TRIARC COMPANIES INC - 10-K Annual Report

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TRIARC COMPANIES, INC.

FORM 10-K

FOR THE FISCAL YEAR ENDED

DECEMBER 30, 2001

________________________________________________________________________________

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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FORM 10-K

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

FOR THE FISCAL YEAR ENDED DECEMBER 30, 2001.

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)

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

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

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

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

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

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

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

None

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

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

The aggregate market value of the outstanding shares of the registrant's
Class A Common Stock (the only outstanding class of the registrant's common
equity) held by non-affiliates of the registrant was approximately $389,880,855
as of March 15, 2002. There were 20,455,403 shares of the registrant's Class A
Common Stock outstanding as of March 15, 2002.

DOCUMENTS INCORPORATED BY REFERENCE

Part III of this 10-K incorporates information by reference from an
amendment hereto or to the registrant's definitive proxy statement, in either
case which will be filed no later than 120 days after December 30, 2001.

________________________________________________________________________________

PART I
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND PROJECTIONS

Certain statements in this Annual Report on Form 10-K, including statements
under 'Item 1. Business' and 'Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations,' that are not historical facts,
including most importantly, information concerning possible or assumed future
results of operations of Triarc Companies, Inc. and its subsidiaries and those
statements preceded by, followed by, or that include the words 'may,'
'believes,' 'expects,' 'anticipates,' or the negation thereof, or similar
expressions, constitute 'forward-looking statements' within the meaning of the
Private Securities Litigation Reform Act of 1995. All statements which 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:

Competition, including product and pricing pressures;

Success of operating initiatives;

Development and operating costs;

Advertising and promotional efforts;

Brand awareness;

The existence or absence of positive or adverse publicity;

Market acceptance of new product offerings;

New product and concept development by competitors;

Changing trends in consumer tastes and preferences (including changes
resulting from health or safety concerns with respect to the consumption of
beef) and in spending and demographic patterns;

The business and financial viability of key franchisees;

Availability, location and terms of sites for restaurant development by
franchisees;

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

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

The performance by material suppliers of their obligations under their
supply agreements with franchisees;

Changes in business strategy or development plans;

Quality of the Company's and franchisees' management;

Availability, terms and deployment of capital;

Business abilities and judgment of the Company's and franchisees'
personnel;

Availability of qualified personnel to the Company and to franchisees;

Labor and employee benefit costs;

Availability and cost of raw materials, ingredients and supplies and the
potential impact on royalty revenues and franchisees' restaurant level
sales that could arise from interruptions in the distribution of supplies
of food and other products to franchisees;
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General economic, business and political conditions in the countries and
territories in which franchisees operate;

Changes in, or failure to comply with, government regulations, including
franchising laws, accounting standards, environmental laws and taxation
requirements;

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

The impact of general economic conditions on consumer spending, including a
slower consumer economy, the effects of the events of September 11, 2001
and the effects of war or other terrorist activities;

Adverse weather conditions; and

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

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

ITEM 1. BUSINESS.

INTRODUCTION

We are a holding company and, through our subsidiaries, the franchisor of
the Arby's'r' restaurant system. 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. Our website address is: www.triarc.com.
Information contained on our website is not part of this Annual Report on
Form 10-K.

BUSINESS STRATEGY

The key elements of our business strategy include (i) focusing our resources
on growing our restaurant franchising business, (ii) evaluating and making
various acquisitions and business combinations to augment our current and future
businesses, (iii) building strong operating management teams for each of our
current and future businesses and (iv) providing strategic leadership and
financial resources to enable these management teams to develop and implement
specific, growth-oriented business plans. The implementation of this business
strategy may result in increases in expenditures for, among other things,
acquisitions and, over time, marketing and advertising. See 'Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations.' It is our policy to publicly announce an acquisition or business
combination only after an agreement with respect to such acquisition or business
combination has been reached.

The Company's cash, cash equivalents and investments (including restricted
cash, but excluding investments related to deferred compensation arrangements)
at December 30, 2001 totaled approximately $694 million. At such date, the
Company's consolidated indebtedness was approximately $314 million, including
approximately $274 million of non-recourse debt issued by a subsidiary of
Arby's, Inc. The Company's cash, cash equivalents and investments (other than
approximately $30.6 million of restricted cash) do not secure such debt. The
Company is evaluating its options for the use of this significant cash and
investment position, including acquisitions, share repurchases and investments.

SALE OF BEVERAGE BUSINESS

On October 25, 2000, we completed the sale of our beverage business by
selling all the outstanding capital stock of Snapple Beverage Group, Inc. and
Royal Crown Company, Inc. to affiliates of Cadbury

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Schweppes plc. The purchase and sale agreement for the transaction provides for
a post-closing adjustment, the amount of which is in dispute. Cadbury has stated
that it believes that it is entitled to receive from us a post-closing
adjustment of approximately $27.6 million and we, on the other hand, have stated
that we believe that we are entitled to receive from Cadbury a post-closing
adjustment of approximately $5.6 million, in each case plus interest from the
closing date. In accordance with the terms of the purchase and sale agreement,
Triarc and Cadbury have selected an arbitrator for the purpose of determining
the amount of the post-closing adjustment. We currently expect such post-closing
adjustment process to be completed in the second half of 2002.

REPURCHASE OF CLASS B COMMON STOCK

On August 19, 1999, we announced that our Board of Directors had unanimously
approved a stock purchase agreement between the Company and two entities
controlled by the late Victor Posner, Victor Posner Trust No. 6 and Security
Management Corp., pursuant to which we would acquire from the Posner entities
all of the 5,997,622 issued and outstanding shares of our non-voting Class B
Common Stock in three separate transactions. Pursuant to the agreement we
acquired one-third of the shares (1,999,208 shares) on August 19, 1999, at a
price of $20.44 per share (which was the trading price of our Class A Common
Stock at the time the transaction was negotiated), for an aggregate cost of
approximately $40.9 million, one-third of the shares (1,999,207 shares) on
August 10, 2000, at a price of $21.18 per share, for an aggregate cost of
approximately $42.3 million and the remaining one-third of the shares (1,999,207
shares) on August 10, 2001, at a price of $21.93 per share, for an aggregate
cost of approximately $43.8 million.

FISCAL YEAR

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

BUSINESS SEGMENT

RESTAURANT FRANCHISING SYSTEM (ARBY'S)

THE ARBY'S RESTAURANT SYSTEM

Through subsidiaries of Arby's, Inc. (which does business as the Triarc
Restaurant Group), which are the franchisors of the Arby's restaurant system, we
participate in the approximately $110 billion quick service restaurant segment
of the domestic restaurant industry. There are over 3,300 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. Arby's celebrated its 37th anniversary in 2001 and
according to Nation's Restaurant News, is the 9th largest quick service
restaurant chain in the United States. In addition to various slow-roasted roast
beef sandwiches, Arby's also offers an extensive menu of chicken, turkey, ham
and submarine sandwiches, side-dishes and salads. In 2001, Arby's introduced its
Market Fresh'TM' line of turkey, ham, chicken and roast beef premium sandwiches
on a nationwide basis. Arby's also owns the T.J. Cinnamons'r' concept, which
consists of gourmet cinnamon rolls, gourmet coffees and other related products,
and the Pasta Connection'r' concept, which includes pasta dishes with a variety
of different sauces. Some Arby's franchisees multi-brand with T.J. Cinnamons or
Pasta Connection within their Arby's restaurants. Currently, all of the Arby's
restaurants are owned and operated by franchisees. As of December 30, 2001, 469
franchisees operated 3,351 separate restaurants, of which 3,198 operate within
the United States and 153 operate outside the United States. Of the domestic
restaurants, 336 are multi-branded locations that sell T.J. Cinnamons products
and 54 are multi-branded locations that sell Pasta Connection products.
Subsequent to such year-end, two franchisees notified Arby's of their intention
to close 76 of the T.J. Cinnamons bakeries within their Arby's restaurants later
this year, although T.J. Cinnamons gourmet coffees will continue to be sold at
those restaurants. Management does not expect such closures to have a material
adverse effect on the Company's consolidated financial position or results of
operations. At December 30, 2001, T.J. Cinnamons gourmet coffees were also sold
in an additional approximately 1,620 Arby's restaurants. Arby's is not currently
offering to sell any additional Pasta Connection franchises.
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From 1997 to 2001, Arby's system-wide sales grew at a compound annual growth
rate of 5.2% to $2.6 billion. Through December 30, 2001, the Arby's system has
experienced five consecutive years of domestic same store sales growth compared
to the prior year. During 2001, our franchisees opened 131 new Arby's
restaurants and closed 99 Arby's restaurants. In addition, Arby's franchisees
opened 17 T.J. Cinnamons units in Arby's units in 2001. As of December 30, 2001,
franchisees have committed to open 616 Arby's restaurants over the next nine
years. You should read the information contained in 'Risk Factors -- Arby's is
Dependent on Restaurant Revenues and Openings'; and ' -- Number of Arby's
Restaurants.'

GENERAL

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

Because Arby's owns no restaurants, it avoids the significant capital costs
and real estate and operating risks associated with restaurant operations.
Arby's and its subsidiaries derive their revenues from two principal sources:
(i) franchise royalties received from all Arby's restaurants; and (ii) up-front
franchise fees from its restaurant operators for each new unit opened. Arby's
current domestic franchise royalty rate is 4.0%. Because of lower royalty rates
still in effect under earlier agreements, the average royalty rate paid by
franchisees was approximately 3.3% during both 2000 and 2001.

On November 21, 2000, our subsidiary Arby's Franchise Trust completed an
offering of $290 million of 7.44% non-recourse fixed rate insured notes due 2020
pursuant to Rule 144A of the Securities Act. As a result of the financing and
related restructuring, Arby's continues to service the franchise agreements
relating to U.S. franchises and a subsidiary services the franchise agreements
relating to Canadian franchises with the assistance of Arby's. 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. 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 9 to our Consolidated Financial
Statements.

ARBY'S RESTAURANTS

Arby's opened its first restaurant in Youngstown, Ohio in 1964. As of
December 30, 2001, franchisees operated Arby's restaurants in 49 states and 6
foreign countries. As of December 30, 2001, the six leading states by number of
operating units were: Ohio, with 262 restaurants; Michigan, with 173
restaurants; Indiana, with 173 restaurants; Texas, with 163 restaurants;
Georgia, with 159 restaurants; and California, with 155 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. Restaurants typically
have a manager, 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.

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The following table sets forth the number of Arby's restaurants at the
beginning and end of each year from 1999 to 2001:

During the period from January 1, 1999 through December 30, 2001, 446 new
Arby's restaurants were opened and 230 Arby's restaurants were closed. We
believe that closing underperforming Arby's restaurants has contributed to an
increase in the average annual unit sales volume of the Arby's system, as well
as to an improvement of the overall brand image of Arby's.

FRANCHISE NETWORK

Arby's seeks to identify potential franchisees that have experience in
owning and operating multiple quick-service restaurant units, have a willingness
to develop and operate multiple Arby's restaurants and have a significant 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 2001, Arby's franchisees opened nine new restaurants in three foreign
countries and closed 22 restaurants in five foreign countries. Arby's also has
territorial agreements with international franchisees in two countries as of
December 30, 2001. Under the terms of these territorial agreements, these
international franchisees have the exclusive right to open Arby's restaurants in
specific regions or countries.

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 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, 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 franchisees was
approximately 3.3% in both 2000 and 2001.

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.

As of December 30, 2001, franchisees have committed to open 616 Arby's
restaurants over the next nine years. As previously reported, that number
reflects a reduction of 283 future store commitments as a result of: (i) the
announcement by Sybra, Inc., the second largest domestic franchisee of Arby's
restaurants, that it would be unable to comply with its development agreement,
which calls for it to open an additional 163 Arby's
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restaurants through 2006; (ii) the insolvency of Arby's United Kingdom
franchisee, resulting in the loss of 99 future commitments; and (iii) the
termination of the existing franchises and all future development rights of
Arby's Indonesian franchisee, resulting in the loss of 21 future commitments.
Arby's terminated Sybra's development agreement effective December 30, 2001.

Arby's does not expect to find other franchisees in the United Kingdom or
Indonesia to replace the above commitments. Arby's expects that Sybra will
develop new Arby's restaurants in the future, but at a slower pace than that
required by its former development agreement. Arby's also expects to recruit new
franchisees to develop restaurants in Sybra's former territories. The Company
believes that the outcome of the matters described above will not have a
material adverse effect on the consolidated financial condition of the Company
or its results of operations. On February 5, 2002 Sybra and its parent company
filed for bankruptcy protection. See 'Item 1. Business -- Risk Factors -- Arby's
Franchise Revenues Depend, to a Large Extent, on a Small Number of Large
Franchisees and a Decline in Their Revenues May Indirectly Adversely Affect Us.'

ADVERTISING AND MARKETING

The Arby's system, through its franchisees, advertises primarily through
regional television, radio and newspapers. Payment for advertising time and
space is made by local advertising cooperatives in which owners of local
franchised restaurants participate. Franchisees contribute 0.7% of net sales to
the AFA Service Corporation, which produces advertising and promotional
materials for the system. Each franchisee is also required to spend a reasonable
amount, but not less than 3% of its monthly net sales, for local advertising.
This amount is divided between the franchisee's individual local market
advertising expense and the expenses of a cooperative area advertising program
with other franchisees who are operating Arby's restaurants in that area.
Contributions by franchisees 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. Arby's and AFA Service Corporation have entered
into an agreement pursuant to which the Arby's system had two flights of
national advertising in 2001 and will have an additional six flights of national
advertising over the 2002-2003 period. Under the agreement, Arby's is
contributing $8.2 million over the three-year period ($2.1 million of which was
expensed in 2001) for the eight flights. Franchisees are required to contribute
incremental dues to AFA Service Corporation equal to 0.5% of net sales (bringing
their total contribution to advertising and marketing to 1.2% of net sales) to
help fund the program, and AFA Service Corporation will contribute an additional
$2.8 million to the program.

PROVISIONS AND SUPPLIES

Five independent meat processors provide all of Arby's roast beef in the
United States. Franchise operators are required to obtain roast beef from one of
these five approved suppliers. ARCOP, Inc., a non-profit purchasing cooperative,
negotiates contracts with approved suppliers on behalf of Arby's franchisees.
Arby's believes that satisfactory arrangements could be made to replace any of
the current roast beef suppliers, if necessary, on a timely basis.

Franchisees may obtain other products, including food, beverage,
ingredients, paper goods, equipment and signs, from any source that meets Arby's
specifications and approval. Through ARCOP, 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. -- Risk Factors -- Arby's is Dependent on Restaurant Revenues and Openings.'

QUALITY ASSURANCE

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

6

representatives also provide a variety of on-site consulting services to
franchisees. Arby's has the right to terminate franchise agreements if
franchisees fail to comply with quality standards.

GENERAL

TRADEMARKS

We own several trademarks that are considered material to our business,
including Arby's'r', T.J. Cinnamons'r', Pasta Connection'r', Arby's Market
Fresh'TM', Satisfy Your Grown Up Tastes'TM' 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 fast food chains, such as
McDonald's, Burger King and Wendy's. In addition, Arby's competes with locally
owned restaurants, drive-ins, diners and other similar establishments. Key
competitive factors in the quick service restaurant industry are price, quality
of products, quality and speed of service, advertising, name identification,
restaurant location and attractiveness of facilities.

Many of the leading restaurant chains have focused on new unit development
as one strategy to increase market share through increased consumer awareness
and convenience. This has led operators to employ other strategies, including
frequent use of price promotions and heavy advertising expenditures.

Additional competitive pressures for prepared food purchases have come more
recently from operators outside the restaurant industry. Several major grocery
chains have begun offering fully prepared food and meals to go as part of their
deli sections. Some of these chains also have added in-store cafes with service
counters and tables where consumers can order and consume a full menu of items
prepared especially for this portion of the operation.

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. Furthermore,
the United States Congress has also considered, and there is currently pending,
legislation governing various aspects of the franchise relationship. In
addition, Arby's franchisees must comply with the Fair Labor Standards Act and
the Americans with Disabilities Act, which requires that all public
accommodations and commercial facilities meet federal requirements related to
access and use by disabled persons, and various state laws governing matters
that include, for example, minimum wages, overtime and other working conditions.
We cannot predict the effect on our operations, particularly on our relationship
with franchisees, of any pending or future legislation. We believe that the
operations of our subsidiaries comply substantially with all applicable
governmental rules and regulations.

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
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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 currently own no restaurants
and lease our material facilities (see 'Item 2. Properties' below). 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. 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 our indirect subsidiary, Adams Packing
Association, Inc., was listed by the U.S. 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 Packing conducted drum recycling operations at the site from some time
prior to 1971 until approximately 1979. In October 2001, an environmental
consultant engaged by the Florida Department of Environmental Protection
conducted a preliminary investigation of the site, including soil and
groundwater sampling. Adams Packing has been orally informed that a purpose of
the preliminary investigation was to determine whether the property should be
included on the National Priorities List ('NPL') created under the Comprehensive
Environmental Response Compensation and Liability Act ('CERCLA'). The NPL is a
listing of sites where known and threatened releases of hazardous substances
have been identified and these sites, on the basis of an evaluation of relative
risk or danger to the public health or the environment, have been assigned a
numerical rating which exceeds a threshold established for inclusion on the NPL.
Based upon the preliminary nature of the testing, the extent of the
contamination of the Adams Packing property and the remediation, if any, that
might be required is not yet known. Consequently, it is currently not possible
to estimate the potential costs of this matter, which could possibly be
significant. Based on currently available information, including various legal
defenses available to us and/or Adams Packing, we do not believe that the
ultimate outcome of this matter 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 -- Liquidity and Capital Resources.'

SEASONALITY

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

EMPLOYEES

As of December 30, 2001, we had 231 employees, including 202 salaried
employees and 29 hourly employees. We believe that employee relations are
satisfactory. As of December 30, 2001, none of our employees were covered by a
collective bargaining agreement.

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 2002, and beyond,
to differ materially from those expressed in any forward-looking statements made
by us or on our behalf.

8

HOLDING COMPANY STRUCTURE.

Because we are a holding company, our ability to service debt and pay
dividends, including dividends on our common stock, is primarily dependent upon,
in addition to our cash, cash equivalents and short term investments on hand,
cash flows from our subsidiaries, including loans, cash dividends and
reimbursement by subsidiaries to us in connection with providing certain
management services and payments by subsidiaries under certain tax sharing
agreements.

Under the terms of the indenture relating to the notes issued in the Arby's
securitization, there are restrictions on the ability of certain of our
subsidiaries to pay dividends and/or make loans or advances to us. The ability
of any of our subsidiaries to pay cash dividends and/or make 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, our equity interests in our subsidiaries rank junior to all of
the respective indebtedness, whenever incurred, of such entities in the event of
their respective liquidation or dissolution. As of December 30, 2001, our
subsidiaries had aggregate indebtedness of approximately $314 million excluding
intercompany indebtedness.

WE HAVE BROAD DISCRETION IN THE USE OF OUR SIGNIFICANT CASH AND INVESTMENT
POSITION.

We have not designated any specific use for our significant cash and
investment position. We are evaluating options for the use of these funds,
including acquisitions, share repurchases and investments. We have significant
flexibility in selecting the opportunities that we will pursue. See 'Item 1.
Business -- Business Strategy.'

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

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

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

The Investment Company Act of 1940, as amended (the '1940 Act'), requires
the registration of, and imposes various restrictions on, companies that do not
meet certain financial tests regarding the composition of their assets and
source of income. A company may be deemed to be an investment company if it owns
'investment securities' with a value exceeding 40% of its total assets
(excluding government securities and cash items) or if more than 45% of its
total assets consists of, or more than 45% of its income/loss is derived from,
securities of companies it does not control. Our acquisition strategy may
require us to take actions that we would not otherwise take so as not to be
deemed an 'investment company' under the 1940 Act. Investment companies are
subject to registration under, and compliance with, the 1940 Act unless a
particular exclusion or safe harbor provision applies. If we were to be deemed
an investment company, we would become subject to the requirements of the 1940
Act. We intend to make acquisitions and other investments in a manner so as not
to be deemed an investment company. As a result, we may forego investments that
we might otherwise make or retain or dispose of investments or assets that we
might otherwise sell or hold.
9

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 from specified passive sources, we would be classified as a 'personal
holding company' for the U.S. federal income tax purposes. If this were the
case, we would be subject to additional taxes at the rate of 39.6% on a portion
of our income, to the extent this income is not distributed to shareholders. We
do not currently expect to have any liability for tax under the personal holding
company rules in 2002. 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 SUBSIDIARIES ARE SUBJECT TO VARIOUS RESTRICTIONS, AND SUBSTANTIALLY ALL
OF THEIR ASSETS ARE PLEDGED, UNDER CERTAIN DEBT AGREEMENTS.

Under our subsidiaries' debt agreements, substantially all of our
subsidiaries' assets, other than cash, cash equivalents and short term
investments, are pledged as collateral security. The indenture relating to the
notes issued in the Arby's securitization contains financial covenants that,
among other things, require Arby's Franchise Trust to maintain certain financial
ratios and restrict its ability to incur debt, enter into certain fundamental
transactions (including sales of all or substantially all of its assets and
certain mergers and consolidations) and create or permit liens. If Arby's
Franchise Trust is unable to generate sufficient cash flow or otherwise obtain
the funds necessary to make required payments of interest or principal under, or
is unable to comply with covenants of, the indenture, it would be in default
under the terms thereof which would, under certain circumstances, permit the
insurer of the notes to accelerate the maturity of the balance thereof. You
should read the information in Note 9 to the Consolidated Financial Statements.

ARBY'S IS DEPENDENT ON RESTAURANT REVENUES AND OPENINGS.

The principal source of revenues for Arby's and its subsidiaries is royalty
fees received from franchisees. Accordingly, Arby's and its subsidiaries' future
revenues will be highly dependent on the gross revenues of Arby's franchisees
and the number of Arby's restaurants that its franchisees operate. In January
2000, the major distributor of food and other products to Arby's franchisees
filed for bankruptcy. That bankruptcy and the subsequent change of distributors
by franchisees did not have a significant adverse effect on us. However, it is
possible that interruptions in the distribution of supplies to Arby's
franchisees could adversely affect sales by such franchisees and cause a decline
in the royalty fees that we receive from them.

THE LEVEL OF GROSS REVENUES OF ARBY'S RESTAURANTS MAY NOT CONTINUE.

Competition is intense among national brand franchisors and smaller chains
in the restaurant industry to grow their franchise systems. Arby's franchisees
are generally in competition for customers with franchisees of other national
and regional fast food chains and locally owned restaurants. We cannot assure
you that the level of gross revenues of Arby's franchisees, upon which our
royalty fees are dependent, will continue.

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

Numerous factors beyond our control affect restaurant openings. These
factors include the ability of potential restaurant owners to obtain financing,
locate appropriate sites for restaurants and obtain all necessary state and
local construction, occupancy and other permits and approvals. Although as of
December 30, 2001 franchisees had signed commitments to open 616 Arby's
restaurants and have made or are required to make non-refundable deposits of
$10,000 per restaurant, we cannot assure you that these commitments will result
in open restaurants. See 'Item 1. Business -- Restaurant Franchising System
(Arby's) -- Franchise Network.' In addition, we cannot assure you that our
franchisees will successfully develop and operate their restaurants in a manner
consistent with our standards.

10

ARBY'S FRANCHISE REVENUES DEPEND, TO A LARGE EXTENT, ON A SMALL NUMBER OF
LARGE FRANCHISEES AND A DECLINE IN THEIR REVENUE MAY INDIRECTLY ADVERSELY
AFFECT US.

During 2001, Arby's received approximately 28% of its royalties from RTM,
Inc. and its affiliates (which as of December 30, 2001, operated 774 Arby's
restaurants), and received approximately 8% and 6%, respectively, of its
royalties from two other franchisees. Arby's franchise royalties could decline
from their present levels if any of these franchisees suffered significant
declines in their businesses. In that connection, Sybra, Inc., Arby's second
largest franchisee, and its parent company filed for bankruptcy protection on
February 5, 2002. Based on statements by Sybra and its parent, it is our
understanding that the filings were made principally in order to separate
Sybra's ongoing Arby's business from various unrelated holding company
liabilities of the parent and, in the case of the Sybra filing, because the
parent's filing constituted a technical event of default under Sybra's loan
agreements. However, we do not believe Sybra has suffered a significant decline
in its business and we expect that Sybra will continue to pay Arby's royalties
during the pendency of its bankruptcy proceedings.

COMPETITION FROM RESTAURANT COMPANIES COULD ADVERSELY AFFECT US.

The sole source of Arby's revenues is royalties and fees paid to it by
franchisees. The business sectors in which Arby's franchisees compete are highly
competitive (e.g., with respect to price, food quality and presentation,
service, location, and the nature and condition of the financed business
unit/location), and are affected by changes in tastes and eating habits, local,
regional and national economic conditions and population and traffic patterns.
Arby's franchisees compete with a variety of locally-owned restaurants, as well
as competitive regional and national chains and franchises. Moreover, new
companies may enter the franchisees' respective market area and target sales
audience. Such competition may have, among other things, lower operating costs,
lower debt service requirements, better locations, better facilities, better
management, more effective marketing and more efficient operations. All such
competition may adversely affect Arby's franchisees' revenues and profits and
the ability of franchisees to make required payments to Arby's. Furthermore,
Arby's franchisees face competition for competent employees and high levels of
employee turnover, which can have an adverse effect on the operations and
revenues of the franchisees and on their abilities to make required payments to
Arby's. Many of Arby's competitors have substantially greater financial,
marketing, personnel and other resources than Arby's.

CHANGES IN CONSUMER TASTES AND PREFERENCES AND IN SPENDING AND DEMOGRAPHIC
PATTERNS, AS WELL AS CONCERNS ABOUT FOOD QUALITY, COULD RESULT IN A LOSS OF
CUSTOMERS AND REDUCE THE ROYALTIES THAT WE RECEIVE.

The quick service restaurant industry is often affected by changes in
consumer tastes, national, regional and local economic conditions, discretionary
spending priorities, demographic trends, traffic patterns and the type, number
and location of competing restaurants. Consumer preferences could also be
affected by health or safety concerns with respect to the consumption of beef.
As is generally the case in the restaurant franchise business, we and our
franchisees may, from time to time, be the subject of complaints or litigation
from customers alleging illness, injury or other food quality, health or
operational concerns. Adverse publicity resulting from these allegations may
harm the reputation of Arby's restaurants, even if the allegations are not
valid, we are not found liable or those concerns relate only to a single
restaurant or a limited number of restaurants. Moreover, complaints, litigation
or adverse publicity experienced by one or more of our franchisees could also
adversely affect our business as a whole. If Arby's is unable to adapt to
changes in consumer preferences and trends, or we have adverse publicity due to
any of these concerns, our franchisees may lose customers and the resulting
royalties that Arby's receives from its franchisees may decline.

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

Our intellectual property is material to the conduct of our business. We
rely on a combination of trademarks, copyrights, service marks, trade secrets
and similar intellectual property rights to protect our brands and other
intellectual property. The success of our business strategy depends, in part, on
our continued ability to use our existing trademarks and service marks in order
to increase brand awareness and further
11

develop our branded products in both domestic and international markets. If our
efforts to protect our intellectual property are not adequate, or if any third
party misappropriates or infringes on our intellectual property, either in print
or on the Internet, the value of our brands may be harmed, which could have a
material adverse effect on our business, including the failure of our brands to
achieve and maintain market acceptance.

We franchise our restaurants to various franchisees. While we try to ensure
that the quality of our brands is maintained by all of our franchisees, we
cannot assure you that these franchisees will not take actions that adversely
affect the value of our intellectual property or the reputation of the Arby's
restaurant system.

We have registered certain trademarks and have other trademark registrations
pending in the U.S. and certain foreign jurisdictions. The trademarks that we
currently use have not been registered in all of the countries outside of the
United States in which we do business and may never be registered in all of
these countries.

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

WE REMAIN CONTINGENTLY LIABLE WITH RESPECT TO CERTAIN OBLIGATIONS RELATING
TO BUSINESSES THAT WE HAVE SOLD.

As previously reported, in 1997 we sold all of our company-owned Arby's
restaurants to affiliates of RTM, Arby's largest franchisee. In connection with
the sale, an aggregate of approximately $54.7 million of mortgage and equipment
notes were assumed by affiliates of RTM, of which we believe approximately $44.0
million was outstanding at December 30, 2001. RTM has guaranteed the payment of
such notes by its affiliates. Notwithstanding the assumption of such debt and
guaranty, the Company remains contingently liable as a guarantor of the notes.
In addition, such affiliates of RTM also assumed certain operating and capital
lease obligations relating to the purchased restaurants (aggregating
approximately $73.0 million at December 30, 2001) and RTM has indemnified us for
any losses we might incur with respect to such leases. Notwithstanding such
assumption, we remain contingently liable if RTM's affiliates fail to make the
required payments under those leases.

In addition, in July 1999, the Company sold 41.7% of its remaining 42.7%
interest in National Propane Partners, L.P. and a sub-partnership, National
Propane, L.P. to Columbia Energy Group, and retained a 1% special limited
partner interest in AmeriGas Eagle Propane, L.P. (formerly known as National
Propane, L.P. and Columbia Propane, L.P.). As part of the transaction, our
subsidiary, National Propane Corporation, agreed that while it remains a special
limited partner of AmeriGas, it would indemnify the owner of AmeriGas for any
payments the owner makes under certain debt of AmeriGas (aggregating
approximately $138.0 million as of December 30, 2001), 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. 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 associated with our sale of the
propane business.

Although the Company believes that it is unlikely that it will be called
upon to make any payments under the guaranty, leases or indemnification
described above, if the Company were required to make such payments it could
have a material adverse effect on the financial position or results of
operations of the Company. 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 Notes 3, 9 and 23 to the
Consolidated Financial Statements.

ENVIRONMENTAL LIABILITIES.

Certain of our current and past operations are or have been subject to
federal, state and local environmental laws and regulations concerning the
discharge, storage, handling and disposal of hazardous or toxic substances. Such
laws and regulations provide for significant fines, penalties and liabilities,
in certain cases without regard to whether the owner or operator of the property
knew of, or was responsible for, the release or presence of such hazardous or
toxic substances. In addition, third parties may make claims against owners or
operators of properties for personal injuries and property damage associated
with releases of hazardous or toxic

12

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 which 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
December 30, 2001:

- ---------

* We are currently seeking to sublet approximately 4,600 square feet of this
space.

** Approximately 1,150 square feet of this space is subleased from Arby's by a
third party.

Arby's also owns three and leases seven properties which are leased or
sublet principally to franchisees and has a lease for one inactive property. 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.

ITEM 3. LEGAL PROCEEDINGS.

On March 23, 1999, Norman Salsitz, a stockholder of Triarc, filed a
complaint in the United States District Court for the Southern District of New
York against Triarc, Nelson Peltz and Peter May. In an amended complaint, filed
in April 2000, Mr. Salsitz purports to assert a claim for alleged violation of
Section 14(e) of the Securities Exchange Act of 1934, as amended, on behalf of
all persons who held our stock as of March 10, 1999. The amended complaint
alleges that our tender offer statement in connection with the 1999 'Dutch
Auction' self-tender offer was materially false and misleading in that, among
other things, it failed to disclose alleged recent valuations of Triarc. The
amended complaint seeks damages in an amount to be determined, together with
prejudgment interest, the costs of suit, including attorneys' fees, an order
permitting all shareholders who tendered their shares in the Dutch Auction
Tender Offer to rescind the transaction, and unspecified other relief. On
November 16, 2001, the defendants moved for summary judgment dismissing the
action in its entirety. On the same day, the plaintiff moved to certify a class
consisting of all persons or entities who held stock in Triarc as of March 10,
1999 and who allegedly suffered damages thereby. The defendants have opposed
that motion. These motions are pending.

In October 1998, various class actions were brought on behalf of our
stockholders in the Court of Chancery of the State of Delaware. These class
actions name Triarc, Messrs. Peltz and May and directors of Triarc as
defendants. On March 26, 1999, four of the plaintiffs in these actions filed an
amended complaint making allegations substantially similar to those asserted in
the Salsitz case described above. In October 2000, the plaintiffs agreed to stay
these actions pending determination of the Salsitz action.

On September 14, 1999, William Pallot, one of our shareholders, filed a
purported derivative action against our directors and other defendants, and
naming us as a nominal defendant, in the Supreme Court of the State of New York,
New York County. In a second amended complaint, filed on February 17, 2000, the
plaintiff alleges that the defendants breached their fiduciary duties and aided
and abetted breaches of fiduciary duties by causing us to enter into an
agreement to purchase shares of the Company's Class B common stock owned by
affiliates of the late Victor Posner. The plaintiff further alleges that the
defendants violated their fiduciary duties and wasted corporate assets by
approving the Company's lease and purchase of aircraft from Triangle Aircraft
Services Corporation and causing Triarc to award Messrs. Peltz and May
unauthorized compensation between 1994 and 1997. On October 31, 2000 the court
granted the defendants' motion to

13

dismiss the action. On December 13, 2001, the Appellate Division, First
Department, affirmed the lower court's dismissal of plaintiff's complaint for
failure to state a cause of action. The plaintiff's time to appeal or to seek
leave to appeal from the Appellate Division decision has expired.

We believe that the outcome of any of the matters described above or any of
the other matters that have arisen in the ordinary course of our business will
not have a material adverse effect on our consolidated financial condition or
results of operations.

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

We held a Special Meeting of Stockholders on October 25, 2001. The matters
acted upon by the stockholders at that meeting were reported in our Quarterly
Report on Form 10-Q for the quarter ended September 30, 2001.

14

PART II

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

The principal market for our Class A Common Stock is the New York Stock
Exchange ('NYSE') (symbol: TRY). The high and low market prices for our Class A
Common Stock, as reported in the consolidated transaction reporting system, are
set forth below:

We did not pay any dividends on our common stock in 2000, 2001 or in the
current year to date and do not presently anticipate the declaration of cash
dividends on our Class A Common Stock in the near future. We have no class of
equity securities currently issued and outstanding except for the Class A Common
Stock. However, we are currently authorized to issue up to 100 million shares of
Class B Common Stock and up to 100 million shares of preferred stock.

Because we are a holding company, our ability to meet our cash requirements,
including required interest and principal payments on our indebtedness, is
primarily dependent upon, in addition to our cash, cash equivalents and
short-term investments on hand, cash flows from our subsidiaries. Under the
terms of the indenture relating to the notes issued in the Arby's securitization
(see 'Item 1. Business -- Restaurant Franchising System (Arby's) -- General'),
the ability of Arby's to pay any dividends or make any loans or advances to us
is limited by the debt service requirements of its subsidiaries. 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
9 to our Consolidated Financial Statements.

In August 1999, we entered into a stock purchase agreement pursuant to which
we were obligated to acquire all of the outstanding shares of Class B Common
Stock on or prior to August 19, 2001, subject to extension in certain limited
circumstances. Pursuant to the agreement, in August 1999 we repurchased
1,999,208 shares of our Class B Common Stock for an aggregate purchase price of
approximately $40.9 million, in August 2000 we repurchased 1,999,207 shares of
our Class B Common Stock for an aggregate purchase price of approximately $42.3
million and on August 10, 2001 we repurchased the remaining 1,999,207 shares of
our Class B Common Stock. You should read the information in 'Item 1.
Business -- Repurchase of Class B Common Stock'.

On January 18, 2001, our management was authorized, when and if market
conditions warrant, to purchase from time to time up to an aggregate of $50
million worth of our Class A Common Stock pursuant to a $50 million stock
repurchase program that ends on January 18, 2003. During the period from January
18, 2001 through March 15, 2002, we repurchased 149,000 shares, at an average
cost of approximately $23.40 per share (including commissions), for an aggregate
cost of approximately $3.5 million, pursuant to the stock repurchase program. We
cannot assure you that we will repurchase any additional shares pursuant to this
stock repurchase program.

As of March 15, 2002, there were approximately 3,671 holders of record of
our Class A Common Stock.

15

ITEM 6. SELECTED FINANCIAL DATA(1)

- ---------

(1) Selected Financial Data for the years ended on or prior to the fiscal year
ended December 31, 2000 reflect the discontinuance of the Company's
beverage businesses sold in October 2000, for the years ended on or prior
to the fiscal year ended January 2, 2000 reflect the discontinuance of the
Company's propane business sold in July 1999 and for the fiscal year ended
December 28, 1997 reflect the discontinuance of the Company's dyes and
specialty chemicals business sold in December 1997.

(2) The Company reports on a fiscal year basis consisting of 52 or 53 weeks
ending on the Sunday closest to December 31. In accordance with this
method, the Company's 1997, 1999, 2000 and 2001 fiscal years contained 52
weeks and its fiscal year 1998 contained 53 weeks.

(3) Basic and diluted income (loss) per share are the same for the years ended
December 28, 1997 and December 31, 2000 since all potentially dilutive
securities would have had an antidilutive effect for each of those years.
The shares used in the calculation of diluted income (loss) per share for
the years ended January 3, 1999 (31,527,000), January 2, 2000 (26,943,000)
and December 30, 2001 (22,692,000) consist of the weighted average common
shares outstanding and potential common shares reflecting the effect of
dilutive stock options of 1,221,000, 818,000 and 1,160,000, respectively,
and for the year ended January 2, 2000 the effect of a dilutive forward
purchase obligation for common stock of 110,000 shares.

(4) The Company has not paid any dividends on its common shares during any of
the years presented.

(5) Reflects certain significant charges and credits recorded during 1997 as
follows: $9,698,000 charged to loss from continuing operations before
income taxes representing (1) a $5,609,000 charge for facilities
(footnotes continued on next page)

16

(footnotes continued from previous page)

relocation and corporate restructuring costs and (2) $4,089,000 of loss on
sale of business; $5,865,000 charged to loss from continuing operations
representing the aforementioned $9,698,000 less $3,833,000 of related
income tax benefit; and $4,716,000 charged to net loss representing
(1) the aforementioned $5,865,000 charged to loss from continuing
operations, (2) $19,999,000 included in the loss from operations of the
discontinued businesses consisting of (a) $31,815,000 of charges for
post-acquisition related transition, integration and changes to business
strategies and (b) $1,466,000 of facilities relocation and corporate
restructuring charges, less (a) $576,000 of gain on sale of business and
(b) $12,706,000 of related income tax benefit and (3) a $3,781,000
extraordinary charge from the early extinguishment of debt, all less
$24,929,000 of gain on disposal of discontinued operations.

(6) Reflects certain significant credits recorded during 1998 as follows:
$7,074,000 credited to net income representing (1) $3,067,000 included in
the income from operations of the discontinued businesses consisting of
$5,016,000 of gain on sale of businesses less $1,949,000 of related income
taxes and (2) $4,007,000 of gain on disposal of discontinued operations.

(7) Reflects certain significant charges and credits recorded during 1999 as
follows: $926,000 credited to income from continuing operations before
income taxes representing $3,052,000 of reversal of excess interest expense
accruals for interest due the Internal Revenue Service (the 'IRS') in
connection with the completion of their examinations of the Company's
Federal income tax returns for prior years less a $2,126,000 charge for a
capital structure reorganization related charge related to equitable
adjustments made to the terms of outstanding stock options for stock of a
former subsidiary held by corporate employees; $5,789,000 credited to
income from continuing operations representing (1) the aforementioned
$926,000 credited to income from continuing operations before income taxes
less $264,000 of related income taxes and (2) $5,127,000 of release of
excess reserves for income taxes in connection with the completion of IRS
examinations of the Company's Federal income tax returns; and $3,897,000
credited to net income representing (1) the aforementioned $5,789,000
credited to income from continuing operations, (2) $15,102,000 of gain on
disposal of discontinued operations, less (i) $4,897,000 of charges
reported in income from operations of the discontinued businesses
consisting of (a) a $3,348,000 charge for a capital structure
reorganization related charge, similar to the charge in continuing
operations, relating to option holders who were employees of the sold
businesses, (b) $411,000 of provision for interest due the IRS in
connection with the completion of their examination of the Company's
Federal income tax returns, both less $1,464,000 of related income taxes
and (c) $2,602,000 of provision for income taxes in connection with the
completion of IRS examinations of the Company's Federal income tax returns
and (ii) a $12,097,000 extraordinary charge from the early extinguishment
of debt.

(8) In 1999 the Company repurchased for treasury 3,805,015 shares of its class
A common stock and 1,999,208 shares of class B common stock for an
aggregate $117,160,000 and recorded a forward purchase obligation for two
future purchases of class B common stock that occurred on August 10, 2000
and on August 10, 2001 for $42,343,000 and $43,843,000, respectively. These
transactions resulted in an aggregate $203,346,000 reduction to
stockholders' equity in 1999 resulting in a stockholders' deficit as of
January 2, 2000 and a reduction of 3,376,000 shares in the weighted-average
common shares outstanding.

(9) Reflects certain significant charges and credits recorded during 2000 as
follows: $36,432,000 charged to income from continuing operations before
income taxes representing (1) a $26,010,000 charge for capital market
transaction related compensation and (2) a $10,422,000 charge resulting
from the Company's repurchase of 1,045,834 shares of its class A common
stock from certain of the Company's officers and a director within six
months after exercise of the related stock options by the officers and
director; $32,914,000 charged to loss from continuing operations
representing the aforementioned $36,432,000 less $3,518,000 of related
income tax benefit; and $427,352,000 credited to net income representing
$480,946,000 of gain on disposal of discontinued operations less (1) the
aforementioned $32,914,000 charged to loss from continuing operations and
(2) a $20,680,000 extraordinary charge from the early extinguishment of
debt.

(10) The increase in stockholders' equity during 2000 principally reflects net
income of $441,241,000 which includes a gain on disposal of discontinued
operations of $480,946,000.
(footnotes continued on next page)

17

(footnotes continued from previous page)

(11) Reflects significant credits recorded during 2001 as follows: $5,000,000
credited to income from continuing operations before income taxes
representing the receipt of a $5,000,000 note receivable from the Chairman
and Chief Executive Officer and the President and Chief Operating Officer
(the 'Executives') of the Company received in connection with the
settlement of a class action lawsuit involving certain awards of
compensation to the Executives; $3,200,000 credited to income from
continuing operations representing the aforementioned $5,000,000 less
$1,800,000 of related income tax expense; 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
discontinued operations.

18

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

INTRODUCTION

We currently operate in one business, the franchising of Arby's restaurants,
from which we derive our revenues principally in the form of franchise royalties
and franchise fees. While over half of our existing royalty agreements and all
of our new domestic royalty agreements provide for royalties of 4% of franchise
revenues, our average rate was 3.3% in 2001. We also derive investment income
from our investments. As discussed below under 'Liquidity and Capital
Resources,' we are presently evaluating our options for the use of our
significant cash, cash equivalent and investment position, including business
acquisitions, repurchases of our common shares and investments.

We incur general and administrative expenses, depreciation and amortization
and interest expense, but no cost of goods sold, in our restaurant franchising
business. In addition, we incur general corporate expenses, including investment
activity related expenses, in those same expense categories. Our restaurant
franchising business does not require significant capital expenditures since we
do not own any restaurants.

We previously operated in the premium beverage and soft drink concentrate
businesses. On October 25, 2000 we completed the sale, which we refer to as the
Snapple Beverage Sale, of Snapple Beverage Group, Inc., the parent company of
Snapple Beverage Corp., Mistic Brands, Inc. and Stewart's Beverages, Inc., and
Royal Crown Company, Inc. to affiliates of Cadbury Schweppes plc, which we refer
to as Cadbury. Our former premium beverage business consisted of Snapple
Beverage Group and our former soft drink concentrate business consisted of Royal
Crown Company. The premium beverage and soft drink concentrate businesses,
formerly reported as business segments, have been accounted for as discontinued
operations in 1999 and 2000 through the date of sale.

On July 19, 1999 we completed the sale of 41.7% of our remaining 42.7%
interest in National Propane Partners L.P. and a subpartnership, which operated
a propane business, retaining a then 1% limited partner interest. Accordingly,
the propane business, formerly reported as a business segment, was accounted for
as a discontinued operation in 1999 through the date of sale.

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

Consistent growth of the restaurant industry as a percentage of total
food-related spending;

Increased competitive pressures from the emphasis by competitors on new
unit development to increase market share leading to frequent use of
price promotions and heavy advertising expenditures within the
industry;

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

Additional competitive pressures for prepared food purchases from
operators outside the restaurant industry such as deli sections and
in-store cafes of several major grocery store chains; and

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

We experience the effects of these trends to the extent they affect sales by
our franchisees and the resulting impact on the royalties and franchise fees we
receive from them.

PRESENTATION OF FINANCIAL INFORMATION

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

We report on a fiscal year consisting of 52 or 53 weeks ending on the Sunday
closest to December 31. Each of our 1999, 2000 and 2001 fiscal years contained
52 weeks. Our 1999 fiscal year commenced on January 4, 1999 and ended on
January 2, 2000, our 2000 fiscal year commenced on January 3, 2000 and ended
19

on December 31, 2000, and our 2001 fiscal year commenced on January 1, 2001 and
ended on December 30, 2001. When we refer to '1999' we mean the period from
January 4, 1999 to January 2, 2000; when we refer to '2000' we mean the period
from January 3, 2000 to December 31, 2000; and when we refer to '2001' we mean
the period from January 1, 2001 to December 30, 2001.

RESULTS OF OPERATIONS

Set forth below is a table that summarizes and compares our results of
operations for 1999, 2000 and 2001 and provides the amount and percent increase
or decrease between (1) 1999 and 2000 and (2) 2000 and 2001. Where there is no
amount in one of the years of the comparison or the change exceeds 100%, the
percent change is not meaningful, which we refer to as 'n/m.' The nature of the
income from discontinued operations and the extraordinary charges are not
comparable between periods and, as a result, we have not provided the percent
change.

2001 COMPARED WITH 2000

Royalties and Franchise Fees

Our royalties and franchise fees, which are generated entirely from our
restaurant franchising business, increased $5.1 million, or 6%, to $92.3 million
in 2001 from $87.2 million in 2000 reflecting a $5.3 million,

20

or 6%, increase in royalty revenue partially offset by a $0.2 million, or 6%,
decrease in franchise fee revenue. The increase in royalty revenue resulted from
an average net increase of 66, or 2%, franchised restaurants and a 1.9% increase
in same-store sales of franchised restaurants. The slight decrease in franchise
fee revenue was principally due to the opening of 25 fewer franchised
restaurants in 2001 compared with 2000 substantially offset by an increase in
revenues recognized from forfeited deposits upon the termination of commitments
to open new franchised restaurants. While we anticipate a continued combined
increase in royalties and franchise fees for the year ended December 29, 2002
compared with 2001, we expect this increase will be at a lower rate than the 6%
increase in combined royalties and franchise fees experienced during 2001.
Although we project an increase in the number of franchised restaurants during
2002, we currently expect the average net increase of franchised restaurants for
2002 will be less than the average net increase of 66 referred to above in 2001.
We also expect a decrease in revenues recognized from forfeited deposits upon
the termination of commitments to open new franchised restaurants. However, we
expect same-store sales of franchised restaurants to continue to increase in
2002. As a result, we expect (1) royalties will be higher in 2002 than in 2001
and (2) franchise fees will be lower in 2002 compared with 2001.

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

Investment Income, Net

The following table summarizes and compares the major components of
investment income, net in 2000 and 2001:

Investment income, net, increased $2.9 million, or 9%, to $33.6 million in
2001 from $30.7 million in 2000. This increase principally reflects (1) a $15.3
million increase in interest income on cash equivalents and short-term
investments and (2) a $0.2 million decrease in the provision for unrealized
losses recognized on investments deemed to be other than temporary. These
increases were partially offset by (1) a $12.2 million decrease in recognized
net gains, realized or unrealized as applicable, on our investments, of which
$10.3 million was attributable to our gain on the sale of one particular common
stock investment in 2000 which did not recur in 2001 and (2) a $0.4 million
decrease in distributions, including dividends, from certain of our investments.
The increased interest income is due to higher average amounts of cash
equivalents and short-term investments in 2001 compared with 2000 as a result of
the full year effect in 2001 of the cash provided from the Snapple Beverage Sale
and $277.0 million of proceeds, net of $13.0 million of expenses, from the
issuance of our 7.44% insured non-recourse securitization notes, which we refer
to as the Securitization Notes, on November 21, 2000. We currently are invested
principally in cash equivalents and we anticipate interest income will be
significantly lower in 2002 compared with 2001 assuming interest rates as of
December 30, 2001 do not increase significantly. In December 2001, moreover,
$175.0 million of United States government agency debt securities matured, which
yielded 6.2% and which had maturities of twelve months when acquired, the
proceeds of which were reinvested principally in money market funds which had an
average yield of 2.0% as of December 30, 2001. The recognized net gains on our
securities and the provision for other than temporary losses on our securities
may not recur in future periods.

Gain on Sale of Businesses

The gain on sale of businesses of $0.5 million in 2001 reflects the release
of sales tax accruals no longer necessary due to the expiration of statutory
audit periods. These accruals were originally provided as a component of the
loss on sale of all of the 355 then company-owned restaurants in 1997. There was
no gain on sale of businesses in 2000 included in continuing operations.
21

Other Income, Net

The following table summarizes and compares the major components of other
income, net in 2000 and 2001:

Other income, net, increased $8.9 million to $10.4 million in 2001 from $1.5
million in 2000. This increase was due to (1) $8.3 million of interest income
related to our election to treat certain portions of the Snapple Beverage Sale
as an asset sale for income tax purposes, as explained in more detail below
under 'Discontinued Operations,' representing interest for the period beginning
45 days after the October 25, 2000 date of the sale through the June 14, 2001
date of payment by Cadbury of $200.0 million to us for our making this election
and (2) a $2.1 million decrease in our equity in the losses of investees other
than investment limited partnerships and similar investment entities accounted
for under the equity method, principally due to $1.8 million of an equity loss
from the write-down of certain assets by an investee in 2000 which did not recur
in 2001. These increases were partially offset by (1) the non-recurring
collection in 2000 of $0.9 million of a receivable from a former affiliate which
was written off in years prior to 1999 due to the former affiliate filing for
bankruptcy protection and (2) other net decreases of $0.6 million.

General and Administrative

Our general and administrative expenses decreased $2.8 million, or 4%, to
$77.4 million in 2001 from $80.2 million in 2000. This decrease principally
reflects (1) an $11.4 million decrease in stock option compensation costs due to
costs incurred in 2000 which did not recur in 2001 consisting of (a) $10.4
million resulting from our repurchase of class A common stock from certain
officers and a director within six months after the exercise of related stock
options by such officers and director and (b) $1.0 million resulting from other
stock option activity relating to the Snapple Beverage Sale, (2) a $5.0 million
reduction in compensation expense related to a note receivable from our Chairman
and Chief Executive Officer and President and Chief Operating Officer, whom we
refer to as the Executives, that we received in 2001 in connection with the
settlement effective March 1, 2001 of a class action shareholder lawsuit which
asserted claims relating to certain compensation awards to the Executives,
(3) provisions of $1.2 million in 2000 which did not recur in 2001 for costs to
support a change in distributors of food and other products for a majority of
franchisees in our restaurant franchising business and (4) a $1.2 million
decrease in charitable contributions in 2001. These decreases were partially
offset by (1) higher incentive compensation costs of $5.0 million to $11.9
million in 2001 from $6.9 million in 2000 under our executive bonus plan
principally due to the effect on the bonus calculation of the positive impact of
the Snapple Beverage Sale on our capitalization, (2) a $2.5 million increase in
insurance expense due to (a) a $1.5 million reduction of insurance expense
recognized in 2000 which did not recur in 2001 relating to the favorable
settlement of insurance claims by the purchaser of a former insurance subsidiary
that we sold in 1998 resulting in the collection of a $1.5 million note
receivable that we received as a portion of the sales proceeds which was fully
reserved at the time of sale and (b) a $1.0 million increase in insurance
premiums in 2001, (3) $2.1 million of contributions to AFA Service Corporation,
an independent organization which produces advertising and promotional materials
for the Arby's franchise system, expensed in connection with an Arby's national
cable television advertising campaign introduced in 2001, (4) $1.9 million of
compensation expense recognized in 2001 representing the increase in the fair
value of investments in two deferred compensation trusts, which we refer to as
the Trusts, invested in January 2001 for the benefit of the Executives, as
explained in more detail below under 'Income from Continuing Operations Before
Income Taxes' and (5) other inflationary increases.

22

The $1.5 million gain in 2000 from realization of the note receivable
discussed above was included as a reduction of general and administrative
expenses since the gain effectively represented an adjustment of prior period
insurance reserves. The $5.0 million gain from the settlement of the class
action shareholder lawsuit discussed above was included as a reduction of
general and administrative expenses since the gain effectively represents an
adjustment of prior period compensation expense. The contributions to AFA
Service Corporation for the national cable television advertising campaign
will continue under an agreement which we expect will result in an additional
$6.1 million of expenses, in total, to be incurred over our fiscal years 2002
and 2003.

Depreciation and Amortization, Excluding Amortization of Deferred Financing
Costs

Our depreciation and amortization, excluding amortization of deferred
financing costs, increased $1.2 million, or 22%, to $6.5 million in 2001 from
$5.3 million in 2000. This increase principally reflects (1) a $0.5 million
increase in depreciation related to the purchase of an airplane in the third
quarter of 2001 which replaced fractional interests in two airplanes under
timeshare agreements which were terminated and (2) a $0.5 million increase in
amortization related to leasehold improvements completed in 2001.

Effective with our first quarter of fiscal 2002 we will adopt Statement of
Financial Accounting Statements No. 142 'Goodwill and Other Intangible Assets'
issued by the Financial Accounting Standards Board. Under SFAS 142 we will no
longer amortize our costs in excess of net assets of acquired companies, which
we refer to as Goodwill, commencing with our first quarter of fiscal 2002.
During 2001 Goodwill amortization amounted to $0.8 million. Further, we have
determined that all of our other intangible assets have finite useful lives and
will continue to be amortized. Therefore, depreciation and amortization,
excluding amortization of deferred financing costs, will decrease $0.8 million
in 2002 compared with 2001 as a result of the adoption of SFAS 142. See
'Recently Issued Accounting Pronouncements' under 'Liquidity and Capital
Resources' for a more complete discussion of SFAS 142.

Capital Market Transaction Related Compensation

The capital market transaction related compensation charge of $26.0 million
in 2000 resulted from incentive compensation costs directly related to the
completion of the Snapple Beverage Sale and the issuance of our Securitization
Notes. This compensation consisted of an aggregate of $22.5 million to the
Executives which was invested in the Trusts for their benefit in January 2001
and $3.5 million paid to other officers and employees in January 2001. There was
no similar charge in 2001.

Capital Structure Reorganization Related Charge

The capital structure reorganization related charge of $0.3 million in 2000
results from equitable adjustments that were made in 1999 to the terms of then
outstanding options under the stock option plan of Snapple Beverage Group to the
extent the option holders were employees of Triarc Companies, Inc. There was no
similar charge in 2001.

The Snapple Beverage Group stock option plan provided for an equitable
adjustment of options in the event of a recapitalization or similar event. As of
May 17, 1999 the exercise prices of Snapple Beverage Group options then
outstanding that were granted prior to January 4, 1999 were equitably adjusted
for the effects of net distributions of $91.3 million, principally consisting of
transfers of cash and deferred tax assets from Snapple Beverage Group to Triarc,
partially offset by the effect of the contribution of Stewart's to Snapple
Beverage Group effective May 17, 1999. We accounted for the equitable adjustment
of the Snapple Beverage Group stock options in accordance with the intrinsic
value method. We reduced the exercise prices of the Snapple Beverage Group stock
options, which did not result in the recognition of any expense because those
modifications to the options did not create a new measurement date under the
intrinsic value method. In addition, a then maximum of $2.6 million of cash
payments relating to option holders who were employees of Triarc was due from us
following the exercise of the stock options and the occurrence of certain other
events. The $0.3 million charge recognized in 2000 represents the additional
vested portion of our then obligation for these cash payments during 2000
through October 25, 2000, the date of the Snapple Beverage Sale, net of credits
for forfeitures of non-vested stock options of terminated employees. As a result
of the Snapple Beverage Sale, all outstanding Snapple Beverage Group stock
options remained the responsibility of Snapple Beverage Group under Cadbury's
ownership and were no longer our responsibility. The then remaining accrual for
these
23

cash payments recognized by Triarc of $2.4 million was released and reported as
a component of the gain on sale of the beverage businesses included in income
from discontinued operations in 2000.

Interest Expense

Interest expense increased $25.6 million to $30.4 million in 2001 from $4.8
million in 2000. This increase is primarily attributable to (1) $18.5 million of
additional interest in 2001 on our Securitization Notes issued on November 21,
2000 and $1.9 million of additional amortization of related deferred financing
costs, due to the full year effect on interest expense in 2001 of the
Securitization Notes which were issued on November 21, 2000, (2) interest of
$3.1 million for the period from March 15, 2001 through June 14, 2001 on the
estimated income tax liability paid with the filing of our election on June 14,
2001 to treat certain portions of the Snapple Beverage Sale as an asset sale for
income tax purposes as discussed more fully below under 'Discontinued
Operations' and (3) interest of $1.3 million in connection with a term loan with
an outstanding principal balance of $21.5 million as of December 30, 2001 and
related interest rate swap agreement used to finance the purchase of an airplane
during the third quarter of 2001.

Insurance Expense Related to Long-Term Debt

Insurance expense related to long-term debt increased $4.2 million to $4.8
million in 2001 from $0.6 million in 2000. These charges, which relate to
insuring the payment of principal and interest on the Securitization Notes,
increased due to the full year effect on insurance expense in 2001 of the
Securitization Notes which were issued on November 21, 2000.

Income from Continuing Operations Before Income Taxes

Our income from continuing operations before income taxes increased $15.5
million to $17.7 million in 2001 from $2.2 million in 2000 due to the effect of
the variances explained in the captions above.

As disclosed above, we recognized $1.9 million of compensation expense in
2001 for the increase in the fair values of the investments in the Trusts.
However, under accounting principles generally accepted in the United States of
America we were able to recognize investment income of only $0.2 million on the
investments in the Trusts resulting in a $1.7 million difference in the
recognition of deferred compensation expense and the related investment income.
This difference will reverse in future periods as either (1) the investments in
the 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 Trusts decrease resulting in the recognition of a reduction
of deferred compensation expense without any offsetting losses recognized in
investment income.

Income Taxes

The provision for income taxes represented effective rates of 49% in 2001
and 559% in 2000. The effective rate is unusually high in 2000 principally due
to the relatively low amount of pretax income and the effect thereon of
non-deductible compensation costs. The effective rate is lower in 2001, but
still exceeds the United States Federal statutory rate of 35%, principally due
to (1) the effect of non-deductible compensation costs, which were significantly
lower in 2001 compared with 2000, and (2) the effect of state income taxes,
which were lower in 2001 compared with 2000 due to the differing impact of the
mix of pretax income or loss among the consolidated entities since we file state
tax returns on an individual company basis.

Discontinued Operations

Income from discontinued operations was $43.4 million in 2001 compared with
$472.1 million in 2000. The 2001 income from discontinued operations resulted
entirely from adjustments to the previously recognized estimated gain on
disposal of our beverage businesses. These net adjustments result principally
from the realization of $200.0 million of proceeds from Cadbury for our electing
to treat certain portions of the Snapple Beverage Sale as an asset sale in lieu
of a stock sale under the provisions of Section 338(h)(10) of the United States
Internal Revenue Code, net of estimated income taxes, partially offset by
additional accruals relating to the Snapple Beverage Sale. The 2000 income from
discontinued operations consists of the then estimated gain

24

on disposal of the discontinued beverage businesses of $481.0 million less the
loss from operations of the discontinued businesses of $8.9 million through the
October 25, 2000 Snapple Beverage Sale.

Revenues and other income of the beverage businesses were $681.0 million in
2000 through the October 25, 2000 Snapple Beverage Sale. Revenues and other
income of the premium beverage business reflected (1) strong demand for newer
product introductions such as Snapple Elements'TM', a product platform of
herbally enhanced drinks, introduced in April 1999, and Mistic Zotics'TM'
introduced in April 2000 and (2) the positive effect of an increased focus by
two premium beverage distributors on sales of our products as a result of our
ownership of these distributors from February 25, 1999 and January 2, 2000,
respectively, through the date of the Snapple Beverage Sale on October 25, 2000.

The beverage businesses generated a pretax loss of $8.0 million in 2000
through the October 25, 2000 Snapple Beverage Sale principally reflecting the
negative impact of operating costs and expenses associated with the acquisition
of the two premium beverage distributors referred to above and interest expense
related to additional borrowings and the effect of an increasing interest rate
environment on the variable-rate debt of our beverage businesses. The beverage
businesses had a provision for income taxes of $0.9 million in 2000 despite a
loss before income taxes principally due to the amortization of non-deductible
Goodwill, and the differing impact of the mix of pretax loss or income among the
consolidated entities since we file state income tax returns on an individual
company basis.

Extraordinary Charges

The extraordinary charges of $20.7 million in 2000 resulted from the early
assumption by Cadbury or extinguishment by us, as applicable, of (1) borrowings
under a senior bank credit facility maintained by Snapple, Mistic, Stewart's,
Royal Crown and RC/Arby's Corporation, the former parent company of Royal Crown
and Arby's, Inc., (2) 10 1/4% senior subordinated notes due 2009, which we refer
to as the Senior Subordinated Notes, co-issued by Snapple Beverage Group and
Triarc Consumer Products Group, LLC, a subsidiary of ours and the former parent
of Snapple Beverage Group and Royal Crown, and (3) zero coupon convertible
subordinated debentures due 2018, which we refer to as the Debentures. These
extraordinary charges consisted of (1) the write-off of previously unamortized
deferred financing costs of $27.5 million and (2) the payment of prepayment
penalties and fees of $5.5 million, both less income tax benefit of $12.3
million. There were no similar charges in 2001.

2000 COMPARED WITH 1999

Royalties and Franchise Fees

Our royalties and franchise fees, which are generated entirely from our
restaurant franchising business, increased $6.0 million, or 7%, to $87.2 million
in 2000 from $81.2 million in 1999 reflecting higher royalty revenue and
slightly higher franchise fee revenue. The increase in royalty revenue resulted
from an average net increase of 91, or 3%, franchised restaurants and a 0.9%
increase in same-store sales of franchised restaurants.

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

25

Investment Income, Net

The following table summarizes and compares the major components of
investment income, net in 1999 and 2000:

Investment income, net increased $13.8 million, or 82%, to $30.7 million in
2000 from $16.9 million in 1999. This increase principally reflects (1) $10.4
million of higher recognized net gains, realized or unrealized as applicable, on
our investments, of which $10.3 million was attributable to our gain on the sale
of one particular common stock investment in 2000, (2) a $4.2 million increase
in interest income on cash equivalents and short-term investments, (3) a $0.9
million decrease in the provision recognized for unrealized losses on
investments deemed to be other than temporary and (4) a $0.8 million increase in
distributions, including dividends, from certain of our investments. These
increases were partially offset by a $2.3 million decrease in our net equity in
the earnings or losses of investment limited partnerships and similar investment
entities accounted for under the equity method. The increased interest income is
due to higher average amounts of cash equivalents and short-term investments in
2000 compared with 1999 as a result of the cash provided from the Snapple
Beverage Sale in October 2000 and the issuance of the Securitization Notes in
November 2000.

Gain on Sale of Businesses

The gain on sale of businesses of $1.2 million in 1999 was recognized as a
result of the decrease in our percentage ownership of MCM Capital Group, Inc.,
an investment accounted for under the equity method which we refer to as MCM,
due to the sale of common stock issued by MCM. There was no gain on sale of
businesses in 2000 included in continuing operations.

Other Income, Net

The following table summarizes and compares the major components of other
income, net in 1999 and 2000:

Other income, net decreased $1.4 million, or 48%, to $1.5 million in 2000
from $2.9 million in 1999. This decrease was principally due to (1) a loss of
$2.3 million in 2000 in our net equity in the income or losses of investees
other than investment limited partnerships and similar investment entities
accounted for under the equity method compared with an essentially break-even
position in 1999, principally due to $1.8 million of an equity loss from the
write-down of certain assets by MCM in 2000 which did not occur in 1999, and
(2) a $0.9 million reduction in interest income due to the receipt of $1.3
million of interest income in 1999 relating to

26

both income tax refunds and casualty insurance collateral which did not recur in
2000. These decreases were partially offset by (1) the collection in 2000 of
$0.9 million of a receivable from a former affiliate which was written off in
years prior to 1999 due to the former affiliate filing for bankruptcy protection
and (2) a $0.7 million reduction in the fair value of a written call option on
our class A common stock effectively established in connection with the
assumption by Cadbury of the Debentures. Although the Debentures were assumed by
Cadbury, they remain convertible into our class A common stock and as such we
have