TRIARC COMPANIES INC - 10-K Annual Report

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

(MARK ONE)

[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JANUARY 2, 2005.

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ________________ TO ________________.

COMMISSION FILE NUMBER 1-2207
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TRIARC COMPANIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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

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

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 451-3000
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SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
None

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

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

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

The aggregate market value of the registrant's common equity held by
non-affiliates of the registrant as of June 27, 2004 was approximately
$353,146,591. As of March 1, 2005, there were 23,715,549 shares of the
registrant's Class A Common Stock and 41,856,533 shares of the registrant's
Class B Common Stock, Series 1, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Items 10, 11, 12, 13 and 14 of Part III of this Form 10-K incorporate
information by reference from an amendment hereto or to the registrant's
definitive proxy statement, in either case which will be filed no later than 120
days after January 2, 2005.

________________________________________________________________________________

PART I
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND PROJECTIONS

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

o competition, including pricing pressures and the potential impact of
competitors' new units on sales by Arby's'r' restaurants;

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

o success of operating initiatives;

o development costs;

o advertising and promotional efforts;

o brand awareness;

o the existence or absence of positive or adverse publicity;

o new product and concept development by us and our competitors, and
market acceptance of such new product offerings and concepts;

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

o changes in spending patterns and demographic trends;

o the business and financial viability of key franchisees;

o the timely payment of franchisee obligations due to us;

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

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

o delays in opening new restaurants or completing remodels;

o anticipated or unanticipated restaurant closures by us and our
franchisees;

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

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

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

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

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

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

o adverse weather conditions;

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

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

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

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

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

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

o changes in legal or self-regulatory requirements, including
franchising laws, investment management regulations, accounting
standards, environmental laws, overtime rules, minimum wage rates and
taxation rates;

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

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

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

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

All future written and oral forward-looking statements attributable to us or
any person acting on our behalf are expressly qualified in their entirety by the
cautionary statements contained or referred to in this section. New risks and
uncertainties arise from time to time, and it is impossible for us to predict
these events or how they may affect us. We assume no obligation to update any
forward-looking statements after the date of this Form 10-K as a result of new
information, future events or developments, except as required by federal
securities laws. In addition, it is our policy generally not to make any
specific projections as to future earnings, and we do not endorse any
projections regarding future performance that may be made by third parties.

ITEM 1. BUSINESS.

INTRODUCTION

We are a holding company and, through our subsidiaries, the franchisor of
the Arby's restaurant system and, as of January 2, 2005, the owner and operator
of 233 Arby's restaurants located in the United States. We also own an
approximate 64% capital interest in Deerfield & Company LLC, which, through its
wholly-owned

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subsidiary Deerfield Capital Management LLC, is a Chicago-based asset manager
offering a diverse range of fixed income strategies to institutional investors.
Our corporate predecessor was incorporated in Ohio in 1929. We reincorporated in
Delaware in June 1994. Our principal executive offices are located at 280 Park
Avenue, New York, New York 10017 and our telephone number is (212) 451-3000. We
make our annual reports on Form 10-K, quarterly reports on Form 10-Q, current
reports on Form 8-K, and amendments to such reports, available, free of charge,
on our website as soon as reasonably practicable after such reports are
electronically filed with, or furnished to, the Securities and Exchange
Commission. Our website address is www.triarc.com. Information contained on our
website is not part of this Form 10-K.

BUSINESS STRATEGY

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

Our consolidated cash, cash equivalents and investments (including
restricted cash, but excluding investments related to deferred compensation
arrangements) at January 2, 2005 totaled approximately $641 million. At such
date, our consolidated indebtedness was approximately $484 million, including
approximately $212 million of debt issued by a subsidiary of Arby's, LLC and $73
million of debt issued by Sybra, Inc. None of the debt of the Arby's subsidiary
or Sybra has been guaranteed by Triarc. Our cash, cash equivalents and
investments (other than approximately $30.5 million of restricted cash) do not
secure such debt. We are reviewing our options to deploy our substantial
liquidity, through, among other things, acquisitions, additional share
repurchases and investments, with the goal of further increasing stockholder
value.

DEERFIELD ACQUISITION

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

JURLIQUE ACQUISITION

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

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

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

FISCAL YEAR

We use a 52/53 week fiscal year convention for Triarc and most of our
subsidiaries whereby our fiscal year ends each year on the Sunday that is
closest to December 31 of that year. Each fiscal year generally is comprised of
four 13 week fiscal quarters, although in some years one quarter represents a 14
week period. Triarc had 14 weeks in its 2004 fiscal fourth quarter. Deerfield
reports on a calendar year basis.

BUSINESS SEGMENTS

RESTAURANT FRANCHISING AND OPERATIONS (ARBY'S)

THE ARBY'S RESTAURANT SYSTEM

Through our subsidiaries, we participate in the quick service restaurant
segment of the restaurant industry as the franchisor of the Arby's restaurant
system and, as of January 2, 2005, the owner and operator of 233 Arby's
restaurants. Arby's, LLC, through its subsidiaries, is the franchisor of the
Arby's restaurant system. Our company-owned Arby's restaurants are owned and
operated through our subsidiary Sybra, Inc., which we acquired on December 27,
2002 and at the time was the second largest franchisee of the Arby's brand.
There are over 3,400 Arby's restaurants in the United States and Canada and
Arby's is the largest restaurant franchising system specializing in the roast
beef sandwich segment of the quick service restaurant industry. According to
Nation's Restaurant News, Arby's is the 10th largest quick service restaurant
chain in the United States. As of January 2, 2005, there were 233 company-owned
Arby's restaurants and 3,228 Arby's restaurants owned by franchisees. As of
January 2, 2005, 463 franchisees operated the 3,228 restaurants, of which 3,094
operated within the United States and 134 operated outside the United States.

Arby's also owns the T.J. Cinnamons'r' concept, which consists of gourmet
cinnamon rolls, gourmet coffees and other related products, and the Pasta
Connection'r' concept, which includes pasta dishes with a variety of different
sauces. Some Arby's restaurants are multi-branded with T.J. Cinnamons or Pasta
Connection. 245 domestic Arby's restaurants are multi-branded locations that
sell T.J. Cinnamons products and 13 are multi-branded locations that sell Pasta
Connection products. At January 2, 2005, T.J. Cinnamons gourmet coffees were
also sold in approximately 931 additional Arby's restaurants. Arby's is not
currently offering to sell any additional Pasta Connection franchises.

In addition to various slow-roasted roast beef sandwiches, Arby's offers an
extensive menu of chicken, turkey and ham sandwiches, side dishes and salads. In
2001, Arby's introduced its Market Fresh'r' line of premium sandwiches on a
nationwide basis. In 2003, Arby's developed a line of Market Fresh Salads, which
were introduced on a nationwide basis in 2004. In response to the recent trend
toward offering menu choices low in carbohydrates, Arby's also developed new
Market Fresh wrap sandwiches, which were introduced nationwide in 2004.

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

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OVERVIEW

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

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

On November 21, 2000, our subsidiary Arby's Franchise Trust completed an
offering of $290 million of 7.44% fixed rate insured notes due 2020 pursuant to
Rule 144A of the Securities Act. In connection with the financing, Arby's
engaged in a corporate restructuring pursuant to which it formed a wholly-owned
Delaware statutory business trust, Arby's Franchise Trust, which became the
franchisor of the Arby's restaurant system in the United States and Canada.
Arby's contributed its U.S. and Canadian franchise agreements, development
agreements, license option agreements and the rights to the revenues from those
agreements to Arby's Franchise Trust. Arby's also formed a new wholly-owned
Delaware statutory business trust, Arby's IP Holder Trust, and contributed to it
all of the intellectual property, including the Arby's trademark, necessary to
operate the Arby's franchise system in the United States and Canada. Arby's IP
Holder Trust has granted Arby's Franchise Trust a 99-year exclusive license to
use such intellectual property. As a result of the financing and related
restructuring, Arby's continues to service the franchise agreements relating to
U.S. franchises, and Arby's of Canada, Inc., a wholly-owned subsidiary of
Arby's, services the franchise agreements relating to Canadian franchises with
the assistance of Arby's. The servicing functions are performed pursuant to
separate servicing agreements with Arby's Franchise Trust pursuant to which the
servicers receive servicing fees from Arby's Franchise Trust equal to their
expenses, subject to a specified cap for any 12-month period. Any residual cash
flow received by Arby's Franchise Trust, after taking into account all required
monthly payments under the notes, including interest and targeted principal
repayments, may be distributed by Arby's Franchise Trust to Arby's. See Note 11
to our Consolidated Financial Statements.

ARBY'S RESTAURANTS

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

Arby's restaurants in the United States and Canada typically range in size
from 2,500 square feet to 3,000 square feet. Restaurants in other countries
typically are larger than U.S. and Canadian restaurants. At January 2, 2005,
approximately 97% of freestanding system-wide restaurants (including
approximately 97% of freestanding company-owned restaurants) feature drive-thru
windows. Restaurants typically have a manager, at least one assistant manager
and as many as 30 full and part-time employees. Staffing levels, which vary
during the day, tend to be heaviest during the lunch hours.

The following table sets forth the number of Arby's restaurants at the
beginning and end of each year from 2002 to 2004:

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

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underperforming Arby's restaurants has contributed to an increase in the average
annual unit sales volume of the Arby's system, as well as to an improvement of
the overall brand image of Arby's.

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

FRANCHISE NETWORK

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

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

Arby's offers franchises for the development of both single and multiple
'traditional' restaurant locations. Both new and existing franchisees may enter
into either a master development agreement, which requires the franchisee to
develop two or more Arby's restaurants in a particular geographic area within a
specified time period, or a license option agreement that grants the franchisee
the option, exercisable for a one year period, to build an Arby's restaurant on
a specified site. All franchisees are required to execute standard franchise
agreements. Arby's standard U.S. franchise agreement for new franchises
currently requires an initial $37,500 franchise fee for the first franchised
unit and $25,000 for each subsequent unit and a monthly royalty payment equal to
4.0% of restaurant sales for the term of the franchise agreement. Franchisees
typically pay a $10,000 commitment fee, which is credited against the franchise
fee during the development process for a new restaurant. Because of lower
royalty rates still in effect under earlier agreements, the average royalty rate
paid by U.S. franchisees was approximately 3.4% in 2003 and 3.5% in 2004.

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

ADVERTISING AND MARKETING

Arby's advertises locally primarily through regional television, radio and
newspapers. Payment for advertising time and space is made mostly by local
advertising cooperatives in which owners of local franchised restaurants and the
Company, to the extent that it owns local restaurants, participate. Some
franchisees spend amounts on advertising in addition to contributions made to a
local advertising cooperative. Other franchisees who operate in areas where
there is no local advertising cooperative handle their own advertising. The
Company and Arby's franchisees contribute 0.7% of net sales of their Arby's
restaurants to AFA Service Corporation, a not-for-profit entity controlled by
the franchisees that produces advertising and promotional materials for the
system. The Company and Arby's franchisees are also required to spend a
reasonable amount, but not less than 3% of monthly net sales of their Arby's
restaurants, for local advertising. This amount is divided between the

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individual local market advertising expense and the expenses of a cooperative
area advertising program with the Company operated restaurants and those
franchisees who are operating Arby's restaurants in that area. Contributions to
the cooperative area advertising program are determined by the participants in
the program and are generally in the range of 3% to 5% of monthly net sales.

Pursuant to an agreement between Arby's and AFA Service Corporation, Arby's
contributed $3.0 million in 2004 for four flights of national advertising and
will contribute $3.0 million in 2005 for five flights of national advertising.
The Company and Arby's franchisees are also required to contribute incremental
dues to AFA Service Corporation equal to 0.5% of net sales of their Arby's
restaurants (bringing their total contribution to AFA Service Corporation for
advertising and marketing to 1.2% of net sales) to help fund the program.

PROVISIONS AND SUPPLIES

As of January 2, 2005, two independent meat processors supplied all of
Arby's roast beef in the United States. Franchise operators are required to
obtain roast beef from approved suppliers. ARCOP, Inc., a not-for-profit
purchasing cooperative, negotiates contracts with approved suppliers on behalf
of the Company and Arby's franchisees.

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

As a result of the BSE incident in Washington State in 2003, Canada banned
the importation of beef from the United States. A single supplier with one
processing facility in Canada has supplied our Canadian franchisees with beef
since the implementation of the ban. Canada now permits importation of beef from
the United States if the cattle is under 30 months old when it is slaughtered,
but management expects that the Canadian supplier will continue to fulfill all
of the beef requirements of our Canadian franchisees.

Franchisees may obtain other products, including food, beverage,
ingredients, paper goods, equipment and signs, from any source that meets Arby's
specifications and approval. Suppliers to the Arby's system must comply with
USDA and United States Food and Drug Administration ('FDA') regulations
governing the manufacture, packaging, storage, distribution and sale of all food
and packaging products. Through ARCOP, the Company and Arby's franchisees
purchase food, proprietary paper and operating supplies through national
contracts employing volume purchasing. You should read the information contained
in 'Item 1. Business -- Risk Factors -- Arby's does not control advertising and
purchasing for the Arby's restaurant system, which could hurt sales and the
Arby's brand.'

QUALITY ASSURANCE

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

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TRADEMARKS

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

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

COMPETITION

Arby's faces direct and indirect competition from numerous well-established
competitors, including national and regional non-burger sandwich chains, such as
Panera Bread, Subway and Quiznos, as well as burger chains, such as McDonald's,
Burger King and Wendy's, and quick casual restaurant chains. In addition, Arby's
competes with locally owned restaurants, drive-ins, diners and other similar
establishments. Key competitive factors in the quick service restaurant industry
are price, quality of products, quality and speed of service, advertising, name
identification, restaurant location and attractiveness of facilities. We also
compete within the food service industry and the quick service restaurant sector
not only for customers, but also for personnel, suitable real estate sites and
qualified franchisees.

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

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

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

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

GOVERNMENTAL REGULATIONS

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

8

have a material adverse effect on the Company's consolidated financial position
or results of operations. We cannot predict the effect on our operations,
particularly on our relationship with franchisees, of any pending or future
legislation.

ASSET MANAGEMENT (DEERFIELD)

OVERVIEW

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

INVESTMENT MANAGEMENT SERVICES AND PRODUCTS

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

INVESTMENT STRATEGIES

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

ASSETS UNDER MANAGEMENT

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

9

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

ADVISORY FEES

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

MARKETING

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

COMPETITION

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

GOVERNMENTAL REGULATIONS

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

10

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

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

OTHER SERVICES

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

INTELLECTUAL PROPERTY

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

GENERAL

ENVIRONMENTAL MATTERS

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

In 2001, a vacant property owned by Adams Packing Association, Inc., an
inactive subsidiary of ours, was listed by the United States Environmental
Protection Agency on the Comprehensive Environmental Response,

11

Compensation and Liability Information System, which we refer to as CERCLIS,
list of known or suspected contaminated sites. The CERCLIS listing appears to
have been based on an allegation that a former tenant of Adams Packing conducted
drum recycling operations at the site from some time prior to 1971 until the
late 1970s. The business operations of Adams Packing were sold in December 1992.
In February 2003, Adams Packing and the Florida Department of Environmental
Protection, which we refer to as the Florida DEP, agreed to a consent order that
provided for development of a work plan for further investigation of the site
and limited remediation of the identified contamination. In May 2003, the
Florida DEP approved the work plan submitted by Adams Packing's environmental
consultant and the work under that plan has been completed. Adams Packing
submitted its contamination assessment report to the Florida DEP in March 2004.
In August 2004, the Florida DEP agreed to a monitoring plan consisting of two
sampling events after which it will reevaluate the need for additional
assessment or remediation. The results of the first sampling event, which
occurred in January 2005, have been submitted to the Florida DEP for its review.
Based on provisions made prior to 2003 of approximately $1.7 million for costs
associated with this matter, and after taking into consideration various legal
defenses available to us, Adams has provided for its estimate of its liability
for this matter, including related legal and consulting fees. Accordingly, this
matter is not expected to have a material adverse effect on our consolidated
financial position or results of operations. See 'Item 7. Management`s
Discussion and Analysis of Financial Condition and Results of
Operations -- Legal and Environmental Matters.'

SEASONALITY

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

EMPLOYEES

As of January 2, 2005, we had 5,360 total employees, including 538 salaried
employees and 4,822 hourly employees. Of these, 70 are employed by Triarc, 5,192
are employed by Arby's and 98 are employed by Deerfield. As of January 2, 2005,
none of our employees was covered by a collective bargaining agreement. We
believe that our employee relations are satisfactory.

RISK FACTORS

We wish to caution readers that in addition to the important factors
described elsewhere in this Form 10-K, the following important factors, among
others, sometimes have affected, or in the future could affect, our actual
results and could cause our actual consolidated results during 2005, and beyond,
to differ materially from those expressed in any forward-looking statements made
by us or on our behalf.

RISKS RELATING TO TRIARC

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

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

12

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

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

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

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

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

At January 2, 2005, our consolidated cash, cash equivalents and investments
(including restricted cash, but excluding investments related to deferred
compensation arrangements) totaled approximately $641 million. We have not
designated any specific use for our significant cash, cash equivalents and
investment position. We are evaluating options to deploy our substantial
liquidity through, among other things, acquisitions, additional share
repurchases and investments. See 'Item 1. Business -- Business Strategy.'

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

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

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

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

13

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

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

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

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

If at any time during the last half of our taxable year, five or fewer
individuals own or are deemed to own more than 50% of the total value of our
shares and if during such taxable year we receive 60% or more of our gross
income, as specially adjusted, from specified passive sources, we would be
classified as a 'personal holding company' for U.S. federal income tax purposes.
If this were the case, we would be subject to additional taxes at the rate of
15% on a portion of our income, to the extent this income is not distributed to
shareholders. We do not currently expect to have any liability in 2005 for tax
under the personal holding company rules. However, we cannot assure you that we
will not become liable for such tax in the future. Because we do not wish to be
classified as a personal holding company or to incur any personal holding
company tax, we may be required in the future to take actions that we would not
otherwise take. These actions may influence our strategic and business
decisions, including causing us to conduct our business and acquire or dispose
of investments differently than we otherwise would.

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

Certain provisions in our certificate of incorporation are intended to
discourage or delay a hostile takeover of control of us. Our certificate of
incorporation authorizes the issuance of shares of 'blank check' preferred stock
and additional series of Class B Common Stock, which will have such
designations, rights and preferences as may be determined from time to time by
our board of directors. Accordingly, our board of directors is empowered,
without stockholder approval, to issue preferred stock and/or Class B Common
Stock with dividend, liquidation, conversion, voting or other rights that could
adversely affect the voting power and other rights of the holders of our
Class A Common Stock and Class B Common Stock, Series 1. The preferred stock and
additional series of Class B Common Stock could be used to discourage, delay or
prevent a change in control of us that is determined by our board of directors
to be undesirable. Although we have no present intention to issue any shares of
preferred stock or additional series of Class B Common Stock, we cannot assure
you that we will not do so in the future.

14

RISKS RELATING TO ARBY'S

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

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

o our ability to attract new franchisees;

o the availability of site locations for new restaurants;

o the ability of potential restaurant owners to obtain financing;

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

o the availability of construction materials and labor;

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

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

o adverse weather conditions.

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

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

Our largest franchisee, RTM Restaurant Group, Inc. ('RTM'), accounted for
approximately 29% of our royalties and franchise and related fees in 2004. As of
January 2, 2005, RTM operated 772 Arby's restaurants. Our revenues could
materially decline from their present levels if RTM suffered a significant
decline in its business.

OUR FRANCHISEES COULD TAKE ACTIONS THAT COULD HARM OUR BUSINESS.

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

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

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

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

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

15

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

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

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

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

ADDITIONAL INSTANCES OF MAD COW DISEASE OR OTHER FOOD-BORNE ILLNESSES, SUCH
AS BIRD FLU, COULD ADVERSELY AFFECT THE PRICE AND AVAILABILITY OF BEEF,
POULTRY OR OTHER MEATS AND CREATE NEGATIVE PUBLICITY, WHICH COULD RESULT IN
A DECLINE IN OUR SALES.

Instances of mad cow disease or other food-borne illnesses, such as bird
flu, e-coli or hepatitis A, could adversely affect the price and availability of
beef, poultry or other meats, including if additional incidents cause consumers
to shift their preferences to other meats. As a result, Arby's restaurants could
experience a significant increase in food costs if there are additional
instances of mad cow disease or other food-borne illnesses.

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

CHANGES IN CONSUMER TASTES AND PREFERENCES AND IN DISCRETIONARY CONSUMER
SPENDING COULD RESULT IN A DECLINE IN SALES AT COMPANY-OWNED RESTAURANTS AND
IN THE ROYALTIES THAT WE RECEIVE FROM FRANCHISEES.

The quick service restaurant industry is often affected by changes in
consumer tastes, national, regional and local economic conditions, discretionary
spending priorities, demographic trends, traffic patterns and the type, number
and location of competing restaurants. Our success depends to a significant
extent on discretionary consumer spending, which is influenced by general
economic conditions and the availability of discretionary income. Accordingly,
we may experience declines in sales during economic downturns. Any material
decline in the amount of discretionary spending or a decline in family
food-away-from-home spending could hurt our sales, results of operations,
business and financial condition.

16

In addition, if company-owned and franchised restaurants are unable to adapt
to changes in consumer preferences and trends, we and our franchisees may lose
customers and the resulting revenues from company-owned restaurants and the
royalties that Arby's receives from its franchisees may decline.

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

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

COMPETITION FROM OTHER RESTAURANT COMPANIES COULD HURT US.

The market segments in which owned and franchised Arby's restaurants compete
are highly competitive with respect to, among other things, price, food quality
and presentation, service, location, and the nature and condition of the
financed business unit. Arby's restaurants compete with a variety of
locally-owned restaurants, as well as competitive regional and national chains
and franchises. Several of these chains compete by offering higher quality
sandwiches and/or menu items that are specifically identified as low in
carbohydrates or otherwise targeted at certain consumer groups. Additionally,
many of our competitors are introducing lower cost, value meal menu options. Our
revenues and those of our franchisees may be hurt by this product and price
competition.

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

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

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

COMPLAINTS OR LITIGATION MAY HURT US.

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

17

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

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

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

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

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

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

OUR OPERATIONS COULD BE INFLUENCED BY WEATHER CONDITIONS.

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

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

Under our restaurant subsidiaries' debt agreements, substantially all of the
assets of our subsidiaries (excluding Deerfield and its subsidiaries), other
than cash, cash equivalents and short-term investments, are pledged as
collateral security. The indenture relating to the notes issued in the Arby's
securitization and the agreements relating to debt issued by Sybra contain
financial covenants that, among other things, require Arby's Franchise Trust
(the borrower in the Arby's securitization) and Sybra, as applicable, to
maintain certain financial ratios and restrict their ability to incur debt,
enter into certain fundamental transactions (including sales of all or
substantially all of their assets and certain mergers and consolidations) and
create or permit liens. If either Arby's Franchise Trust or Sybra is unable to
generate sufficient cash flow or otherwise obtain the funds

18

necessary to make required payments of interest or principal under, or is unable
to comply with covenants of, its respective debt agreements, it would be in
default under the terms of such agreements, which would, under certain
circumstances, permit the insurer of the notes issued in the Arby's
securitization or the lenders to Sybra, as applicable, to accelerate the
maturity of the balance of its indebtedness. You should read the information in
Note 11 to the Consolidated Financial Statements.

RISKS RELATING TO DEERFIELD

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

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

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

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

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

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

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

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

19

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

CHANGES IN THE FIXED INCOME MARKETS COULD ADVERSELY AFFECT DCM.

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

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

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

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

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

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

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

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

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

20

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

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

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

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

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

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

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

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

OTHER RISKS

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

Our intellectual property is material to the conduct of our business. We
rely on a combination of trademarks, copyrights, service marks, trade secrets
and similar intellectual property rights to protect our brands and other
intellectual property. The success of our business strategy depends, in part, on
our continued ability to use our existing trademarks and service marks in order
to increase brand awareness and further develop our branded products in both
existing and new markets. If our efforts to protect our intellectual property
are not adequate, or if any third party misappropriates or infringes on our
intellectual property, either

21

in print or on the Internet, the value of our brands may be harmed, which could
have a material adverse effect on our business, including the failure of our
brands to achieve and maintain market acceptance. This could harm our image,
brand or competitive position and, if we commence litigation to enforce our
rights, cause us to incur significant legal fees.

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

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

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

In 1997 we sold all of our then company-owned Arby's restaurants to
subsidiaries of RTM, Arby's largest franchisee. In connection with the sale, an
aggregate of approximately $55 million of mortgage and equipment notes were
assumed by subsidiaries of RTM, of which approximately $38 million remained
outstanding at January 2, 2005. RTM has guaranteed the payment of these notes by
its subsidiaries. Notwithstanding the assumption of this debt and guaranty, we
remain contingently liable as a guarantor of the notes. In addition, the
subsidiaries of RTM also assumed substantially all of the lease obligations
relating to the purchased restaurants (which aggregate a maximum of
approximately $52 million at January 2, 2005) and RTM has indemnified us for any
losses we might incur with respect to such leases. Notwithstanding such
assumption, Arby's and its subsidiaries remain contingently liable if RTM's
subsidiaries fail to make the required payments under those notes and leases.

In addition, in July 1999, we sold 41.7% of our then remaining 42.7%
interest in National Propane Partners, L.P. and a sub-partnership, National
Propane, L.P. to Columbia Energy Group, and retained less than a 1% special
limited partner interest in AmeriGas Eagle Propane, L.P. (formerly known as
National Propane, L.P. and as Columbia Propane, L.P.). As part of the
transaction, our subsidiary, National Propane Corporation, agreed that while it
remains a special limited partner of AmeriGas, it would indemnify the owner of
AmeriGas for any payments the owner makes under certain debt of AmeriGas
(aggregating approximately $138 million as of January 2, 2005), if AmeriGas is
unable to repay or refinance such debt, but only after recourse to the assets of
AmeriGas. Either National Propane Corporation or AmeriGas Propane, L.P., the
owner of AmeriGas, may require AmeriGas to repurchase the special limited
partner interest. However, we believe it is unlikely that either party would
require repurchase prior to 2009 as either AmeriGas Propane, L.P. would owe us
tax indemnification payments or we would accelerate payment of deferred taxes,
which amount to approximately $36.1 million as of January 2, 2005, associated
with our sale of the propane business.

Although we believe that it is unlikely that we will be called upon to make
any payments under the guaranty, leases or indemnification described above, if
we are required to make such payments it could have a material adverse effect on
our financial position and results of operations. You should read the
information in 'Item. 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources' and in
Note 23 to the Consolidated Financial Statements.

22

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

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

ITEM 2. PROPERTIES.

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

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

- ---------

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

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

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

At January 2, 2005, Sybra's 233 restaurants were located in the following
states: 74 were in Michigan, 63 in Texas, 39 in Pennsylvania, 21 in Florida, 14
in New Jersey, 10 in Maryland, 8 in Connecticut, 3 in Virginia and 1 in West
Virginia. In addition to its Arby's restaurant locations, Sybra also leases
office space in Ft. Lauderdale, Florida for its corporate and executive offices
and in Flint, Michigan, Sinking Spring, Pennsylvania, Plano, Texas and Temple
Terrace, Florida for its regional operations centers.

ITEM 3. LEGAL PROCEEDINGS.

In 1998, a number of class action lawsuits were filed on behalf of our
stockholders. Each of these actions named Triarc, Messrs. Peltz and May and the
other then directors of Triarc as defendants. In 1999, certain plaintiffs in
these actions filed a consolidated amended complaint alleging that our tender
offer statement filed with the Securities and Exchange Commission in 1999,
pursuant to which we repurchased 3,805,015 shares of our Class A Common Stock,
failed to disclose material information. The amended complaint seeks, among
other relief, monetary damages in an unspecified amount. In 2000, the plaintiffs
agreed to stay this action pending determination of a related stockholder action
that was subsequently dismissed in October 2002 and is

23

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

In addition to the legal matter described above and the environmental matter
described under 'Item 1. Business -- General -- Environmental Matters', we are
involved in other litigation and claims incidental to our current and prior
businesses. We and our subsidiaries have reserves for all of our legal and
environmental matters aggregating $1.1 million as of January 2, 2005. Although
the outcome of these matters cannot be predicted with certainty and some of
these matters may be disposed of unfavorably to us, based on our currently
available information, including legal defenses available to us and/or our
subsidiaries, and given the aforementioned reserves, we do not believe that the
outcome of these legal and environmental matters will have a material adverse
effect on our consolidated financial position or results of operations.

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

On June 9, 2004, Triarc held its Annual Meeting of Stockholders. The matters
acted upon by the stockholders at that meeting were reported in our Quarterly
Report on Form 10-Q for the quarter ended June 27, 2004.

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PART II

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

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

On September 4, 2003 we made a stock distribution of two shares of our Class
B Common Stock for each share of our Class A Common Stock issued as of August
21, 2003. Our Class B Common Stock is entitled to one-tenth of a vote per share
and our Class A Common Stock is entitled to one vote per share. Our Class B
Common Stock is also entitled to vote as a separate class with respect to any
merger or consolidation in which Triarc is a party unless each holder of a share
of Class B Common Stock receives the same consideration as a holder of Class A
Common Stock, other than consideration paid in shares of common stock that
differ as to voting rights, liquidation preference and dividend preference to
the same extent that our Class A and Class B Common Stock differ. Our Class B
Common Stock is entitled to receive regular quarterly cash dividends per share
of at least 110% of any regular quarterly cash dividends declared and paid on
our Class A Common Stock on or before September 4, 2006. Thereafter, each share
of our Class B Common Stock is entitled to at least 100% of the regular
quarterly cash dividend paid on each share of our Class A Common Stock. In
addition, our Class B Common Stock has a $.01 per share preference in the event
of any liquidation, dissolution or winding up of Triarc and, after each share of
our Class A Common Stock also receives $.01 per share in any such liquidation,
dissolution or winding up, our Class B Common Stock would thereafter participate
equally on a per share basis with our Class A Common Stock in any remaining
assets of Triarc.

On each of September 25, 2003, December 16, 2003, March 16, 2004, June 16,
2004, September 15, 2004, December 15, 2004 and March 15, 2005, we paid cash
dividends of $0.065 and $0.075 per share on our Class A Common Stock and Class B
Common Stock, respectively, to holders of record on September 15, 2003, December
2, 2003, March 4, 2004, June 3, 2004, September 3, 2004, December 3, 2004 and
March 3, 2005, respectively. The September 25, 2003, December 16, 2003, March
16, 2004, June 16, 2004, September 15, 2004, December 15, 2004 and March 15,
2005 dividends aggregated approximately $4.2 million, $4.3 million, $4.3
million, $4.6 million, $4.6 million, $4.7 million and $4.7 million,
respectively. Although we currently intend to continue to declare and pay
regular quarterly cash dividends, there can be no assurance that any dividends
will be declared or paid in the future or the amount or timing of such
dividends, if any. Future dividends will be made at the discretion of our board
of directors and will be based on such factors as our earnings, financial
condition, cash requirements, future prospects and other factors. We have no
class of equity securities currently issued and outstanding except for our Class
A Common Stock and our Class B Common Stock, Series 1. However, we are currently
authorized to issue up to 100 million shares of preferred stock.

25

Because we are a holding company, our ability to meet our cash requirements,
including required interest and principal payments on our indebtedness, is
primarily dependent upon, in addition to our cash, cash equivalents and
short-term investments on hand, cash flows from our subsidiaries. Under the
terms of the indenture relating to the notes issued in the Arby's securitization
and the agreements relating to debt issued by Sybra (see 'Item 1.
Business -- Risk Factors'), there are restrictions on the ability of certain of
our subsidiaries to pay any dividends or make any loans or advances to us. The
ability of any of our subsidiaries to pay cash dividends or make any loans or
advances to us is also dependent upon the respective abilities of such entities
to achieve sufficient cash flows after satisfying their respective cash
requirements, including debt service, to enable the payment of such dividends or
the making of such loans or advances. In addition, in connection with the
acquisition of Sybra, Triarc agreed that Sybra would not pay dividends to it
prior to December 27, 2004. You should read the information in 'Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources' and Note 11 to our Consolidated
Financial Statements.

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

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

Issuer Repurchases of Equity Securities(1)

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

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

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