth
individual and institutional investors that wish to allocate a portion of their
investment capital to alternative fixed income asset management strategies. DCM
competes for such clients with numerous other asset managers, some of which
(like DCM) concentrate on fixed income instruments and others that are more
diversified. The factors considered by clients in choosing DCM or a competing
asset management firm include the past performance of the accounts managed by
the firm, the background and experience of its key portfolio management
personnel, its reputation in the fixed income asset management industry, its
advisory fees, and the structural features of the investment products (such as
CDOs and hedge funds) that it offers. Some of DCM's competitors have greater
portfolio management resources than DCM, have managed client accounts for longer
periods of time or have other competitive advantages over DCM.

GOVERNMENTAL REGULATIONS

DCM is registered with the U.S. Securities and Exchange Commission as an
investment adviser and with the Commodity Futures Trading Commission as a
commodity pool operator and commodity trading advisor.

10

DCM is also a member of the National Futures Association, the self-regulatory
organization for the U.S. commodity futures industry. In these capacities, DCM
is subject to various regulatory requirements and restrictions of these
organizations with respect to its asset management activities (in addition to
other laws), such as regulations relating to promotional materials, the custody
of client funds, allocation of investment opportunities among client accounts,
recordkeeping, supervision, the establishment of compliance procedures,
investing in securities by DCM employees, conflicts of interest, the prevention
of money laundering, and ethical standards. In addition, investment vehicles
managed by DCM, such as hedge funds, are subject to various securities and other
laws.

While DCM believes that it and the investment vehicles it manages are
substantially in compliance with all applicable regulatory and other legal
requirements, DCM and such investment vehicles may incur significant additional
costs to comply with such requirements and any additional requirements that may
be imposed in the future. However, we do not believe that any such cost increase
would have a material adverse effect on the Company's consolidated financial
position or results of operations.

OTHER SERVICES

In connection with its management of client investment vehicles, DCM
typically provides other services to those vehicles in addition to investment
advice, such as selecting the brokerage firms and counterparties through which
the vehicles conduct their investing and assisting the vehicles in obtaining the
financing needed to leverage their investing. Also, DCM provides day-to-day
administrative services to the REIT in addition to managing the REIT's
investment portfolio.

INTELLECTUAL PROPERTY

We have developed rights in the trademarks and trade names 'Deerfield' and
'Deerfield Capital Management', which we consider to be material to our
business. We periodically license the 'Triarc' and 'Deerfield' names on a
non-exclusive basis to vehicles that we manage. Any such licenses will
automatically terminate if we are terminated or withdraw as investment manager
of such vehicles.

GENERAL

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 subsidiary of ours, was listed by the United States Environmental
Protection Agency on the Comprehensive Environmental Response,

11

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
provided 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 the work under that plan has been completed. Adams Packing
submitted its contamination assessment report to the Florida DEP in March 2004.
In August 2004, the Florida DEP agreed to a monitoring plan consisting of two
sampling events after which it will reevaluate the need for additional
assessment or remediation. The results of the first sampling event, which
occurred in January 2005, have been submitted to the Florida DEP for its review.
Based on provisions made prior to 2003 of approximately $1.7 million for costs
associated with this matter, and after taking into consideration various legal
defenses available to us, Adams has provided for its estimate of its liability
for this matter, including related legal and consulting fees. Accordingly, this
matter is not expected to 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 -- Legal and Environmental Matters.'

SEASONALITY

Our consolidated results are not significantly impacted by seasonality.
However, our restaurant revenues are somewhat lower in our first quarter.
Further, while our asset management business is not directly affected by
seasonality, our asset management revenues likely will be higher in our fourth
quarter as a result of our revenue recognition accounting policy for incentive
fees related to certain funds managed by Deerfield, which fees are usually based
upon calendar year performance and are recognized when the amounts become fixed
and determinable upon the close of a performance fee measurement period.

EMPLOYEES

As of January 2, 2005, we had 5,360 total employees, including 538 salaried
employees and 4,822 hourly employees. Of these, 70 are employed by Triarc, 5,192
are employed by Arby's and 98 are employed by Deerfield. As of January 2, 2005,
none of our employees was covered by a collective bargaining agreement. We
believe that our 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 2005, and beyond,
to differ materially from those expressed in any forward-looking statements made
by us or on our behalf.

RISKS RELATING TO TRIARC

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

As of March 1, 2005, Nelson Peltz, our Chairman and Chief Executive Officer,
and Peter May, our President and Chief Operating Officer, each individually
beneficially owned shares of our outstanding Class A Common Stock and Class B
Common Stock, Series 1 (including shares issuable upon the exercise of options
exercisable within 60 days of March 1, 2005), that collectively constituted
approximately 42.1% of our Class A Common Stock, 30.3% of our Class B Common
Stock and 40.3% of our total voting power as of March 1, 2005. In addition, in
accordance with procedures adopted by the Performance Compensation Subcommittee
of our Board of Directors, in 2003 and 2004 Messrs. Peltz and May elected to
defer receipt of a significant number of shares issuable to them upon exercise
of stock options previously granted to them. In connection with these deferred
compensation arrangements, a corresponding number of shares of our Class A
Common Stock and Class B Common Stock are being held in trusts for the benefit
of Messrs. Peltz and May. As of March 1, 2005, these trusts beneficially owned
shares of our Class A Common Stock and Class B Common

12

Stock that collectively constituted approximately 7.1% of our Class A Common
Stock, 8.1% of our Class B Common Stock and 7.3% of our total voting power as of
March 1, 2005. The trustee of the trusts has the sole right to vote these shares
until they are released from the trusts, subject to the rights of the Messrs
Peltz and May to consult with the trustee regarding any such vote. The trusts
currently terminate on January 2, 2008, subject to extension and/or earlier
distribution of the shares under certain circumstances. Accordingly, these
shares are not deemed to be beneficially owned by Messrs. Peltz and May and are
not included in the percentage ownership and voting interests of Messrs. Peltz
and May referred to above.

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 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 January 2, 2005, our consolidated cash, cash equivalents and investments
(including restricted cash, but excluding investments related to deferred
compensation arrangements) totaled approximately $641 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,
which could contain restrictive covenants, or the issuance of additional equity
securities, which could dilute our existing stockholders.

OUR INVESTMENT OF EXCESS FUNDS MAY BE SUBJECT TO RISK, PARTICULARLY DUE TO
USE OF LEVERAGE AND THE RISKINESS OF UNDERLYING ASSETS.

From time to time we place our excess cash in investment funds managed by
third parties or by Deerfield. Some of these funds use substantial leverage in
their trading, including through the use of borrowed funds, total return swaps
and/or other derivatives. The use of leverage generates various risks, including
the exacerbation of losses, increased interest expense in the case of leverage
through borrowing, and exposure to

13

counterparty risk in the case of leverage through derivatives. However,
volatility in the value of a fund is a function not only of the amount of
leverage employed but also of the riskiness of the underlying investments.
Therefore, the greater the amount of leverage used by a fund and the greater the
riskiness of a fund's underlying assets, the greater the risk associated with
our investment in such fund.

WE MAY BE REQUIRED TO TAKE OR NOT TAKE CERTAIN ACTIONS, SUCH AS FOREGOING
INVESTMENT OPPORTUNITIES, SO AS NOT TO BE DEEMED AN 'INVESTMENT COMPANY'
UNDER THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED.

The Investment Company Act of 1940, as amended (the '1940 Act'), requires
the registration of, and imposes various restrictions on the operations of,
companies that own 'investment securities' having a value exceeding 40% of their
assets (excluding government securities and cash items) on an unconsolidated
basis, absent an available exclusion. We and/or our subsidiaries may be required
to take actions that we and/or our subsidiaries would not otherwise take so as
not to be deemed an 'investment company' under the 1940 Act. Presently, neither
we nor any of our subsidiaries is an investment company required to register
under the 1940 Act. If we or one of our subsidiaries invests more than 40% of
its assets in investment securities, and is unable to rely on an exclusion from
being an investment company, we and/or that subsidiary might be required to
register under and thus become subject to the restrictions of the 1940 Act. We
and our subsidiaries intend to continue to make acquisitions and other
investments in a manner so as not to be an investment company. As a result, we
and/or our subsidiaries may forego investments that we and/or our subsidiaries
might otherwise make or retain or dispose of investments or assets that we
and/or our subsidiaries 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 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 in 2005 for tax
under the personal holding company rules. 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.

OUR CERTIFICATE OF INCORPORATION CONTAINS CERTAIN ANTI-TAKEOVER PROVISIONS
AND PERMITS OUR BOARD OF DIRECTORS TO ISSUE PREFERRED STOCK AND ADDITIONAL
SERIES OF CLASS B COMMON 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
and additional series of Class B Common 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 and/or Class B Common
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, Series 1. The preferred stock and
additional series of Class B Common 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 or additional series of Class B Common Stock, we cannot assure
you that we will not do so in the future.

14

RISKS RELATING TO ARBY'S

ARBY'S IS SIGNIFICANTLY DEPENDENT ON NEW RESTAURANT OPENINGS, WHICH MAY BE
INTERRUPTED BY FACTORS BEYOND OUR CONTROL.

Our restaurant business derives revenues and earnings from franchise
royalties and fees from franchised restaurants and sales in company-owned
restaurants. Growth in our restaurant revenues and earnings is significantly
dependent on new restaurant openings. Numerous factors beyond our control may
affect restaurant openings. These factors include but are not limited to:

o our ability to attract new franchisees;

o the availability of site locations for new restaurants;

o the ability of potential restaurant owners to obtain financing;

o the ability of restaurant owners to hire, train and retain qualified
operating personnel;

o the availability of construction materials and labor;

o construction and development costs of new restaurants, particularly in
highly-competitive markets;

o the ability of restaurant owners to secure required governmental
approvals and permits in a timely manner, or at all; and

o adverse weather conditions.

Although as of January 2, 2005, franchisees had signed commitments to open
437 Arby's restaurants and have made or are required to make non-refundable
deposits of $10,000 per restaurant, we cannot assure you that franchisees will
meet these commitments and that they will result in open restaurants. See
'Item 1. Business -- Business Segments -- Restaurant Franchising and Operations
(Arby's) -- Franchise Network.'

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 29% of our royalties and franchise and related fees in 2004. As of
January 2, 2005, RTM operated 772 Arby's restaurants. Our revenues could
materially decline from their present levels if RTM suffered a significant
decline in its business.

OUR FRANCHISEES COULD TAKE ACTIONS THAT COULD HARM OUR BUSINESS.

Our franchisees are contractually obligated to operate their restaurants in
accordance with the standards we set in our agreements with them. We also
provide training and support to franchisees. However, franchisees are
independent third parties that we do not control, and the franchisees own,
operate and oversee the daily operations of their restaurants. As a result, the
ultimate success and quality of any franchise restaurant rests with the
franchisee. If franchisees do not successfully operate restaurants in a manner
consistent with our standards, the Arby's image and reputation could be harmed,
which in turn could hurt our business and operating results.

OUR SUCCESS DEPENDS ON OUR FRANCHISEES' PARTICIPATION IN OUR STRATEGY.

Our franchisees are an integral part of our business. We may be unable to
successfully implement our brand strategies that we believe are necessary for
further growth if our franchisees do not participate in that implementation. The
failure of our franchisees to focus on the fundamentals of restaurant operations
such as quality, service and cleanliness would have a negative impact on our
success.

OUR FINANCIAL RESULTS ARE AFFECTED BY THE FINANCIAL RESULTS OF OUR
FRANCHISEES.

We receive revenue in the form of royalties and fees from our franchisees. A
substantial portion of our financial results are to a large extent dependent
upon the operational and financial success of our franchisees, including their
implementation of our strategic plans, as well as their ability to secure
adequate financing. If

15

sales trends or economic conditions worsen for our franchisees, their financial
results may worsen and our collection rates may decline. To the extent we divest
restaurants in the future, we may also be required to assume the responsibility
for lease payments for these restaurants if the relevant franchisees default on
their leases. Additionally, if our franchisees fail to renew their franchise
agreements, or if we are required to restructure our franchise agreements in
connection with such renewal, it would result in decreased revenues for us.

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

Arby's franchisees control the provision of national advertising and
marketing services to the Arby's franchise system through AFA Service
Corporation, a not-for-profit entity controlled by Arby's franchisees. Subject
to the Company's right to protect its trademarks, and except to the extent that
the Company participates in AFA Service Corporation through its company-owned
restaurants, AFA Service Corporation makes all decisions regarding the national
marketing and advertising strategies and the creative content of advertising for
the Arby's system. In addition, local cooperatives run by operators of Arby's
restaurants in a particular local area (including us) make their own decisions
regarding local advertising expenditures, subject to spending the required
minimum amounts. The Company's lack of control over advertising could hurt sales
and the Arby's brand.

In addition, although Arby's ensures that all suppliers to the Arby's system
meet quality control standards, our franchisees control the purchasing of food,
proprietary paper and other operating supplies from such suppliers through
ARCOP, Inc., a not-for-profit entity controlled by our franchisees. ARCOP
negotiates national contracts for such food and supplies. We are entitled to
appoint one representative on the board of directors of ARCOP and participate in
ARCOP through our company-owned restaurants, but otherwise exercise no control
over the decisions and activities of ARCOP except to ensure 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, makes poor
purchasing decisions, or decides to cease its operations, system sales and the
financial condition of Arby's franchisees could be hurt.

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 AND CREATE NEGATIVE PUBLICITY, WHICH COULD RESULT IN
A DECLINE IN OUR SALES.

Instances of mad cow disease or other food-borne illnesses, such as bird
flu, e-coli or hepatitis A, 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. As a result, 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.

In addition to losses associated with higher prices and a lower supply of
our food ingredients, instances of food-borne illnesses could result in negative
publicity for us. This negative publicity, as well as any other negative
publicity concerning food products we serve, may reduce demand for our food and
could result in a decrease in guest traffic to our restaurants. A decrease in
guest traffic to Arby's restaurants as a result of these health concerns or
negative publicity could result in a decline in our sales.

CHANGES IN CONSUMER TASTES AND PREFERENCES AND IN DISCRETIONARY CONSUMER
SPENDING 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. Our success depends to a significant
extent on discretionary consumer spending, which is influenced by general
economic conditions and the availability of discretionary income. Accordingly,
we may experience declines in sales during economic downturns. Any material
decline in the amount of discretionary spending or a decline in family
food-away-from-home spending could hurt our sales, results of operations,
business and financial condition.

16

In addition, if company-owned and franchised restaurants are unable to adapt
to changes in consumer preferences and trends, 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.

CHANGES IN FOOD AND SUPPLY COSTS COULD HARM OUR RESULTS OF OPERATIONS.

Our profitability depends in part on our ability to anticipate and react to
changes in food and supply costs. Any increase in food prices, especially that
of roast beef, could harm our operating results. For example, we experienced
increases in the cost of roast beef in 2003 and 2004 due to decreased supply and
increased demand. In addition, we are susceptible to increases in food costs as
a result of factors beyond our control, such as weather conditions, food safety
concerns, product recalls and government regulations. We cannot predict whether
we will be able to anticipate and react to changing food costs by adjusting our
purchasing practices and menu prices, and a failure to do so could adversely
affect our operating results. In addition, we may not seek to or be able to pass
along price increases to our customers.

COMPETITION FROM OTHER RESTAURANT COMPANIES COULD HURT US.

The market segments 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. 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 compete by offering higher quality
sandwiches and/or menu items that are specifically identified as low in
carbohydrates or otherwise targeted at certain consumer groups. Additionally,
many of our competitors are introducing lower cost, value meal menu options. Our
revenues and those of our franchisees may be hurt by this product and price
competition.

Moreover, new companies, including operators outside the quick service
restaurant industry, may enter our market areas and target our customer base.
For example, additional competitive pressures for prepared food purchases have
recently come from deli sections and in-store cafes of several major grocery
store chains, as well as from convenience stores and casual dining outlets. Such
competitors 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 by reducing gross revenues of
company-owned restaurants and royalty payments from franchised restaurants. Many
of Arby's competitors have substantially greater financial, marketing, personnel
and other resources than Arby's, which may allow them to react to changes in
pricing and marketing in the quick service restaurant industry better than we
can.

OUR BUSINESS COULD BE HURT BY INCREASED LABOR COSTS OR LABOR SHORTAGES.

Labor is a primary component in the cost of operating our company-owned
restaurants. We devote significant resources to recruiting and training our
managers and hourly employees. Increased labor costs due to competition,
increased minimum wage or employee benefits costs or otherwise would adversely
impact our operating expenses. In addition, our success depends on our ability
to attract, motivate and retain qualified employees, including restaurant
managers and staff. If we are unable to do so, our results of operations may be
hurt.

COMPLAINTS OR LITIGATION MAY HURT US.

Occasionally, our customers file complaints or lawsuits against us alleging
that we are responsible for an illness or injury they suffered at or after a
visit to an Arby's restaurant, or alleging that there was a problem with food
quality or operations at an Arby's restaurant. We are also subject to a variety
of other claims arising in the ordinary course of our business, including
personal injury claims, contract claims, claims from franchisees and claims
alleging violations of federal and state law regarding workplace and employment
matters, discrimination and similar matters. We could also become subject to
class action lawsuits related to these matters in the future. Regardless of
whether any claims against us are valid or whether we are found to be liable,
claims may be expensive to defend and may divert our management's attention away
from our operations and hurt our performance. A judgment significantly in excess
of our insurance coverage for any claims could

17

materially adversely affect our financial condition or results of operations.
Further, adverse publicity resulting from these allegations may hurt us and our
franchisees.

Additionally, the restaurant industry has been subject to a number of claims
that the menus and actions of restaurant chains have led to the obesity of
certain of their customers. Adverse publicity resulting from these allegations
may harm the reputation of Arby's restaurants, even if the allegations are not
directed against Arby's restaurants or are not valid, and even if we are not
found liable or the concerns relate only to a single restaurant or a limited
number of our restaurants. Moreover, complaints, litigation or adverse publicity
experienced by one or more of our franchisees could also hurt our business as a
whole.

OUR CURRENT INSURANCE MAY NOT PROVIDE ADEQUATE LEVELS OF COVERAGE AGAINST
CLAIMS WE MAY FILE.

We currently maintain insurance customary for businesses of our size and
type. However, there are types of losses we may incur that cannot be insured
against or that we believe are not economically reasonable to insure, such as
losses due to natural disasters or acts of terrorism. In addition, we currently
self-insure a significant portion of expected losses under our workers
compensation, general liability and property insurance programs. Unanticipated
changes in the actuarial assumptions and management estimates underlying our
reserves for these losses could result in materially different amounts of
expense under these programs, which could harm our business and cause a decline
in our results of operations and financial condition.

CHANGES IN GOVERNMENTAL REGULATION MAY HURT OUR ABILITY TO OPEN NEW
RESTAURANTS OR OTHERWISE HURT 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.

OUR OPERATIONS COULD BE INFLUENCED BY WEATHER CONDITIONS.

Weather, which is unpredictable, can impact our restaurant sales. Harsh
weather conditions that keep customers from dining out result in lost
opportunities for our restaurants. A heavy snowstorm in the Northeast or Midwest
or a hurricane in the Southeast can shut down an entire metropolitan area,
resulting in a reduction in sales in that area. Our first quarter includes
winter months and historically has a lower level of sales. Because a significant
portion of our restaurant operating costs is fixed or semi-fixed in nature, the
loss of sales during these periods hurts our operating margins, resulting in
restaurant operating losses. For these reasons, a quarter-to-quarter comparison
may not be a good indication of our performance or how we may perform in the
future.

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

Under our restaurant subsidiaries' debt agreements, substantially all of the
assets of our subsidiaries (excluding Deerfield and its subsidiaries), 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

18

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 11 to the Consolidated Financial Statements.

RISKS RELATING TO DEERFIELD

DCM MAY LOSE CLIENT ASSETS, AND THUS FEE REVENUE, FOR VARIOUS REASONS.

DCM's success depends on its ability to earn investment advisory fees from
the client accounts it manages. Such fees generally consist of payments based on
the amount of assets in the account (management fees), and on the profits earned
by the account or the returns to certain investors in the accounts (performance
fees). If there is a reduction in an account's assets, there will be a
corresponding reduction in DCM's management fees from the account, and a likely
reduction in DCM's performance fees (if any) relating to the account, since the
smaller the account's asset base the smaller will be the potential profits
earned by the account. There could be a reduction in an account's assets as the
result of investment losses in the account, the withdrawal by investors of their
capital in the account, or both. Investors in the accounts managed by DCM have
various types of withdrawal rights, ranging from the right of investors in
separate accounts to withdraw any or all of their capital on a daily basis, the
right of investors in hedge funds to withdraw their capital on a monthly or
quarterly basis, and the right of investors in CDOs to terminate the CDO in
specified situations. Investors may withdraw capital for many reasons, including
their dissatisfaction with the account's performance, adverse publicity
regarding DCM, DCM's loss of key personnel, errors in reporting to investors
account values, account performance or other matters resulting from problems in
Deerfield's systems technology, investors' desire to invest the capital
elsewhere, and their need (in the case of investors that are themselves
investment funds) for the capital to fund withdrawals by their investors. DCM
could experience a major loss of account assets, and thus advisory fee revenue,
at any time.

DCM COULD BE REMOVED AS INVESTMENT MANAGER OF ACCOUNTS IT MANAGES, THUS
LOSING ANY FUTURE FEE REVENUE FROM THE ACCOUNT.

The accounts managed by DCM generally have the right to remove DCM as the
investment manager of the account, and replace DCM with a substitute investment
manager, pursuant to the investment management agreement between the account and
DCM. There are significant differences among the accounts in terms of removal
rights, but in some cases, such as CDOs, DCM can be removed without cause by
investors that hold a specified amount of the securities issued by the CDO. In
the event of its removal, DCM would no longer receive any advisory fees from the
account, and any termination fees received by DCM would likely be insignificant.

DCM COULD LOSE CLIENT ASSETS AS THE RESULT OF THE LOSS OF KEY DCM PERSONNEL.

DCM generally assigns the management of its investment products to specific
teams, consisting of DCM portfolio management and other personnel. The loss of a
particular member or members of such a team -- for example, because of
resignation or retirement -- could cause investors in the product to withdraw
all or a portion of their investment in the product, and adversely affect the
marketing of the product to new investors. In the case of some accounts, such as
certain CDOs, DCM can be removed as investment manager upon its loss of
specified key employees. In addition to the loss of specific portfolio
management team members, the loss of one or more members of DCM's senior
management involved in supervising the portfolio teams could have similar
adverse effects on DCM's investment products.

DCM MAY NEED TO OFFER NEW INVESTMENT STRATEGIES AND PRODUCTS IN ORDER TO
CONTINUE TO GENERATE REVENUE.

The segments of the asset management industry in which DCM operates are
subject to rapid change. Investment strategies and products that had
historically been attractive to investors may lose their appeal, for various
reasons. Thus, strategies and products that have generated fee revenue for DCM
in the past may fail to

19

do so in the future, in which case DCM would have to develop new strategies and
products in order to retain investors or replace withdrawing investors with new
investors. It could be both expensive and difficult for DCM to develop new
strategies and products, and there is no assurance that DCM would be successful
in this regard. In addition, alternative asset management products represent a
substantially smaller segment of the overall asset management industry than
traditional asset management products (such as many corporate bond funds). DCM's
inability to expand its offerings beyond alternative asset management products
could inhibit the growth of its business.

CHANGES IN THE FIXED INCOME MARKETS COULD ADVERSELY AFFECT DCM.

DCM's success generally depends on the attractiveness to institutional
investors of investing in the fixed income markets, and changes in those markets
could significantly reduce the appeal of DCM's investment products to such
investors. Such changes could include increased volatility in the prices of
fixed income instruments, periods of illiquidity in the fixed income trading
markets, changes in the taxation of fixed income instruments, significant
changes in the 'spreads' in the fixed income markets (the amount by which the
yields on particular fixed income instruments exceed the yields on benchmark
U.S. Treasury securities), and the lack of arbitrage opportunities between U.S.
Treasury securities and their related instruments (such as interest rate swap
and futures contracts).

THE NARROWING OF CDO SPREADS COULD MAKE IT DIFFICULT FOR DCM TO LAUNCH NEW
CDOS.

It is important for DCM to be able to launch new CDO products from time to
time, both to expand its CDO activities (which are a major part of DCM's
business) and to replace existing CDOs as they are terminated or mature. The
ability to launch new CDOs is dependent on, among other factors, the amount by
which the interest earned on the collateral held by the CDO (such as bank loans
or corporate bonds) exceeds the interest payable by the CDO on the debt
obligations it issues to investors. If these 'spreads' are not wide enough, the
proposed CDO will not be attractive to investors and thus cannot be launched.
There may be sustained periods when such spreads will not be sufficient for DCM
to launch new CDO products.

DCM'S FEE REVENUE COULD BE REDUCED BECAUSE OF THE NEED TO LOWER THE ADVISORY
FEES IT CHARGES.

As a general matter, the fees charged by 'alternative' asset managers such
as DCM are higher than those charged by traditional managers, particularly with
respect to hedge funds and similar products. This could change, however, as a
result of competitive pressures or other factors and DCM might have to reduce
the fees it charges to some or all of its clients. This would reduce DCM's fee
revenue unless DCM was able to counteract the effect of the lower fees by
increasing its assets under management. There is no assurance that DCM will be
able to do so.

DCM COULD LOSE CLIENT ASSETS AS THE RESULT OF ADVERSE PUBLICITY.

Asset managers such as DCM can be particularly vulnerable to losing clients
because of adverse publicity. Asset managers are generally regarded as
fiduciaries, and if they fail to adhere at all times to a high level of honesty,
fair dealing and professionalism they can incur large and rapid losses of client
assets. Accordingly, a relatively small lapse in this regard, particularly if it
resulted in a regulatory investigation or enforcement proceeding, could hurt
DCM's business.

DCM COULD LOSE MANAGEMENT FEE INCOME FROM ITS CDOS BECAUSE OF PAYMENT
DEFAULTS BY ISSUERS OF COLLATERAL HELD BY THE CDOS.

Pursuant to the investment management agreements between DCM and the CDOs it
manages, DCM's management fee from the CDO is generally subject to a 'waterfall'
structure, under which DCM will not receive all or a portion of its fees if,
among other things, the CDO does not have sufficient income from its underlying
collateral (such as corporate bonds or bank loans) to pay the required interest
on the notes it has issued to investors and certain expenses. This could occur
if there are defaults by issuers of the collateral on their payments of
principal or interest relating to the collateral. In that event, DCM's
management fees would be deferred until funds are available to pay the fees, if
such funds become available.

20

DCM MAY BE UNABLE TO INCREASE ITS ASSETS UNDER MANAGEMENT IN CERTAIN OF ITS
INVESTMENT VEHICLES, OR IT MAY HAVE TO REDUCE SUCH ASSETS, BECAUSE OF
CAPACITY CONSTRAINTS.

A number of DCM's investment vehicles are limited in the amount of client
assets they can accommodate by the amount of liquidity in the instruments traded
by such vehicles, the arbitrage opportunities available in those instruments, or
other factors. Thus, DCM may manage investment vehicles that are relatively
successful but that cannot accept additional capital because of such
constraints. Conversely, DCM might have to reduce the amount of assets managed
by investment vehicles that face capacity constraints. Changes in the fixed
income markets could materially increase capacity constraints, such as an
increase in the number of asset managers using the same or similar strategies as
DCM.

DCM MAY LOSE CLIENT ASSETS BECAUSE OF COMPETITION FROM OTHER ASSET MANAGERS.

The areas of the asset management industry in which DCM operates are highly
competitive. For example, there are numerous other asset managers that have
substantial experience in managing CDOs and fixed income arbitrage hedge funds.
DCM could lose existing and prospective clients to these managers for various
reasons, such as lower advisory fees than those charged by DCM or investment
vehicles with more attractive structural features than those managed by DCM. In
addition, DCM may be at a disadvantage in competing with other asset managers
for clients for various other reasons, such as that DCM may be competing with
managers that are subject to less regulation and thus less restricted in their
client solicitation and portfolio management activities, and DCM may be
competing for non-U.S. clients with asset managers that are based in the
jurisdiction of the prospective client's domicile. The barriers to entry into
the asset management business are not particularly high, and thus DCM may face
increased competition from many new entrants. DCM's current focus is on
providing fixed income asset management services to institutional clients, and
the market for such services is limited.

CHANGES IN GOVERNMENTAL REGULATIONS, ACCOUNTING STANDARDS OR TAXATION COULD
ADVERSELY AFFECT DCM'S BUSINESS.

The level of investor participation in the products offered by DCM is
affected by various factors other than the actual performance of the products,
such as regulatory and self-regulatory requirements and restrictions applicable
to DCM, the products or the investors in the products, the manner in which
investors in the products must account for their investments for financial
reporting purposes, and the manner in which such investors are taxed on their
investments. Adverse changes in any of these areas could cause DCM to lose
existing investors and fail to attract new investors.

DCM IS NOT AS DIVERSIFIED AS NUMEROUS OTHER RELATIVELY LARGE ASSET MANAGERS.

DCM currently focuses almost exclusively on fixed income securities and
related financial instruments in managing client accounts. DCM has little or no
experience in investing in equity securities. This is in contrast to numerous
other asset managers with comparable assets under management, which have
significant background and experience in both the equity and debt markets. These
managers have a more diversified revenue base than DCM and thus are better able
to withstand periods of lack of investor interest in a particular asset class.

OTHER RISKS

WE MAY NOT BE ABLE TO ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY, WHICH
COULD HARM THE VALUE OF OUR BRANDS AND HURT 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
existing and new 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

21

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. This could harm our image,
brand or competitive position and, if we commence litigation to enforce our
rights, cause us to incur significant legal fees.

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 hurt 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 United States 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 or may do
business in the future 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 United States and foreign countries will be
adequate. The laws of some foreign countries do not protect intellectual
property rights to the same extent as the laws of the United States.

In addition, we cannot assure you that third parties will not claim
infringement by us in the future. Any such claim, whether or not it has merit,
could be time-consuming, result in costly litigation, cause delays in
introducing new menu items or investment products or require us to enter into
royalty or licensing agreements. As a result, any such claim could harm our
business and cause a decline in our results of operations and financial
condition.

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 $38 million remained
outstanding at January 2, 2005. 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 $52 million at January 2, 2005) 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 million as of January 2, 2005), 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 indemnification payments or we would accelerate payment of deferred taxes,
which amount to approximately $36.1 million as of January 2, 2005, 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 23 to the Consolidated Financial Statements.

22

CHANGES IN GOVERNMENTAL REGULATION MAY ADVERSELY AFFECT OUR EXISTING AND
FUTURE OPERATIONS AND RESULTS.

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 that
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 -- General -- Environmental
Matters.'

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.

The following table contains information about our material facilities as of
January 2, 2005:

- ---------

* On December 22, 2004, Triarc entered into a lease agreement pursuant to which
Triarc commenced leasing approximately 53,000 square feet of executive office
space in Rye Brook, New York on February 1, 2005. The lease expires on
December 31, 2015, although Triarc has the right under certain circumstances
to extend the term of the lease for up to two additional five-year periods.
Triarc currently intends to begin occupying this facility in early 2006 and
is exploring alternatives with respect to the lease on its New York, NY
facility.

** 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 January 2, 2005, Sybra's 233 restaurants were located in the following
states: 74 were in Michigan, 63 in Texas, 39 in Pennsylvania, 21 in Florida, 14
in New Jersey, 10 in Maryland, 8 in Connecticut, 3 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 1998, a number of class action lawsuits were filed on behalf of our
stockholders. Each of these actions named Triarc, Messrs. Peltz and May and the
other then directors of Triarc 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,
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
that was subsequently dismissed in October 2002 and is

23

no longer being appealed. Through January 2, 2005, no further action has
occurred with respect to the remaining class action lawsuit and such action
remains stayed.

In addition to the legal matter described above and the environmental matter
described under 'Item 1. Business -- General -- Environmental Matters', 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 $1.1 million as of January 2, 2005. 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 9, 2004, Triarc held its Annual Meeting of Stockholders. The matters
acted upon by the stockholders at that meeting were reported in our Quarterly
Report on Form 10-Q for the quarter ended June 27, 2004.

24

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES.

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 our Class A Common Stock is entitled to one vote per share. Our Class B
Common Stock is also entitled to vote as a separate class with respect to any
merger or consolidation in which Triarc is a party unless each holder of a share
of Class B Common Stock receives the same consideration as a holder of Class A
Common Stock, other than consideration paid in shares of common stock that
differ as to voting rights, liquidation preference and dividend preference to
the same extent that our Class A and Class B Common Stock differ. Our Class B
Common Stock is entitled 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, each share
of our Class B Common Stock is entitled to at least 100% of the regular
quarterly cash dividend paid on each share of our Class A Common Stock. 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.

On each of September 25, 2003, December 16, 2003, March 16, 2004, June 16,
2004, September 15, 2004, December 15, 2004 and March 15, 2005, 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, December
2, 2003, March 4, 2004, June 3, 2004, September 3, 2004, December 3, 2004 and
March 3, 2005, respectively. The September 25, 2003, December 16, 2003, March
16, 2004, June 16, 2004, September 15, 2004, December 15, 2004 and March 15,
2005 dividends aggregated approximately $4.2 million, $4.3 million, $4.3
million, $4.6 million, $4.6 million, $4.7 million and $4.7 million,
respectively. 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, Series 1. However, we are currently
authorized to issue up to 100 million shares of preferred stock.

25

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 -- Risk Factors'), 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 11 to our Consolidated
Financial Statements.

As of March 1, 2005, there were approximately 2,737 holders of record of our
Class A Common Stock and 2,902 holders of record of our Class B Common Stock.

The following table provides information with respect to repurchases of
shares of our common stock by us and our 'affiliated purchasers' (as defined in
Rule 10b-18(a)(3) under the Securities Exchange Act of 1934, as amended) during
the fourth fiscal quarter of 2004:

Issuer Repurchases of Equity Securities(1)

(1) On December 16, 2004, we announced that our existing stock repurchase
program, which was originally approved by our board of directors on January
18, 2001, had been extended until June 30, 2006 and that the amount
available under the program had been replenished to permit the purchase of
up to $50 million of our Class A Common Stock and Class B Common Stock. No
transactions were effected under our stock repurchase program during the
fourth fiscal quarter of 2004.

(2) Reflects an aggregate of 300 shares of our Class B Common Stock acquired by
affiliated purchasers in open market transactions.

(3) Reflects an aggregate of 342,904 shares of our Class B Common Stock tendered
as payment of the exercise price of employee stock options under the
Company's 1993 Equity Participation Plan. The shares were valued at the
closing price of our Class B Common Stock on the date of exercise of the
employee stock options.

26

ITEM 6. SELECTED FINANCIAL DATA

- ---------

(1) The Company reports on a fiscal year consisting of 52 or 53 weeks ending on
the Sunday closest to December 31. However, Deerfield & Company LLC, in
which the Company acquired a 63.6% capital interest on July 22, 2004,
reports on a calendar year ending on December 31. In accordance with this
method, each of the Company's fiscal years presented above contained 52
weeks except for the 2004 fiscal year which contained 53 weeks. All
references to years relate to fiscal years rather than calendar years.

(footnotes continued on next page)

27

(footnotes continued from previous page)

(2) Selected Financial Data for the year ended December 31, 2000 reflects the
discontinuance of the Company's beverage businesses sold in October 2000
and the reclassification of charges for early extinguishment of debt
originally reported as extraordinary charges to income (loss) from
discontinued operations, 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.'

(3) Income (loss) per share amounts reflect the effect of a stock distribution
(the 'Stock Distribution') on September 4, 2003 of two shares of the
Company's Class B common stock, series 1 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 December 31,
2000. For the purposes of calculating income per share, 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. Net income for the 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.

(4) The weighted average shares outstanding reflect 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 2001 and 2004
are 22,692,000 and 23,415,000, respectively. The number of shares used in
the calculation of diluted income (loss) per share of Class B common stock
for the years 2001 and 2004 are 45,384,000 and 43,206,000, respectively.
These shares used for the calculation of diluted income (loss) per share
for the years 2001 and 2004 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 1,160,000 and 1,182,000,
respectively, for Class A common stock and 2,320,000 and 2,366,000,
respectively, for 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. Prior to 2000,
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 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 2000, 2001 and 2002 and 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 2000, 2001 and 2002.

(5) 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
then 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.

(6) 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

(footnotes continued on next page)

28

(footnotes continued from previous page)

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').

(7) 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.

(8) 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.

(9) Working capital at December 28, 2003 reflects a reclassification to conform
with the current year's presentation.

(10) Reflects certain significant credits recorded during 2004 as follows:
$17,333,000 credited to income from continuing operations representing
(1) $14,592,000 of income tax benefit due to the release of income tax
reserves which were no longer required upon the finalization of the
examination of the Company's Federal income tax returns for the years ended
December 31, 2000 and December 30, 2001, the finalization of a state income
tax examination and the expiration of the statute of limitations for the
examination of certain of the Company's state income tax returns and (2) a
$2,741,000 credit, net of $1,601,000 of income tax provision, representing
the release of related interest accruals no longer required; and
$28,156,000 credited to net income representing the aforementioned
$17,333,000 credited to income from continuing operations and $12,464,000
of additional gain on disposal of the Company's beverage businesses
resulting from the release of income tax reserves related to discontinued
operations which were no longer required upon finalization of the Federal
income tax returns noted above and the expiration of the statute of
limitations noted above.

29

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

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.'

INTRODUCTION AND EXECUTIVE OVERVIEW

We currently operate in two business segments. We operate in the restaurant
business through our franchised and Company-owned Arby's restaurants and,
effective with the acquisition of Deerfield & Company LLC, which we refer to as
Deerfield, in the asset management business.

On December 27, 2002, we completed the acquisition of Sybra, Inc., which we
refer to as Sybra, in a transaction we refer to as the Sybra Acquisition. At the
time, Sybra was the second largest franchisee of Arby's restaurants. (The
largest of our franchisees was, and still is, RTM Restaurant Group, which we
refer to as RTM, with 772 Arby's restaurants in the United States as of
January 2, 2005.) As of January 2, 2005 Sybra owns and operates 233 Arby's
restaurants in nine states. As a result of the Sybra Acquisition, our
consolidated results of operations and cash flows for fiscal 2004, 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, 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 loss from
continuing operations before income taxes and minority interests.

On July 22, 2004 we completed the acquisition of a 63.6% capital interest in
Deerfield, which transaction we refer to as the Deerfield Acquisition.
Deerfield, through its wholly-owned subsidiary Deerfield Capital Management LLC,
is an asset manager offering a diverse range of fixed income and credit-related
strategies to institutional investors. Deerfield provides asset management
services for (1) collateralized debt obligation vehicles, which we refer to as
CDOs, and (2) fixed income and investment funds and private investment accounts,
which we refer to as Funds, including Triarc Deerfield Capital Corp., a real
estate investment trust formed in December 2004, which we refer to as the REIT.
Our consolidated results of operations include Deerfield's results and cash
flows commencing July 23, 2004, less applicable minority interests.

In our restaurant business, we derive revenues in the form of royalties and
franchise and related fees and from sales by our Company-owned restaurants.
While over 60% of our existing Arby's royalty agreements and all of our new
domestic royalty agreements provide for royalties of 4% of franchise revenues,
our average royalty rate was 3.5% for the year ended January 2, 2005. In our
asset management business, we derive revenues in the form of asset management
and related fees from our management of CDOs and Funds and we may expand the
types of investments that we offer and manage. We also derived investment income
or loss throughout the periods presented principally from the investment of our
excess cash.

Our goal is to enhance the value of our Company by increasing the revenues
of the Arby's restaurant business and our recently acquired asset management
business. In April 2004, we began adding new Arby's menu items such as salads
and wraps and we are continuing to focus on growing the number of restaurants in
the Arby's system, adding new menu offerings and implementing new operational
initiatives targeted at service levels and convenience. We plan to grow
Deerfield's assets under management by utilizing the value of its historically
profitable investment advisory brand and increasing the types of assets under
management, such as the REIT, thereby increasing its asset management fee
revenues.

As discussed below under 'Liquidity and Capital Resources - Acquisitions and
Investments,' we continue to evaluate our options for the use of our significant
cash, cash equivalent and investment position, including additional business
acquisitions, repurchases of our common stock and investments. In recent years
we evaluated a number of business acquisition opportunities, including
Deerfield, and we intend to continue our disciplined search for potential
business acquisitions that we believe have the potential to create significant
value to our stockholders.

30

Beginning with fiscal 2003, we reported cost of sales as a result of the
Sybra Acquisition. Beginning with fiscal 2004, we now report cost of services as
a result of the Deerfield Acquisition. Our royalties and franchise and related
fees continue to have no associated cost of sales or services.

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

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

o Growing U.S. adult population, our principal customer demographic;

o Addition of selected higher-priced quality items to menus, which
appeal more to adult tastes;

o Increased consumer preference for premium sandwiches with perceived
higher levels of freshness, quality and customization along with
increased competition in the premium sandwich category;

o Increased price competition, as evidenced by value menu concepts,
which offer comparatively lower prices on some menu items; combination
meals concepts, which offer a complete meal at an aggregate price
lower than the price of the individual food and beverage items; and
use of coupons and other price discounting;

o 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 availability to consumers of new product choices, including
low calorie, low carbohydrate and/or low fat products driven by a
greater consumer awareness of nutritional issues;

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

o Increases in beef and other commodity costs; 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.

In recent periods, our asset management business has experienced the
following trends, including trends prior to our entrance into the asset
management business through the Deerfield Acquisition:

o Growth in the hedge fund market as investors appear to be increasing
their investment allocations to hedge funds;

o Increased competition in the hedge fund industry in the form of new
hedge funds offered by both new and established asset managers to meet
the increasing demand of hedge fund investors;

o Continued growth of the CDO market as it opens to individual
investors, in addition to the institutional investors which it has
mainly served in the past, with CDOs that offer more simplified income
tax reporting for the investor; and

o Increased competition in the fixed income investment markets resulting
in higher demand for, and costs of, investments purchased by CDOs
resulting in the need to continuously develop new investment
strategies with the goal of maintaining acceptable returns to
investors.

PRESENTATION OF FINANCIAL INFORMATION

We report on a fiscal year consisting of 52 or 53 weeks ending on the Sunday
closest to December 31. However, Deerfield reports on a calendar year ending on
December 31. Each of our 2002 and 2003 fiscal years contained 52 weeks and our
2004 fiscal year contained 53 weeks. In this discussion, we refer to the
additional week in 2004 compared with 2002 and 2003 as the 53rd week in 2004.
Our 2002 fiscal year commenced on December 31, 2001 and ended on December 29,
2002. Our 2003 fiscal year commenced on December 30,

31

2002 and ended on December 28, 2003. Our 2004 fiscal year commenced on
December 29, 2003 and ended on January 2, 2005. All references to years relate
to fiscal years rather than calendar years.

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) 2002 and 2003, which
we refer to as the 2003 Change, and (2) 2003 and 2004, which we refer to as the
2004 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 2002, whereas the royalties and franchise and related fees from Sybra of
$7.1 million in 2003 and $7.2 million in 2004 were eliminated in
consolidation.

32

2004 COMPARED WITH 2003

Net Sales

Our net sales, which were generated entirely from the Company-owned
restaurants, increased $4.1 million, or 2%, to $205.6 million for 2004 from
$201.5 million for 2003. Aside from a $3.6 million effect of the inclusion of
the 53rd week in 2004, our net sales were relatively flat.

Our net sales improved $1.2 million due to a 1% growth in same-store sales
of the Company-owned restaurants during 2004 compared with the weak same-store
sales performance during 2003, partially offset by a $0.7 million decrease in
net sales due to the closing during 2004 of four underperforming Company-owned
restaurants, two of which were closed at the end of 2004 and had no effect on
the decrease. 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. The increase in same-store sales reflected new menu offerings
consisting of salads and wraps and new sandwiches which were introduced
beginning in the second and third quarters of 2004, the effects of which were
partially offset by unfavorable performance in Company-owned restaurants in the
Michigan region, an area where approximately one-third of our Company-owned
restaurants are located and which has been particularly impacted by high
unemployment. The growth in same-store sales of Company-owned restaurants of 1%
was less than the 4% growth in same-store sales of franchised restaurants
discussed under 'Royalties and Franchise and Related Fees' below. Factors
contributing to this difference include the (1) economic conditions in the
Michigan region, as previously discussed, and (2) weaker revenue performance in
the Dallas region as a result of lower advertising spending in the region for
our combined Company-owned and franchised restaurants than would have occurred
if that market were more fully penetrated. Same-store sales during 2004 also
reflect increased price promotions compared with 2003, although we are unable to
determine if the incremental effect on sales volume of the price promotions was
sufficient to exceed or partially offset the unfavorable effect on pricing.

We expect same-store sales of Company-owned restaurants in 2005 to exceed
the same-store sales of 2004 due to the continuation of new menu offerings,
improved marketing programs supporting the new menu offerings that will be
implemented in the first quarter of 2005 and operational initiatives targeting
continued improvement in customer service levels and convenience. We presently
plan to open ten new Company-owned restaurants during 2005 and will evaluate
whether to close any underperforming restaurants. Specifically, we have fifteen
restaurants where the facilities leases either expire or are scheduled for
renewal in 2005 and we have begun the process of reviewing the performance of
each of those restaurants in connection with the decision to renew or extend
these leases. We currently anticipate the renewal or extension of most of these
leases.

Royalties and Franchise and Related Fees

Our royalties and franchise and related fees, which were generated entirely
from the franchised restaurants, increased $8.8 million, or 10%, to
$100.9 million for 2004 from $92.1 million for 2003. This increase consisted of
(1) a $4.0 million improvement in royalties due to a 4% increase in same-store
sales of the franchised restaurants during 2004 compared with the weak
same-store sales performance during 2003, (2) a $3.5 million improvement in
royalties from the 93 restaurants opened since December 28, 2003 with generally
higher than average sales volumes, replacing the royalties from the 79 generally
underperforming restaurants closed since December 28, 2003 and (3) an estimated
$1.3 million increase as a result of the 53rd week in 2004.

We expect to continue to experience positive same-store sales growth of
franchised restaurants in 2005, although at a slightly lower rate than in 2004,
due to the continuation of new menu offerings, a new marketing program
supporting the new menu offerings that is being implemented in the first quarter
of 2005 and operational initiatives targeting continued improvement in customer
service levels and convenience.

Asset Management and Related Fees

Our asset management and related fees of $22.1 million in 2004 resulted
entirely from the management of CDOs and Funds reflecting the Deerfield
Acquisition.

33

Cost of Sales, Excluding Depreciation and Amortization

Our cost of sales, excluding depreciation and amortization, resulted
entirely from the Company-owned restaurants. Cost of sales increased
$11.0 million, or 7%, to $162.6 million for 2004, resulting in a gross margin of
21%, from $151.6 million for 2003, resulting in a gross margin of 25%. We define
gross margin as the difference between net sales and cost of sales divided by
net sales. The decrease in gross margin is due principally to (1) higher costs
for roast beef, the largest component of our menu offerings, as well as higher
costs for other commodities, (2) new menu offerings with relatively higher costs
than our other products and for which we experienced additional costs during the
roll-out period in the second quarter of 2004 and (3) increased price
discounting of some of our other products primarily through increased use of
coupons. The increase in cost of sales also reflects $2.4 million due to the
inclusion of the 53rd week in 2004.

Also affecting our 2004 gross margins was an increase in straight-line rent
expense. In connection with the fourth quarter closing process, we reviewed our
accounting for straight-line rent expense, whereby we recognize the impact of
future rent escalations ratably over the appropriate lease period, resulting in
an equal amount of rent expense for each period of a given lease. As a result of
this review, we determined that certain leases containing escalation provisions
required adjustment. The effect of the aggregate adjustment was an increase to
rent expense recognized in the fourth quarter of $0.6 million, of which the
impact related to 2003 and the first three quarters of 2004 was immaterial.

During 2005, we expect that our gross margin will improve compared with the
21% for 2004 due to (1) an improvement in operating efficiencies as a result of
(a) the effects of management personnel changes and (b) training programs
implemented in the first quarter of 2005, (2) the ability of management to
respond to operating trends more effectively due to the improved operational
reporting as a result of the implementation of the new back-office and
point-of-sale restaurant systems principally in the 2004 fourth quarter and (3)
margin improvements from price increases implemented in August 2004 and December
2004 for some of our new and existing menu items and more limited price
promotions.

Cost of Services, Excluding Depreciation and Amortization

Our cost of services, excluding depreciation and amortization, of
$7.8 million for 2004 resulted entirely from the management of CDOs and Funds
reflecting the Deerfield Acquisition.

Our royalties and franchise and related fees have no associated cost of
services.

Advertising and Selling

Our advertising and selling expenses increased $0.5 million, or 3%,
principally due to a $0.4 million increase in advertising expenses of the
Company-owned restaurants primarily related to the new menu offerings introduced
in the second and third quarters of 2004.

General and Administrative, Excluding Depreciation and Amortization

Our general and administrative expenses, excluding depreciation and
amortization increased $27.6 million, partially reflecting $10.4 million of
general and administrative expenses of Deerfield. Aside from the effect of the
Deerfield Acquisition, general and administrative expenses increased $17.2
million due to (1) a $10.4 million increase in incentive compensation costs, (2)
a $3.0 million increase in employee relocation, severance and recruiting costs
attributable to personnel changes, (3) a $1.5 million expense in 2004 for an
environmental liability insurance policy covering unknown pre-existing and
future conditions on all of our currently-owned properties as well as unknown
pre-existing conditions on formerly-owned properties, (4) a $1.3 million
increase in professional fees as a result of our compliance with the
Sarbanes-Oxley Act of 2002 and (5) other inflationary increases. These increases
were partially offset by $1.2 million of facility relocation expenses related to
the Sybra Acquisition that occurred in the 2003 period and a $0.8 million
decrease in deferred compensation expense. Deferred compensation expense of $3.4
million in 2003 and $2.6 million in 2004 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.'

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Depreciation and Amortization, Excluding Amortization of Deferred Financing
Costs

Our depreciation and amortization, excluding amortization of deferred
financing costs increased $6.2 million, partially reflecting $2.2 million of
depreciation and amortization related to Deerfield. Aside from the effect of the
Deerfield Acquisition, depreciation and amortization increased $4.1 million
principally due to a $3.0 million increase in impairment losses on Company-owned
restaurants and trademarks and a $0.7 million effect of our implementation of
new back office and point-of-sale restaurant systems in the second half of 2004.
The impairment loss in 2004 of $3.4 million consisted of $1.8 million related to
Company-owned restaurants acquired in the Sybra Acquisition and $1.6 million
related to our T.J. Cinnamons trademark. Restaurant impairment losses in 2003
and 2004 predominantly reflect (1) impairment charges resulting from the
deterioration in operating performance of certain restaurants and (2) in 2004,
additional charges for restaurants impaired in 2003 which did not recover in
2004, principally for the investment in their back office and point-of-sale
systems installed in each of the Company-owned restaurants in 2004. The
trademark impairment loss in 2004 resulted from our assessment during the fourth
quarter of the T.J. Cinnamons brand, which offers, through franchised and
Company-owned restaurants, a product line of gourmet cinnamon rolls, coffee
rolls, coffees and other related products. This assessment resulted in (1) our
decision to not actively pursue new T.J. Cinnamons franchisees until additional
new product offerings within its existing product line are tested and become
available and (2) the corresponding significant reduction in anticipated T.J.
Cinnamons unit growth.

On March 14, 2005, we granted 149,155 and 731,411 performance-based
restricted shares of our class A and class B common stock, respectively, to
certain of our officers and key employees. These restricted shares vest ratably
over three years, subject to meeting, in each case, certain class B common share
market price targets, or to the extent not previously vested, on March 14, 2010
subject to meeting a specific class B common share market price target. The
prices of our class A and class B common stock on the March 14, 2005 grant date
were $15.59 and $14.75 per share, respectively.

We are required to adopt Statement of Financial Accounting Standards
No. 123 (revised 2004), 'Share-Based Payment,' no later than our 2005 fiscal
third quarter which ends on October 2, 2005. As a result, we will be required to
measure the cost of employee services received in exchange for an award of
equity instruments, including grants of employee stock options and restricted
stock, based on the fair value of the award rather than its intrinsic value,
which we are currently using. We expect that the adoption of this statement will
materially increase the amount of compensation expense which is amortized to
'Depreciation and amortization, excluding amortization of deferred financing
costs' over the periods that the respective stock options and restricted stock
vest.

Goodwill Impairment

We test the goodwill of our restaurant business for impairment annually
during the fourth quarter in conjunction with our annual budgeting and long
range forecasting process. We determined that for 2002 and 2004 our goodwill was
recoverable and did not require the recognition of an impairment loss. However,
for 2003 we recorded a goodwill impairment loss of $22.0 million relating to our
Company-owned restaurants, which are considered to be a separately identified
reporting unit even though we acquired the restaurants to enhance the value of
the Arby's brand. The impairment loss in 2003 resulted from the overall effect
on cash flows and anticipated cash flows of the Company-owned restaurants due to
stiff competition from new product choices in the marketplace and significant
cost increases in roast beef, the largest component for Sybra's menu offerings.
In light of the increased competitive pressures and recognizing the unfavorable
trend in roast beef costs versus historical averages during 2003, we 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.

We have evaluated from time to time whether the value of our restaurant
business would be enhanced by selectively seeking the sale of certain of our
Company-owned restaurants to secure additional multiple unit development
agreements with new or existing franchisees. 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
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.

35

Interest Expense

Interest expense decreased $3.0 million principally due to (1) the release
in 2004 of $4.3 million of interest accruals no longer required upon the
finalization by the Internal Revenue Service of its examination of our Federal
income tax returns for the years ended December 31, 2000 and December 30, 2001,
which we refer to as the IRS Examination, (2) a $2.5 million decrease
attributable to lower outstanding amounts of a majority of our long-term debt
and (3) $0.4 million of interest expense in 2003 which did not recur in 2004
relating to a post-closing sales price adjustment settled in December 2003 in
connection with the sale of our former beverage businesses. These decreases were
partially offset by a $3.7 million increase in interest expense, including
related amortization of deferred financing costs, due to the full period effect
in 2004 of the $175.0 million principal amount of our 5% convertible notes,
which we refer to as the Convertible Notes, issued on May 19, 2003 and a $0.9
million increase in interest expense on debt securities sold with an obligation
to purchase.

Investment Income, Net

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

Interest income increased $7.0 million partially reflecting $1.3 million of
interest income of Deerfield. Aside from the effect of the Deerfield
Acquisition, interest income increased $5.7 million primarily due to an increase
in average rates on our interest-bearing investments from 1.4% in 2003 to 2.5%
in 2004 principally due to our investing in some higher yielding, but more
risk-inherent, debt securities with the objective of improving the overall
return on our interest-bearing investments and the general increase in the money
market and short-term interest rate environment. These factors were partially
offset by a lower average outstanding balance of our interest-bearing
investments in 2004 because of the liquidation of some of these investments to
provide cash for the Deerfield Acquisition. Our other than temporary unrealized
losses increased $6.5 million reflecting the recognition of $6.9 million of
impairment charges based on significant declines in the market values of some of
our higher yielding, but more risk-inherent, debt investments, as well as
declines in three of our available-for-sale investments in publicly traded
companies. Any 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. 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 purchase. The
increase in our recognized net gains of $3.9 million was principally due to
gains realized on the sales of two cost-basis investments in 2004. During 2003
and 2004, our recognized net gains included $0.9 million and $2.4 million,
respectively, of realized gains from the sale of certain cost-related
investments in the Deferred Compensation Trusts, as explained in more detail
below under 'Loss from Continuing Operations before Income Taxes and Minority
Interests.' All of these recognized gains and losses may vary significantly in
future periods depending upon the timing of the sales of our investments,
including the investments in the Deferred Compensation Trusts, or the changes in
the value of our investments, as applicable.

As of January 2, 2005, we had pretax unrealized holding gains and (losses)
on available-for-sale marketable securities of $7.2 million and $(0.4) million,
respectively, included in accumulated other comprehensive income. We evaluated
the unrealized losses to determine whether these losses were other than
temporary and concluded that they were not. 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 related investments at that time.

36

Gain (Costs) Related to Proposed Business Acquisitions Not Consummated

The $2.1 million gain related to proposed business acquisitions not
consummated in 2003 represented 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 $0.8 million of costs
in 2004 relate to another proposed business acquisition that we decided not to
pursue and did not consummate.

Gain (Loss) on Sale of Businesses

The gain on sale of businesses decreased $5.6 million to $0.2 million in
2004 from $5.8 million in 2003. The gain 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.
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 from the Encore offering over
the portion of our carrying value in Encore allocable to the decrease in our
ownership percentage. We recognize non-cash gains 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.

On January 20, 2005, we sold an additional portion of our investment in
Encore for a gain of approximately $9.0 million, which will be recognized in our
quarter ending April 3, 2005.

Other Income, Net

The $1.7 million decrease in other income, net is principally attributable
to a $1.5 million net loss on transactions related to our July 2004 investment
in Jurlique International Pty Ltd., which we refer to as Jurlique, an Australian
company. The net loss consists of a $1.7 million foreign currency transaction
loss on the liability for the remaining cost of the investment in Jurlique
payable by us in Australian dollars in July 2005 and a $1.4 million loss on a
foreign currency put and call arrangement on a portion of our total cost related
to the investment in Jurlique whereby we limited our overall foreign currency
risk of holding the investment through July 2007, both partially offset by a
$1.6 million gain on a foreign currency forward contract whereby we fixed the
exchange rate in connection with the liability for the remaining payment for the
Jurlique investment noted above.

The fair value of our investment in Jurlique has increased by $3.1 million
as a result of the change in the currency exchange rate since the date of our
investment. Since we account for the investment in Jurlique under the cost
method, we were unable to recognize this increase, which would have more than
offset the recognized loss on the put and call arrangement noted above.

Loss From Continuing Operations Before Income Taxes and Minority Interests

Our loss from continuing operations before income taxes and minority
interests decreased $1.5 million to $13.1 million in 2004 from $14.6 million in
2003 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 $2.6 million in 2004, within general and administrative
expenses, for the increases in the fair value of investments in the Deferred
Compensation Trusts. Under accounting principles generally accepted in the
United States of America, we 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 of accounting. We recognized
net investment income from investments in the Deferred Compensation Trusts of
$0.7 million and $2.0 million during 2003 and 2004, respectively, consisting of
realized gains from the sale of certain cost-method investments in the Deferred
Compensation Trusts of $0.9 million and $2.4 million, respectively, which
included increases in value prior to 2003 and 2004 of $0.7 million and $1.8
million, respectively, less investment management fees of $0.2 million and $0.4
million, respectively. The

37

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
134% in 2004 on the respective losses from continuing operations before income
taxes and minority interests. The effective benefit rate is higher in 2004 due
to the release of $14.6 million of income tax reserves related to our continuing
operations which were no longer required upon the finalization of the IRS
Examination and a state income tax examination and the expiration of the statute
of limitations for examinations of certain state income tax returns. The
effective benefit rate for 2003 is lower than the Federal statutory rate of 35%
principally due to the effects of the non-deductible portion of the impairment
charge for goodwill previously discussed under 'Goodwill Impairment' and
compensation costs.

Minority Interests in (Income) Loss of Consolidated Subsidiaries

The minority interests in (income) loss of consolidated subsidiaries was
$(2.9) million in 2004 relating entirely to the minority interests resulting
from the Deerfield Acquisition compared with $0.1 million in 2003.

Gain on Disposal of Discontinued Operations

During 2004 we recorded an additional gain on the disposal of our former
beverage businesses of $12.4 million resulting from the release of reserves for
income taxes that were no longer required upon the finalization of the IRS
Examination and the expiration of the statute of limitations for examinations of
certain state income tax returns. 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 transaction we
refer to as the Snapple Beverage Sale.

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.

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.

The 2% decline in same-store sales of franchised restaurants in 2003
continued a trend which commenced in the fourth quarter of 2002. For the fourth
quarter of 2003, same-store sales were approximately flat versus

38

the weak same-store sales performance 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 performance 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.

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 experienced
increases in the costs of roast beef, the largest component of our menu
offerings, which adversely affected our cost of sales during the second half of
2003.

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, Excluding Depreciation and Amortization

Our general and administrative expenses, excluding depreciation and
amortization, 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 the Deferred Compensation Trusts for the
benefit of 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 properties resulting
principally from a deterioration in the operating performance of certain
restaurants compared with the prior year pre-acquisition period of Sybra.

Goodwill Impairment

The impairment loss of $22.0 million recognized in 2003 is associated with
the goodwill relating to Sybra and has been explained in detail in the
comparison of 2004 with 2003.

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 Convertible Notes. 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.

39

Investment Income, Net

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

The 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 then 57.9%-owned consolidated subsidiary, 280 BT Holdings LLC,
including $3.3 million related to Scientia Health Group Limited, a non-public
company 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. 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.
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.

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 components of the $5.8 million gain on sale of business in 2003 relates
to Encore transactions and have been explained in detail in the comparison of
2004 with 2003. 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.

40

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 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, 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 net investment income from investments in the Deferred Compensation
Trusts of $0.7 million during 2003 consisting of realized gains from the sale of
certain cost-method investments in the Deferred Compensation Trusts of $0.9
million, which included increases in value prior to 2003 of $0.7 million, less
investment management fees of $0.2 million.

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 non-deductible portion of the impairment
charge for 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 Consolidated Subsidiaries

The minority interests in loss of consolidated subsidiaries 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 related to the Snapple Beverage Sale in
2000. 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.

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
$18.4 million during 2004 reflecting income from continuing operations of
$1.5 million adjusted for decreases consisting of net operating investment
adjustments of $26.6 million and increases consisting of (1) cash provided by
changes in operating assets and liabilities of $4.2 million and (2) other net
adjustments of $2.5 million.

The net operating investment adjustments of $26.6 million reflected
(1) $15.3 million of purchases in excess of sales of trading securities,
(2) $6.0 million increase in restricted cash securing the notional amount of
trading derivatives and (3) $5.3 million of net recognized (gains) losses on
investments and net accretion of

41

discount on debt securities. The cash used by changes in operating assets and
liabilities of $4.2 million primarily reflected a $13.8 million increase in
accounts payable and accrued expenses principally due to an increase in accrued
incentive compensation, including that of Deerfield since the date of the
Deerfield Acquisition, partially offset by a $9.1 million increase in
receivables principally due to an increase in asset management incentive fees
receivable since the date of the Deerfield Acquisition. The other net
adjustments of $2.5 million were principally non-cash adjustments for
depreciation and amortization of $22.9 million, partially offset by the release
of $18.9 million of income tax reserves and related interest accruals upon the
finalization of the IRS Examination and a state income tax examination and the
expiration of the statute of limitations for examinations of certain state
income tax returns.

Excluding the effect of the net purchases of trading securities and
restriction of cash securing trading derivatives, which represent the
discretionary investment of excess cash, our continuing operating activities
provided cash of $2.9 million in 2004. We expect positive cash flows from
continuing operating activities during 2005 excluding the effect, if any, of net
purchases or sales of trading securities and changes in restricted cash securing
trading derivatives.

Working Capital and Capitalization

Working capital, which equals current assets less current liabilities, was
$463.9 million at January 2, 2005, reflecting a current ratio, which equals
current assets divided by current liabilities, of 3.3:1. Working capital
decreased $146.8 million from $610.7 million at December 28, 2003 principally
due to (1) the $88.1 million cost of the Deerfield Acquisition net of working
capital acquired, (2) long-term debt repayments of $35.2 million, (3) our
purchase of an interest in Jurlique for $25.6 million and (4) dividend payments
of $18.2 million, all partially offset by proceeds from stock option exercises
of $15.0 million.

Our total capitalization at January 2, 2005 was $802.1 million, consisting
of stockholders' equity of $303.1 million, long-term debt of $483.7 million,
including current portion, and notes payable of $15.3 million. Our total
capitalization decreased $4.4 million from $806.5 million at December 28, 2003
principally due to (1) notes payable and long-term debt repayments of $37.0
million and (2) dividend payments of $18.2 million, both partially offset by (1)
notes payable of $16.4 million assumed in the Deerfield Acquisition, (2) the
proceeds from stock option exercises of $15.0 million, (3) net income of $13.9
million, (4) unrealized gains on available-for-sale securities included in other
comprehensive income of $3.0 million and (5) the income tax benefit from stock
option exercises of $2.3 million.

Contractual Obligations

The following table summarizes the expected payments under our outstanding
contractual obligations at January 2, 2005:

- ---------

(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 $12.9 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.

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(d) Represents amounts due to the Executives in 2008, which can be settled
either by the payment of cash or transfer of the investments held in the
Deferred Compensation Trusts.

(e) Includes, in 2005, (1) a remaining payment of $14.0 million for our
investment in Jurlique and (2) a funding commitment of $3.0 million as part
of an Arby's national cable television advertising campaign.

Securitization Notes

We have outstanding, through our ownership of Arby's Franchise Trust,
Securitization Notes with a remaining principal balance of $211.9 million as of
January 2, 2005, 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
$24.0 million in 2005 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 $49.6 million as of January 2, 2005 consisting of cash and cash
equivalents of $10.2 million, a cash equivalent reserve account of
$30.5 million and royalty receivables of $8.9 million.

Restaurant Notes

We have outstanding, through our ownership of Sybra, leasehold notes,
equipment notes and mortgage notes relating to our Company-owned restaurants
with a total remaining principal balance of $71.4 million as of January 2, 2005.
The leasehold notes have a remaining principal balance of $64.6 million and are
due in equal monthly installments including interest through 2021, of which $5.6
million is due in 2005. The leasehold notes are secured by restaurant leasehold
improvements, equipment and inventories with respective net book values of $29.5
million, $12.3 million and $1.7 million as of January 2, 2005. The equipment
notes have a remaining principal balance of $3.7 million and are due in equal
monthly installments including interest through 2009, of which $1.3 million is
due in 2005. The equipment notes are secured by restaurant equipment with a net
book value of $5.2 million as of January 2, 2005. The mortgage notes have a
remaining principal balance of $3.1 million and are due in equal monthly
installments including interest through 2018, of which $0.2 million is due in
2005. 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 January 2,
2005.

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.

Other Long-Term Debt

We have outstanding $175.0 million of 5% Convertible Notes due 2023 which do
not have any scheduled principal repayments prior to 2023. However, 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
have a secured bank term loan payable through 2008 with an outstanding principal
amount of $11.8 million as of January 2, 2005, of which $3.2 million is due in
2005. We also have a secured promissory note payable through 2006 with an
outstanding principal amount of $9.4 million as of January 2, 2005, of which
$2.2 million is due in 2005. In addition, we have mortgage notes payable through
2016 related to restaurants we sold in 1997 with outstanding principal amounts
totaling $2.8 million as of January 2, 2005, of which $0.1 million is due in
2005.

Notes Payable

We have outstanding $15.3 million of notes payable which relate to
Deerfield. Of these notes, $10.3 million are secured by several of Deerfield's
short-term investments in preferred shares of CDOs

43

originally financed by these notes with a carrying value of $14.3 million as of
January 2, 2005. These notes must be repaid from a portion or all of the
distributions on, or sales proceeds from, those investments and a portion of the
total asset management fees received from the respective CDOs. We expect to make
repayments of approximately $5.3 million under these notes in 2005. The
remaining $5.0 million represents a note payable which was settled with a
related note receivable on January 26, 2005, resulting in no net use of cash.

Revolving Credit Facilities

We did not have any revolving credit facilities as of January 2, 2005.

Debt Repayments and Covenants

Our total scheduled long-term debt and note repayments in 2005 are $42.5
million consisting principally of the $24.0 million expected to be paid under
the Securitization Notes, $7.1 million under the restaurant leasehold, equipment
and mortgage notes, $3.2 million under the secured bank term loan, $2.2 million
under the secured promissory note and $5.3 million expected to be paid under the
notes payable.

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. We were in compliance with all of these covenants as of January
2, 2005.

In accordance with the Securitization Indenture, as of January 2, 2005
Arby's Franchise Trust had no amounts available for the payment of
distributions. However, on January 20, 2005, $1.3 million relating to cash flows
for the calendar month of December 2004 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.

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 January 2, 2005,
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 January 2, 2005. We believe it is unlikely that we will be
called upon to make any payments under this indemnity. Prior to 2002, 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 $36.1 million as of January 2, 2005, associated
with the sale, prior to 2002, of the propane business if National Propane
required the repurchase.

Triarc guarantees mortgage notes payable through 2015 of approximately
$38.0 million as of January 2, 2005 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 $52.0
million as of January 2, 2005, assuming the purchaser has made all scheduled
payments under those lease obligations through that date.

44

Capital Expenditures

Cash capital expenditures amounted to $12.5 million in 2004. We expect that
cash capital expenditures will be approximately $20.0 million in 2005,
principally relating to (1) leasehold improvements for our newly leased
corporate office facility and (2) maintenance capital expenditures for our
restaurants. In addition, we plan to open ten new Company-owned restaurants and
remodel ten of our existing restaurants for an aggregate cost of approximately
$11.0 million, which we expect to finance through capitalized lease obligations
and operating lease commitments as well as leasehold incentives from landlords.
There were no significant outstanding commitments for capital expenditures as of
January 2, 2005.

Acquisitions and Investments

On July 22, 2004 we completed the Deerfield Acquisition for an aggregate
cost of $94.9 million, consisting of payments of $86.5 million to selling owners
and estimated expenses of $8.4 million, including expenses reimbursed to a
selling owner, as discussed in more detail in the 'Introduction' to this
'Management's Discussion and Analysis of Financial Condition and Results of
Operations.'

In October 2004 we invested $100.0 million to seed a new multi-strategy
hedge fund managed by Deerfield which we account for as a consolidated
subsidiary of ours, with minority interests to the extent of third-party
investor participation. We also invested $14.1 million in the REIT in December
2004, representing an ownership percentage of 3.7% as of January 2, 2005, which
we account for under the equity method due to our significant influence over the
operational and financial policies through our greater than 20% representation
on the REIT's board of directors and Deerfield's management of the REIT. The
REIT also granted Deerfield restricted stock and options with a fair value of
$6.3 million as stock-based compensation in consideration of Deerfield's
management of the REIT.

In addition, in July 2004 we acquired a 25% equity interest (14.3% general
voting interest) in Jurlique, a privately held Australian skin and beauty
products company, for $25.6 million, including expenses of $0.4 million. We are
accounting for Jurlique under the cost method since our voting stock interest of
14.3% does not provide us the ability to exercise significant influence over
Jurlique's operating and financial policies. We paid $13.3 million of the cost
of the Jurlique acquisition, including expenses of $0.4 million, in July 2004.
The remaining payment is payable in July 2005 in $18.0 million Australian
dollars, or $14.0 million based on the exchange rate as of January 2, 2005, plus
accrued interest from March 23, 2005. We entered into a forward contract whereby
we fixed the exchange rate for the payment of this liability in order to limit
the related foreign currency risk. In addition, we entered into a put and call
arrangement on a portion of our total cost related to this investment whereby we
have limited the overall foreign currency risk of holding the investment through
July 2007.

As of January 2, 2005, we have $641.1 million of cash, cash equivalents,
investments and receivables from sales of investments, net of both liabilities
related to investments and investments held in deferred compensation trusts.
This amount includes $32.9 million of noncurrent restricted cash equivalents,
including $30.5 million related to the Securitization Notes. We continue to
evaluate strategic opportunities for the use of our significant cash and
investment position, including additional business acquisitions, repurchases of
Triarc common stock (see 'Treasury Stock Purchases' below) and investments.

In that connection, we are engaged in negotiations to combine our restaurant
segment with RTM, which operates 772 Arby's restaurants in the United States as
of January 2, 2005. If consummated, it is expected that we would be the majority
owner of the combined entity and, accordingly, would consolidate that entity
with minority interests. There can be no assurance that RTM, its owners or we
will enter into definitive agreements or that such a business combination will
be consummated.

Income Taxes

During 2004, the Internal Revenue Service finalized its examination of our
Federal income tax returns for the years ended December 31, 2000 and December
30, 2001 without any additional income tax liability to us. Our Federal income
tax returns subsequent to December 30, 2001 are not currently under examination
by the Internal Revenue Service although some of our state income tax returns
are currently under examination. We have not received any notices of proposed
adjustments in connection with these state examinations and,

45

accordingly, the amount of payments, if any, required as a result of these state
examinations cannot be determined.

Dividends

During 2004 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
$18.2 million. On March 15, 2005, we paid 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 3, 2005 aggregating $4.7 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 2005 at the same rate as declared
in our 2005 first quarter, based on the number of our class A and class B common
shares outstanding as of March 3, 2005, our total cash requirement for dividends
would be $18.7 million in 2005.

Treasury Stock Purchases

Our management is currently authorized, when and if market conditions
warrant and to the extent legally permissible, to repurchase through June 30,
2006 up to a total of $50.0 million of our class A and class B common stock as
of January 2, 2005. We did not make any treasury stock purchases during 2004 and
we cannot assure you that we will repurchase any shares under this program in
the future.

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 $2.0 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 January 2, 2005, our consolidated cash requirements for continuing
operations for 2005 exclusive of operating cash flow requirements, consist
principally of (1) a maximum of an aggregate $50.0 million of payments for
repurchases of our class A and class B common stock for treasury under our
current stock repurchase program, (2) scheduled debt principal repayments
aggregating $42.5 million, (3) cash capital expenditures of approximately $20.0
million, (4) regular quarterly cash dividends aggregating approximately $18.7
million and (5) the remaining payment for Jurlique of approximately $14.0
million. Our cash requirements for discontinued operations during 2005, could
amount to $13.8 million, representing the remaining current liabilities relating
to discontinued operations, including accrued income taxes, as of January 2,
2005. We anticipate meeting all of these requirements through (1) the use of our
aggregate $577.1 million of existing cash and cash equivalents, short-term
investments, current restricted cash related to short-term investments and
receivables from the sale of securities which had not settled as of January 2,
2005, net of $35.4 million of liabilities related to short-term investments, (2)
cash flows from continuing operating activities 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

46

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
provided 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 during 2004 the work under that plan was completed. Adams Packing
submitted its contamination assessment report to the Florida DEP in March 2004.
In August 2004, the Florida DEP agreed to a monitoring plan consisting of two
sampling events after which it will reevaluate the need for additional
assessment or remediation. The first sampling event occurred in January 2005 and
the results have been submitted to the Florida DEP for its review. Based on
provisions of $1.7 million for those costs primarily made during the year ended
December 29, 2002, and after taking into consideration various legal defenses
available to us, including Adams Packing, Adams Packing has provided for its
estimate of its remaining liability for completion of this matter.

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,
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 January 2, 2005, 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 $1.2 million as of January 2, 2005.
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 and tax 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.

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:

As previously discussed above, in 2004 the Internal Revenue Service
finalized its examination of our Federal income tax returns for the
years ended December 31, 2000 and December 30, 2001 without assessing
any additional income tax liability to us. In this connection, in 2004
our results of operations were materially impacted by the release of
income tax reserves and related interest accruals that were no longer
required. Our Federal income tax returns subsequent to December 30,
2001 are not currently under examination by the Internal Revenue
Service although some of our state income tax returns are currently
under examination. We believe that adequate provisions have been made
in prior periods for any liabilities, including interest, that may
result from the

47

completion of these examinations. To the extent that any estimated
amount required to liquidate the related liability as it pertains to
the former beverage businesses that we sold in October 2000 is
determined to be less than or in excess of the aggregate of amounts
included in 'Current liabilities relating to discontinued operations'
in the accompanying consolidated balance sheets, 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 income tax contingency amounts included in 'Other liabilities
and deferred income,' any such difference will be recorded at that
time as a component of results from continuing operations.

o Reserves which total $1.2 million at January 2, 2005 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 principally based on quoted market
prices, broker/dealer prices or statements of account received from
investment managers which are principally based on quoted market or
broker/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
broker/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 broker/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
$17.0 million as of January 2, 2005. In addition, we have a
$25.6 million Cost Investment in Jurlique, an Australian company not
publicly traded, for which we currently believe the carrying amount is
recoverable due to the relatively recent purchase of this investment
in July 2004. 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 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
$0.4 million as of January 2, 2005 which, if not recovered, may result
in the recognition of future losses. Also, should any of our Cost
Investments totaling approximately $72.9 million, including $17.0
million held in the Deferred Compensation Trusts, as of January 2,
2005 experience declines in value due to conditions that we deem to be
other than temporary, we

48

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 $14.5
million, $0.4 million, and $6.9 million during 2002, 2003 and 2004,
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:

As of January 2, 2005, $64.2 million of our goodwill relates to our
restaurant segment, including $45.4 million associated with the
Company-owned restaurant reporting unit, and $54.1 million relates to
our asset management segment. We test the goodwill of each of our two
restaurant business reporting units and our asset management segment
for impairment annually. We recognize a goodwill impairment charge, if
any, for any excess of the net carrying amount of the respective
goodwill over the implied fair value of the goodwill. The implied fair
value of the goodwill is 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 has been
estimated to be the present value of the anticipated cash flows
associated with the reporting unit. As explained more fully in the
comparison of 2004 with 2003 in 'Goodwill Impairment' under 'Results
of Operations' above, we recognized a $22.0 million goodwill
impairment charge in 2003, and no additional charge in 2004, with
respect to the Company-owned restaurants we had purchased in the Sybra
Acquisition. The amount of the impairment in 2003, and the
recoverability of the remaining goodwill in 2004, 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, if
any, might have differed significantly from the amounts reported.

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 2004 with 2003 in 'Depreciation and Amortization' under
'Results of Operations' above, we recognized related impairment losses
of $0.4 million and $3.4 million in 2003 and 2004, respectively. The
entire impairment loss in 2003 and $1.8 million of the loss in 2004
related to long-lived assets of certain restaurants which were
determined to not be fully recoverable in order to reduce the carrying
value of those assets to their estimated fair value. The remaining
$1.6 million impairment loss in 2004 related to the trademark referred
to above. 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 and with the trademark. Those estimates are
subject to change as a result of many factors including, among others,
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 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 amounts of the
respective impairment charges might have differed significantly from
the charges reported. As of January 2, 2005, the remaining net
carrying value of that trademark and the Company-owned restaurant
long-lived

49

assets were $1.9 million and $60.3 million, respectively. In addition,
we have asset management contracts of Deerfield with a net book value
of $30.6 million as of January 2, 2005 that could require testing for
impairment should future events or changes in circumstances indicate
they may not be recoverable.

Our estimates of each of these items historically have been adequate;
however we have not had any experience with impairment testing the long-lived
assets or goodwill relating to Deerfield 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 2002, 2003 and 2004 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.
Further, while our asset management business is not directly affected by
seasonality, our asset management revenues will be higher in our fourth quarter
as a result of our revenue recognition accounting policy for incentive fees
related to the Funds which are based upon performance and are recognized when
the amounts become fixed and determinable upon the close of a performance
period.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In March 2004, the Financial Accounting Standards Board (the 'FASB')
ratified the consensus reached by the Emerging Issues Task Force on issue 03-1,
'The Meaning of Other-Than-Temporary Impairment and its Application to Certain
Investments' ('EITF 03-1'). EITF 03-1 provides guidance on evaluating whether an
investment is other-than-temporarily impaired. The recognition and measurement
provisions of EITF 03-1, which were to be effective for periods beginning after
June 15, 2004, were delayed by the issuance in September 2004 of a FASB Staff
Position ('FSP') until the final issuance of a proposed FSP, which would provide
guidance for the application of Paragraph 16 of EITF 03-1. During the period of
delay, we will continue to evaluate our investments as required by existing
authoritative guidance, including Securities and Exchange Commission Staff
Accounting Bulletin Topic 5M, 'Other Than Temporary Impairment of Certain
Investments in Debt and Equity Securities.' We do not expect that the
recognition and measurement provisions of EITF 03-1 will have a significant
impact on our financial position or results of operations if and when they
become effective since the principles we use to measure any other than temporary
impairment losses are generally consistent with those proposed in EITF 03-1.

In December 2004, the FASB issued Statement of Financial Accounting
Standards ('SFAS') No. 123 (revised 2004), 'Share-Based Payment'
('SFAS 123(R)'), which revises SFAS No. 123, 'Accounting for Stock-Based
Compensation' ('SFAS 123'), and supersedes Accounting Principles Board Opinion
No. 25, 'Accounting for Stock Issued to Employees' ('APB 25'). The requirements
of SFAS 123(R) are similar to those of SFAS 123, except that SFAS 123(R)
generally requires companies to measure the cost of employee services received
in exchange for an award of equity instruments, including grants of employee
stock options and restricted stock, based on the fair value of the award. The
intrinsic value method of measuring these awards under APB 25, which we
currently use, and the resulting required pro forma disclosures under SFAS 123
will no longer be an alternative to the use of the fair value method under
SFAS 123(R). We are required to adopt SFAS 123(R) no later than our 2005 fiscal
third quarter which ends on October 2, 2005. Under SFAS 123(R), we must
determine the appropriate fair value model to be used in our circumstances, the
amortization method for compensation cost and the transition method to be used
upon adoption. Acceptable fair value models include a lattice model, such as a
binomial model, a closed-form model, such as the Black-Scholes-Merton formula,
and a Monte Carlo simulation model. Amortization methods for graded vesting
awards having only service conditions, such as those we have granted in the
past, can be amortized on a straight-line basis over the requisite service
period for either (1) each separately vesting portion of the award, or ratably,
which is referred to as the graded vesting attribution method, or (2) the entire
award. The transition options include prospective

50

and retroactive adoption methods. Under the retroactive options, prior periods
may be restated for all unvested awards either as of the beginning of the year
of adoption or for all periods presented, in either instance using the amounts
previously calculated for pro forma disclosures under SFAS 123. The prospective
method requires that compensation expense be recorded for all unvested awards at
the beginning of the first quarter of adoption of SFAS 123(R). We are evaluating
the requirements of SFAS 123(R) and expect that the adoption of SFAS 123(R) will
have a material impact on our consolidated results of operations and income
(loss) per share. We have not yet determined the fair value model, the
amortization method or adoption method we will use. Accordingly, we are unable
to estimate the effect of adopting SFAS 123(R) or whether the adoption will
result in future period amounts that are similar to our current pro forma
disclosures under SFAS 123.

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 commodity
prices, changes in the market value of our investments and, to a lesser extent,
foreign currency fluctuations. In the normal course of business, we employ
established policies and procedures to manage our exposure to these changes
using financial instruments we deem appropriate.

Interest Rate Risk

Our objective in managing our exposure to interest rate changes is to limit
their impact 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 January 2, 2005 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 January 2, 2005, our notes payable and long-term debt, including
current portion, aggregated $499.0 million and consisted of $471.9 million of
fixed-rate debt, including $1.0 million of capitalized leases, $15.3 million of
variable-rate notes payable and $11.8 million of a variable-rate bank loan. The
fair 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 approximately thirty years.
The fair market value of our investments in fixed-rate debt securities will
decline if interest rates increase.

Commodity Price Risk

We purchase certain food products, such as beef, poultry, pork and cheese,
that are affected by changes in commodity prices and, as a result, we are
subject to volatility in our food costs. Management monitors our exposure to
commodity price risk. However, we do not enter into financial instruments to
hedge commodity prices or hold any significant inventories of these commodities.
In order to ensure favorable pricing for beef, poultry, pork, cheese and other
food products, as well as maintain an adequate supply of fresh food products, a
purchasing cooperative with our franchisees negotiates contracts with approved
suppliers on behalf of the Arby's system. These contracts establish pricing
arrangements, but do not establish any firm purchase commitments by us or our
franchisees.

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 our
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,

51

equity derivatives, equity 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 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 $25.6 million purchase
of a 25% equity interest (14.3% general voting interest) in Jurlique
International Pty Ltd., an Australian company, for which half the purchase
price, plus interest commencing March 23, 2005, is payable in Australian dollars
in July 2005. We entered into a forward contract whereby we fixed the exchange
rate for the payment of this liability in order to limit the related foreign
currency risk. In addition, we entered into a put and call arrangement on a
portion of our total cost related to this investment whereby we have limited the
overall foreign currency risk of holding the investment through July 5, 2007. To
a more limited extent, we have exposure to foreign currency risk relating to our
investments in certain investment limited partnerships and similar investment
entities that hold foreign securities, and for one of these funds that 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 each of the years
ended December 28, 2003 and January 2, 2005 together represented only 3% of our
total royalties and franchise and related fees and 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 28, 2003 and January 2, 2005 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 potentially 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 regularly 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. During 2004, we recognized unrealized losses
deemed to be other than temporary of $5.2 million based on declines in market
value of some of these more risk-inherent debt securities. We are continuing to
adjust our asset allocation to increase the portion of our investments that
offers the opportunity for higher, but more risk inherent, returns. In that
regard, in October 2004 we invested $100.0 million in a new hedge fund that is
consolidated by us with minority interests to the extent of third-party investor
participation. The fund invests in various fixed income securities and their
derivatives, as opportunities arise. As of January 2, 2005, the derivatives held
by the fund consisted of (1) bank loan total return swaps, (2) futures contracts
relating to interest rates, (3) forward contracts on corporate bonds and (4)
credit default swaps. We did not designate any of these derivatives as hedging
instruments and, accordingly, all of these derivative instruments were recorded
at fair value with changes in fair value recorded in our results of operations.
Further, the fund employs leverage in its trading activities, including the
borrowing of funds through repurchase agreements and short sales as well as the
effective leverage represented by the notional amounts of its various
derivatives. The fund's investments are subject to interest

52

rate risk and the inherent credit risk related to the underlying credit
worthiness of the various issuers. The fund uses hedging strategies, including
the derivatives it holds and other asset/liability management strategies, to
generally minimize its overall interest rate risk while retaining an acceptable
level of credit risk as part of its technical trading strategy. The fund
monitors its overall credit risk and attempts to maintain an acceptable level of
exposure through diversification of credit positions by industry, credit rating
and individual issuer concentrations.

We maintain investment portfolio holdings of various issuers, types and
maturities. As of December 28, 2003 and January 2, 2005, 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 mutual fund and bank money market accounts, securities purchased under
agreements to resell the following day collateralized by United States
government agency debt securities, interest-bearing brokerage and bank accounts
with a stable value, commercial paper of high credit-quality entities and, at
December 28, 2003, United States government debt securities.

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
and does not include the reinvestment of $495,000 of proceeds receivable
from the sale of securities which had not settled as of December 28, 2003.

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

53

At January 2, 2005 our investments were classified in the following general
types or categories (in thousands):

- ---------

(a) Includes $3,009,000 of cash equivalents held in deferred compensation trusts
and does not include the reinvestment of $20,465,000 of proceeds receivable
from the sale of securities, net of accounts payable for the cost of
securities purchased, which had not settled as of January 2, 2005.

(b) Includes $14,266,000 of preferred shares of collateralized debt obligation
vehicles, which we refer to as CDOs, which, if sold, would require us to use
the proceeds to repay our related notes payable of $10,334,000.

(c) The fair value of this liability does not reflect the offsetting effect of
the related foreign currency forward contract in an asset position which had
a fair value of $1,640,000.

(d) 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. Our investments in preferred shares of CDOs are accounted
for similar to debt securities and are classified as available-for-sale.
Investment limited partnerships and similar investment entities and other
current and non-current investments in which we do not have significant
influence over the investees are accounted for at cost. Derivative instruments
held in trading portfolios are similar to and classified as trading securities
which are accounted for as described above. 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. Investments in
which we have significant influence over the investees 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 the investees. Our
investments accounted for under the equity method consist of non-current
investments in (1) a public company and (2) commencing in December 2004, a real
estate investment trust

54

managed by Deerfield. We also hold restricted stock and stock options in the
real estate investment trust that we received as stock-based compensation and
that we account for at fair value. 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 28, 2003 and January 2, 2005 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 28, 2003 and January 2, 2005 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% adverse change in the equity markets in which
we are invested and (2) an instantaneous one percentage point adverse change in
market interest rates, each from their levels at December 28, 2003 and January
2, 2005, 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 interest rate risk with respect to our debt securities, other than
convertible bonds, and our trading derivatives reflects the effect of the
assumed adverse interest rate change on the fair value of each of those
securities or derivative positions and does not reflect any offsetting of hedged
positions. The adverse effects on the fair values of the respective securities
and derivatives were determined based on market standard pricing models
applicable to those particular instruments. Those models consider variables such
as coupon rate and frequency, maturity date(s), yield and, in the case of
derivatives, volatility, price of the underlying instrument, strike price,
expiration, prepayment assumptions and probability of default. The convertible
bonds, of which we held $7.6 million as of December 28, 2003 and none at January
2, 2005, were assumed to trade primarily on the conversion feature of those
securities rather than on the stated interest rate and, accordingly, were
assumed to have equity price risk but no interest rate risk.

55

OTHER THAN TRADING PURPOSES:

The sensitivity analysis of financial instruments held at December 28, 2003
and January 2, 2005 for purposes of other than trading assumes (1) an
instantaneous one percentage point adverse change in market interest rates, (2)
an instantaneous 10% adverse change in the equity markets in which we are
invested and (3) an instantaneous 10% adverse change in the foreign currency
exchange rates versus the United States dollar, each from their levels at
December 28, 2003 and January 2, 2005 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 available-for-sale investments and cost
investments to the extent of unrealized gains on certain of those investments,
which would limit or eliminate the effect of the indicated market risk on our
results of operations and, for cost investments, our financial position.

56

For purposes of this analysis, our debt investments and preferred shares of
CDOs 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 and, in
2004, the preferred shares of CDOs, the impact on our results of operations.
Assuming we reinvest in similar securities at the time these securities mature,
the effect of the interest rate risk of an increase of one percentage point
above the existing levels would continue beyond the maturities assumed. The
interest rate risk for our preferred shares of CDOs excludes those portions of
the CDOs for which the risk has been fully hedged. Our cash equivalents included
$413.3 million and $301.6 million as of December 28, 2003 and January 2, 2005,
respectively, of mutual fund and bank money market accounts and interest-bearing
brokerage and bank accounts which are designed to maintain a stable value and,
as of January 2, 2005, $50.8 million of securities purchased under agreements to
resell the following day 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 notes payable and
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, as well as our liability for securities sold under
agreements to repurchase, approximates the carrying value since the floating
interest rate resets daily, monthly or quarterly and, as a result, we assumed no
associated interest rate risk. 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 bank loan. 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.

57

The foreign currency risk presented for our investment in Jurlique as of
January 2, 2005 excludes the portion of risk that is hedged by the foreign
currency put and call arrangement and by the portion of Jurlique's operations
which are denominated in United States dollars. The foreign currency risk
presented with respect to the foreign currency forward contract and foreign
currency put and call arrangement represents the potential impact the indicated
change has on the net fair value of each of these respective financial
instruments and on our financial position and results of operations and has been
determined by an independent broker/dealer. For investments in investment
limited partnerships and similar investment entities, all of which are accounted
for at cost, and other non-current investments 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.

58

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

59

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors 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 January 2, 2005 and
December 28, 2003, and the related consolidated statements of operations,
stockholders' equity, and cash flows for each of the three years in the period
ended January 2, 2005. 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 the standards of the Public
Company Accounting Oversight Board (United States). 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 January 2,
2005 and December 28, 2003, and the results of its operations and its cash flows
for each of the three years in the period ended January 2, 2005, in conformity
with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the effectiveness of the Company's
internal control over financial reporting as of January 2, 2005, based on the
criteria established in Internal Control -- Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission and our report
dated March 17, 2005 expressed an unqualified opinion on management's assessment
of the effectiveness of the Company's internal control over financial reporting
and an unqualified opinion on the effectiveness of the Company's internal
control over financial reporting.

Deloitte & Touche LLP
New York, New York
March 17, 2005

60

TRIARC COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE DATA)

See accompanying notes to consolidated financial statements.

61

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 $7,433
for the year ended December 29, 2002, whereas the royalties and franchise
and related fees from Sybra, Inc. of $7,051 and $7,204 for the years ended
December 28, 2003 and January 2, 2005, respectively, were eliminated in
consolidation.

See accompanying notes to consolidated financial statements.

62

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

63

TRIARC COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY -- CONTINUED
(IN THOUSANDS)

64

TRIARC COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY -- CONTINUED
(IN THOUSANDS)

See accompanying notes to consolidated financial statements.

65

TRIARC COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

66

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 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.

In September 2003, the Company made a stock distribution (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 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

67

TRIARC COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS -- CONTINUED

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 15 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 with such offering, 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
represented 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.

During the year ended December 28, 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. During the year ended
January 2, 2005 the Executives exercised an aggregate 3,250,000 stock options,
each of which was exercisable for a package of one share of class A common stock
and two shares of class B common stock as a result of the Stock Distribution,
under the Company's equity plans and paid the exercise prices utilizing shares
of the Company's class B common stock received by the Executives in connection
with the Stock Distribution and effectively owned by the Executives for more
than six months at the dates the options were exercised. These exercises
resulted in aggregate deferred gains to the Executives of $44,297,000,
represented by an additional 1,334,323 shares of class A common stock and
2,668,630 shares of class B common stock based on the market prices at the dates
of exercises. All such shares for the years ended December 28, 2003 and January
2, 2005, along with 721,590 shares of class B common stock issued as part of the
Stock Distribution are being held in two deferred compensation trusts. The
aggregate resulting non-cash obligations of $10,160,000 and $54,457,000 are
reported as the 'Deferred compensation payable in common stock' component of
'Stockholders' equity' in the accompanying consolidated balance sheets as of
December 28, 2003 and January 2, 2005, respectively, with increases of
$10,160,000 and $44,297,000 included in 'Common stock held in treasury.' See
Note 24 for further disclosure of these transactions.

In July 2004, the Company purchased a 63.6% capital interest in Deerfield &
Company LLC ('Deerfield') for $94,907,000, including estimated expenses of
$8,375,000. The purchase price, less cash of Deerfield of $1,014,000, resulted
in a net use of the Company's cash of $93,893,000. In conjunction with the
acquisition, liabilities were assumed as follows (in thousands):

Fair value of assets acquired, excluding cash acquired...... $119,979
Net cash paid for the 63.6% capital interest................ (93,893)
--------
Liabilities assumed, including minority interests....... $ 26,086
--------
--------

See Note 3 for further disclosure of this transaction.

In December 2004, in connection with a private offering of shares of
Deerfield Triarc Capital Corp., a real estate investment trust (the 'REIT')
managed by the Company through Deerfield, the Company was granted 403,847 shares
of restricted stock of the REIT and options to purchase an additional 1,346,156
shares of stock of the REIT (collectively, the 'Restricted Investments'). The
Restricted Investments represent stock-based compensation granted in
consideration of the Company's management of the REIT. The Restricted
Investments were recorded at fair value, which was $6,058,000 and $263,000 for
the restricted stock and stock options, respectively, with an equal offsetting
credit to deferred income. See Note 8 for further disclosure of this
transaction.

See accompanying notes to consolidated financial statements.

68

TRIARC COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 2, 2005

(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 subsidiaries of the Company, each
indirectly wholly-owned as of January 2, 2005 unless otherwise indicated, are
(1) Arby's, LLC ('Arby's' which, on May 20, 2004 was converted from a
corporation under the name of Arby's, Inc. to a limited liability company),
which in turn, indirectly owns 100% of Arby's Franchise Trust ('Arby's Trust'),
(2) Sybra, Inc. ('Sybra'), which was acquired on December 27, 2002,
(3) Deerfield & Company LLC ('Deerfield'), in which the Company acquired a 63.6%
capital interest on July 22, 2004 and (4) Deerfield Opportunities Fund, LLC (the
'Opportunities Fund'), an investment fund which commenced on October 4, 2004 in
which the Company holds an aggregate 95.2% direct and indirect capital interest
as of January 2, 2005. Effective August 20, 2004 Deerfield granted membership
interests in future profits (the 'Profit Interests') to certain of its key
employees, which reduced the Company's interest in profits of Deerfield
subsequent to August 19, 2004 to 61.5% (see Note 15). The Company's other
wholly-owned subsidiaries at January 2, 2005 that are referred to in these notes
to consolidated financial statements include National Propane Corporation
('National Propane'); SEPSCO, LLC ('SEPSCO'); Citrus Acquisition Corporation
which owns 100% of Adams Packing Association, Inc. ('Adams'); Madison West
Associates Corp. which owns 58.9% of 280 BT Holdings LLC ('280 BT'); and Triarc
Consumer Products Group, LLC ('TCPG'). TCPG owned 100% of (1) Snapple Beverage
Group, Inc. ('Snapple Beverage Group') and (2) Royal Crown Company, Inc. ('Royal
Crown'), before the sale of such companies prior to 2002. All significant
intercompany balances and transactions have been eliminated in consolidation.
See Note 3 for further disclosure of the acquisitions 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. However, Deerfield reports on a calendar year
ending on December 31. Each of the Company's 2002 and 2003 fiscal years
contained 52 weeks and its 2004 fiscal year contained 53 weeks. Such periods are
referred to herein as (1) 'the year ended December 29, 2002' or '2002,' which
commenced on December 31, 2001 and ended on December 29, 2002, (2) 'the year
ended December 28, 2003' or '2003,' which commenced on December 30, 2002 and
ended on December 28, 2003 and (3) 'the year ended January 2, 2005' or '2004,'
which commenced on December 29, 2003 and ended on January 2, 2005, except that
for this period, Deerfield is included commencing July 23, 2004 through its
year-end of December 31, 2004. The effect of including Deerfield in the
Company's consolidated financial statements through Deerfield's year-end of
December 31, 2004 instead of the Company's year-end of January 2, 2005 was not
material. December 28, 2003 and January 2, 2005 are referred to herein as
'Year-End 2003' and 'Year-End 2004,' respectively. All references to years and
year-ends herein relate to fiscal years rather than calendar years except for
Deerfield, as disclosed above.

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 mutual fund and bank money market accounts,
securities purchased under agreements to resell the following day collateralized
by United States government agency debt securities, interest-bearing brokerage
and bank accounts with a stable value, commercial paper of high credit-quality
entities and, at December 28, 2003, United States government debt securities.

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INVESTMENTS

Short-Term Investments

Short-term investments include (1) debt securities and marketable equity
securities with readily determinable fair values, (2) other short-term
investments that are not readily marketable, including investments in limited
partnerships and similar investment entities and assignments of commercial term
loans, (3) preferred shares of collateralized debt obligation vehicles ('CDOs')
for which the Company acts as collateral manager and (4) derivative instruments
held in trading portfolios. 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 and January 2, 2005 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'). During 2002, the Company also had a short-term investment in
which the Company had significant influence over the operating and financial
policies of the investee ('Equity Investment'). Preferred shares of CDOs are
considered financial assets subject to prepayment and are therefore classified
as available-for-sale securities which are accounted for similar to debt
securities as described above. Interest income is accreted on the preferred
shares of CDOs over the respective estimated lives of the CDOs using the
effective yield method. Derivative instruments held in trading portfolios are
similar to and classified as trading securities which are accounted for as
described above.

Non-Current Investments

The Company's non-current investments consist of (1) Equity Investments
which are accounted for in accordance with the equity method (the 'Equity
Method'), (2) Cost Investments which are accounted for under the Cost Method and
(3) restricted stock and stock option investments in Deerfield Triarc Capital
Corp., a real estate investment trust (the 'REIT') for which the Company acts as
the investment manager, received as stock-based compensation. 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. The restricted stock and
stock options were recorded at fair value and will be adjusted for any future
changes in their fair value.

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. For acquisitions of Equity Investments prior to
December 31, 2001, any Carrying Value Difference is 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 not
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

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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.

Securities Sold under Agreements to Repurchase

Securities sold under agreements to repurchase for fixed amounts at
specified future dates are considered collateralized financing transactions and
are recorded at the contractual amounts required to settle the liabilities.

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 net unrealized
gain or a decrease in the net 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 to the extent realization of the gain is
reasonably assured.

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, including periods covered by
renewal options that the Company is reasonably assured of exercising.

AMORTIZATION OF INTANGIBLES AND DEFERRED COSTS

Goodwill, representing the costs in excess of net assets of acquired
companies, is not amortized.

Asset management contracts are amortized on the straight-line basis over
their estimated lives of less than 1 year to 27 years for CDO contracts and 15
years for contracts under which the Company acts as the investment manager for
various investment funds and private investment accounts (collectively with the
REIT, the 'Funds').

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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; 2 years to 8 years for non-compete
agreements; 3 years for costs of computer software acquired new; 2 years for
costs of computer software acquired used; and the lives of the respective
leases, including periods covered by renewal options that the Company is
reasonably assured of exercising, for favorable leases.

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 intangible
assets.

IMPAIRMENTS

Goodwill

The Company reviews its goodwill for impairment at least annually. The
amount of impairment, if any, in goodwill is measured by the excess, if any, of
the net carrying amount of the goodwill over its implied fair value.

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 16 for further disclosure related to the Company's impairment
charges.

DERIVATIVE INSTRUMENTS

The Company's derivative instruments, excluding those that may be settled in
its own stock and therefore not subject to the guidance in SFAS No. 133
('SFAS 133'), 'Accounting for Derivative Instruments and Hedging Activities,'
are recorded at fair value with changes in fair value recorded in the Company's
results of operations. The Company has no derivatives that it has designated as
hedging instruments. See Note 12 for further disclosure related to the Company's
derivative 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. Compensation cost for the Company's stock options is measured as the
excess, if any, of the market price of the Company's class A common stock (the
'Class A Common Stock' or 'Class A Common Shares'), and/or class B common stock,
series 1 (the 'Class B Common Stock' or 'Class B Common Shares'), as applicable,
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.
Compensation cost for Profit Interests granted to key employees of a subsidiary
is measured as the fair value of those Profit Interests at the date of grant and
is amortized over the respective vesting periods.

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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, calculated under the
Black-Scholes-Merton option pricing model, had been applied to all outstanding
and unvested stock options during each of the years presented is as follows (in
thousands except per share data):

- ---------

(a) Diluted net income (loss) per share, as adjusted, is the same as basic net
income (loss) per share, as adjusted, for each of the Class A and Class B
Common Stock since the Company would have had a loss from continuing
operations, on an as adjusted basis, in each of the years. As such, the
effect of all potentially dilutive securities on the loss per share from
continuing operations, as adjusted, would have been antidilutive and are
not included in the calculation of diluted net income (loss) per share.

See Note 15 for disclosure of the adjustments, methods and significant
assumptions used to estimate the fair values of stock options granted in 2002
through 2004 reflected in the table above.

The Company is required to adopt SFAS No. 123 (revised 2004)
('SFAS 123(R)'), 'Share-Based Payment,' no later than its quarter ending
October 2, 2005. As a result, the Company will be required to measure the cost
of employee services received in exchange for an award of equity instruments,
including grants of employee stock options and restricted stock, based on the
fair value of the award rather than its intrinsic value, which the Company is
currently using. Under SFAS 123(R), the Company must choose from among several
types of acceptable fair value models, including the Black-Scholes-Merton option
pricing model, as appropriate under the circumstances. The Company expects that
the adoption of SFAS 123(R) will have a material impact on its consolidated
results of operations and income (loss) per share.

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.

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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 local
currency and translated into United States dollars at the current exchange rate
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 except Deerfield. The Company provides for Federal income taxes on
Deerfield's income net of minority interests since, as a limited liability
company, Deerfield's income is includable in the Federal income tax returns of
its various members. 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 recorded as deferred income when received and 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 recorded as deferred
income when received 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 were recognized as a reduction of franchise
fee revenue when a franchisee earned the available credits by opening new
restaurants within the time frame allowed under the remodel program since the
Company had not incurred any obligation until the new restaurant was opened and
the use of the credit did not result in any loss to the Company.

Asset management and related fees consist of the following types of revenues
generated by the Company in its capacity as the investment manager for various
Funds and as the collateral manager for various CDOs: (1) management fees,
(2) incentive fees and (3) other related fees. Management fees are recognized as
revenue when the management services have been performed for the period and all
contingencies have been resolved including the generation of sufficient cash
flows by the CDOs to pay the fees under the terms of the related management
agreements. Other contingencies may include the achievement of minimum CDO or
Fund performance requirements specified under certain agreements with some
investors or a guarantee provider to provide minimum rate of return or principal
loss protection. In connection with these agreements, the Company has
subordinated receipt of certain of its management fees. Incentive fees are based
upon the performance of the Funds and CDOs and are recognized as revenues when
the amounts become fixed and determinable upon the close of a performance period
for the Funds and the achievement of performance targets

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for the CDOs and any related agreements with certain investors or a guarantee
provider. Other related fees primarily include structuring and warehousing fees
earned by the Company for services provided to CDOs and are recognized as
revenues upon the rendering of such services and the closing of the respective
CDO.

ADVERTISING COSTS

The Company incurs various advertising costs, including contributions to
certain advertising cooperatives based upon a percentage of net sales of
Company-owned restaurants. The Company accounts for contributions made related
to the Company-owned restaurants to advertising cooperatives as expense when the
related net sales 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' expenses in the accompanying consolidated statements
of operations for 2002, 2003 and 2004 represent advertising costs.

RENTAL EXPENSE

Rental expense is recognized on a straight-line basis over the term of the
respective operating lease, including periods covered by renewal options that
the Company believes it is reasonably assured of exercising because the failure
to renew the lease would result in an economic detriment to the Company.

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 in two business segments: restaurants and, effective
with the acquisition of Deerfield on July 22, 2004, asset management.

The restaurant segment is operated 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
and ham sandwiches, side dishes and salads. These include Arby's Market
Fresh'TM' sandwiches, salads and wraps. Some of the Arby's system-wide
restaurants are multi-branded with the Company's T.J. Cinnamons'r' product line.
The franchised restaurants are principally located 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:

The asset management segment is comprised of an asset management company
that offers a diverse range of fixed income and credit-related strategies to
institutional investors from its domestic offices. It currently

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provides asset management services for CDOs and Funds, including the REIT, but
may expand its services into other types of investments.

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 or state taxing authorities,
including remaining provisions included in 'Current liabilities relating to
discontinued operations,' (see Note 14), (2) provisions for the resolution of
legal and environmental matters (see Note 25), (3) the valuation of investments
which are not publicly traded (see Note 13), (4) provisions for Other Than
Temporary Losses (see Note 17) and (5) estimates of impairment of the carrying
values of long-lived assets of the restaurant business (see Notes 1 and 16). The
Company's estimates of each of these items historically have been adequate. 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. In this connection, in 2004 the
Company's results of operations were materially impacted by the release of
income tax reserves and related interest accruals that were no longer required
(see Note 14).

CERTAIN RISK CONCENTRATIONS

The Company believes its vulnerability to risk concentrations in its cash
equivalents and investments, including leverage employed in its trading
portfolios, 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, (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 substantially all
of the Company's brokerage firms, (4) hedging strategies employed in its trading
portfolios that are not designated as hedging instruments and
(5) diversification of credit positions by industry, credit rating and
individual issuer concentrations for asset-backed and corporate debt securities
in its trading portfolios. The Company has only one significant major customer
which is a franchisee that accounted for 27%, 9% and 9% of consolidated revenues
and 27%, 30% and 29% of royalties and franchise and related fees in 2002, 2003
and 2004, respectively. In addition, the Company has an institutional investor
whose participation in various Funds managed by the Company generated
approximately 17% of asset management and related fees in 2004 subsequent to the
Deerfield Acquisition; however it represented less than 10% of consolidated
revenues during that period. The loss of either this franchisee or the
institutional investor would have a material adverse impact on the Company's
businesses.

The Company's restaurant segment 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 in its restaurant segment 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 adversely affected profit margins of the
Company-owned

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restaurants in 2003 and 2004. The Company also believes that its vulnerability
to risk concentrations related to geographical concentration in its restaurant
segment is mitigated since the Company and its franchisees generally operate
throughout the United States and have minimal foreign exposure.

The Company believes that it has no material risk concentrations in its
asset management segment with respect to sources of investment products or
geographic concentration. Since the segment performs its services from its
domestic offices, it has no significant foreign exposure although there are
investors and Funds and CDOs in certain foreign countries.

(3) BUSINESS ACQUISITIONS

ACQUISITION OF DEERFIELD IN 2004

On July 22, 2004 the Company completed the acquisition of a 63.6% capital
interest in Deerfield (the 'Deerfield Acquisition') for an aggregate cost of
$94,907,000, consisting of payments of $86,532,000 to selling owners and
estimated expenses of $8,375,000, including expenses reimbursed to a selling
owner. The Company acquired Deerfield with the expectation of growing the
substantial value of Deerfield's historically profitable investment advisory
brand. Deerfield, through its wholly-owned subsidiary Deerfield Capital
Management LLC, is an asset manager and represents a business segment of the
Company (see Notes 2 and 26).

The preliminary allocation of the purchase price of Deerfield to the assets
acquired and liabilities assumed is presented below at the end of this footnote
under 'Purchase Price Allocations of Acquisitions.' The Deerfield Acquisition
resulted in $54,111,000 of goodwill (see Note 9), which will be fully deductible
for income tax purposes and was assigned entirely to the Company's new asset
management business segment. Such goodwill reflects the substantial value of
Deerfield's historically profitable investment advisory brand, as disclosed
above, and the Company's expectation of being able to grow Deerfield's asset
management portfolio thereby increasing its asset management fee revenues. The
acquired identifiable intangible assets, aggregating $34,227,000, principally
include (1) asset management contracts for Funds of $17,720,000, (2) asset
management contracts for CDOs of $14,508,000, (3) asset management computer
software systems of $1,062,000 and (4) non-compete agreements of $846,000 and
are all amortizable. Each of those amounts represents the Company's 63.6%
interest in the fair value of the respective intangible asset, as determined in
accordance with a preliminary independent appraisal. The management contracts
have been valued using an income approach based on the present value of
estimated net cash flows that these contracts are expected to generate in the
future. Software technology has been valued utilizing a replacement cost
approach involving development costs, annual support costs and license fees and
the associated timing of these costs. The non-compete contracts have been valued
using a lost revenues approach which is a type of income approach that involves
present valued estimates of probable revenue losses if key individuals were to
initiate a competing enterprise. The acquired identifiable intangible assets
have a weighted average amortization period of approximately 11 years,
reflecting a weighted average of approximately 12 years for the asset management
contracts and approximately 4 years for the other intangible assets.

A reconciliation of the change in goodwill from the preliminary estimated
allocation of Deerfield as reported in the Company's consolidated financial
statements as of September 26, 2004 with the preliminary allocation as reported
in the accompanying consolidated balance sheet as of January 2, 2005 and as set
forth in the table below under 'Purchase Price Allocations of Acquisitions' is
summarized as follows (in thousands):

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Goodwill in estimated preliminary allocation of purchase
price at September 26, 2004............................... $59,620
Changes in goodwill:
Increase in estimated fair value of asset management
contracts and other intangible assets for revision of
preliminary estimated appraisal....................... (5,634)
Increase in the original estimated purchase price....... 125
-------
Goodwill in estimated preliminary allocation of
purchase price at January 2, 2005................. $54,111
-------
-------

Deerfield's results of operations, less applicable minority interests, and
cash flows subsequent to the July 22, 2004 date of the Deerfield Acquisition
through January 2, 2005 have been included in the accompanying consolidated
statements of operations and cash flows for the year ended January 2, 2005.

The following supplemental pro forma consolidated summary operating data
(the 'As Adjusted Data') of the Company for 2003 and 2004 has been prepared by
adjusting the historical data as set forth in the accompanying condensed
consolidated statements of operations to give effect to the Deerfield
Acquisition as if it had been consummated as of the beginning of each respective
year (in thousands except per share amounts):

This As Adjusted Data is presented for comparative purposes only and does
not purport to be indicative of the Company's actual results of operations had
the Deerfield Acquisition actually been consummated as of the beginning of each
of the respective years presented above or of the Company's future results of
operations.

ACQUISITION OF SYBRA IN 2002

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 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

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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 is presented below under 'Purchase Price Allocations of
Acquisitions.' The fair values of properties, other intangible assets and
unfavorable lease liability were determined in accordance with an independent
appraisal. Land has been valued using a market approach. Buildings, improvements
and personal property have been valued using a depreciated replacement cost
approach involving inspections, indexing and modeling. Favorable and unfavorable
leases have been valued by measuring the difference between current relevant
local market rents and contractual rents projected over the economic life of the
individual leases then discounted to a present value. The Sybra Acquisition
resulted in $67,424,000 of goodwill (see Note 9) which was assigned entirely to
the Company's restaurant segment, 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 election by Triarc and ICH 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 was
included in goodwill in the Company's consolidated balance sheets under
accounting guidance in existence at the date of the Sybra Acquisition. 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 periods covered by renewal options, with
a weighted average remaining useful life of 18 years as of the date of the Sybra
Acquisition.

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 table, below under 'Purchase Price
Allocations of Acquisitions' is summarized as follows (in thousands):

Goodwill in estimated preliminary allocation of purchase price....... $71,960
Changes in goodwill:
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)
-------
(4,536)
-------
Goodwill in final allocation of purchase price............... $67,424(b)
-------
-------

- ---------

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

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JANUARY 2, 2005

(footnotes continued from previous page)

(b) Before an impairment charge recorded in 2003 of $22,000,000 (see Note 16).

Sybra's results of operations and cash flows have been included in the
accompanying consolidated statements of operations and cash flows for the years
ended January 2, 2005 and 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 19) 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
----
----

PURCHASE PRICE ALLOCATIONS OF ACQUISITIONS

The following table (1) summarizes the allocations of the purchase prices of
Sybra and, on a preliminary basis, Deerfield to the assets acquired and
liabilities assumed in the Sybra Acquisition and the Deerfield Acquisition,
respectively, and (2) provides a reconciliation to 'Cost of business
acquisitions less cash acquired' in the accompanying consolidated statements of
cash flows for 2002 and 2003, in the aggregate, for the Sybra Acquisition and
2004 for the Deerfield Acquisition (in thousands):

- ---------

(a) Includes an adjustment of $200,000 in 2003.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
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(4) INCOME (LOSS) PER SHARE

Income (loss) per share amounts in the accompanying consolidated financial
statements and notes thereto reflect the effect of a stock distribution (the
'Stock Distribution') on September 4, 2003 of two shares of Class B Common Stock
for each share of Class A Common Stock issued as of August 21, 2003 (see
Note 15), as if the Stock Distribution had occurred at the beginning of 2002.

Basic income (loss) per share has been computed by dividing the allocated
income or loss for the Company's Class A Common Stock and the Company's Class B
Common Stock by the weighted average number of shares of each class. Both
factors are presented in the table below. Net income for 2002 was allocated
equally among each share of Class A Common Stock and Class B Common Stock since
prior to the Stock Distribution there were no dividends declared or
contractually payable. Net loss for 2003 was also allocated equally among each
share of Class A Common Stock and Class B Common Stock, resulting in the same
loss per share for each class. Net income for 2004 was allocated between the
Class A Common Stock and Class B Common Stock 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 15). The weighted average number of shares
includes the weighted average effect of the shares held in the additional
deferred compensation trusts which are not reported as outstanding shares for
financial statement purposes (see Notes 15 and 24).

Diluted income (loss) per share for 2002 and 2003 was the same as basic
income (loss) per share for each of the Class A and Class B Common Stock 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. Diluted income per share for
2004 has been computed by dividing the allocated income for the Class A Common
Stock and Class B Common Stock by the weighted average number of shares of each
class plus the potential common share effects of dilutive stock options,
computed using the treasury stock method, as presented in the table below. The
shares used to calculate diluted income per share exclude any effect of the
Company's $175,000,000 of 5% convertible notes which would have been
antidilutive due to the effect of the interest on the convertible notes, net of
income taxes, which would be added back to the allocated income loss per share
of Class A Common Stock and Class B Common Stock obtainable upon conversion
exceeding the reported basic income per share from continuing operations (see
Note 11).

The only remaining Company securities as of January 2, 2005 that could
dilute basic income per share for years subsequent to January 2, 2005 are
(1) outstanding stock options which are exercisable into 3,624,801 shares and
9,194,102 shares of the Company's Class A Common Stock and Class B Common Stock,
respectively, (see Note 15) 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 11).

Income (loss) per share has been computed by allocating the income or loss
as follows (in thousands):

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TRIARC COMPANIES, INC. AND SUBSIDIARIES
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The number of shares used to calculate basic and diluted loss per share were
as follows (in thousands):

(5) SHORT-TERM INVESTMENTS AND CERTAIN LIABILITY POSITIONS

SHORT-TERM INVESTMENTS

The Company's short-term investments are carried at fair market value,
except for short-term Cost Investments (see Note 1) set forth in the table
below. 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 17). Information
regarding the Company's short-term investments at December 28, 2003 and January
2, 2005 is as follows (in thousands):

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TRIARC COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
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As of January 2, 2005, the Company had an aggregate of $362,000 of
unrealized holding losses on available-for-sale securities relating to 32
securities. Each of these securities has been in a continuous unrealized loss
position for less than 12 months.

The maturities as of January 2, 2005 of asset-backed securities, including
those with and without a single maturity date, United States government and
government agency debt securities, commercial paper and corporate debt
securities which are classified as available-for-sale at fair value, which is
equal to their carrying value, are as follows (in thousands):

Within one year............................................. $23,156
After one year through five years........................... 13,744
Six years................................................... 1,251
Asset-backed securities not due at a single maturity date... 13,316
-------
$51,467
-------
-------

Proceeds from sales and maturities of available-for-sale securities and
gross realized gains and gross realized losses on those sales, which are
included in 'Investment income, net' in the accompanying consolidated statements
of operations (see Note 17), are as follows (in thousands):

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The following is a summary of the components of the unrealized gains or
losses on available-for-sale securities included in other comprehensive income
(loss) (in thousands):

The change in the net unrealized gain (loss) on trading securities and in
2004, trading derivatives, resulted in gains (losses) of $(883,000), $5,205,000
and $(2,050,000) in 2002, 2003 and 2004 respectively, which are included in
'Investment income, net' in the accompanying consolidated statements of
operations (see Note 17).

The preferred shares of CDOs represent less than 5% of each of the CDOs'
total debt and equity as of January 2, 2005. In addition, the Company has
determined that it does not have the majority of expected losses or gains of the
respective CDOs. The Company may be considered to have significant variable
interests in the CDOs in which the Company manages and owns an equity interest
in CDOs, but is not the primary beneficiary. The Company's maximum loss exposure
relating to these variable interests is comprised of its investment balance of
$18,684,000 and the potential loss of future management fees.

Short-term Cost Investments represent (1) investments in limited
partnerships, limited liability companies and similar investment entities,
principally hedge funds 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, in
2003, (2) assignments of commercial term loans. These investments are focused on
both domestic and foreign securities.

CERTAIN LIABILITY POSITIONS RELATED TO SHORT-TERM INVESTMENTS

Certain liability positions related to short-term investments, which are
included in 'Accrued expenses and other current liabilities' (see Note 6) in the
accompanying consolidated balance sheets, consisted of the following (in
thousands):

The Company enters into (1) securities sold under agreements to repurchase
('Repurchase Agreements'), (2) debt and equity securities sold with an
obligation to purchase ('Short Sales'), and (3) derivatives which are held in
trading portfolios, certain of which were in liability positions as of January
2, 2005, all as part of its portfolio management strategy. Repurchase Agreements
are securities sold under agreements to repurchase for fixed amounts at
specified future dates. Short sales are debt and equity securities not owned at
the time of sale that require purchase of the debt and equity securities at a
future date. The change in the net unrealized gains (losses) on securities sold
with an obligation to purchase resulted in losses of $(1,020,000) and
$(4,578,000) in

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TRIARC COMPANIES, INC. AND SUBSIDIARIES
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2002 and 2003, respectively, and income of $291,000 in 2004, which are included
in 'Investment income, net' (see Note 17). Derivatives in liability positions as
of January 2, 2005 consisted of certain futures contracts and credit default
swaps (see Notes 12 and 13).

COLLATERAL

Debt securities with an aggregate carrying value of $15,140,000 as of
January 2, 2005 are pledged as collateral for Repurchase Agreements. Debt
securities and marketable equity securities with an aggregate carrying value of
$5,008,000 and cash of $10,255,000 as of January 2, 2005 included in 'Restricted
cash equivalents' classified in current assets (see Note 7) in the accompanying
consolidated balance sheet are pledged as collateral principally for Short
Sales. Cash of $6,017,000 also included in 'Restricted cash equivalents'
classified in current assets secures the notional amount (see Note 12) of
trading derivatives held in trading portfolios. In addition, certain preferred
shares of CDOs with an aggregate carrying value of $14,266,000 as of January 2,
2005 are pledged as collateral for certain notes payable (see Note 10).

(6) BALANCE SHEET DETAIL

CASH

Cash and cash equivalents aggregating $9,495,000 and $10,222,000 as of
December 28, 2003 and January 2, 2005, respectively, are pledged as collateral
for the Company's insured securitization notes (see Note 11). 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.

RECEIVABLES

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

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TRIARC COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
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The following is an analysis of the allowance for doubtful accounts (in
thousands):

- ---------

(a) The recovery in 2003 and 2004 represents the release of allowances for
doubtful accounts no longer required due to a continuing favorable
collections history for formerly delinquent trade accounts.

(b) The reversal in 2002 and 2003 represents the realization of collections
related to fully-reserved notes receivable from two franchisees.

Certain trade receivables with an aggregate net book value of $8,837,000 as
of January 2, 2005 are pledged as collateral for the Company's insured
securitization notes (see Note 11).

INVENTORIES

Inventories consist principally of food, beverage and paper inventories and
are classified entirely as raw materials. Inventories aggregating $1,723,000 as
of January 2, 2005 are pledged as collateral for certain debt (see Note 11).

PROPERTIES

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

Properties with a net book value of $91,410,000 as of January 2, 2005 are
pledged as collateral for certain debt (see Note 11).

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TRIARC COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
JANUARY 2, 2005

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. The allowance was
increased during 2003 by a $67,000 additional provision and was reduced
during 2003 and 2004 by $194,000 and $20,000, respectively, in connection
with the write-off of certain uncollectible accounts which were forgiven in
accordance with their terms.

ACCOUNTS PAYABLE

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

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

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

Certain liability positions related to short-term investments as of
January 2, 2005 are secured by marketable equity securities and debt securities
with an aggregate carrying value of $20,148,000 included in 'Short-term
investments' (see Note 5) in the accompanying consolidated balance sheet and
cash of $10,255,000

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TRIARC COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
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included in 'Restricted cash equivalents' (see Note 7) classified in current
assets in the accompanying consolidated balance sheet.

MINORITY INTERESTS IN CONSOLIDATED SUBSIDIARIES

The following is a summary of the components of minority interests in
consolidated subsidiaries (in thousands):

The minority interests set forth above are comprised principally of certain
of the Company's management (see Note 24). Deerfield granted Profit Interests
effective August 20, 2004 to certain of its key employees which effectively
increased the minority interest in any profits of Deerfield subsequent to August
19, 2004 by 2.1% to 38.5% from 36.4%.

(7) RESTRICTED CASH EQUIVALENTS

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

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
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(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 19) 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 9.0% and certain present
officers, including entities controlled by them, collectively owning 14.5% of
Encore's issued and outstanding common stock (the 'Encore Common Stock') as of
January 2, 2005. Encore is a financial services company which purchases and
manages charged-off 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.

Prior to 2002 the investment in Encore was reduced to zero due to losses of
Encore and the Company ceased to apply the Equity Method to its equity in
additional losses of Encore.

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 then newly issued convertible preferred stock of Encore
(the 'Encore Preferred Stock') in which the Company invested $873,000, and the
officers collectively invested $1,427,000. As a result, in 2002 the Company
recognized its cumulative unrecorded equity in losses of Encore of $744,000 for
periods prior to 2002 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

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TRIARC COMPANIES, INC. AND SUBSIDIARIES
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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, 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% and 9.0% as of December 28, 2003 and January 2, 2005,
respectively, as a result of additional exercises of Encore stock options and,
in 2003, warrants by third parties.

The Company recorded a $5,810,000 gain 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 recorded a $66,000
gain in the accompanying consolidated statement of operations for the year ended
January 2, 2005 from the exercise of Encore stock options not participated in by
the Company. All such gains are included in 'Gain (loss) on sale of businesses'
(see Note 18) in the accompanying consolidated statements of operations.

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
January 2, 2005 is $346,000 less than the corresponding underlying equity
interest in Encore, net of accumulated

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TRIARC COMPANIES, INC. AND SUBSIDIARIES
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amortization, comprised of (1) $235,000 related to the Company's original
investment in Encore Common Stock prior to 2002 and (2) $111,000 remaining from
the $350,000 effectively allocated to Encore's assets, net of amortization and
other reductions. The decrease in the difference between the Company's
investment in the common stock of Encore and the corresponding underlying equity
interest in Encore of $132,000 during the year ended January 2, 2005 is netted
in the equity in net earnings of investees included in 'Other income, net' (see
Note 19) in the accompanying consolidated statement of operations.

In December 2004 the Company purchased 1,000,000 shares of the REIT (see
Note 1), the assets of which are managed by the Company. This purchase was
pursuant to a private offering (the 'REIT Offering'), and was for $15,000,000,
less $912,000 of related issuance costs, principally underwriters' discount.
These shares represent an ownership percentage in the REIT of 3.7% at
January 2, 2005. The Company accounts for its investment in the REIT under the
Equity Method due to the Company's significant influence over the operational
and financial policies of the REIT, principally reflecting the Company's greater
than 20% representation on the REIT's board of directors and the management of
the REIT by the Company. In connection with the REIT Offering, the Company was
granted 403,847 shares of restricted stock of the REIT and options to purchase
an additional 1,346,156 shares of stock of the REIT (collectively, the
'Restricted Investments'). The Restricted Investments represent stock-based
compensation granted in consideration of the Company's management of the REIT.
The Restricted Investments were recorded at fair value, which was $6,058,000 and
$263,000 for the restricted stock and stock options, respectively, with an equal
offsetting credit to deferred income and will be adjusted for any future changes
in their fair value. Such deferred income is amortized to revenues as 'Asset
management and related fees' ratably over the three-year vesting period of the
Restricted Investments and amounted to $95,000 for the year ended January 2,
2005. The Company also recorded its $232,000 equity in the value of the
Restricted Investments recorded by the REIT as a charge to the 'Unearned
Compensation' component of 'Stockholders' equity' with an equal offsetting
increase to 'Additional paid-in capital.' The carrying value of the investment
in the REIT is greater than the Company's interest in the underlying equity of
the REIT as a result of the dilution caused by the grant of restricted stock to
the Company for which the REIT received no consideration. This excess will be
amortized over the three-year vesting period of the Restricted Investments as a
reduction of the equity in earnings of the REIT.

In July 2004 the Company acquired a 25% equity interest (14.3% general
voting interest) in Jurlique International Pty Ltd. ('Jurlique'), a privately
held Australian skin and beauty products company. The Company accounts for its
investment in Jurlique under the Cost Method since its 14.3% voting interest
does not provide it the ability to exercise significant influence over
Jurlique's operational and financial policies. The Company paid $13,303,000 of
the cost of the investment, including expenses of $407,000, with the remainder
payable in July 2005. The remainder is payable in 18,000,000 Australian dollars,
or $14,049,000 based on the exchange rate as of January 2, 2005 and is included
in 'Accrued expenses and other current liabilities' (see Note 6) and bears
interest commencing March 23, 2005. In connection with the Jurlique investment
and the July 2005 payment, the Company entered into certain foreign currency
related derivative transactions that are described in Note 12.

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 29, 2002 and as of and for the year ended
January 2, 2005 because the Company's Equity Investments, including Equity
Investments classified as 'Short-term investments' (see Note 5), were not
significant to the Company's

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
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consolidated total assets or consolidated income (loss) from continuing
operations before income taxes and minority interests in 2002 or 2004. The
summary financial information is as follows (in thousands):

(9) GOODWILL AND ASSET MANAGEMENT CONTRACTS AND OTHER INTANGIBLE ASSETS

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

The Company no longer amortizes goodwill. A summary of the changes in the
carrying amount of goodwill for 2003 and 2004 is as follows (in thousands):

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

Aggregate amortization expense:
Actual for fiscal year:
2003.................................................. $ 991
2004.................................................. 4,669(a)
Estimate for fiscal year:
2005.................................................. $5,191
2006.................................................. 5,043
2007.................................................. 3,884
2008.................................................. 3,242
2009.................................................. 3,219

- ---------

(a) This amount includes $1,670,000 of impairment charges related to other
intangible assets (see Note 16).

(10) NOTES PAYABLE

Notes payable relate to the Company's asset management business and
consisted of the following at January 2, 2005 (in thousands):

Notes payable to financial institutions bearing interest at
a weighted average rate of 2.78% as of January 2, 2005,
net of unamortized discount of $135 (a)................... $10,334
Note payable to an institutional investor bearing interest
effectively at 15.08% as of January 2, 2005 (b)........... 5,000
-------
$15,334
-------
-------

- ---------

(a) These notes are secured by certain of the Company's short-term investments
in preferred shares of CDOs having a carrying value of $14,266,000 as of
January 2, 2005. The notes bear interest at variable rates ranging from the
three-month London Interbank Offered Rate ('LIBOR') to LIBOR plus 1%, reset
quarterly. The notes have no stated maturities, but are payable from a
portion or all of distributions the Company receives on, or sales proceeds
from, the respective preferred shares of CDOs, as well as certain of the
asset management fees to be paid to the Company from the CDOs.

(b) This note is effectively offset by a related note receivable included in
'Receivables' (see Note 6), both of which were settled on January 26, 2005.

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(11) LONG-TERM DEBT

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

Aggregate annual maturities of long-term debt were as follows as of January
2, 2005 (in thousands):

- ---------

(a) The Company, through Arby's Trust, has outstanding $211,883,000 of insured
non-recourse securitization notes (the 'Securitization Notes') as of
January 2, 2005 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 $23,969,000 in 2005 with increasing annual payments to
$37,377,000 in 2011 in accordance with a targeted principal payment
schedule. The table of annual
(footnotes continued on next page)

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(footnotes continued from previous page)

maturities of long-term debt above reflects these targeted payments. The
Securitization Notes are 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 of the Company with an
aggregate net book value of $49,606,000 as of January 2, 2005 consisting of
cash and cash equivalents of $10,222,000, a cash equivalent reserve account
of $30,547,000 and royalties receivable of $8,837,000.

(b) The 5% convertible notes due 2023 (the 'Convertible Notes') were issued on
May 19, 2003 and 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 $5,551,000 of principal is due in 2005. 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 $29,467,000, $12,253,000 and $1,723,000.

(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 (4.13% as of January 2, 2005),
determined at the Company's option, at the prime rate or the one-month
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 12). Obligations under the Bank Term Loan are secured by an airplane
with a net book value of $18,984,000 as of January 2, 2005.

(e) The secured promissory note (the 'Promissory Note') is due $2,223,000 in
2005 and $7,204,000 in 2006. The Promissory Note is secured by an airplane
with a net book value of $22,740,000 as of January 2, 2005.

(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 $1,338,000 of principal is due in 2005. 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 $5,221,000.

(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 $164,000 of principal is due in 2005. 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
$995,000, respectively.

(h) The Company remains liable for $2,768,000 of mortgage notes payable as of
January 2, 2005, of which it is a co-obligor for notes aggregating $409,000
as of January 2, 2005.

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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. The Company was in compliance with all of such
covenants as of January 2, 2005.

In accordance with the Securitization Indenture, as of January 2, 2005,
Arby's Trust had no amounts available for the payment of distributions. However,
on January 20, 2005, $1,268,000 relating to cash flows for the calendar month of
December 2004 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.

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 January 2, 2005.

(12) DERIVATIVE INSTRUMENTS

The Company invests in derivative instruments that are subject to the
guidance in SFAS 133. At January 2, 2005, these instruments are as follows:
(1) derivatives held in a short-term investment trading portfolio (described in
detail below), (2) the Swap Agreement entered into prior to 2002 (see Note 11
and below), (3) a foreign currency forward contract whereby the Company fixed
the exchange rate in connection with a liability for the remaining cost of the
investment in Jurlique payable by the Company in Australian dollars in July 2005
and (4) a put and call arrangement on a portion of the Company's total cost
related to the investment in Jurlique whereby the Company limited its overall
foreign currency risk of holding the investment through July 2007. At
January 2, 2005, the Company's derivatives held in a short-term investment
trading portfolio consisted of (1) bank loan total return swaps, (2) futures
contracts relating to interest rates, (3) forward contracts on corporate bonds
and (4) credit default swaps. In addition, the Company's derivatives during
2002, 2003 and a portion of 2004 had previously included the conversion
component of short-term investments in convertible debt securities and put and
call options on a portion of equity and corporate debt securities, all held in a
short-term investment trading portfolio. The Company did not designate any of
these derivatives as hedging instruments and, accordingly, all of these
derivative instruments were recorded at fair value with changes in fair value
recorded in the Company's results of operations. The Company invests in the
derivatives held in short-term investment trading portfolios 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 these trading derivatives. In that regard, in October 2004, the
Company increased investing activities in the derivatives held in a short-term
investment trading portfolio. 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. Derivative instruments that may be
settled in the Company's own stock are not subject to the guidance in SFAS 133
(see Note 15).

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The notional amounts, converted as applicable into United States dollars,
and the carrying amounts of the Company's derivatives described above as of
January 2, 2005, and their classification in the accompanying consolidated
balance sheet, are as follows (in thousands):

Recognized net gains (losses) on the Company's derivatives were classified
in the accompanying consolidated statements of operations as follows (in
thousands):

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(13) 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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(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 principally on (1) quoted market prices,
(2) broker/dealer prices or (3) statements of account received from
investment managers or investees which were principally based on quoted
market or broker/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, other than Jurlique, were based almost entirely on statements
of account received from investment managers or investees which are
principally based on quoted market or broker/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
broker/dealer prices, the Company relies on third-party appraisals or
valuations performed by the investment managers or investees in valuing
those investments. The fair value of the Company's investment in Jurlique,
which is not publicly traded, was based on converting the original purchase
price in Australian dollars, which was assumed to approximate fair value
due to the relatively recent purchase of such investment in July 2004, to
United States dollars using the foreign currency exchange rate as of
January 2, 2005.

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

(e) The Restricted Investments consist of restricted stock and stock options in
the REIT. The fair value of the restricted stock was determined by the
offering price of the stock in a recent private offering. The fair value of
the restricted stock options was calculated under the Black-Scholes-Merton
option pricing model.

(f) The fair values were determined by broker/dealer prices and were based on
current and expected future currency rates.

(g) The fair value approximated the carrying value due to the frequent reset,
on a monthly or quarterly basis, of the floating interest rates.

(h) 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.

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

(j) The fair value represents the liability converted at the foreign currency
exchange rate as of January 2, 2005.

(k) The fair value approximated the carrying amount, due to the daily resetting
of interest rates on the contractual amounts.

(l) Trading derivative liabilities consist of futures contracts and credit
default swaps. The fair values of the futures contracts were based on
quoted market prices. The fair values of credit default swaps were based on
broker/dealer quotations.

(m) 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.

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

(o) 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.

(p) 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.

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.

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(14) INCOME TAXES

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

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

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

The decrease in the net deferred income tax liability from $14,846,000 at
December 28, 2003 to $5,382,000 at January 2, 2005, or a decrease of $9,464,000
differs from the benefit for deferred income taxes of $6,101,000 for 2004. The
difference of $3,363,000 is principally due to the recognition of deferred tax
assets related to the exercise of employee stock options.

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

During 2004, the Internal Revenue Service (the 'IRS') finalized its
examination of the Company's Federal income tax returns for the years ended
December 31, 2000 and December 30, 2001 without assessing any additional income
tax liability. Also during 2004, a state income tax examination was finalized
and the statute of limitations for examinations of certain state income tax
returns expired. In connection with these matters, the Company determined that
it had income tax reserves and related interest accruals that were no longer
required and released (1) $27,056,000 of income tax reserves, of which
$14,592,000 increased the 'Benefit from income taxes' and $12,464,000 was
reported as the 'Gain on disposal of discontinued operations' (see Note 20), and
(2) $4,342,000 of related interest accruals as a reduction of 'Interest expense'
in the accompanying consolidated statements of operations for the year ended
January 2, 2005. The Company's Federal income tax returns are not currently
under examination by the IRS although certain state income tax returns are
currently under examination. However, management of the Company believes that
adequate aggregate provisions have been made in prior periods for any
liabilities, including interest, that may result from any such examination(s).
Such contingency reserves are included in 'Other liabilities and deferred
income' in the accompanying consolidated balance sheets.

(15) 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 2002, 2003 and 2004.

Class B Common Stock

The Company increased the number of shares authorized of Class B Common
Stock to 150,000,000 shares in June 2004 from 100,000,000 shares authorized
prior to 2002.

Throughout 2002 and until September 4, 2003 there were no shares issued of
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. Subsequently, there have been no changes in the
number of shares issued of Class B Common Stock.

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

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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
issuance 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 be
entitled to participate equally on a per share basis with the Class A Common
Stock in any cash dividends.

Dividends

Commencing in September 2003, the Company has 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 $8,515,000 in 2003 and
$18,168,000 in 2004. On March 15, 2005 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, to holders of record on March 3, 2005. 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

There were 100,000,000 shares authorized and no issued shares of preferred
stock throughout 2002, 2003 and 2004.

Treasury Stock

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

STOCK-BASED COMPENSATION

Stock Options

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

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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 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. Stock options granted subsequent to the
Stock Distribution are exercisable either for one share of Class A Common Stock
(the 'Class A Options') or one share of Class B Common Stock (the 'Class B
Options'). As of January 2, 2005 there were 4,929,881 Class A shares and
7,919,414 Class B shares available for future grants under the Equity Plans.

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

The weighted average grant date fair values calculated under the
Black-Scholes-Merton option pricing model (the 'Black-Scholes Model') of stock
options granted under the Equity Plans during 2002, 2003 and 2004, all of which
were granted at exercise prices equal to the market price of the common stock on
the grant date, were as follows:

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None of the Class A Options were exercisable as of January 2, 2005. A
summary of exercisable Package Options and Class B Options is as follows:

The following table sets forth information relating to stock options
outstanding at January 2, 2005 under the Equity Plans:

All currently outstanding stock options under the Equity Plans have maximum
terms of ten years and vest ratably over periods of two or three years.

During 2002, 2003 and 2004, 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 $275,000,
$422,000 and $246,000 during 2002, 2003 and 2004, respectively, which was
credited to 'Additional paid-in capital' with an equal offsetting charge to
'General and administrative, excluding depreciation and amortization' 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 or loss, (2) the
recognition of total stock-based employee compensation expense for all
outstanding and unvested stock options during each of the years presented
determined under the fair value method and (3) the income tax effects of each.

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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 in 2003 occurred prior to the commencement of
regular quarterly cash dividends.

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 the model
requires the use of highly subjective assumptions including expected stock price
volatility. The Company's stock-option 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 model does not
necessarily provide a reliable single measure of the fair value of its
stock-option awards to employees.

Deerfield Profit Interests

Deerfield granted Profit Interests effective August 20, 2004 to certain of
its key employees, which effectively increased the minority interests in any
profits of Deerfield subsequent to August 19, 2004 by 2.1% to 38.5% from 36.4%
and decreased the Company's interest in such profits to 61.5% from 63.6%. No
payments were required from the employees to acquire the Profit Interests. The
estimated fair value at the date of grant of the Profit Interests was $2,050,000
in accordance with an independent appraisal and represents the
probability-weighted present value of estimated future cash flows to those
Profit Interests. This fair value resulted in aggregate unearned compensation of
$1,260,000, net of minority interests, being charged to the 'Unearned
compensation' component of 'Stockholders' equity' with an equal offsetting
increase in 'Additional paid-in capital.' The vesting of Profit Interests varies
by employee either vesting ratably in each of the three years ended August 20,
2007, 2008, and 2009 or 100% on August 20, 2007. Accordingly, this unearned
compensation is being amortized as compensation expense as earned over periods
of three or five years.

Restricted Stock

On March 14, 2005, the Company granted 149,155 and 731,411 performance-based
restricted shares of Class A Common Stock and Class B Common Stock,
respectively, (the 'Restricted Shares') to certain officers and key employees
under its 2002 equity participation plan. The Restricted Shares vest ratably
over three years, subject to meeting, in each case, certain Class B Common Share
market price targets, or to the extent not previously vested, on March 14, 2010
subject to meeting a specific Class B Common Share market price target. The
prices of the Company's Class A and Class B Common Stock on the March 14, 2005
grant date were $15.59 and $14.75 per share, respectively.

(16) IMPAIRMENT

LONG-LIVED ASSETS

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 years ended December 28, 2003 and January 2, 2005, the Company recorded

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impairment losses of $364,000 and $3,382,000, respectively. The impairment loss
in 2003 related entirely 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 sheets. The
impairment loss in 2004 included $1,800,000 related to Company-owned restaurants
acquired in the Sybra Acquisition and $1,582,000 related to the Company's T.J.
Cinnamons trademark. The 2004 impairment loss related to Company-owned
restaurants included $1,712,000 related to equipment, leasehold improvements and
leased assets capitalized, $65,000 related to computer software and $23,000
related to favorable leases. The restaurant impairment losses in 2003 and 2004
predominantly reflect (1) impairment charges resulting from the deterioration in
operating performance of certain restaurants and (2) in 2004, additional charges
for restaurants impaired in 2003 which did not recover in 2004, principally for
the investment in their back office and point-of-sale systems installed in each
of the Company-owned restaurants in 2004. The trademark impairment loss in 2004
resulted from the Company's assessment during the fourth quarter of the T.J.
Cinnamons brand, which offers, through franchised and Company-owned restaurants,
a product line of gourmet cinnamon rolls, coffee rolls, coffees and other
related products. This assessment resulted in (1) the Company's decision to not
actively pursue new T.J. Cinnamons franchisees until additional new product
offerings within its existing product line are tested and become available and
(2) the corresponding reduction in anticipated TJ Cinnamons unit growth. All of
these impairment losses represented the excess of the carrying value over the
fair value of the affected assets and are included in 'Depreciation and
amortization, excluding amortization of deferred financing costs' in the
accompanying consolidated statements of operations for the years ended
December 28, 2003 and January 2, 2005. 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.

GOODWILL

The Company determined that for the years ended December 29, 2002 and
January 2, 2005 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 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 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 overall 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 were adversely impacted in 2003. In
light of the increased competitive pressures and recognizing the unfavorable
trend in roast beef costs versus historical averages during 2003, 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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(17) INVESTMENT INCOME, NET

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

- ---------

(a) The Other Than Temporary 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. The Other Than
Temporary Losses in 2004 of $6,943,000 related primarily to the recognition
of (1) $5,157,000 of impairment charges based on significant declines in the
market values of some of the Company's higher yielding, but more
risk-inherent, debt securities that were entered into with the objective of
improving the overall return on the Company's interest-bearing investments
and (2) $1,383,000 of impairment charges based on significant decline in the
market values of three of the Company's available-for-sale investments in
publicly-traded companies.

(18) GAIN (LOSS) ON SALE OF BUSINESSES

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

(footnote on next page)

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(footnote from previous page)

(a) On January 20, 2005, the Company sold an additional 604,790 shares of
Encore Common Stock thereby reducing the Company's ownership in Encore to
6.3% and resulting in a gain of approximately $9,000,000, which will be
recognized in our quarter ending April 3, 2005.

(19) OTHER INCOME, NET

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

(20) DISCONTINUED OPERATIONS

Prior to 2002 the Company sold the Snapple Beverage Group and Royal Crown
(the 'Snapple Beverage Sale'). 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. During 2002, 2003 and 2004 the Company recorded
additional gains from the Snapple Beverage Sale of $11,100,000, $1,565,000 and
$12,464,000, respectively. 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 the purchaser of the Former Beverage Businesses 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. The additional gain in 2004 resulted
from the release of reserves for income taxes which were no longer required upon
the finalization of the IRS examination of the Company's Federal income tax
returns for the years ended December 31, 2000 and December 30, 2001 and the
expiration of the statute of limitations for examinations of certain of the
Company's state income tax returns.

Prior to 2002 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

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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
28, 2003 and January 2, 2005 consisted of the following (in thousands):

Accrued income taxes and other accrued expenses of the Beverage Discontinued
Operations as of January 2, 2005 represent remaining liabilities payable with
respect to the Beverage Discontinued Operations. The liabilities of the SEPSCO
and Propane Discontinued Operations principally represent liabilities that have
not been liquidated as of January 2, 2005. The Company expects that the
liquidation of the remaining liabilities associated with all of these
discontinued operations as of January 2, 2005 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 or loss on disposal of discontinued operations.

(21) RETIREMENT BENEFIT PLANS

The Company maintains three 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 and employees of Deerfield subsequent to July 22, 2004. Under the
provisions of the 401(k) Plans, employees may contribute various percentages of
their compensation ranging up to a maximum of 20% for one of the 401(k) Plans
and 100% for the other plans, 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. Another of the plans provides for discretionary Company
matching contributions, which during 2004 were 25% of employee contributions.
The other plan permits unspecified matching contributions; however, no such
contributions have been made. In addition, two of 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 $1,174,000, $1,232,000 and $1,386,000 as
compensation expense in 2002, 2003 and 2004, 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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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 28, 2003 and January 2, 2005 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 losses in 2002 and 2004, and the recovery in 2003,
less related deferred income taxes, have been reported as 'Unrecognized pension
loss' and 'Recovery of 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 2004
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 2002 to 2003 resulted in an
increase in the net periodic pension cost of $12,000. A change in the mortality
table used in determining the 2003 net periodic pension cost resulted in an
increase of $47,000. The effect of the decrease in the discount rate used in
measuring the accumulated benefit obligations from 2003 to 2004 resulted in an
increase in the accumulated benefit obligations of $216,000.

The weighted-average asset allocations of the two defined benefit plans by
asset category at December 28, 2003 and January 2, 2005 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 will not be required, and accordingly does not expect, to make
any contributions to its two defined benefit plans in 2005.

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The expected benefits to be paid by the Company's two defined benefit plans
over the next five fiscal years and in the aggregate for the five fiscal years
thereafter are as follows (in thousands):

(22) 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 significantly
commencing in 2003 due to the Sybra Acquisition, consisted of the following
components (in thousands):

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 January 2, 2005, are as follows (in thousands):

As of January 2, 2005, the Company had $2,870,000 of 'Favorable leases,' net
of accumulated amortization, included in 'Asset management contracts and other
intangible assets' (see Note 9) and $12,396,000 of unfavorable leases included
in 'Other liabilities and deferred income,' resulting in $9,526,000 of net
unfavorable leases. The future minimum rental payments set forth above have been
reduced by (1) the $9,526,000 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 23) and (3) the lease obligations for closed

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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 January 2, 2005 (see
Note 11).

(23) 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 January 2, 2005, 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
January 2, 2005. The Company believes it is unlikely that it will be called upon
to make any payments under the Indemnification. Prior to 2002, AmeriGas Propane
L.P. ('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, 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 approximately $36,100,000 as of January 2, 2005, associated with
the sale, prior to 2002, 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
$40,000,000 and $38,000,000 were outstanding as of December 28, 2003 and
January 2, 2005, 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 $59,000,000 and $52,000,000 as of December 28, 2003 and
January 2, 2005, respectively, assuming RTM has made all scheduled payments
thereof through those dates.

The carrying amounts of the Mortgage and Equipment Notes Guarantee and the
Lease Guarantee aggregated $222,000 and $151,000 as of December 28, 2003 and
January 2, 2005, respectively (see Note 13). Such carrying amounts are included
in 'Other liabilities and deferred income' in the accompanying consolidated
balance sheets.

(24) TRANSACTIONS WITH RELATED PARTIES

Prior to 2002 the Company provided aggregate incentive compensation of
$22,500,000 to the Chairman and Chief Executive Officer and President and Chief
Operating Officer of the Company (the 'Executives'), which was invested in two
deferred compensation trusts (the 'Deferred Compensation Trusts') for their
benefit. Deferred compensation expense of $1,350,000, $3,438,000 and $2,580,000
was recognized in 2002, 2003 and 2004, 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

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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 net investment income
(loss) from investments in the Deferred Compensation Trusts of $(25,000) in
2002, $714,000 in 2003 and $2,000,000 in 2004. The net investment loss in 2002
consisted entirely of management fees. The net investment income during 2003 and
2004 consisted of (1) realized gains from the sale of certain Cost Method
investments in the Deferred Compensation Trusts of $949,000 and $2,358,000,
respectively, which included increases in value prior to 2003 and 2004 of
$668,000 and $1,823,000, respectively, (2) interest income of $9,000 and
$18,000, respectively, less (3) management fees of $244,000 and $376,000,
respectively. Recognized gains, interest income and investment fees are included
in 'Investment income, net' and deferred compensation expense is included in
'General and administrative, excluding depreciation and amortization' expenses
in the accompanying consolidated statements of operations. As of December 28,
2003 and January 2, 2005, the obligation to the Executives related to the
Deferred Compensation Trusts is $29,144,000 and $31,724,000, respectively, and
is included in 'Deferred compensation payable to related parties' in the
accompanying consolidated balance sheets. As of December 28, 2003 and
January 2, 2005 the assets in the Deferred Compensation Trusts consisted of
$21,496,000 and $17,001,000, respectively, included in 'Investments,' which does
not reflect the unrealized increase in the fair value of the investments,
$495,000 and $6,725,000, respectively, included in 'Receivables' and $1,475,000
and $1,792,000, respectively, included in 'Cash (including cash equivalents)' in
the accompanying consolidated balance sheets. The cumulative disparity between
(1) deferred compensation expense and net recognized investment income and
(2) the obligation to the Executives and the carrying value of the assets in the
Deferred Compensation Trusts 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.

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. During 2004 the Executives exercised an aggregate 3,250,000 Package
Options (see Note 15) under the Company's Equity Plans and paid the exercise
prices utilizing shares of the Company's Class B Common Stock received by the
Executives in connection with the Stock Distribution and effectively owned by
the Executives for more than six months at the dates the options were exercised.
These exercises resulted in aggregate deferred gains to the Executives of
$44,297,000, represented by an additional 1,334,323 Class A Common Shares and
2,668,630 Class B Common Shares based on the market prices at the dates of
exercises. All such shares for 2003 and 2004, 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 'Additional Deferred
Compensation Trusts'). The aggregate resulting obligation of $10,160,000 and
$54,457,000 is reported as the 'Deferred compensation payable in common stock'
component of 'Stockholders' equity' in the accompanying consolidated balance
sheets as of December 28, 2003 and January 2, 2005, respectively. 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. 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 and, during 2004,
elected to further defer the receipt of these shares until no earlier than
January 2, 2008. The cash equivalents of $155,000 and $1,217,000 as of
December 28, 2003 and January 2, 2005, respectively, funded from cumulative
dividends paid on shares held by the Additional Deferred Compensation Trusts and
interest thereon and not yet paid to the Executives

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are included in 'Cash (including cash equivalents),' and the related obligation
is included in 'Deferred compensation payable to related parties' in the
accompanying consolidated balance sheets.

A class action lawsuit relating to certain awards of compensation to the
Executives in 1994 through 1997 was settled in 2001 whereby, among other things,
the Company received an interest-bearing note (the 'Executives' Note') from the
Executives, in the aggregate amount of $5,000,000. The Executives' Note was
repaid in three equal installments in March 2001, 2002 and 2003. The Executives'
Note bore interest at an annual rate of 4.92% from the beginning of 2002 through
April 1, 2002 when, in accordance with its terms, the rate was adjusted to
1.75%. The Company recorded interest income on the Executives' Note of $62,000
and $7,000 during 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,
2003 or 2004.

As part of its overall retention efforts, the Company had 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 prior to 2002. 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 current co-investment and corporate
opportunity policy no longer permits any new loans. The former 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 and reset annually. The Company and
certain of its management had entered into four 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. 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.

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Information pertaining to each of the co-investments from their inception,
including years prior to 2002, 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, to the extent they relate to years
subsequent to 2001, were included in 'General and administrative, excluding
depreciation and amortization' expenses 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 $5,000 on the fully-reserved non-recourse notes was written off
in 2002 as a reduction of the 'Other interest income' component of 'Other
income, net' (see Note 19).

(b) The other reductions relate to the return of unused capital to the Company
since the inception of the investment, 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, $17,000 in 2003 and
$35,000 in 2004, which resulted in increases in the Company's ownership
percentage, which has increased to 58.9% at January 2, 2005 from 55.9% at
the beginning of 2002. Such settlements resulted in pretax gains (losses)
to the Company of $48,000, $(10,000) and none in 2002, 2003 and 2004,
respectively, consisting of reductions of the minority interests in 280 BT
of $100,000, $7,000 and $15,000, respectively, as a result of the Company
now owning the 1.5%, 0.5% and 1.0% surrendered interests, less charges of
$52,000, $18,000 and $15,000, 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
(footnotes continued on next page)

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(footnotes continued from previous page)

interests in (income) loss of consolidated subsidiaries' and the charges
for the extinguishment of the notes were included in 'General and
administrative, excluding depreciation and amortization' expenses in the
accompanying consolidated statements of operations.

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, such that the Company owns 9.0% (see Note 8) and certain
present officers collectively own 14.5% of Encore's issued and outstanding
common stock as of January 2, 2005. In October 2002 the Company made a
restricted stock award of 90,000 shares of Encore Common Stock owned by it to a
then 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 a deferred cost which is being amortized to 'Depreciation and
amortization excluding amortization of deferred financing costs' 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 18). The officer's employment with the Company was
terminated in December 2004, and the terms of the unvested portion of the
restricted stock award of 30,000 shares of Encore Common Stock were modified. As
a result of the modification, the $667,000 incremental fair market value of the
Encore shares was recorded as a deferred cost and is being amortized to
'Depreciation and amortization, excluding amortization of deferred financing
costs' through the October 2005 vesting date. An equal offsetting deferred gain
is being amortized to income included in 'Gain (loss) on sale of businesses'
(see Note 18).

Prior to 2002 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 19) in 2003.

As of January 2, 2005, the Company owns 63.6% of the capital interests and
61.5% of the Profit Interests in Deerfield. The remaining economic interests in
Deerfield are owned directly or indirectly by executives of Deerfield, including
one who is also a director of the Company. In connection with the Deerfield
Acquisition, commencing July 22, 2009, the Company will have certain rights to
acquire the economic interests of Deerfield owned by two of its executives,
which aggregate 35.5% of the capital interests and 34.3% of the Profit
Interests. In addition, commencing July 22, 2007, those two executives will have
certain rights to require the Company to acquire their economic interests. In
each case, the rights are generally exercisable at a price equal to the then
current fair market value of those interests and are subject to acceleration
under certain circumstances.

In December 2004 the Company purchased 1,000,000 shares of the REIT (see
Note 8) for $15,000,000 representing an ownership percentage in the REIT of 3.7%
at January 2, 2005 and certain officers of the Company and/or its subsidiaries
purchased 115,414 shares of the REIT for a cost of $1,731,000, representing an
ownership percentage of 0.4% at January 2, 2005. The Company, through Deerfield,
is the investment manager of the REIT and it has a 43% representation on the
REIT's board of directors. The Company accounts for its investment in the REIT
under the Equity Method. The shares purchased by the Company and the officers
referred to above were all purchased at the same price and terms as those shares
purchased by third-party investors pursuant to the REIT Offering. In addition,
the Company received the Restricted

118

TRIARC COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
JANUARY 2, 2005

Investments consisting of 403,847 shares of restricted stock of the REIT and
options to purchase an additional 1,346,156 shares of stock of the REIT, which
represent stock-based compensation granted in consideration of the Company's
management of the REIT. All of these transactions are explained in more detail
in Note 8.

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 of the helicopter directly to
third parties. The aggregate expense attributable to lease related payments to
TASCO aggregated $248,000 in 2002.

In accordance with an employment agreement with an executive of Deerfield
who is also a director of the Company, Deerfield incurred expenses in 2004 of
$199,000 to reimburse an entity of which the executive is the principal owner
for operating expenses related to the usage of an airplane. As of January 2,
2005, the Company has a remaining payable of $140,000 to this entity.

The Company also has related party transactions disclosed in Note 15
consisting of stock-based compensation.

(25) 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 1970s. 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 provided
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 during 2004 the work
under that plan was completed. Adams submitted its contamination assessment
report to the FDEP in March 2004. In August 2004, the FDEP agreed to a
monitoring plan consisting of two sampling events after which it will reevaluate
the need for additional assessment or remediation. The first sampling event
occurred in January 2005 and the results have been submitted to the FDEP for its
review. Based on provisions of $1,667,000 for those costs primarily made 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,
and after taking into consideration various legal defenses available to the
Company, including Adams, Adams has provided for its estimate of its remaining
liability for completion of this matter.

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 other members of the Company's then 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, 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 that was subsequently dismissed in October 2002 and is no
longer being appealed. Through January 2, 2005, 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 $1,200,000 as of
January 2, 2005.

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TRIARC COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
JANUARY 2, 2005

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.

(26) BUSINESS SEGMENTS

As a result of the Deerfield Acquisition, the Company now manages and
internally reports its operations as two business segments: (1) the operation
and franchising of restaurants and (2) asset management (see Note 3). The
Company evaluates segment performance and allocates resources based on each
segment's earnings before interest, taxes, depreciation and amortization
('EBITDA'). Information concerning the segments in which the Company operates is
shown in the table below. EBITDA has been computed as operating profit plus
depreciation and amortization, excluding amortization of deferred financing
costs ('Depreciation and Amortization'). Operating profit has been computed as
revenues less operating expenses. In computing EBITDA and operating profit,
interest expense and non-operating income and expenses have not been considered.
Identifiable assets by segment are those assets that are used in the Company's
operations in each segment. General corporate assets consist primarily of cash
and cash equivalents, short-term and non-current investments and properties.

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TRIARC COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
JANUARY 2, 2005

The following is a summary of the Company's segment information (in
thousands):

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TRIARC COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
JANUARY 2, 2005

(27) QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

The table below sets forth summary unaudited consolidated quarterly
financial information for 2003 and 2004. The Company reports on a fiscal year
consisting of 52 or 53 weeks ending on the Sunday closest to December 31.
However, Deerfield reports on a calendar year ending on December 31. Excluding
Deerfield each of the Company's fiscal quarters of 2003 and the first three
fiscal quarters of 2004 contained 13 weeks and the fourth quarter of 2004
contained 14 weeks. As disclosed more fully in Note 3, on July 22, 2004 the
Company completed the Deerfield Acquisition and, accordingly, Deerfield's
results of operations, net of minority interests, subsequent to the acquisition
date have been included in the Company's consolidated results of operations on a
basis of calendar quarters.

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TRIARC COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
JANUARY 2, 2005

- ---------

(a) 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 16), 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 18), or
$3,792,000 after income tax provision of $2,042,000 included in income
(loss) from continuing operations.

(b) Basic and diluted income (loss) per share amounts reflect the effect of the
Stock Distribution and have been computed consistent 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 two quarters and the fourth quarters of both 2003 and 2004 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 income from continuing operations and net income for the quarter ended
September 26, 2004 were materially affected by (1) the release of reserves
for income taxes no longer required of $25,415,000 (see Note 14) of which
$14,592,000 increased the benefit from income taxes included in income
(loss) from continuing operations and $10,823,000 was reported as gain on
disposal of discontinued operations (see Note 20) and (2) the release of
related interest accruals of $4,342,000, or $2,741,000 after an income tax
provision of $1,601,000, included in income (loss) from continuing
operations.

(28) SUBSEQUENT EVENT

The Company is engaged in negotiations to combine its restaurant segment
with RTM, which operates 772 Arby's restaurants in the United States as of
January 2, 2005. If consummated, it is expected that the Company would be the
majority owner of the combined entity and, accordingly, would consolidate that
entity with minority interests. There can be no assurance that RTM, its owners
or the Company will enter into definitive agreements or that such a business
combination will be consummated.

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

Not applicable.

ITEM 9A. CONTROLS AND PROCEDURES.

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Our management, with the participation of our Chairman and Chief Executive
Officer and our Executive Vice President and Chief Financial Officer, carried
out an evaluation of the effectiveness of the design and operation of our
disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
of the Securities Exchange Act of 1934, as amended (the 'Exchange Act')) as of
January 2, 2005. Based on that evaluation, our Chairman and Chief Executive
Officer and our Executive Vice President and Chief Financial Officer have
concluded that, as of January 2, 2005, our disclosure controls and procedures
were effective to provide reasonable assurance that information required to be
disclosed by us in the reports that we file or submit under the Exchange Act was
recorded, processed, summarized and reported within the time periods specified
in the rules and forms of the Securities and Exchange Commission.

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Our management is responsible for establishing and maintaining adequate
internal control over financial reporting (as defined in Rule 13a-15(f) of the
Exchange Act). Our management, with the participation of our Chairman and Chief
Executive Officer and our Executive Vice President and Chief Financial Officer,
carried out an assessment of the effectiveness of our internal control over
financial reporting as of January 2, 2005. The assessment was performed using
the criteria for effective internal control reflected in the Internal Control-
Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO).

The scope of our management's assessment did not include Deerfield & Company
LLC and its subsidiaries ('Deerfield'), a business in which we acquired a 63.6%
capital interest on July 22, 2004, or Deerfield Opportunities Fund, LLC (the
'Opportunities Fund'), an investment fund managed by a subsidiary of Deerfield
in which we held an aggregate 95.2% direct and indirect capital interest as of
January 2, 2005. Our investment in the Opportunities Fund was an integral and
required element of our acquisition of Deerfield, and the Opportunities Fund is
subject to substantially the same internal control over financial reporting as
Deerfield. For our fiscal year ended January 2, 2005, Deerfield accounted for
$22.1 million (or 6.7%) of our $328.6 million of revenues, $1.6 million (or
58.9%) of our $2.7 million of operating profit and $152.9 million (or 14.3%) of
our $1,067.0 million of consolidated assets, before the effects of minority
interests. The Opportunities Fund accounted for $133.0 million (or 12.5%) of our
$1,067.0 million of consolidated assets and $3.3 million (or 14.9%) of our $21.7
million of consolidated investment income as of and for the year ended January
2, 2005, before the effects of minority interests. Deerfield and the
Opportunities Fund are 'significant subsidiaries' (as defined in Regulation S-X
under the Exchange Act).

Based on its assessment, our management believes that, as of January 2,
2005, our internal control over financial reporting was effective.

Our independent registered public accounting firm, Deloitte & Touche LLP,
has issued its report on our assessment of our internal control over financial
reporting, which is included below.

CHANGE IN INTERNAL CONTROL OVER FINANCIAL REPORTING

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.

INHERENT LIMITATIONS ON EFFECTIVENESS OF CONTROLS

There are inherent limitations in the effectiveness of any control system,
including the potential for human error and the circumvention or overriding of
the controls and procedures. Additionally, judgments in decision-making can be
faulty and breakdowns can occur because of simple error or mistake. An effective

124

control system can provide only reasonable, not absolute, assurance that the
control objectives of the system are adequately met. Accordingly, our
management, including our Chairman and Chief Executive Officer and our Executive
Vice President and Chief Financial Officer, does not expect that our control
system can prevent or detect all error or fraud. Finally, projections of any
evaluation or assessment of effectiveness of a control system to future periods
are subject to the risks that, over time, controls may become inadequate because
of changes in an entity's operating environment or deterioration in the degree
of compliance with policies or procedures.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of
Triarc Companies, Inc.
New York, New York

We have audited management's assessment, included in the accompanying
Management's Report on Internal Control Over Financial Reporting, that Triarc
Companies, Inc. and subsidiaries (the 'Company') maintained effective internal
control over financial reporting as of January 2, 2005, based on criteria
established in Internal Control -- Integrated Framework issued by the Committee
of Sponsoring Organizations of the Treadway Commission. As described in
Management's Report on Internal Control Over Financial Reporting, management
excluded from their assessment the internal control over financial reporting of
Deerfield & Company LLC and subsidiaries and Deerfield Opportunities Fund, LLC,
interests in which were acquired on July 22, 2004 and October 4, 2004,
respectively, and whose combined financial statements reflect total assets and
revenues constituting 27 and 7 percent, respectively, of the related
consolidated financial statement amounts as of and for the year ended
January 2, 2005. Accordingly, our audit did not include the internal control
over financial reporting of Deerfield & Company LLC and subsidiaries or of
Deerfield Opportunities Fund, LLC. The Company's management is responsible for
maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting.
Our responsibility is to express an opinion on management's assessment and an
opinion on the effectiveness of the Company's internal control over financial
reporting based on our audit.

We conducted our audit in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether
effective internal control over financial reporting was maintained in all
material respects. Our audit included obtaining an understanding of internal
control over financial reporting, evaluating management's assessment, testing
and evaluating the design and operating effectiveness of internal control, and
performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our
opinions.

A company's internal control over financial reporting is a process designed
by, or under the supervision of, the company's principal executive and principal
financial officers, or persons performing similar functions, and effected by the
company's board of directors, management, and other personnel to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company's internal control over
financial reporting includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company's
assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial
reporting, including the possibility of collusion or improper management
override of controls, material misstatements due to error or fraud may not be
prevented or detected on a timely basis. Also, projections of any evaluation of
the effectiveness of the internal control over financial reporting to future
periods are subject to the risk that the controls may become

125

inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.

In our opinion, management's assessment that the Company maintained
effective internal control over financial reporting as of January 2, 2005, is
fairly stated, in all material respects, based on the criteria established in
Internal Control -- Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Also in our opinion, the Company
maintained, in all material respects, effective internal control over financial
reporting as of January 2, 2005, based on the criteria established in Internal
Control -- Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the consolidated financial
statements as of and for the year ended January 2, 2005 of the Company and our
report dated March 17, 2005 expressed an unqualified opinion on those financial
statements.

DELOITTE & TOUCHE LLP

New York, New York
March 17, 2005

ITEM 9B. OTHER INFORMATION.

Not applicable.

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 May 2, 2005 (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,' 'Audit Committee Report' and 'Stock
Price Performance Graph' shall not be deemed to be incorporated by reference in
this Form 10-K.

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PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(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.

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128

129

130

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

* Filed herewith.

** Identifies a management contract or compensatory plan or arrangement.

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.

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

The consolidated financial statements of Encore 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, 2004 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.

131

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 18, 2005

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below on March 18, 2005 by the following persons on
behalf of the registrant in the capacities indicated.

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STATEMENT OF DIFFERENCES
------------------------

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