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

                                  FORM 10-K

(Mark One)
(X)   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934

For the fiscal year ended December 28, 1997

                                      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 0-20286
                       -------
                             RC/ARBY'S CORPORATION
                             ---------------------
            (Exact name of registrant as specified in its charter)

                  Delaware                           59-2277791 
                  --------                           ---------- 
      (State or other jurisdiction of             (I.R.S. Employer 
       incorporation or organization)            Identification No.)

            1000 Corporate Drive
          Fort Lauderdale, Florida                      33334
          ------------------------                      -----
    (Address of principal executive offices)          (Zip Code)

   Registrant's telephone number, including area code (954) 351-5100
                                                      --------------
Securities registered pursuant to Section 12(b) of the Act:
                                            Name of each exchange
            Title of each class              on which registered
            -------------------              -------------------
                                     None

Securities registered pursuant to Section 12(g) of the Act:

                                     None

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

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

      All of the voting stock of the  registrant  is held by the  registrant's
parent, CFC Holdings Corp. There were 1,000 shares of the registrant's  common
stock ($1.00 par value) outstanding as of March 31, 1998.

      The registrant  meets the  conditions  set forth in General  Instruction
J(1)(a)  and (b) of Form 10-K and is  therefore  filing  this  report with the
reduced disclosure format.


<PAGE>





                                    PART I

       SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND PROJECTIONS

   Certain  statements  in this Annual Report on Form 10-K (this "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,  those statements
preceded  by,  followed  by,  or that  include  the words  "may,"  "believes,"
"expects,"  "anticipates,"  or the negation thereof,  or similar  expressions,
constitute  "forward-looking  statements"  within the  meaning of the  Private
Securities Litigation Reform Act of 1995 (the "Reform Act"). In addition,  all
statements which address  operating  performance,  events or developments that
are  expected  or  anticipated  to occur in the future,  including  statements
relating  to volume  and  revenue  growth  and  shares of sales or  statements
expressing   general   optimism   about   future   operating   results,    are
forward-looking  statements  within  the  meaning  of  the  Reform  Act.  Such
forward-looking  statements  involve  risks,  uncertainties  and other factors
which may cause the actual  results,  performance or achievements of RC/Arby's
Corporation  ("RCAC") and its subsidiaries to be materially different from any
future  results,  performance  or  achievements  express  or  implied  by such
forward-looking  statements. Such factors include, but are not limited to, the
following:  general economic and business  conditions;  competition  including
product and pricing pressures;  success of operating initiatives;  development
and  operating  costs;  brand  awareness;  the existence or absence of adverse
publicity; market acceptance of new product offerings; new product and concept
development by competitors; changing trends in customer tastes; the success of
multi-branding;  availability,  location  and  terms of sites  for  restaurant
development;  the ability of franchisees to open new restaurants in accordance
with their development commitments;  the satisfaction by material customers of
the terms of their  purchase  agreements;  changes  in  business  strategy  or
development plans; quality of management;  availability,  terms and deployment
of capital;  business  abilities  and judgment of personnel;  availability  of
qualified personnel;  labor and employee benefit costs;  availability and cost
of raw  materials  and  supplies;  changes  in, or  failure  to  comply  with,
government regulations, including accounting standards, environmental laws and
taxation requirements; the costs, uncertainties and other effects of legal and
administrative   proceedings;   general   economic,   business  and  political
conditions  in  countries  and  territories  where  RCAC and its  subsidiaries
operate, including the ability to form successful strategic business alliances
with local  participants;  the impact of such conditions on consumer spending;
and other risks and  uncertainties  referred  in this Form 10- K and  periodic
filings by RCAC with the  Securities  and Exchange  Commission.  RCAC will not
undertake and  specifically  declines any  obligation to publicly  release the
result of any revisions which may be made to any forward-looking statements to
reflect  events  or  circumstances  after  the date of such  statements  or to
reflect the occurrence of anticipated or unanticipated events. In addition, it
is RCAC's policy  generally not to make any specific  projections as to future
earnings,   and  RCAC  does  not  endorse  any  projections  regarding  future
performance that may be made by third parties.

Item 1.     Business.

                                 INTRODUCTION

   RCAC is a holding  company that conducts  business  operations  through its
wholly-owned  subsidiaries,  Royal Crown  Company,  Inc.  ("Royal  Crown") and
Arby's, Inc. (d/b/a Triarc Restaurant Group) ("TRG"). Royal Crown produces and
sells  concentrates  used in the production and distribution of soft drinks by
independent bottlers under the brand names RC Cola(R),  Diet RC Cola(R),  Diet
Rite Cola(R), Diet Rite(R) flavors,  Nehi(R), Upper 10(R) and Kick(R). RC Cola
is the third largest  national  brand cola and is the only national brand cola
available to bottlers who do not bottle either Coca-Cola or Pepsi-Cola.  Royal
Crown  is also  the  exclusive  supplier  of cola  concentrate  and a  primary
supplier of flavor concentrates  to  Cott  Corporation ("Cott"),  which  sells 

                                     2

<PAGE>



private label soft drinks to major retailers in the United States, Canada, the
United Kingdom, Australia, Japan, Spain and South Africa.

   Arby's(R) is the world's largest franchise  restaurant system  specializing
in  roast  beef  sandwiches  with  an  estimated   market  share  in  1997  of
approximately  73% of the roast beef  sandwich  segment  of the  quick-service
sandwich restaurant  category.  In addition,  RCAC believes that Arby's is the
10th  largest  restaurant  chain  in the  United  States,  based  on  domestic
system-wide  sales.  Worldwide sales for the Arby's system were  approximately
$2.1 billion in 1997. TRG now operates solely as a franchisor in a system that
included 3,091 restaurants as of December 28, 1997.

   RCAC is an  indirect  wholly-owned  subsidiary  of Triarc  Companies,  Inc.
("Triarc"). Triarc is a public company, the Class A Common Stock of which (the
only  class of  Triarc's  voting  securities)  is traded on the New York Stock
Exchange.

   RCAC was  incorporated  in 1982 in  Florida  under  the name  "Royal  Crown
Corporation" and  reincorporated  in Delaware,  by means of a merger, in March
1994.  Royal  Crown was  incorporated  in 1978 in  Delaware  and,  through its
predecessor   corporations,   has  been  in  business   since  1905.  TRG  was
incorporated  in 1964 in Ohio and  reincorporated  in  Delaware  in 1994.  The
principal  executive  offices  of  each of RCAC  and TRG are  located  at 1000
Corporate Drive, Fort Lauderdale,  Florida 33334. The telephone number at such
offices is (954) 351-5100.  The principal executive offices of Royal Crown are
located at 709 Westchester Avenue, White Plains, New York 10604. The telephone
number at such offices is (914)  397-9200.  Reference  herein to the "Company"
includes  collectively RCAC, Royal Crown and TRG, unless the context indicates
otherwise.

   RECENT DISPOSITIONS

   Sale of Company-Owned Restaurants

   On May 5, 1997,  subsidiaries  of RCAC sold to an  affiliate  of RTM,  Inc.
("RTM"),  the largest franchisee in the Arby's system, all of the stock of two
corporations  owning  all of the 355  company-owned  Arby's  restaurants.  The
purchase  price was  approximately  $73 million,  consisting  primarily of the
assumption  of  approximately   $69  million  in  mortgage   indebtedness  and
capitalized lease obligations. In connection with the transaction, the Company
received  options to purchase up to an aggregate of 20% of the common stock of
the two  corporations  owning such  restaurants.  RTM and  certain  affiliated
entities have agreed to indemnify and hold the Company  harmless  from,  among
other things,  the assumed debt and lease  obligations.  In addition,  the two
corporations  that  were  sold  agreed  to build an  aggregate  of 190  Arby's
restaurants over 14 years pursuant to a development  agreement (in addition to
a previous agreement by affiliates of RTM to build 210 Arby's restaurants over
a ten and one-half year period).

   Sale of C&C Beverage Line

   On  July  18,  1997,  Royal  Crown  and  TriBev   Corporation   ("TriBev"),
subsidiaries  of RCAC,  completed the sale of their rights to the C&C beverage
line,  including the C&C trademark.  In connection with the sale,  Royal Crown
also  agreed to sell  concentrate  for C&C  products  and to  provide  certain
technical  services to the buyer for seven  years.  In  consideration  for the
foregoing,   Royal  Crown  and  TriBev  will  receive  aggregate  payments  of
approximately $9.4 million, payable over seven years.

   CANCELLATION OF SPINOFF TRANSACTIONS

   On October 29, 1996, Triarc announced that its Board of Directors  approved
a plan to offer up to  approximately  20% of the  shares of its  beverage  and
restaurant  businesses  (including those of the Company) to the public through
an initial public offering and to spin off the remainder of the shares of such
businesses to Triarc's stockholders (collectively, the "Spinoff Transactions").

                                     3

<PAGE>



In  May  1997  Triarc   announced  it  would  not  proceed  with  the  Spinoff
Transactions  as a  result  of  its  acquisition  of  Snapple  Beverage  Corp.
("Snapple") and other issues.

   CHANGE IN FISCAL YEAR

   Effective  January  1,  1997,  the  Company  adopted  a 52/53  week  fiscal
convention  whereby  its fiscal  year will end each year on the Sunday that is
closest to  December  31 of such year.  Each  fiscal  year  generally  will be
comprised of four 13 week fiscal  quarters,  although in some years the fourth
quarter will represent a 14 week period.

BUSINESS SEGMENTS

                           BEVERAGES (ROYAL CROWN)

   TRIARC BEVERAGE GROUP

   The Triarc  Beverage Group ("TBG")  oversees the Company's  carbonated soft
drink  operations,  conducted by Royal Crown,  and Triarc's  premium  beverage
operations,  conducted by Snapple, Mistic Brands, Inc., and Cable Car Beverage
Corporation.  TBG is headquartered in White Plains,  New York. Royal Crown and
Triarc's premium beverage operations continue to operate independent sales and
marketing  operations  to  serve  their  different  distribution  systems  and
marketplace needs. The finance,  administrative  and operational  functions of
the beverage companies have been consolidated to maximize efficiencies.

   GENERAL

   Royal Crown produces and sells  concentrates used in the production of soft
drinks  which  are  sold  domestically  and  internationally  to  independent,
licensed bottlers who manufacture and distribute  finished beverage  products.
Royal Crown's major  products have  significant  recognition  and include:  RC
Cola,  Diet RC Cola, Diet Rite Cola,  Diet Rite flavors,  Nehi,  Upper 10, and
Kick. Further, Royal Crown is the exclusive supplier of cola concentrate and a
primary supplier of flavor concentrates to Cott which sells private label soft
drinks to major  retailers in the United States,  Canada,  the United Kingdom,
Australia, Japan, Spain and South Africa.

   RC Cola is the third largest  national  brand cola and is the only national
brand cola  available  to  bottlers  who do not  bottle  either  Coca-Cola  or
Pepsi-Cola.  Diet Rite is available in a cola as well as various other flavors
and is the  only  national  brand  that is  sugar-free  (sweetened  with  100%
aspartame, a non-nutritive sweetener),  sodium-free and caffeine-free. Diet RC
Cola is the no-calorie  version of RC Cola presently  containing  aspartame as
its sweetening agent, but which is being reformulated to contain Sucralose,  a
non-nutritive  sweetening agent recently approved for use by the United States
Food and Drug  Administration  (the "FDA"). Nehi is a line of approximately 20
flavored soft drinks, Upper 10 is a lemon-lime soft drink and Kick is a citrus
soft drink. Royal Crown's share of the overall domestic  carbonated soft drink
market was  approximately  1.9% in 1997  according to Beverage  Digest/Maxwell
estimates.  Royal Crown's soft drink brands have approximately a 1.7% share of
national  supermarket  volume,  as measured by data of Information  Resources,
Inc. ("IRI").

   BUSINESS STRATEGY

   TBG's  management is pursuing  business  strategies  designed to strengthen
Royal Crown's  distribution  system,  make more effective use of its marketing
resources,  continue the  expansion  of its  international  and private  label
businesses, develop new packages and concentrate resources on its core brands.
As a result,  in January  1997 Triarc sold its  interest in Saratoga  Beverage
Group, Inc. ("Saratoga") and Royal  Crown  terminated  its  relationship  with 

                                     4

<PAGE>



Saratoga.  In  addition,  in July 1997 Royal Crown  completed  the sale of its
rights to the C&C beverage line,  including the C&C  trademark.  Royal Crown's
license  relationship  with Celestial  Seasonings Inc. for ready to drink iced
teas terminated as of December 31, 1997.

   ADVERTISING AND MARKETING

   A  principal  determinant  of  success in the soft  drink  industry  is the
ability to  establish a recognized  brand name,  the lack of which serves as a
significant  barrier to entry to the  industry.  Advertising,  promotions  and
marketing  expenditures  in  1995,  1996  and 1997  were  approximately  $73.7
million, $61.7 million and $56.1 million,  respectively.  Royal Crown believes
that its products continue to enjoy nationwide brand recognition.

   ROYAL CROWN'S BOTTLER NETWORK

   Royal  Crown  sells its  flavoring  concentrates  for  branded  products to
independent  licensed bottlers in the United States and 61 foreign  countries,
including Canada.  Consistent with industry practice, each bottler is assigned
an exclusive  territory for bottled and canned  products within which no other
bottler may  distribute  Royal Crown  branded soft drinks.  As of December 28,
1997,  Royal Crown products were packaged and/or  distributed  domestically in
152 licensed territories,  by 172 licensees,  covering 50 states. There were a
total  of 45  production  centers  operating  pursuant  to 48  production  and
distribution agreements and 126 distribution only agreements.

   Royal Crown enters into a license agreement with each of its bottlers which
it believes is comparable to those prevailing in the industry. The duration of
the  license  agreements  varies,  but  Royal  Crown  may  terminate  any such
agreement  in the  event of a  material  breach of the  terms  thereof  by the
bottler that is not cured within a specified period of time.

   Royal Crown's ten largest bottler groups  accounted for  approximately  68%
and 74% of Royal  Crown's  domestic  unit  sales of  concentrate  for  branded
products during 1996 and 1997,  respectively.  The two largest bottler groups,
the  RC  Chicago   Bottling   Group  and  Beverage   America,   accounted  for
approximately 22% and 9%,  respectively,  of Royal Crown's domestic unit sales
of concentrate for branded products during 1996 and 27% and 9%,  respectively,
during 1997.  Royal Crown believes that, if required,  there would be adequate
alternative  bottlers  available if Royal  Crown's  relationships  with the RC
Chicago Bottling Group and Beverage America were terminated.

   PRIVATE LABEL

   Royal Crown  believes  that  private  label sales  through  Cott, a leading
supplier of private  label soft drinks,  represent an  opportunity  to benefit
from sales by retailers of store  brands.  Royal  Crown's  private label sales
began in late 1990.  Unit sales of  concentrate  to Cott in 1997  increased by
4.6% over sales in 1996. In 1995,  1996 and 1997,  revenues from sales to Cott
represented  approximately  12.1%,  12.6% and  15.8%,  respectively,  of Royal
Crown's total revenues.

   Royal Crown provides  concentrate to Cott pursuant to a concentrate  supply
agreement  entered into in 1994 (the "Cott  Worldwide  Agreement").  Under the
Cott Worldwide  Agreement,  Royal Crown is Cott's exclusive worldwide supplier
of cola concentrates for retailer-branded  beverages in various containers. In
addition,  Royal Crown also supplies Cott with non-cola  carbonated soft drink
concentrates.  The Cott  Worldwide  Agreement  requires  that Cott purchase at
least  75% of its total  worldwide  requirements  for  carbonated  soft  drink
concentrates  from  Royal  Crown.  The  initial  term  of the  Cott  Worldwide
Agreement is 21 years, with multiple six-year extensions.


                                     5

<PAGE>



   The Cott  Worldwide  Agreement  provides  that, as long as Cott purchases a
specified minimum number of units of private label concentrate in each year of
the Cott  Worldwide  Agreement,  Royal  Crown  will not  manufacture  and sell
private label  carbonated  soft drink  concentrates to parties other than Cott
anywhere in the world.

   Through its private label program,  Royal Crown  develops new  concentrates
specifically for Cott's private label accounts. The proprietary formulae Royal
Crown uses for its private label program are customer specific and differ from
those of Royal  Crown's  branded  products.  Royal  Crown  works  with Cott to
develop flavors according to each trade customer's specifications. Royal Crown
retains  ownership of the formulae for such  concentrates  developed after the
date of the Cott  Worldwide  Agreement,  except upon  termination  of the Cott
Worldwide Agreement as a result of breach or non-renewal by Royal Crown.

   PRODUCT DISTRIBUTION

   Bottlers  distribute  finished  soft  drink  products  through  four  major
distribution  channels:  take home (consisting of  supermarkets,  drug stores,
mass merchandisers,  warehouses and discount stores);  convenience (consisting
of  convenience  stores and retail gas  station  mini-markets);  fountain/food
service  (consisting  of fountain  syrup  sales and  restaurant  single  drink
sales);  and  vending  (consisting  of bottle  and can sales  through  vending
machines).  The take home channel is the principal channel of distribution for
Royal  Crown  products.  According  to IRI data,  the  volume  of Royal  Crown
products in supermarkets and drug stores in 1997 declined  approximately 14.6%
and 19.9%, respectively,  as compared to 1996, while the volume of Royal Crown
products in mass merchandisers  increased  approximately  28.2% in 1997. Royal
Crown brands  historically have not been broadly  distributed  through vending
machines or convenience  outlets;  in 1997, the volume of Royal Crown products
in the convenience channel was relatively  unchanged,  down approximately 0.2%
as compared to 1996.

   INTERNATIONAL

   Sales outside the United States accounted for approximately 9.6%, 10.3% and
11.5% of Royal  Crown's sales in 1995,  1996,  and 1997,  respectively.  Sales
outside the United States of branded concentrates  accounted for approximately
10.2%,  12.3% and 13.9% of branded  concentrate  sales in 1995, 1996 and 1997,
respectively.  As of December 28, 1997, 92 bottlers and 13  distributors  sold
Royal Crown branded products  outside the United States in 64 countries,  with
international sales in 1997 distributed among Canada (8.1%), Latin America and
Mexico (32.1%),  Europe (22.4%),  the Middle  East/Africa  (18.6%) and the Far
East (18.8%). While the financial and managerial resources of Royal Crown have
been  focused on the United  States,  TBG's  management  believes  significant
opportunities  exist for Royal Crown in  international  markets.  New bottlers
were added in 1997 to the following  international markets:  Russia,  Ukraine,
Croatia, Latvia, Brazil and Bangladesh.

   PRODUCT DEVELOPMENT AND RAW MATERIALS

   Royal Crown  believes  that it has a  reputation  as an industry  leader in
product innovation.  Royal Crown introduced the first national brand diet cola
in 1961.  The Diet Rite flavors line was  introduced in 1988 to complement the
cola line and to target the  non-cola  segment of the market.  In 1997,  Royal
Crown  introduced a new version of Diet Rite Cola. As mentioned  above,  Royal
Crown  expects  to soon be  using  Sucralose,  instead  of  aspartame,  as the
sweetening  agent in Diet RC Cola.  Royal Crown  believes it will be the first
national diet soft drink brand to use Sucralose.

   From time to time,  Royal Crown  purchases as much as a  year's  supply  of
certain raw  materials  to protect  itself  against  supply  shortages,  price
increases and/or political  instabilities in the countries from which such raw
materials are sourced.  Flavoring  ingredients  and  sweeteners  are generally
available on the open market from  several  sources,  however,  TBG and Triarc
have chosen,  for quality control and other purposes,  to purchase certain raw
materials  (such as aspartame) on an exclusive or preferred  basis from single
suppliers.

                                     6

<PAGE>

                     RESTAURANTS (TRIARC RESTAURANT GROUP)


   SALE OF COMPANY-OWNED RESTAURANTS

   On May 5, 1997, subsidiaries of RCAC sold (the "Restaurant Sale") their 355
company-owned   Arby's  restaurants  to  an  affiliate  of  RTM,  the  largest
franchisee  in  the  Arby's  system.   See  "Item  1.  --  Business   --Recent
Dispositions."  Focused  solely as a  franchisor,  TRG has reduced from recent
historical   levels  the  operating  costs  of  the  restaurant   segment  and
substantially eliminated capital expenditure  requirements,  thereby improving
its cash flows. See "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of  Operations."  TRG's role in the Arby's system as the
franchisor  is to enhance the strength of the Arby's brand by  increasing  the
number of restaurants  in the Arby's system and by  establishing a "cut above"
positioning  for the Arby's brand through  upgraded menu items and facilities,
while  continuing  to  bring  new  concepts  to  the  system,   such  as  T.J.
Cinnamons(R) and p.t. Noodles(R).

   GENERAL

   Arby's is the world's largest franchise  restaurant system  specializing in
slow-roasted  meat  sandwiches  with  an  estimated  market  share  in 1997 of
approximately  73% of the roast beef  sandwich  segment  of the quick  service
sandwich restaurant category. In addition,  Triarc believes that Arby's is the
10th largest quick service  restaurant  chain in the United  States,  based on
domestic  system-wide  sales.  As of December 28, 1997, the Arby's  restaurant
system  consisted of 3,091  franchised  restaurants,  of which 2,913  operated
within  the  United  States  and  178  operated  outside  the  United  States.
System-wide sales were approximately $1.9 billion in 1995,  approximately $2.0
billion in 1996 and approximately $2.1 billion in 1997.

   In addition to its various slow-roasted meat sandwiches, Arby's restaurants
also offer a selected menu of chicken,  submarine sandwiches,  side-dishes and
salads.  A breakfast  menu is also  available at some Arby's  restaurants.  In
addition,   Arby's  currently   multi-brands  with  T.J.  Cinnamons  products,
primarily gourmet cinnamon rolls,  premium coffees and related  products,  and
p.t. Noodles  products,  which are pasta dishes based on serving  corkscrew or
fettucine pasta with a variety of different sauces.  TRG intends to expand its
multi-branding efforts which will add other brands' items to Arby's menu items
at such multi-branded restaurants. See " -- Multi-Branding" below.

   As a result  of the sale of the  company-owned  restaurants  to RTM,  TRG's
revenues  are  derived  from  two  principal   sources:   (i)  royalties  from
franchisees  and (ii)  franchise  fees.  Prior to the Restaurant  Sale,  TRG's
revenues were  principally  derived from sales at  company-owned  restaurants.
During 1995, 1996, and 1997 approximately 80%, 80% and 53%,  respectively,  of
TRG's  revenues  were  derived  from sales at  company-owned  restaurants  and
approximately 20%, 20% and 47%, respectively,  were derived from royalties and
franchise fees.

   INDUSTRY

   According to data compiled by the National  Restaurant  Association,  total
domestic  restaurant  industry sales were estimated to be  approximately  $207
billion in 1996, of which  approximately  $98 billion were  estimated to be in
the Quick Service  Restaurant  ("QSR") or fast food segment.  Large chains are
continuing to gain a greater share of industry sales.  According to Technomic,
Inc., the 100 largest  restaurant chains accounted for approximately  48.4% of
restaurant  industry sales in 1995, up from  approximately  39.7% in 1980. The
QSR segment  accounts  for  approximately  70% of sales and 83% of  restaurant
units within the top 100 restaurant chains,  according to a study by Franchise
Finance Corporation of America.


                                     7

<PAGE>


   ARBY'S RESTAURANTS

   The first  Arby's  restaurant  opened in  Youngstown,  Ohio in 1964.  As of
December 28, 1997, Arby's  restaurants were being operated in 48 states and 10
foreign  countries.  At December 28, 1997, the six leading states by number of
operating units were: Ohio, with 234 restaurants; Texas, with 181 restaurants;
California, with 161 restaurants;  Michigan, with 154 restaurants; and Georgia
and Indiana,  with 152 restaurants each. The country outside the United States
with the most operating units is Canada, with 119 restaurants.

   Arby's  restaurants in the United States and Canada typically range in size
from 700 square feet to 4,000  square  feet.  Restaurants  in other  countries
typically are larger than U.S. and Canadian restaurants. Restaurants typically
have a  manager,  assistant  manager  and as  many as 30  full  and  part-time
employees.  Staffing  levels,  which vary during the day,  tend to be heaviest
during the lunch hours.

   The following table sets forth the number of  company-owned  and franchised
Arby's restaurants at December 31, 1995 and 1996 and at December 28, 1997.

                                         December 31,  December 28,
                                         1995   1996       1997
                                         ----   ----       ----

      Company-owned restaurants.........  373    355          -
      Franchised restaurants............2,577  2,667      3,091
                                        -----  -----      -----
            Total restaurants...........2,950  3,022      3,091
                                        =====  =====      =====


   FRANCHISE NETWORK

   At December 28, 1997,  there were 574 Arby's  franchisees  operating  3,091
separate locations.  The initial term of the typical  "traditional"  franchise
agreement  is 20  years.  As of  December  28,  1997,  TRG did not  offer  any
financing arrangements to its franchisees,  except that in certain development
agreements TRG has made available extended payment terms.

   As of December  28,  1997,  TRG had received  prepaid  commitments  for the
opening of up to 592 new  domestic  franchised  restaurants  over the next ten
years.  TRG also expects  that 15 new  franchised  restaurants  outside of the
United  States will open in 1998.  TRG also has  territorial  agreements  with
international  franchisees in four  countries at December 28, 1997.  Under the
terms of these territorial agreements,  many of the international  franchisees
have the exclusive  right to open Arby's  restaurants  in specific  regions or
countries.  TRG's  management  expects  that  future  international  franchise
agreements  will  more  narrowly  limit  the  geographic  exclusivity  of  the
franchisees and prohibit sub-franchise arrangements.

   TRG offers  franchises  for the  development  of both  single and  multiple
"traditional"  restaurant  locations.  All franchisees are required to execute
standard  franchise  agreements.   TRG's  standard  U.S.  franchise  agreement
currently  requires an initial $37,500  franchise fee for the first franchised
unit and $25,000 for each  subsequent unit and a monthly royalty payment equal
to 4.0% of  restaurant  sales for the term of the  franchise  agreement.  As a
result of lower royalty rates still in effect under  earlier  agreements,  the
average  royalty rate paid by  franchisees  during 1997 was 3.2%.  Franchisees
typically pay a $10,000  commitment  fee,  credited  against the franchise fee
referred  to above,  during  the  development  process  for a new  traditional
restaurant.


                                     8

<PAGE>

   Franchised  restaurants  are  required to be operated  in  accordance  with
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.  TRG
continuously   monitors   franchisee   operations  and  inspects   restaurants
periodically  to  ensure  that  company  practices  and  procedures  are being
followed.

   MULTI-BRANDING

   TRG  has  developed  a  multi-branding  strategy,  which  allows  a  single
restaurant to offer the consumer distinct,  but  complementary,  brands at the
same restaurant. Collaborating to offer a broader menu is intended to increase
sales per square foot of facility space, a key measure of return on investment
in retail operations.  Because lunchtime customers account for the majority of
sales at Arby's restaurants, TRG seeks multi-branding concepts that it expects
will  attract  higher  breakfast  or dinner  traffic.  TRG  currently  has two
multi-brand  concepts:  T.J. Cinnamons and p.t. Noodles. T.J. Cinnamons offers
gourmet  cinnamon rolls,  premium coffees and related  products.  p.t. Noodles
offers a variety of Italian and American dishes based on serving  corkscrew or
fettucine pasta with a variety of different  sauces.  As of December 28, 1997,
127 Arby's restaurants were multi-brand locations,  including 119 that offered
T.J. Cinnamons' products and eight that offered p.t. Noodles' products.

   ADVERTISING AND MARKETING

   TRG advertises primarily through regional television, radio and newspapers.
Payment  for  advertising  time  and  space  is  made  by  local   advertising
cooperatives  in which  owners of local  franchised  restaurants  participate.
Franchisees contribute 0.7% of gross sales to the Arby's Franchise Association
("AFA"),  which produces  advertising and promotion  materials for the system.
Each  franchisee is also required to spend a reasonable  amount,  but not less
than 3% of its monthly  gross  sales,  for local  advertising.  This amount is
divided between the franchisee's  individual local market advertising  expense
and  the  expenses  of a  cooperative  area  advertising  program  with  other
franchisees who are operating Arby's  restaurants in that area.  Contributions
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  gross
sales. As a result of the Restaurant Sale in May 1997, TRG's  expenditures for
advertising  and  marketing  in  support  of  what  were  then   company-owned
restaurants,   were  approximately  $9.0  million  in  1997,  as  compared  to
approximately $25.8 million and $22.7 million in 1996 and 1995, respectively.

   QUALITY ASSURANCE

   TRG  has  developed  a  quality  assurance  program  designed  to  maintain
standards  and  uniformity of the menu  selections  at each of its  franchised
restaurants. A full-time quality assurance employee is assigned to each of the
five  independent  processing  facilities  that process  roast beef for Arby's
domestic  restaurants.  The quality assurance employee inspects the roast beef
for quality and uniformity.  In addition,  a laboratory at TRG's  headquarters
tests  samples  of  roast  beef  periodically  from  franchisees.  Each  year,
representatives  of TRG conduct  unannounced  inspections  of  operations of a
number of franchisees to ensure that Arby's policies, practices and procedures
are being  followed.  TRG's field  representatives  also  provide a variety of
on-site consultative services to franchisees.

   PROVISIONS AND SUPPLIES

   Arby's  roast  beef  is  provided  by  five  independent  meat  processors.
Franchise  operators  are  required to obtain  roast beef from one of the five
approved   suppliers.   ARCOP,  Inc.   ("ARCOP"),   a  non-profit   purchasing
cooperative,  negotiates contracts with approved suppliers on behalf of Arby's
franchisees,  and has entered into "cost-plus" contracts with these suppliers.
TRG believes that  satisfactory  arrangements  could be made to replace any of
the current roast beef suppliers, if necessary, on a timely basis.

                                     9

<PAGE>



   Franchisees   may  obtain  other  products,   including   food,   beverage,
ingredients,  paper  goods,  equipment  and signs,  from any source that meets
TRG's specifications and approval,  which products are available from numerous
suppliers.  Food,  proprietary  paper  and  operating  supplies  are also made
available,  through national contracts employing volume purchasing,  to Arby's
franchisees through ARCOP.

GENERAL

   TRADEMARKS

   Royal Crown considers its concentrate  formulae,  which are not the subject
of any patents,  to be trade  secrets.  In addition,  RC Cola,  Diet RC, Royal
Crown,  Diet Rite, Nehi, Upper 10 and Kick are registered as trademarks in the
United States,  Canada and a number of other  countries.  Royal Crown believes
that such trademarks are material to its business.

   TRG is the sole owner of the Arby's trademark and considers it, and certain
other  trademarks  owned or licensed  by TRG, to be material to its  business.
Pursuant  to  its  standard  franchise  agreement,  TRG  grants  each  of  its
franchisees the right to use TRG's  trademarks,  service marks and trade names
in the manner specified therein.

   The material  trademarks of Royal Crown and TRG are  registered in the U.S.
Patent and Trademark Office and various foreign  jurisdictions.  Royal Crown's
and  TRG's  rights  to  such   trademarks  in  the  United  States  will  last
indefinitely  as long as they  continue to use and police the  trademarks  and
renew filings with the applicable  governmental  offices.  No challenges  have
arisen to Royal Crown's or TRG's right to use the foregoing  trademarks in the
United States.

   COMPETITION

   The Company's two businesses operate in highly competitive industries. Many
of the  major  competitors  in these  industries  have  substantially  greater
financial,  marketing,  personnel and other resources than does the Company or
Triarc.

   Royal  Crown's  soft  drink  products  compete  generally  with all  liquid
refreshments and in particular with numerous nationally-known soft drinks such
as  Coca-Cola  and  Pepsi-Cola.  Royal  Crown  competes  with  other  beverage
companies not only for consumer  acceptance but also for shelf space in retail
outlets and for marketing focus by Royal Crown's  distributors,  most of which
also distribute other beverage brands. The principal methods of competition in
the beverage  industry include product quality and taste,  brand  advertising,
trade and  consumer  promotions,  marketing  agreements  (including  so called
calendar marketing agreements),  pricing, packaging and the development of new
products.

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

   In  recent  years,  both  the  beverage  and  restaurant   businesses  have
experienced   increased  price  competition  resulting  in  significant  price
discounting throughout these industries. Price competition has been especially
intense with  respect to sales of soft drink  products in  supermarkets,  with
local  bottlers  (and, in  particular,  competitive  cola  bottlers)  granting
significant  discounts and allowances off wholesale  prices in order to, among
other things,  maintain or increase market share in the  supermarket  segment.
While the net impact of price  discounting  in the soft  drink and  restaurant
industries cannot be quantified,  such practices, if continued,  could have an
adverse impact on the Company.

                                     10

<PAGE>



   WORKING CAPITAL

   Royal  Crown's and TRG's  working  capital  requirements  are generally met
through  cash flow from  operations.  Accounts  receivable  of Royal Crown are
generally due in 30 days and TRG's  franchise  royalty fee receivables are due
within 10 days after each month end.

   GOVERNMENTAL REGULATIONS

   Each of the  Company's  two  business  segments  is subject to a variety of
federal, state and local laws, rules and regulations.

   The  production  and marketing of Royal Crown  beverages are subject to the
rules and  regulations of various  federal,  state and local health  agencies,
including  the FDA.  The FDA also  regulates  the  labeling  of Royal  Crown's
products.  In addition,  Royal  Crown's  dealings  with its  licensees  and/or
distributors  may, in some  jurisdictions,  be subject to state laws governing
licensor-licensee or distributor relationships.

   TRG is subject to regulation by the Federal Trade Commission and state laws
governing the offer and sale of franchises and the substantive  aspects of the
franchisor-franchisee  relationship.  In addition, TRG franchisees are subject
to the Fair Labor Standards Act and the Americans with Disabilities Act, which
requires that all public accommodations and commercial facilities meet certain
federal  requirements  related  to access  and use by  disabled  persons,  and
various state laws governing such matters as minimum wages, overtime and other
working conditions.

   Except  as  described  herein,  the  Company  is not  aware of any  pending
legislation that in its view is likely to affect  significantly the operations
of the Company's subsidiaries. The Company believes that the operations of its
subsidiaries comply  substantially with all applicable  governmental rules and
regulations.

   ENVIRONMENTAL MATTERS

   Certain of the Company's operations are subject to federal, state and local
environmental laws and regulations concerning the discharge, storage, handling
and  disposal of  hazardous  or toxic  substances.  Such laws and  regulations
provide for significant  fines,  penalties and  liabilities,  in certain cases
without  regard to whether the owner or operator of the  property  knew of, or
was  responsible  for,  the  release or presence  of such  hazardous  or toxic
substances.  In  addition,  third  parties may make claims  against  owners or
operators of properties for personal  injuries and property damage  associated
with releases of hazardous or toxic  substances.  The Company  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.  The Company  cannot  predict  the amount of future  expenditures
which  may be  required  in order to  comply  with any  environmental  laws or
regulations  or to satisfy  any such  claims.  The Company  believes  that its
operations comply  substantially  with all applicable  environmental  laws and
regulations.

   In  1993  Royal  Crown   became  aware  of  possible   contamination   from
hydrocarbons in groundwater at two closed  facilities.  In 1994,  hydrocarbons
were discovered in the groundwater at a former Royal Crown  distribution  site
in Miami,  Florida.  Assessment is proceeding  under the direction of the Dade
County  Department  of  Environmental  Resources  Management  to determine the
extent of the  contamination.  Remediation  has  commenced  at this site,  and
management  estimates  that  total  remediation  costs (in  excess of  amounts
incurred through December 28, 1997) will be approximately $59,000 depending on
the  actual  extent  of the  contamination.  Additionally,  in 1994 the  Texas
Natural  Resources   Conservation   Commission  approved  the  remediation  of
hydrocarbons in the groundwater by Royal Crown at its former distribution site
in San Antonio,  Texas.  Remediation  has  commenced at this site.  Management
estimates the total cost of remediation to be approximately $60,000 (in excess
of amounts incurred through December 28, 1997), of which 60-70% is expected to
be reimbursed by the State of Texas Petroleum Storage  Tank  Remediation  Fund.

                                     11

<PAGE>



Royal Crown has incurred actual costs of $714,000,  in the aggregate,  through
December  28, 1997 for these  matters.  The Company  does not believe that the
ultimate  outcome of these matters will have a material  adverse effect on its
consolidated results of operations or financial position.

   SEASONALITY

   The Company's  beverage and  restaurant  businesses  are seasonal.  In such
businesses,  the highest sales occur during  spring and summer (April  through
September).  However,  the Company's  consolidated  financial  results are not
materially affected by these seasonal factors.

   EMPLOYEES

   As of December 28, 1997, the Company employed  approximately 325 personnel,
including  approximately  295 salaried  personnel and  approximately 30 hourly
personnel.  The Company's  management  believes  that  employee  relations are
satisfactory.  At December  28, 1997,  none of the  Company's  employees  were
represented by labor unions.

Item 2. Properties.

   The Company maintains several  properties.  Management  believes that these
properties,  taken as a whole,  are generally well maintained and are adequate
for  current  and  foreseeable  business  needs.  Except as set  forth  below,
substantially all of the Company's  materially  important physical  properties
are being fully utilized.

   Certain  information  about the major plants and  facilities  maintained by
each of the  Company's  two  business  segments as of December 28, 1997 is set
forth in the following table:

         Segment             Facilities-Location    Land Title  Floor Space
         -------             -------------------    ----------  -----------
         Beverages.........  Concentrate Mfg.:
                              Columbus, GA
                                (including office)    1  owned    216,000
                             TBG Headquarters
                                White Plains, NY *    1  leased    13,400

         Restaurant........  TRG Headquarters
                              Fort Lauderdale, FL *   1  leased    47,300
---------
*  Royal Crown shares approximately  one-quarter of a 53,600 square foot lease
   for TBG's  headquarters  in White  Plains,  NY. Royal Crown also  subleases
   approximately 3,500 square feet of the above space in TRG's headquarters.

   TRG also owns six and  leases  24  restaurants  which are  leased or sublet
principally to franchisees and has leases for 11 inactive properties.

   Substantially all properties are pledged as collateral for certain debt.

Item 3.  Legal Proceedings.

   On February 19, 1996,  Arby's  Restaurants S.A. de C.V. ("AR"),  the master
franchisee of Arby's,  Inc.  ("Arby's") in Mexico,  commenced an action in the
civil court of Mexico against Arby's for breach of contract. AR alleged that a
non-binding  letter of intent  dated  November  9, 1994  between AR and Arby's
constituted a binding  contract  pursuant to which Arby's had obligated itself
to repurchase the master franchise  rights  from  AR  for  $2.85  million  and

                                     12

<PAGE>



that Arby's had breached a master development agreement between AR and Arby's.
Arby's commenced an arbitration proceeding since the franchise and development
agreements  each  provided  that all disputes  arising  thereunder  were to be
resolved by arbitration.  In September 1997, the arbitrator ruled that (i) the
November  9, 1994  letter of intent  was not a binding  contract  and (ii) the
master development  agreement was properly  terminated.  AR has challenged the
arbitrator's decision. In March 1998, the civil court of Mexico ruled that the
November 9, 1994 letter of intent was a binding contract and ordered Arby's to
pay AR $2.85 million,  plus interest and value added tax.  Arby's has appealed
the civil court's decision.  Arby's believes that it has a strong basis for an
appeal because,  among other things,  the civil court's  decision  ignored the
arbitration  provisions of the franchise and  development  agreements  and the
language of the November 9, 1994 letter.  In May 1997,  AR commenced an action
against Arby's in the United States  District Court for the Southern  District
of Florida  alleging  that (i) Arby's had engaged in  fraudulent  negotiations
with AR in 1994-1995, in order to force AR to sell the master franchise rights
for Mexico to Arby's cheaply and (ii) Arby's had tortiously interfered with an
alleged business  opportunity that AR had with a third party. Arby's has moved
to dismiss that action.  Arby's is vigorously  contesting  AR's various claims
and believes it has meritorious defenses to such claims.

   On June 3, 1997, ZuZu, Inc.  ("ZuZu") and its subsidiary,  ZuZu Franchising
Corporation ("ZFC") commenced an action against Arby's, Inc. and Triarc in the
District  Court of Dallas  County,  Texas.  Plaintiffs  allege that Arby's and
Triarc  conspired to steal the ZuZu Speedy Tortilla  concept and convert it to
their own use.  ZuZu  seeks  actual  damages  in excess of $70.0  million  and
punitive  damages  of not less than  $200.0  million  against  Triarc  for its
alleged  appropriation  of trade secrets,  conversion and unfair  competition.
Additionally,  plaintiffs  seek  injunctive  relief  against Arby's and Triarc
enjoining them from disclosing or using ZuZu's trade secrets.  ZFC also made a
demand  for  arbitration  with  the  Dallas,  Texas  office  of  the  American
Arbitration  Association  ("AAA")  against  Arby's  alleging  that  Arby's had
breached a Master  Franchise  Agreement  between  ZFC and  Arby's.  Arby's and
Triarc  have moved to dismiss  or, in the  alternative,  abate the Texas court
action on the ground that a Stock Purchase  Agreement  between Triarc and ZuZu
required  that  disputes be subject to mediation in  Wilmington,  Delaware and
that any  litigation  be brought in the  Delaware  courts.  On July 16,  1997,
Arby's and Triarc commenced a declaratory judgment action against ZuZu and ZFC
in Delaware  Chancery Court for New Castle County  seeking a declaration  that
the  claims in both the  litigation  and the  arbitration  must be  subject to
mediation in Wilmington,  Delaware. In the arbitration proceeding,  Arby's has
asserted counterclaims against ZuZu for unjust enrichment,  breach of contract
and breach of the duty of good  faith and fair  dealing  and has  successfully
moved to transfer the proceeding to the Atlanta, Georgia office of the AAA. An
arbitrator has been chosen and discovery is taking place.  The  arbitration is
expected  to  commence  in  April  1998.  Arby's  and  Triarc  are  vigorously
contesting  plaintiffs'  claims in both the litigation and the arbitration and
believe that plaintiffs'  various claims are without merit. In a related case,
on March 13, 1998 ZuZu  franchisees  Gregg Katz,  Susan Katz Zweig and ZuZu of
Orlando,  LLC commenced an action against Arby's,  ZuZu, ZFC and Triarc in the
Superior Court of Fulton County,  Georgia.  Plaintiffs  allege,  in connection
with the ZuZu  handmade  Mexican  food  concept and the ZuZu  Speedy  Tortilla
concept,  that,  among other  things,  the  various  defendants  breached  the
development and franchise  agreements between the plaintiffs and ZuZu, as well
as other oral agreements, made false representations,  intentionally failed to
disclose material information, and violated several Florida and Texas business
opportunity  and similar  statutes.  The plaintiffs seek actual damages of not
less than $600,000,  consequential damages,  punitive damages,  treble damages
and other fees, costs and expenses. While Triarc and Arby's have not yet filed
an answer in this action, they believe the claims are without merit.

   Other matters have arisen in the ordinary course of the Company's business,
and it is the opinion of  management  that the outcome of any such matter will
not have a material  adverse effect on the Company's  consolidated  results of
operations or financial position.

Item 4.  Submission of Matters to Vote of Security Holders.

   Not applicable.

                                     13

<PAGE>



                                    PART II

Item 5.Market for Registrant's Common Equity and Related Stockholder Matters.

   All of the Company's  common stock is owned by Triarc through  wholly-owned
subsidiaries.

Item 6.Selected Financial Data.
                                               Year Ended
                              ------------------------------------------------
                                          December 31,          
                              ----------------------------------- December 28,
                              1993     1994      1995      1996     1997(1)
                              ----     ----      ----      ----     -------
                                             (In thousands)

Net sales..................$314,686  $322,888 $389,591   $409,100  $221,077  
Royalties, franchise fees
  and other revenues.......  46,296    51,017   55,792     57,252    66,233
                            -------   -------  -------    -------   -------
Total revenues............. 360,982   373,905  445,383    466,352   287,310
                            -------   -------  -------    -------   -------
Operating profit (loss)....   9,713(2) 30,074   (4,756)(3)(31,583)(4)40,547 (5)
Loss before extraordinary
  charges and cumulative
  effect of changes in 
  accounting principles.... (22,890)   (5,477) (33,650)(3)(50,558)(4)  (184)(5)
Extraordinary charges......  (7,059)        -        -          -    (1,800)
Cumulative effect of change
  in accounting principles.  (1,891)        -        -          -         -
Net loss................... (31,840)(2)(5,477) (33,650)(3)(50,558)(4)(1,984)(5)
Total assets............... 358,657   346,403  404,099    369,642   287,476
Long-term debt and note
  payable to affiliate..... 288,394   291,349  357,938    287,810   279,606
Stockholder's deficit(6)... (33,148)  (38,625) (63,410)  (113,968)  (86,860)
------------------

(1)The  Company  changed  its  fiscal  year  from a  calendar  year  to a year
   consisting  of 52 or 53 weeks  ending on the Sunday  closest to December 31
   effective  for the 1997  fiscal  year which  commenced  January 1, 1997 and
   ended on December 28, 1997.

(2)Reflects  certain  significant  charges  recorded  during  1993 as follows:
   $21,305,000  charged  to  operating  profit  representing   $18,000,000  of
   facilities relocation and corporate  restructuring  relating to a change in
   control of the Company and  $3,305,000  of other net  charges;  $18,507,000
   charged to loss  before  extraordinary  charges  and  cumulative  effect of
   changes  in   accounting   principles   representing   the   aforementioned
   $21,305,000 charged to operating profit,  $5,700,000 of other charges, less
   $8,498,000  of income tax benefit  relating to the  aggregate  of the above
   charges;   and   $27,457,000   charged   to  net  loss   representing   the
   aforementioned $18,507,000 charged to loss before extraordinary charges and
   cumulative  effect of  changes  in  accounting  principles,  $7,059,000  of
   extraordinary  charges from the early extinguishment of debt and $1,891,000
   cumulative effect of changes in accounting principles.

(3)Reflects  certain  significant  charges  recorded  during  1995 as follows:
   $17,054,000 charged to operating loss representing a $14,647,000 charge for
   a reduction in the carrying  value of long-lived  assets  impaired or to be
   disposed of and $2,407,000 of other  charges;  and  $13,243,000  charged to
   loss  before  extraordinary  charges  and  cumulative  effect of changes in
   accounting   principles  and  net  loss  representing  the   aforementioned
   $17,054,000  charged  to  operating  loss,  less  $4,911,000  of income tax
   benefit  relating to the  aggregate of the above  charges plus a $1,100,000
   provision for income tax contingencies.

(4)Reflects  certain  significant  charges  recorded  during  1996 as follows:
   $65,250,000 charged to operating loss representing a $58,900,000 charge for
   a reduction in the carrying  value of long-lived  assets  impaired or to be
   disposed  of  and   $6,350,000  of  facilities   relocation  and  corporate
   restructuring; and $41,107,000 charged to loss before extraordinary charges

                                     14

<PAGE>



   and cumulative effect of changes in  accounting  principles  and  net  loss
   representing the aforementioned $65,250,000 charged to operating loss, less
   $24,143,000 of income tax benefit relating to the aggregate  of  the  above 
   charges.

(5)Reflects  certain  significant  charges  recorded  during  1997 as follows:
   $7,034,000  charged to  operating  profit  for  facilities  relocation  and
   corporate  restructuring;  $5,480,000 charged to loss before  extraordinary
   charges  and  cumulative   effect  of  changes  in  accounting   principles
   representing the  aforementioned  $7,034,000  charged to operating  profit,
   less  $1,554,000  of income tax  benefit  on such  charge;  and  $7,280,000
   charged to net loss  representing the  aforementioned  $5,480,000 charge to
   loss  before  extraordinary  charges  and  cumulative  effect of changes in
   accounting principles and a $1,800,000  extraordinary charge from the early
   extinguishment of debt.

(6)The Company has not paid any cash dividends on its common shares during any
   of the years presented.  In 1993, the Company  transferred as a dividend to
   its  direct  parent a $75.0  million  promissory  note which  evidenced  an
   intercompany loan from the Company to Triarc.


                                     15

<PAGE>



Item 7. Management's Discussion  and  Analysis  of  Financial  Condition  and 
        Results of Operations.

Introduction

    This  "Management's  Discussion  and Analysis of Financial  Condition  and
Results of  Operations"  should be read in conjunction  with the  consolidated
financial  statements  included  herein of RC/Arby's  Corporation  ("RCAC" or,
collectively with its subsidiaries,  the "Company").  Certain statements under
this caption "Management's  Discussion and Analysis of Financial Condition and
Results  of  Operations"  constitute  "forward-looking  statements"  under the
Reform Act. Such forward-looking  statements involve risks,  uncertainties and
other factors which may cause the actual results,  performance or achievements
of the Company to be materially different from any future results, performance
or achievements  express or implied by such  forward-looking  statements.  See
"Special Note Regarding  Forward-Looking  Statements and Projections" in "Part
I" preceding "Item 1".

    Effective  January 1, 1997 the  Company  changed  its  fiscal  year from a
calendar  year to a year  consisting  of 52 or 53 weeks  ending on the  Sunday
closest to December 31. In accordance  therewith,  the  Company's  1997 fiscal
year commenced January 1, 1997 and ended on December 28, 1997. As used herein,
"1997"  refers to the period  January 1, 1997  through  December  28, 1997 and
"1996" and "1995"  refer to the  calendar  years ended  December  31, 1996 and
1995, respectively.

Results of Operations

    Trends  affecting the beverage  segment (Royal Crown) in recent years have
included the  increased  market share of private  label  beverages,  increased
price  competition  throughout  the industry,  the  development of proprietary
packaging and the  proliferation  of new products being  introduced  including
"premium" beverages.

    Trends  affecting  the  restaurant  segment  (TRG) in recent years include
consistent  growth  of  the  restaurant  industry  as a  percentage  of  total
food-related spending, with the quick service restaurant ("QSR"), or fast food
segment,  in which the Company  operates (see below) being the fastest growing
segment of the  restaurant  industry.  In addition,  there has been  increased
price  competition  in the QSR industry,  particularly  evidenced by the value
menu concept  which offers  comparatively  lower prices on certain menu items,
the combination  meals concept which offers a combination meal at an aggregate
price lower than the individual food and beverage  items,  couponing and other
price discounting.  Some QSR's have been adding selected higher-priced premium
quality  items to their  menus,  which appeal more to adult tastes and recover
some of the margins  lost in the  discounting  of other menu  items.  However,
following the sale of all of the 355 company-owned  Arby's  restaurants on May
5, 1997 (the "RTM Sale") to an affiliate  of RTM,  Inc.  ("RTM"),  the largest
franchisee  in the Arby's  system  (see below  under  "Liquidity  and  Capital
Resources"), the effects of the trends on the restaurant segment are currently
limited to their impact on franchise fees and royalties.

1997 Compared with 1996

    Revenues  decreased  $179.1  million  (38.4%)  to $287.3  million in 1997.
Restaurant  revenues  decreased  $147.9  million  (51.3%)  to  $140.4  million
principally  reflecting the nonrecurring sales for the period from May 5, 1996
through  December 31, 1996 resulting  from the RTM Sale on May 5, 1997.  Aside
from the effect on sales of the RTM Sale,  restaurant  revenues increased $6.5
million  (4.8%)  due to a $9.0  million  (15.7%)  increase  in  royalties  and
franchise fees partially offset by a $2.5 million (3.2%) decrease in net sales
of company-owned  Arby's  restaurants  through the date of the May 5, 1997 RTM
Sale,  compared with the comparable 1996 period. The increase in royalties and
franchise  fees is due to (i)  incremental  royalties  of $6.2 million for the
period from May 5, 1997  through  December  28, 1997 from the 355  restaurants
sold to RTM,  (ii) a net increase of 69 (2.6%)  franchised  restaurants  other
than  from the RTM Sale  and  (iii) a 1.7%  increase  in  same-store  sales of
franchised restaurants. Beverage revenues decreased $31.2 million  (17.5%)  to

                                     16

<PAGE>



$146.9 million due to decreases in sales of  finished  goods  ($21.7  million)
and  concentrate  ($9.5  million).  The  decrease in sales of  finished  goods
principally  reflects  (i) the  absence  in the 1997  period of 1996  sales to
MetBev,  Inc.  ("MetBev"),  a former  distributor  of the  Company's  beverage
products in the New York City metropolitan area and a volume decrease in sales
of Royal Crown branded finished products in areas other than those serviced by
MetBev (where in both instances the Company now sells concentrate  rather than
finished  goods),  (ii) a volume decrease in sales of the C&C beverage line of
mixers,  colas and flavors  (where the Company  now sells  concentrate  to the
purchaser of the C&C beverage line rather than finished goods),  the rights to
which (including the C&C trademark) were sold in July 1997 (the "C&C Sale") as
described  below and (iii) a volume  reduction in the sales of finished  Royal
Crown  Premium  Draft Cola ("Draft  Cola") which the Company no longer  sells.
Sales of concentrate decreased, despite the shift in sales to concentrate from
finished goods noted above,  principally  reflecting (i) a decrease in branded
sales due to volume  declines,  which were adversely  affected by soft bottler
case sales and (ii) an overall lower average concentrate selling price.

    Gross profit (total  revenues less cost of sales)  decreased $26.7 million
to $186.8  million in 1997 while gross margins  (gross profit divided by total
revenues)  increased to 65.0%  compared  with 45.8% for the same period of the
prior year.  Restaurant  gross profit  declined $15.9 million to $81.2 million
due to a $24.9 million  decrease in store gross profit partially offset by the
$9.0 million increase in royalties and franchise fees (with no associated cost
of sales)  described  above. The decrease in store gross profit is principally
due to the  non-recurring  1996 gross profit associated with the company-owned
Arby's  restaurants  sold to RTM  partially  offset by the  absence in 1997 of
depreciation  and amortization on all long-lived  restaurant  assets which had
been written down to their  estimated  fair values as of December 31, 1996 and
were no longer  depreciated  or  amortized  through  their May 5, 1997 date of
sale. Aside from the effect on sales of the RTM Sale, restaurant gross margins
increased to 57.8% from 44.9%  primarily  due to (i) the higher  percentage of
royalties  and  franchise  fees to total  revenues in 1997 due to the RTM Sale
discussed above and (ii) the absence in 1997 of depreciation  and amortization
on all long-lived  restaurant assets as discussed above. Beverage gross profit
declined  $10.8 million to $105.6  million  principally  due to the decline in
sales volume  discussed  above,  whereas  beverage gross margins  increased to
71.9% from 65.4%  principally due to the shift in product mix to higher-margin
concentrate sales compared with finished product sales discussed above.

    Advertising,  selling and distribution expenses decreased $25.0 million to
$77.5 million in 1997. Restaurant  advertising expenses declined $16.7 million
principally due to the cessation of local restaurant advertising and marketing
expenses resulting from the RTM Sale. Beverage  advertising  expenses declined
$8.3 million principally due to (i) lower bottler  promotional  reimbursements
resulting  from  the  decline  in  sales  volume,   (ii)  the  elimination  of
advertising expenses for Draft Cola and (iii) planned reductions in connection
with the  aforementioned  decreases  in sales of  other  Royal  Crown  and C&C
branded finished products.

    General  and  administrative  expenses  decreased  $15.5  million to $61.8
million  in  1997  principally  due to  reduced  spending  levels  related  to
administrative  support,  principally payroll, no longer required for the sold
restaurants  as a result  of the RTM Sale  and,  to a lesser  extent,  reduced
travel activity in the restaurant segment prior to the RTM Sale.

    The 1997 facilities relocation and corporate  restructuring charge of $7.0
million  consists of employee  severance  and  related  termination  costs and
employee  relocation  associated with  restructuring the restaurant segment in
connection  with the RTM Sale and, to a lesser extent,  costs  associated with
the relocation (the "Royal Crown Relocation") of the Fort Lauderdale,  Florida
headquarters of Royal Crown,  which has been  centralized in the White Plains,
New York  headquarters  of  Triarc's  other  beverage  subsidiaries.  The 1996
facilities  relocation  and  corporate  restructuring  charge of $6.3  million
results from (i) estimated  losses on planned  subleases  (principally for the
write-off of nonrecoverable  unamortized leasehold  improvements and furniture
and fixtures) of surplus  office space as a result of the then planned sale of
company-owned restaurants  and  the  Royal  Crown  Relocation,  (ii)  employee

                                     17

<PAGE>



severance costs  associated with the Royal Crown Relocation and (iii) costs of
the shutdown of the beverage segment's Ohio production facility.

    No provision for reduction in carrying value of long-lived assets impaired
or to be disposed of was  required  for 1997.  The 1996  reduction in carrying
value of long-lived  assets  impaired or to be disposed of is discussed  below
under "1996 Compared with 1995".

    Interest expense decreased $7.2 million to $35.7 million in 1997 primarily
due to (i) the assumption by RTM of an aggregate $69.6 million of mortgage and
equipment notes payable and capitalized  lease  obligations in connection with
the RTM Sale on May 5, 1997,  (ii) the  absence in 1997 of losses  incurred in
1996 on an interest rate swap agreement which terminated in September 1996 and
(iii) lower  average  borrowings in 1997 under a demand note payable to Triarc
(the "Demand Note") due to the forgiveness on May 5, 1997 of all $23.2 million
then outstanding as a capital contribution to the Company and the cessation of
interest  expense on $6.5 million of an outstanding  balance repaid  effective
May 5, 1997 under another note payable to Triarc,  both in connection with the
RTM Sale.

    Other income  (expense),  net  deteriorated  $0.7 million to an expense of
$0.1 million in 1997  principally due to a $4.1 million loss from the RTM Sale
partially offset by (i) a $0.9 million gain on lease termination for a portion
of the space no longer required in the Fort  Lauderdale  facility due to staff
reductions as a result of the RTM Sale and the Royal Crown Relocation,  (ii) a
$0.7 million  increase in interest  income from  invested  cash,  (iii) a $0.6
million gain  recognized  from the C&C Sale and (iv) $1.3 million of increased
gains on other asset sales.

    The Company's provision for and benefit from income taxes in 1997 and 1996
represented effective rates of 104% and 32%, respectively. Such rate is higher
in 1997 due  principally to the differing  impact on the respective  effective
rates of the  amortization of  nondeductible  costs in excess of net assets of
acquired companies  ("Goodwill") in a period with pre-tax income compared with
a period with a pre-tax loss.

    The  extraordinary  charge of $1.8 million  incurred  during 1997 resulted
from  the  assumption  by RTM of  mortgage  and  equipment  notes  payable  in
connection  with the RTM Sale and  consists  of the  write-off  of  previously
unamortized deferred financing costs of $3.0 million net of income tax benefit
of $1.2 million.

1996 Compared with 1995

    Revenues  increased  $21.0  million  (4.7%)  to  $466.4  million  in 1996.
Restaurant  revenues  increased  $15.6 million (5.7%) to $288.3 million due to
(i) an increase in net sales principally  resulting from the inclusion in 1996
of a full year of net sales for the 85 company-owned restaurants added in 1995
(net of closings) and an increase in same-store  sales and (ii) an increase in
royalties and franchise  fees  resulting  primarily  from a net increase of 90
(3.5%)  franchised  restaurants,  a  0.8%  increase  in  same-store  sales  of
franchised restaurants and a 2.0% increase in average royalty rates due to the
declining  significance  of older franchise  agreements with lower rates,  the
effects  of which  were  partially  offset by a  decrease  in  franchise  fees
resulting  from fewer  franchise  store  openings in 1996.  Beverage  revenues
increased  $5.4  million  (3.1%) to $178.1  million  due to (i) an increase in
finished  beverage  product  sales  (as  opposed  to  concentrate)  reflecting
increased sales in the New York metropolitan area, the distribution  rights to
which were  acquired  during  January 1995, as well as the full year effect of
the 1995 addition of an herbal tea line and (ii) a volume  increase in private
label  concentrate  sales,  both  partially  offset by a  decrease  in branded
concentrate sales principally reflecting lower average selling prices.

    Gross profit  increased $8.0 million to $213.5 million in 1996 while gross
margins (gross profit divided by total revenues) were relatively  unchanged at
45.8% in 1996 compared with 46.1% in 1995.  Restaurant  gross profit increased
$7.2 million to $97.1  million due  primarily to the effect of the increase in
revenues  described above and an increase in restaurant gross margins to 33.7%
from 33.0%.The increase in restaurant gross margins was primarily due to lower

                                     18

<PAGE>



beef costs and health insurance costs and an improvement in labor efficiencies
due to fewer new store  openings  and  related  start-up  costs in 1996 versus
1995,  the  effects  of  which  were  partially  offset  by a  slightly  lower
percentage of royalties and franchise fees to total  revenues.  Beverage gross
profit  increased  $0.8 million to $116.4 million as a result of the effect of
the  increase  in net sales  volume  noted  above,  substantially  offset by a
decline in gross  margins to 65.4%  from 66.9% due to the  increased  sales of
lower-margin finished product noted above and lower average selling prices for
branded concentrate.

    Advertising,  selling and distribution  expenses  declined $6.0 million to
$102.5  million in 1996.  Advertising  and selling  expenses  in the  beverage
segment  declined  $9.4 million  primarily due to (i) a net reduction in media
spending for branded concentrate  products and Draft Cola, for which there had
been higher  costs in  connection  with its launch in mid-1995  and (ii) lower
beverage coupon costs reflecting reduced bottler utilization, partially offset
by a $2.0 million provision in 1996 for  uncollectible  trade receivables from
MetBev. Partially offsetting the decrease in the beverage segment, advertising
and  selling  expenses  in  the  restaurant  segment  increased  $3.4  million
primarily in response to competitive  pressures,  a larger company-owned store
base and multi-brand restaurant development.

    General  and  administrative  expenses  decreased  $9.7  million  to $77.3
million in 1996,  principally  reflecting the effect of cost reduction efforts
in both the restaurant and beverage segments and non-recurring 1995 charges of
$2.1 million for the closing of certain  unprofitable  restaurants  and a $1.2
million  provision for the guarantee of MetBev's third party accounts  payable
since  MetBev had  experienced  in 1995 and  continued to  experience  in 1996
significant  losses from  operations  There was no similar  provision  for the
guarantee in 1996 since MetBev made similar purchases from a subsidiary of the
Company in 1996.

    The  1995 and 1996  reductions  in  carrying  value of  long-lived  assets
impaired or to be disposed of result from the  application  of the  evaluation
measurement requirements under Statement of Financial Accounting Standards No.
121,  "Accounting  for the Impairment of Long-Lived  Assets and for Long-Lived
Assets to be Disposed  Of" which was adopted in 1995.  The 1996  provision  of
$58.9 million was recorded principally to reduce the carrying value of certain
long-lived assets and certain identifiable intangibles to estimated fair value
relating to the  estimated  loss on the  anticipated  disposal  of  long-lived
assets  in  connection  with  the  then  planned  sale  of  all  company-owned
restaurants.  The reduction in carrying value of long-lived assets impaired or
to be disposed of in the amount of $14.6  million in 1995 reflects a reduction
in the  net  carrying  value  of  certain  restaurants  and  other  long-lived
restaurant  assets which were determined to be impaired and a reduction in the
net carrying value of certain other  restaurants  and equipment to be disposed
of.

    The 1996 facilities relocation and corporate  restructuring charge of $6.3
million is discussed above.

    Interest  expense   increased  $3.3  million  to  $42.9  million  in  1996
principally  due to the full year  effect  in 1996 of  financing  for  capital
spending at the  restaurant  segment  through  mortgage  and  equipment  notes
principally  during the second through fourth  quarters of 1995 ($58.4 million
was outstanding at December 31, 1996).

    Other  income  (expense),  net  improved  $2.4  million  to income of $0.6
million  in 1996  principally  due to $1.4  million  of lower  losses on asset
disposals and the nonrecurring 1995 write-down of a $1.0 million investment in
MetBev.

    The  Company's  benefit  from  income  taxes in 1996 and 1995  represented
effective rates of 32% and 27%,  respectively.  Such benefit rate is higher in
1996 due to the reduced  effect in 1996 of the  amortization  of Goodwill as a
result of the significantly  greater 1996 pre-tax loss and a nonrecurring 1995
provision  for income tax  contingencies  relating to the  examination  of the
Company's income tax returns for the years 1989 through 1992.


                                     19

<PAGE>



Liquidity and Capital Resources

    Consolidated  cash and cash equivalents  (collectively  "cash")  increased
$3.1 million  during 1997 to $10.5  million.  Such increase  reflects (i) cash
provided by financing  activities of $5.5 million (a capital  contribution  of
$6.2 million and net borrowings of $3.5 million from Triarc, net of repayments
of  long-term  debt of $4.2  million)  and (ii)  cash  provided  by  investing
activities of $1.7 million (proceeds from sales of properties and the C&C Sale
of $3.2 million less capital  expenditures of $1.5 million),  partially offset
by cash used in operating  activities  of $4.1  million.  The net cash used in
operating  activities  reflects  (i) a net loss of $2.0  million and (ii) cash
used by changes in operating  assets and  liabilities of $20.3  million,  both
partially  offset by net non-cash  charges of $18.2 million  consisting of (a)
depreciation  and  amortization  of $14.1  million  (including  a $3.0 million
write-off of unamortized deferred financing costs), (b) provision for doubtful
accounts  of $2.9  million  and (c)  other of $1.2  million.  The cash used by
changes in  operating  assets and  liabilities  of $20.3  million  principally
reflects a $19.6 million  decrease in accounts  payable and accrued  expenses,
primarily  due to the paydown of payables and accruals  subsequent  to the RTM
Sale and C&C Sale which related to those sold operations.  In conjunction with
the full year effect of the change in the restaurant operations to exclusively
franchising (see below) and the resulting anticipated improvement in operating
results,  the Company  expects  cash flows from  operations  during 1998 to be
positive.

   Working capital (current assets less current  liabilities) was $8.8 million
at December 28, 1997,  reflecting a current ratio  (current  assets divided by
current  liabilities) of 1.1:1.  Such amount represents an increase in working
capital of $47.8 million from December 31, 1996 principally reflecting (i) the
$3.1 million increase in cash discussed above, (ii) the $19.6 million decrease
in accounts  payable  and  accrued  expenses  discussed  above,  (iii) a $12.9
million  increase in current deferred income taxes reflecting an $11.8 million
increase  in the  net  operating  loss  carryforward  under  the  tax  sharing
agreement  with Triarc and (iv) a $12.6  million  decrease in notes payable to
affiliates reflecting the capital contribution  forgiving the Demand Note (see
below).

    On May 5, 1997, certain of the subsidiaries of the Company sold to RTM all
of the 355 company-owned Arby's restaurants. The sales price consisted of cash
and a promissory note (discounted  value)  aggregating $3.5 million (including
$2.1  million  of  post-closing  adjustments)  and  the  assumption  by RTM of
mortgage and equipment notes payable to FFCA Mortgage  Corporation ("FFCA") of
$54.7 million (the "FFCA  Borrowings")  and capitalized  lease  obligations of
$14.9 million.  RTM now operates the 355  restaurants as a franchisee and pays
royalties to the Company at a rate of 4% of those restaurants' net sales.

    As a result of the RTM Sale, the Company's remaining restaurant operations
are exclusively franchising.  The restaurant segment, without the operation of
the  company-owned  restaurants,  has begun to experience and will continue to
benefit  from  improved  cash  flow as a result of (i)  substantially  reduced
capital   expenditures,   (ii)  higher   royalty  fees  as  a  result  of  the
aforementioned royalties relating to the restaurants sold to RTM and (iii) the
reduction of operating  costs, a process begun in the second quarter and whose
full year effect should be realized in 1998.

    On July 18, 1997,  the Company  completed  the C&C Sale  consisting of its
rights to the C&C beverage  line of mixers,  colas and flavors,  including the
C&C trademark and equipment related to the operation of the C&C beverage line,
to Kelco Sales & Marketing Inc., for consideration of $0.8 million in cash and
an $8.6  million  note (the  "Kelco  Note")  with a  discounted  value of $6.0
million  consisting of $3.6 million  relating to the C&C Sale and $2.4 million
relating to future revenues for services to be performed over seven years. The
Kelco Note is due in monthly  installments of varying amounts of approximately
$0.1 million through August 2004.

    The $275.0  million  aggregate  principal  amount of 9 3/4% senior secured
notes  due 2000  (the  "Senior  Notes")  mature  on  August 1, 2000 and do not
require any  amortization of the principal  amount thereof prior to such date.
Interest at the rate of 9 3/4% per annum is payable  semi-annually on February
1 and August 1 of  each  year.  Under the  indenture  pursuant  to  which  the 

                                     20

<PAGE>



Senior Notes were issued (the "Senior Note  Indenture"),  substantially all of
the  Company's  assets  other than cash and cash  equivalents  are  pledged as
security.  Obligations  under the Senior Notes have been  guaranteed  by Royal
Crown  and TRG and all of the  stock of Royal  Crown  and TRG are  pledged  as
collateral for such  guarantees.  The Senior Note Indenture  contains  various
covenants including, among others, restrictions on dividends and other similar
payments and  limitations  on (i) the incurrence of  indebtedness,  (ii) asset
dispositions,  (iii) investments and (iv) affiliate transactions other than in
the normal course of business.  Under the terms of the Senior Note  Indenture,
as of December 28, 1997 RCAC could not pay any dividends, or make any loans or
advances, to Its direct parent.

    The  Company  has $3.8  million  and  $0.5  million,  respectively,  as of
December 28, 1997 of remaining FFCA mortgage  notes and equipment  notes after
the assumption of the FFCA  Borrowings.  Such mortgage and equipment notes are
repayable in equal monthly installments,  including interest, through 2016 and
2003,  respectively.  Amounts  due under these  notes in 1998  aggregate  $0.7
million  consisting of $0.6 million to be assumed by RTM (and offset against a
receivable from RTM for an equal amount) and $0.1 million to be paid in cash.

    During  1997 the  Company  reduced  its  borrowings  from  Triarc  and its
subsidiaries  to $1.2  million  (payable  in 1998)  from  $20.5  million as of
December 31, 1996,  while a demand note  receivable  increased $0.4 million to
$2.0 million.  In May 1997, in connection with the RTM Sale, two  subsidiaries
of the Company issued common shares  representing  49% of each of their common
stock after such  issuances to Triarc in exchange for  consideration  of $32.0
million  consisting  of cash of  $6.2  million  and  forgiveness  of the  then
outstanding  balance of $23.2 million  ($12.0 million as of December 31, 1996)
under the Demand Note plus related accrued interest of $2.6 million. The $29.4
million  excess of the  consideration  for the stock issued to Triarc of $32.0
million over Triarc's 49% minority  interest in the two  subsidiaries  of $2.6
million as of May 5, 1997 was accounted for as a capital  contribution  to the
Company.  In  addition,  $6.5  million of a note due in February  1998 with an
outstanding  balance of $6.7  million as of  December  31,  1996 was repaid to
Triarc.

    Consolidated capital expenditures  amounted to $1.5 million in 1997, which
reflects  reduced  spending  levels from 1996,  principally  in the restaurant
segment,  first in anticipation of and then as a result of the consummation of
the RTM Sale. The Company expects that capital  expenditures  during 1998 will
approximate  $1.4 million,  exclusive of $4.6 million the Company was required
to reinvest in core business assets pursuant to the Senior Note Indenture as a
result of the C&C Sale and certain other asset  disposals.  As of December 28,
1997,  there  were no  outstanding  commitments  for  such  estimated  capital
expenditures  other than the $4.6  million  reinvestment  requirement  made in
January 1998.

     Although  the Company  made no business  acquisitions  during  1997,  the
Company considers  selective business  acquisitions,  as appropriate,  to grow
strategically  and explores other  alternatives to the extent it has available
resources to do so.

    The Company is a party to a  tax-sharing  agreement  with Triarc (the "Tax
Sharing Agreement") whereby the Company is required to pay amounts relating to
taxes based on the taxable income of the Company and its eligible subsidiaries
on a stand alone basis.  The Company had overpaid its 1993 tax  obligation due
to losses during the fourth  quarter of 1993, and has  experienced  additional
losses in 1994  through  1997.  As a result,  no  subsequent  payment has been
required through  December 28, 1997 and,  considering the $35.5 million of net
operating loss carryforwards under the Tax Sharing Agreement, the Company does
not expect to be required to make any such payments during 1998.

    The Federal income tax returns of Triarc and its  subsidiaries,  including
the Company,  have been examined by the Internal  Revenue  Service ("IRS") for
the tax years 1989  through  1992 and the IRS has issued  notices of  proposed
adjustments relating to the Company increasing taxable income by approximately

                                     21

<PAGE>



$13.0 million.  Triarc, on behalf of the Company,  has resolved  approximately
$10.0 million of such proposed adjustments and, in connection  therewith,  the
Company paid $4.6 million,  including interest, in the fourth quarter of 1997.
The Company  intends to contest the unresolved  adjustments  of  approximately
$3.0 million at the appellate division of the IRS and, accordingly, the amount
of any payments required as a result thereof cannot presently be determined.

    As of December 28, 1997,  the Company had cash of $10.5 million  available
to meet its cash  requirements.  The  Company's  cash  requirements  for 1998,
exclusive  of  operating  cash  flows,  consist  principally  of  (i)  capital
expenditures of $6.0 million,  including the reinvestment  requirement of $4.6
million made in January 1998, (ii) debt principal  repayments of $2.1 million,
including $1.2 million under affiliated  notes, $0.8 million under other notes
and $0.1 million under the FFCA Loan Agreements (exclusive of the $0.6 million
to be assumed by RTM),  (iii) payments,  if any, to the IRS in connection with
the $3.0  million of proposed  adjustments  relating  to the Company  from the
examination of Triarc's income tax returns for the tax years 1989 through 1992
and (iv) the cost of business  acquisitions,  if any. The Company  anticipates
meeting all such  requirements  through  existing  cash and/or cash flows from
operations  and  borrowings  from Triarc under the Demand Note,  to the extent
available.

Legal and Environmental Matters

    The Company is involved in litigation,  claims and  environmental  matters
incidental  to its  business.  The  Company  has  reserves  for such legal and
environmental  matters  aggregating  approximately $1.1 million as of December
28,  1997.  Although  the outcome of such  matters  cannot be  predicted  with
certainty  and some of these may be disposed of  unfavorably  to the  Company,
based  on   currently   available   information   and  given   the   Company's
aforementioned  reserves,  the Company  does not  believe  that such legal and
environmental  matters will have a material adverse effect on its consolidated
results of operations or financial position.

Year 2000

    The Company has undertaken a study of its functional  application  systems
to  determine  their  compliance  with year 2000  issues and, to the extent of
noncompliance,  the required  remediation.  An  assessment of the readiness of
third party  entities  with which the Company has  relationships,  such as its
suppliers, customers and payroll processor and others, is ongoing. As a result
of such study,  the Company believes the majority of its systems are year 2000
compliant.  However,  certain  systems,  which are significant to the Company,
require  remediation.  The Company  currently  estimates it will  complete the
required  remediation  by the end of the  first  half  of  1999.  The  current
estimated cost of such  remediation is approximately  $1.5 million,  including
computer software costs. Such costs, other than software,  will be expensed as
incurred.

Inflation and Changing Prices

    Management  believes that  inflation did not have a significant  effect on
gross margins during 1995,  1996 and 1997,  since  inflation  rates  generally
remained  at  relatively  low  levels.  Historically,  the  Company  has  been
successful in dealing with the impact of inflation to varying  degrees  within
the  limitations  of  the  competitive  environment  of  each  segment  of its
business.

Recently Issued Accounting Pronouncements

    In June 1997 the Financial  Accounting Standards Board (the "FASB") issued
SFAS No. 130 ("SFAS 130") "Reporting  Comprehensive Income". SFAS 130 requires
that all items which are required to be recognized under accounting  standards
as components  of  comprehensive  income be reported in a financial  statement
that is displayed  with the same  prominence  as other  financial  statements.
Comprehensive  income is  defined as the  change in the  stockholder's  equity
during a period exclusive of stockholder investments and  distributions to the 

                                     22

<PAGE>



stockholder.  For the Company, in addition to net income (loss), comprehensive
income includes any changes in the currency  translation  adjustment.  In June
1997 the FASB  also  issued  SFAS No.  131  ("SFAS  131")  "Disclosures  about
Segments of an Enterprise and Related  Information"  which supersedes SFAS No.
14  "Financial  Reporting  for  Segments of a Business  Enterprise".  SFAS 131
requires  disclosure  in  the  Company's   consolidated  financial  statements
(including quarterly condensed consolidated financial statements) of financial
and  descriptive  information  by  operating  segment as used  internally  for
evaluating  segment  performance  and  deciding  how to allocate  resources to
segments.  SFAS 130 and SFAS 131 are effective  for the Company's  fiscal year
beginning  December 29, 1997  (exclusive of the  quarterly  segment data under
SFAS 131 which is effective the following fiscal year) and require comparative
information for earlier periods  presented.  The application of the provisions
of both SFAS 130 and SFAS 131 will require an additional  financial  statement
and may result in changes to segment  disclosures but will not have any effect
on the  Company's  reported  consolidated  results of  operations or financial
position.

                                     23

<PAGE>



Item 8.  Financial Statements and Supplementary Data.


                  INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


                                                                          Page
                                                                          ----

Independent Auditors' Report..............................................  25
Consolidated Balance Sheets as of December 31, 1996 and December 28, 1997.  26
Consolidated Statements of Operations for the years ended December 31,
  1995 and 1996 and the fiscal year ended December 28, 1997...............  27
Consolidated Statements of Stockholder's Equity (Deficit) for the years
  ended December 31, 1995 and 1996 and the fiscal year ended
  December 28, 1997.......................................................  28
Consolidated Statements of Cash Flows for the years ended December 31,
  1995 and 1996 and the fiscal year ended December 28, 1997...............  29
Notes to Consolidated Financial Statements................................  31



                                     24

<PAGE>










INDEPENDENT AUDITORS' REPORT



To the Board of Directors and Stockholder of RC/Arby's Corporation:

   We have audited the accompanying  consolidated  balance sheets of RC/Arby's
Corporation (a wholly-owned subsidiary of CFC Holdings Corp.) and subsidiaries
(the "Company") as of December 28, 1997 and December 31, 1996, and the related
consolidated statements of operations, stockholder's equity (deficit) and cash
flows for each of the three  fiscal  years in the period  ended  December  28,
1997.  These  financial  statements  are the  responsibility  of the Company's
management.  Our  responsibility  is to express an opinion on these  financial
statements based on our audits.

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

   In our opinion,  such consolidated  financial statements present fairly, in
all material  respects,  the financial  position of the Company as of December
28, 1997 and December 31, 1996 and the results of their  operations  and their
cash flows for each of the three fiscal years in the period ended December 28,
1997 in conformity with generally accepted accounting principles.




DELOITTE & TOUCHE LLP
Certified Public Accountants

Fort Lauderdale, Florida
March 10, 1998

                                     25

<PAGE>



                       RC/ARBY'S CORPORATION AND SUBSIDIARIES
                             CONSOLIDATED BALANCE SHEETS


                                                       December 31, December 28,
                                                            1996        1997
                                                            ----        ----
                                                             (In thousands)
                       ASSETS

Current assets:
  Cash and cash equivalents ($-0- and $7,075,000)........   $  7,411   $10,463
  Receivables, net (Note 4)..............................     35,151    34,991
  Note receivable from affiliate (Note 13)...............      1,650     2,000
  Inventories (Note 4)...................................     12,110    12,444
  Assets held for sale (Note 3)..........................     71,116         -
  Deferred income tax benefit (Note 7)...................      8,568    21,537
  Prepaid expenses and other current assets..............      6,761     3,583
                                                            --------  --------
    Total current assets.................................    142,767    85,018

Properties, net (Note 4).................................     11,943     8,805
Unamortized costs in excess of net assets of acquired
  companies (Note 4).....................................    159,123   153,396
Deferred income tax benefit (Note 7).....................     33,429    20,246
Deferred costs and other assets (Note 4).................     22,380    20,011
                                                            --------  --------
                                                            $369,642  $287,476
                                                            ========  ========
          LIABILITIES AND STOCKHOLDER'S DEFICIT

Current liabilities:
  Current portion of long-term debt (Notes 3, 5 and 6)...   $ 73,055   $ 1,556
  Notes payable to affiliates (Notes 5 and 13)...........     13,765     1,200
  Accounts payable.......................................     24,027    13,584
  Due to affiliates (Note 13)............................     12,283     8,062
  Accrued expenses (Note 4)..............................     58,659    51,846
                                                            --------  --------
    Total current liabilities............................    181,789    76,248

Long-term debt (Notes 5 and 6)...........................    281,110   279,606
Note payable to affiliate (Notes 5 and 13)...............      6,700         -
Deferred income and other liabilities....................     14,011    18,482
Commitments and contingencies (Notes 2, 7,10, 11 and 12)

Stockholder's equity (deficit) (Notes 5, 10 and 13):
  Common stock, $1.00 par value; authorized 3,000 shares;
    issued and outstanding 1,000 shares..................          1         1
  Additional paid-in capital.............................     44,300    73,690
  Accumulated deficit....................................   (158,269) (160,253)
  Currency translation adjustment........................          -      (298)
                                                            --------  --------
    Total stockholder's deficit..........................   (113,968)  (86,860)
                                                            --------  --------
                                                            $369,642  $287,476
                                                            ========  ========
         See accompanying notes to consolidated financial statements.

                                     26

<PAGE>



                     RC/ARBY'S CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                                            Year ended
                                                  ----------------------------
                                                     December 31,
                                                  ----------------- December 28,
                                                    1995      1996     1997
                                                  -------   -------- --------
                                                         (In thousands)

Revenues:
  Net sales..................................... $389,591   $409,100  $221,077
  Royalties.....................................   50,135     53,639    62,388
  Franchise fees................................    4,648      2,834     3,149
  Other revenues................................    1,009        779       696
                                                 --------   --------  --------
                                                  445,383    466,352   287,310
                                                 --------   --------  --------

Costs and expenses:
  Cost of sales.................................  239,870    252,811   100,470
  Advertising, selling and distribution (Note 1)  108,584    102,535    77,497
  General and administrative....................   87,038     77,339    61,762
  Reduction in carrying value of long-lived assets
   impaired or to be disposed of (Note 3).......   14,647     58,900         -
  Facilities relocation and corporate
   restructuring (Note 8).......................        -      6,350     7,034
                                                 --------   --------  --------
                                                  450,139    497,935   246,763
                                                 --------   --------  --------

     Operating profit (loss)....................   (4,756)   (31,583)   40,547

Interest expense................................  (39,565)   (42,883)  (35,749)
Other income (expense), net (Notes 3 and 13)....   (1,818)       562       (50)
                                                 --------   --------   -------

     Income (loss) before income taxes
      and extraordinary charge..................  (46,139)   (73,904)    4,748

Benefit from (provision for) income taxes
  (Note 7)......................................   12,489     23,346    (4,932)
                                                 --------   --------   -------

     Loss before extraordinary charge...........  (33,650)   (50,558)     (184)

Extraordinary charge (Note 9)...................        -          -    (1,800)
                                                 --------   --------   -------

     Net loss................................... $(33,650)  $(50,558)  $(1,984)
                                                 ========   ========   =======

         See accompanying notes to consolidated financial statements.

                                     27

<PAGE>



                     RC/ARBY'S CORPORATION AND SUBSIDIARIES
            CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY (DEFICIT)
                   For the three years ended December 28, 1997





                              Common Stock 
                            -----------------  Additional             Currency
                              Number            Paid-In  Accumulated Translation
                            of Shares  Amount   Capital    Deficit   Adjustment
                            ---------  ------   -------    -------   ----------
                                             (Dollars in thousands)


Balance at December 31, 1994.. 1,000   $    1   $ 35,435   $(74,061)   $      -
   Capital contribution
    (Note 13).................     -        -      8,865          -           -
   Net loss...................     -        -          -    (33,650)          -
                               -----   ------   --------  ---------    --------
Balance at December 31, 1995.. 1,000        1     44,300   (107,711)          -
   Net loss...................     -        -          -    (50,558)          -
                               -----   ------   --------  ---------    --------
Balance at December 31, 1996.. 1,000        1     44,300   (158,269)          -
   Capital contribution 
    (Note 13).................     -        -     29,390          -           -
   Net loss...................     -        -          -     (1,984)          -
   Net change in currency
     translation adjustment...     -        -          -          -        (298)
                               -----   ------   --------  ---------    --------
Balance at December 28, 1997.. 1,000   $    1   $ 73,690  $(160,253)   $   (298)
                               =====   ======   ========  =========    ========

         See accompanying notes to consolidated financial statements.

                                     28

<PAGE>



                        RC/ARBY'S CORPORATION AND SUBSIDIARIES
                         CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                            Year ended
                                                   ----------------------------
                                                      December 31,  
                                                   ---------------- December 28,
                                                    1995      1996      1997
                                                   ------    ------    ------
                                                          (In thousands)
 
Cash flows from operating activities:
   Net loss..................................... $ (33,650) $ (50,558) $ (1,984)
   Adjustments to reconcile net loss to net cash
     provided by (used in) operating activities:
      Amortization of costs in excess of net
        assets of acquired companies and
        other intangibles.......................     9,399      8,597     7,204
      Depreciation and amortization
        of properties...........................    13,768     14,095     1,803
      Reduction in carrying value of
        long-lived assets.......................    14,647     58,900         -
      Amortization of deferred financing costs..     2,204      2,369     2,174
      Write-off of unamortized deferred  
        financing costs.........................         -          -     2,950
      Provision for facilities relocation
        and corporate restructuring.............         -      6,350     7,034
      Payments on facilities relocation
        and corporate restructuring.............      (711)      (224)   (6,097)
      Provision for doubtful accounts...........     1,970      3,095     2,892
      Provision for (benefit from) deferred 
        income taxes............................   (10,477)   (24,377)      214
      Other, net................................      (580)       (91)       44
      Changes in operating assets and liabilities:
        Decrease (increase) in:
          Receivables...........................    (5,074)    (7,576)    1,011
          Inventories...........................    (2,367)     1,120    (2,862)
          Prepaid expenses and other
           current assets.......................      (999)        91     2,709
        Increase (decrease) in:
          Accounts payable and accrued expenses.     5,262       (728)  (19,632)
          Due to affiliates.....................     6,631      2,404    (1,584)
                                                   -------    -------   -------
Net cash provided by (used in) operating
  activities....................................        23     13,467    (4,124)
                                                   -------    -------   -------

Cash flows from investing activities:
   Proceeds from sales of properties
     and businesses.............................     1,997      1,408     3,175
   Capital expenditures.........................   (48,556)   (16,175)   (1,480)
   Business acquisitions........................   (14,335)    (1,972)        -
   Investment in affiliate......................    (1,000)         -         -
                                                   -------    -------   -------
Net cash provided by (used in) investing
  activities....................................   (61,894)   (16,739)    1,695
                                                   -------    -------   -------

Cash flows from financing activities:
   Capital contribution.........................     8,865          -     6,211
   Net borrowings from affiliates...............     5,950      3,690     3,535
   Repayments of long-term debt.................    (3,358)    (6,453)   (4,265)
   Proceeds from long-term debt ................    61,620      4,027         -
   Deferred financing costs.....................    (3,347)      (325)        -
                                                   -------    -------   -------
Net cash provided by financing activities.......    69,730        939     5,481
                                                   -------    -------   -------

Net increase (decrease) in cash.................     7,859     (2,333)    3,052
Cash at beginning of year.......................     1,885      9,744     7,411
                                                   -------    -------   -------
Cash and cash equivalents at end of year........   $ 9,744    $ 7,411   $10,463
                                                   =======    =======   =======

                                      (continued)

                                         29
 <PAGE>



                        RC/ARBY'S CORPORATION AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued)


                                                             Year ended
                                                    ---------------------------
                                                      December 31,  
                                                    --------------- December 28,
                                                     1995      1996     1997
                                                    ------    ------   ------
                                                            (In thousands)
Supplemental disclosures of cash flow information:
  Cash paid (received) during the year for:
   Interest....................................... $36,683   $ 37,931   $36,634
                                                   =======   ========   =======
   Income taxes (refunds), net.................... $   740   $   (101)  $ 3,059
                                                   =======   ========   =======

Supplemental disclosures of noncash investing and
  financing activities:
   Total capital expenditures..................... $48,918   $ 16,175   $ 1,480
   Amounts representing capitalized leases........    (362)         -         -
                                                   -------   --------   -------
     Capital expenditures paid in cash............ $48,556   $ 16,175   $ 1,480
                                                   =======   ========   =======

   As described in Note 13, in May 1997 two subsidiaries of the Company issued
common  shares  representing  49% of each of their  common  stock  after  such
issuances to Triarc Companies, Inc. ("Triarc"), the Company's indirect parent,
in consideration for forgiveness of the then outstanding principal balance and
accrued interest  aggregating  $25,788,000 under a note payable by the Company
to Triarc together with cash of $6,211,000.











         See accompanying notes to consolidated financial statements.

                                     30

<PAGE>


                 RC/ARBY'S CORPORATION AND SUBSIDIARIES
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            December 28, 1997



(1) Summary of Significant Accounting Policies

Principles of Consolidation

  The  consolidated  financial  statements  include the  accounts of RC/Arby's
Corporation ("RCAC" or, collectively with its subsidiaries,  the "Company"), a
direct  wholly-owned  subsidiary of CFC Holdings Corp. ("CFC Holdings") and an
indirect wholly-owned subsidiary of Triarc Companies, Inc. ("Triarc"), and its
subsidiaries.  The Company's  principal  wholly-owned  subsidiaries  are Royal
Crown Company,  Inc. ("Royal Crown") and Arby's, Inc. (d/b/a Triarc Restaurant
Group - "TRG").  Additionally,  the Company has three which,  prior to the May
1997 sale of all company-owned restaurants (see Note 3), owned and/or operated
Arby's restaurants,  consisting of Arby's Restaurant  Development  Corporation
("ARDC"),  Arby's  Restaurant  Holding Company ("ARHC") and Arby's  Restaurant
Operations  Company  ("AROC").  All  significant   intercompany  balances  and
transactions have been eliminated in consolidation.

Change in Fiscal Year

  Effective  January  1,  1997 the  Company  changed  its  fiscal  year from a
calendar  year to a year  consisting  of 52 or 53 weeks  ending on the  Sunday
closest to December 31. In accordance  therewith,  the  Company's  1997 fiscal
year  commenced  January 1, 1997 and ended  December 28, 1997.  Such period is
referred to herein as "the year ended  December 28, 1997" or "1997".  December
28, 1997 and December  31, 1996 are referred to herein as "Year-End  1997" and
"Year-End 1996", respectively.

Cash Equivalents

  All highly liquid  investments  with a maturity of three months or less when
acquired are considered cash  equivalents.  The Company  typically invests its
excess cash in commercial paper of high  credit-quality  entities and in a U.S
Treasury money market fund.

Inventories

  Inventories  are stated at the lower of cost  (determined  on the  first-in,
first-out basis) or market.

Properties and Depreciation and Amortization

  Properties   are   stated  at  cost  less   accumulated   depreciation   and
amortization.  Depreciation  and amortization of properties is computed on the
straight-line  basis using the  estimated  useful  lives of the related  major
classes of properties:  3-15 years for machinery and equipment and 15-40 years
for  buildings.  Leased  assets  capitalized  and leasehold  improvements  are
amortized over the shorter of their estimated useful lives or the terms of the
respective leases.


                                   31

<PAGE>


                 RC/ARBY'S CORPORATION AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                            December 28, 1997


Amortization of Intangibles

  Costs in excess of net assets of acquired  companies  ("Goodwill") are being
amortized on the straight-line basis over 31 to 40 years.  Goodwill associated
with certain  restaurant  acquisitions  was  amortized  over 15 years prior to
being written off as of December 31, 1996.  Trademarks are being  amortized on
the  straight-line  basis over 15 years.  Deferred  financing  costs are being
amortized as interest  expense over the lives of the respective debt using the
interest rate method.

Impairments

  Intangible Assets

  The amount of impairment,  if any, in unamortized Goodwill is measured based
on projected  future  results of  operations.  To the extent future results of
operations of those  subsidiaries  to which the Goodwill  relates  through the
period such Goodwill is being  amortized are  sufficient to absorb the related
amortization, the Company has deemed there to be no impairment of Goodwill.

  Long-Lived Assets

  Effective  October  1,  1995 the  Company  adopted  Statement  of  Financial
Accounting  Standards  ("SFAS") No. 121,  "Accounting  for the  Impairment  of
Long-Lived  Assets and for Long-Lived Assets to Be Disposed Of". This standard
requires that long-lived assets and certain identifiable  intangibles held and
used by an entity be reviewed  for  impairment  whenever  events or changes in
circumstances  indicate  that  the  carrying  amount  of an  asset  may not be
recoverable (see Note 3).

Derivative Financial Instrument

  The Company had an interest rate swap agreement (see Note 5) entered into in
order to  synthetically  alter the interest  rate of certain of the  Company's
fixed-rate debt until the agreement's maturity in 1996. The Company calculated
the estimated  remaining amount to be paid or received under the interest rate
swap agreement for the period from the periodic  settlement  date  immediately
prior to the financial  statement date through the end of the agreement  based
on the interest rate applicable at the financial statement date and recognized
such amount which applied to the period from the last periodic settlement date
through the financial statement date as a component of interest expense.  Thus
the  recognition  of gain or loss from the interest  rate swap  agreement  was
effectively  correlated  with the underlying  debt. A payment  received at the
inception of the agreement, which was deemed to be a fee to induce the Company
to enter into the agreement, was amortized over the full life of the agreement
since the Company was not at risk for any gain or loss on such payment.

Foreign Currency Translation

  Financial   statements  of  foreign   subsidiaries  are  prepared  in  their
respective  local  currencies and translated into United States dollars at the
current  exchange rates for assets and liabilities and an average rate for the
year of revenues,  costs and expenses.  Net gains or losses resulting from the
translation of foreign  financial  statements are charged or credited directly
to the "Currency  translation  adjustment"  component of "Stockholder's equity
(deficit)".


                                   32

<PAGE>


                 RC/ARBY'S CORPORATION AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                            December 28, 1997


Advertising Costs

  The Company  accounts for  advertising  production  costs by expensing  such
production  costs  the  first  time  the  related   advertising  takes  place.
Advertising  costs amounted to  $37,064,000,  $31,056,000  and $16,068,000 for
1995,  1996 and 1997,  respectively.  In  addition  the Company  supports  its
beverage bottlers and distributors with promotional  allowances,  a portion of
which is utilized for indirect  advertising by such bottlers and distributors.
Promotional  allowances  amounted to $58,431,000,  $55,982,000 and $48,528,000
for 1995, 1996 and 1997, respectively.

Income Taxes

  The Company and its subsidiaries  are included in the  consolidated  Federal
income tax return filed by Triarc. Under a tax sharing agreement,  the Company
provides for Federal  income taxes on the same basis as if it filed a separate
consolidated  return.  Deferred income taxes are provided to recognize the tax
effect of temporary  differences  between the bases of assets and  liabilities
for tax and financial statement purposes.

Franchise Fees and Royalties

  Franchise  fees are  recognized  as income when a franchised  restaurant  is
opened.  Franchise fees for multiple area development agreements represent the
aggregate  of the  franchise  fees for the number of  restaurants  in the area
development and are recognized as income when each restaurant is opened in the
same manner as franchise fees for individual restaurants.  Royalties are based
on a percentage of restaurant  sales of the franchised  outlet and are accrued
as earned.

Reclassifications

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

(2) Significant Risks and Uncertainties

Nature of Operations

  The Company is a holding  company  which is engaged in two lines of business
(each with the indicated percentage of the Company's consolidated revenues for
the year ended December 28, 1997): beverages (51%) and restaurants (49%).

  The beverage segment produces and sells  concentrates used in the production
and distribution of soft drinks by independent  bottlers under the brand names
RC Cola(R), Diet RC Cola(R), Diet Rite Cola(R), Diet Rite(R) flavors, Nehi(R),
Upper 10(R), and Kick(R).  The restaurant segment primarily  franchises Arby's
quick service restaurants representing the largest franchise restaurant system
specializing  in roast  beef  sandwiches.  Prior  to the May 1997  sale of all
company-owned  restaurants,  the Company also operated  Arby's(R)  restaurants
(see Note 3). The Company operates its businesses  principally  throughout the
United States with minimal foreign exposure.


                                   33

<PAGE>


                 RC/ARBY'S CORPORATION AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                            December 28, 1997


Use of Estimates

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

Significant Estimates

  The Company's  significant estimates are for costs related to provisions for
examinations  of Triarc's  income tax returns by the Internal  Revenue Service
("IRS") (see Note 7).

Certain Risk Concentrations

  The Company believes that its vulnerability to risk  concentrations  related
to  significant  customers  and vendors,  products sold and sources of its raw
materials  is  somewhat  mitigated  due to  the  diversification  of  its  two
businesses.   In  addition,  no  customer  accounted  for  more  than  10%  of
consolidated  revenues  in 1997.  While the  beverage  segment  has  chosen to
purchase  certain raw materials (such as aspartame) on an exclusive basis from
single  suppliers,  the Company  believes  that,  if  necessary,  adequate raw
materials  can be  obtained  from  alternate  sources.  Risk  of  geographical
concentration  is  also  minimized  since  each  of the  businesses  generally
operates throughout the United States with minimal foreign exposure.

(3) Dispositions and Prior Year Business Acquisitions

Sale of Restaurants

  On May 5, 1997 certain  subsidiaries  of the Company sold to an affiliate of
RTM, Inc. ("RTM"), the largest franchisee in the Arby's system, all of the 355
company-owned  restaurants (the "RTM Sale"). The sales price consisted of cash
and a promissory note (discounted  value)  aggregating  $3,471,000  (including
$2,092,000  of  post-closing  adjustments)  and  the  assumption  by RTM of an
aggregate  $54,682,000 in mortgage and equipment notes payable and $14,955,000
in capitalized  lease  obligations.  RTM now operates the 355 restaurants as a
franchisee  and  pays  royalties  to  the  Company  at a rate  of 4% of  those
restaurants'  net sales effective May 5, 1997. In 1997 the Company  recorded a
$4,089,000 loss on the sale included in "Other income  (expense),  net", which
(i)  includes  a  $1,457,000  provision  for the fair  value of the  Company's
effective guarantee of future lease commitments and debt repayments assumed by
RTM for  which  the  Company  or  Triarc  remains  contingently  liable if the
payments are not made by RTM and (ii) is exclusive of an extraordinary  charge
in connection with the early  extinguishment of debt (see Note 9). The results
of operations of the sold  restaurants  have been included in the accompanying
consolidated  statements  of  operations  until  the May 5, 1997 date of sale.
Following the RTM Sale,  the Company  continues as the  franchisor of the more
than 3,000 store Arby's system. See below under "Pro Forma Operating Data" for
the unaudited  supplemental pro forma condensed  summary operating data of the
Company  (the "Pro Forma  Data") for the years  ended  December  31,  1996 and
December 28, 1997 giving effect to the RTM Sale and the C&C Sale (see below).

  In 1996 the Company recorded a $58,900,000  charge reported as "Reduction in
carrying  value of  long-lived  assets  impaired or to be disposed  of" to (i)
reduce the carrying value of the long-lived assets  to  be  sold  (reported as 

                                   34

<PAGE>


                 RC/ARBY'S CORPORATION AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                            December 28, 1997


"Assets held for sale" in the  accompanying  consolidated  balance sheet as of
December  31,  1996) by  $46,000,000  to estimated  fair value  consisting  of
adjustments to "Properties, net" of $36,343,000,  "Unamortized costs in excess
of net assets of acquired  companies"  of $5,214,000  and "Deferred  costs and
other assets" of $4,443,000 and (ii) provide for associated net liabilities of
approximately $12,900,000, principally reflecting the present value of certain
equipment  operating  lease  obligations  which  would not be  assumed  by the
purchaser and estimated closing costs. The estimated fair value was determined
based on the terms of the February 1997  agreement for the RTM Sale  including
the  then  anticipated  sales  price.   During  1996  the  operations  of  the
restaurants to be disposed of had net sales of $231,041,000  and a pretax loss
of  $3,897,000.  Such loss  reflected  $10,071,000  of  allocated  general and
administrative  expenses and  $8,692,000  of interest  expense  related to the
mortgage  and  equipment  notes and  capitalized  lease  obligations  directly
related to the operations of the restaurants sold to RTM.

  In 1995 the Company  recorded a provision of  $14,647,000  in its restaurant
segment  consisting  of a $12,019,000  reduction in the net carrying  value of
certain restaurants and other restaurant-related  long-lived assets which were
determined to be impaired and a $2,628,000  reduction to a net carrying  value
of $975,000 of certain restaurants and related equipment to be disposed.  Such
provision  reduced  "Properties,  net" by $12,425,000,  "Unamortized  costs in
excess of net assets of acquired  companies" by $1,260,000 and "Deferred costs
and other  assets" by  $962,000  to reflect  the fair value of the  respective
assets.  The fair value was  generally  determined  by  applying a fair market
capitalization  rate to the estimated  expected future annual cash flows.  The
results of  operations  of the  restaurants  to be disposed as of December 31,
1995  resulted in a pre-tax loss of $806,000  for the year ended  December 31,
1995.

C&C Sale

  On July 18,  1997,  the  Company  completed  the sale (the "C&C  Sale"  and,
together  with the RTM Sale,  the  "Sales") of its rights to the C&C  beverage
line of mixers,  colas and flavors,  including the C&C trademark and equipment
related to the operation of the C&C beverage  line, to Kelco Sales & Marketing
Inc. ("Kelco"), for $750,000 in cash and an $8,650,000 note (the "Kelco Note")
with a discounted value of $6,003,000 consisting of $3,623,000 relating to the
C&C Sale and  $2,380,000  relating  to  future  revenues.  The  $2,380,000  of
deferred revenues consists of (i) $2,096,000  relating to minimum  take-or-pay
commitments  for  sales of  concentrate  for C&C  products  to Kelco  and (ii)
$284,000  relating to future  technical  services to be performed for Kelco by
the Company, both under the contract with Kelco. The excess of the proceeds of
$4,373,000  over the carrying value of the C&C trademark of $1,575,000 and the
related  equipment of $2,000  resulted in a pretax gain of  $2,796,000  which,
commencing in the third quarter of 1997, is being  recognized pro rata between
the gain on sale and the  carrying  value of the assets sold based on the cash
proceeds and collections  under the Kelco Note since  realization of the Kelco
Note is not yet fully assured.  Accordingly, a gain of $576,000 was recognized
in "Other income (expense), net" in the accompanying consolidated statement of
operations  for the year ended  December 28, 1997.  See below under "Pro Forma
Operating Data" for the Pro Forma Data giving effect to the Sales.

Pro Forma Operating Data (Unaudited)

  The following Pro Forma Data of the Company for the years ended December 31,
1996 and December 28, 1997 have been prepared by adjusting the historical data
as set forth in the accompanying consolidated statements of operations to give
effect  to the Sales as if the Sales had been  consummated  as of  January  1,
1996. Such Pro Forma Data is presented for comparative  purposes only and does
not purport to be indicative of the Company's actual results of operations had
the Sales actually been consummated on January 1, 1996  or  of  the  Company's

                                   35

<PAGE>


                 RC/ARBY'S CORPORATION AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                            December 28, 1997


future results of  operations  and  are  as  follows  (in thousands):

                                     1996                    1997
                            ------------------------ ------------------------
                            As Reported Pro Forma(a) As Reported Pro Forma(a)
                            ----------- ------------ ----------- ------------

  Revenues..................  $466,352   $236,339     $287,310    $209,240
  Operating profit (loss)...   (31,583)    34,172       40,547      45,675
  Income (loss) before
    extraordinary charge....   (50,558)    (3,373)        (184)      7,305
--------------------
  (a) The effect of the RTM Sale consists of (i) the  elimination  of revenues
and expenses  (including the reduction in carrying value of long-lived  assets
impaired or to be disposed of for 1996 and the elimination of loss on sale for
1997)  related to the sold  Arby's  restaurants,  (ii) a decrease  to interest
expense  associated with the assumption of debt by RTM and the forgiveness and
repayment of certain  amounts then  outstanding  under notes payable to Triarc
(see Note 13) and (iii) the income tax effects of the above. The effect of the
elimination of income and expenses of the sold  restaurants  is  significantly
greater in 1996 as compared with 1997 principally due to two 1996 eliminations
which did not recur in 1997 for (i) a $58,900,000  reduction in carrying value
of  long-lived   assets   associated  with  the  restaurants   sold  and  (ii)
depreciation and amortization on the long-lived  restaurant assets sold, which
had been written down to their  estimated  fair values as of December 31, 1996
and were no longer depreciated or amortized while they were held for sale. The
effect  of the C&C  Sale  consists  of (i) the  elimination  of  revenues  and
expenses  related to the C&C  beverage  line,  (ii)  realization  of  deferred
revenues based on the portion of the minimum take-or-pay  commitment for sales
of  concentrate  for C&C  products to Kelco and from fees related to technical
services  performed,  both under the contract with Kelco,  (iii) imputation of
interest expense on the deferred revenues, (iv) recognition of the cost of the
concentrate to be sold, (v) elimination of the aforementioned $576,000 gain on
the sale of C&C  recorded  in 1997,  (vi)  accretion  of the  discount  on the
portion  of the Kelco Note  relating  to the C&C Sale and (vii) the income tax
effects of the above.

Purchase Price Allocations of Prior Years Acquisitions

   The  Company  consummated  several business  acquisitions  during 1995  and
1996  for  cash  of  $14,335,000  and  $1,972,000,   respectively.   All  such
acquisitions have been accounted for in accordance with the purchase method of
accounting.  In  accordance  therewith,  the  following  table  sets forth the
allocation of the aggregate  purchase prices and a reconciliation to "Business
acquisitions"  in the accompanying  consolidated  statements of cash flows (in
thousands):

                                                        1995         1996
                                                        ----         ----
 Deferred costs and other assets..................... $ 4,376      $ 4,268
 Properties..........................................   9,219            -
 Goodwill............................................   2,708            -
 Net current assets (liabilities)....................     758         (358)
 Other liabilities...................................       -         (188)
 Long-term debt assumed including current portion....  (2,726)           -
                                                      -------      -------
                                                       14,335        3,722
 Less: Long-term debt issued to sellers..............       -       (1,750)
                                                      -------      -------
                                                      $14,335      $ 1,972
                                                      =======      =======

                                   36

<PAGE>


                 RC/ARBY'S CORPORATION AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                            December 28, 1997



Cancellation of Spinoff Transactions

 In October 1996 Triarc had announced  that its Board of Directors  approved a
plan to  offer up to  approximately  20% of the  shares  of its  beverage  and
restaurant  businesses  (including those of the Company) to the public through
an initial public offering and to spin off the remainder of the shares of such
businesses to Triarc stockholders (collectively,  the "Spinoff Transactions").
In  May  1997  Triarc   announced  it  would  not  proceed  with  the  Spinoff
Transactions  as a  result  of  its  acquisition  of  Snapple  Beverage  Corp.
("Snapple") and other issues.

(4) Balance Sheet Detail

Receivables, net

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

                                                           Year-End
                                                       -----------------
                                                       1996         1997
                                                       ----         ----
    Receivables:
        Trade......................................   $35,749     $33,843
        Other......................................     4,061       7,833
                                                      -------     -------
                                                       39,810      41,676
    Less allowance for doubtful accounts............    4,659       6,685
                                                      -------     -------
                                                      $35,151     $34,991
                                                      =======     =======

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

                                               1995      1996       1997
                                              ------    ------     ------

    Balance at beginning of year..........   $    986   $ 1,910    $4,659
    Provision for doubtful accounts 
      (Note 13)...........................      1,970     3,095     2,892
    Recoveries of doubtful accounts.......         44        53       130
    Uncollectible accounts written off....     (1,090)     (399)     (996)
                                             --------   -------    ------
    Balance at end of year................   $  1,910   $ 4,659    $6,685
                                             ========   =======    ======

   Substantially all receivables are pledged as collateral  for  certain  debt 
(see Note 5).


                                     37

<PAGE>


                 RC/ARBY'S CORPORATION AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                            December 28, 1997


Inventories

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

                                                            Year-End
                                                        ----------------
                                                        1996        1997
                                                        ----        ----

    Raw materials..................................   $ 8,184     $ 5,904
    Work in process................................       467         214
    Finished goods.................................     3,459       6,326
                                                      -------     -------
                                                      $12,110     $12,444
                                                      =======     =======
 
   Substantially all inventories are pledged as collateral  for  certain  debt
(see Note 5).

Properties, net

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

                                                           Year-End
                                                       -----------------
                                                       1996         1997
                                                       ----         ----

    Land............................................  $ 3,413      $2,351
    Buildings and improvements and 
      leasehold improvements........................   11,422       8,277
    Machinery and equipment.........................   13,359       8,938
    Leased assets capitalized.......................      888         493
                                                      -------      ------
                                                       29,082      20,059
    Less accumulated depreciation and amortization..   17,139      11,254
                                                      -------      ------
                                                      $11,943      $8,805
                                                      =======      ======

   Substantially all properties are pledged as  collateral  for  certain  debt
(see Note 5).

Unamortized Costs in Excess of Net Assets of Acquired Companies

  The following is a summary of the components of unamortized  costs in excess
of net assets of acquired companies (in thousands):

                                                           Year-End
                                                       ----------------
                                                       1996        1997
                                                       ----        ----

    Costs in excess of net assets of
      acquired companies............................ $223,721     $223,721
    Less accumulated amortization...................   64,598       70,325
                                                     --------     --------
                                                     $159,123     $153,396
                                                     ========     ========

                                     38

<PAGE>


                 RC/ARBY'S CORPORATION AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                            December 28, 1997


Deferred Costs and Other Assets

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

                                                           Year-End
                                                       ----------------
                                                       1996        1997
                                                       ----        ----

    Deferred financing costs........................  $18,987     $15,739
    Less accumulated amortization of 
     deferred financing costs.......................    8,077       9,953
                                                      -------     -------
      Deferred financing costs, net.................   10,910       5,786
                                                      -------     -------

    Trademarks......................................    7,748       5,801
    Less accumulated amortization of trademarks.....      934       1,099
                                                      -------     -------
      Trademarks, net...............................    6,814       4,702
                                                      -------     -------

    Notes receivable................................        -       7,181
    Other...........................................    4,656       2,342
                                                      -------     -------
                                                      $22,380     $20,011
                                                      =======     =======
Accrued Expenses

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

                                                           Year-End
                                                       ----------------
                                                       1996        1997
                                                       ----        ----

    Accrued interest................................  $16,949     $15,286
    Accrued advertising.............................   12,504       9,436
    Accrued compensation and related benefits.......   11,208       6,501
    Accrued rent and other costs on closed
      restaurants not sold to RTM...................    2,145       4,932
    Other...........................................   15,853      15,691
                                                      -------     -------
                                                      $58,659     $51,846
                                                      =======     =======
                                                       
                                     39

<PAGE>


                 RC/ARBY'S CORPORATION AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                            December 28, 1997


(5) Long-term Debt and Notes Payable to Affiliates

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

                                                            Year-End
                                                        ----------------
                                                        1996        1997
                                                        ----        ----

  9 3/4% senior secured notes due 2000 (a)............$275,000    $275,000
  Mortgage notes payable to FFCA Mortgage Corporation
   ("FFCA"), bearing interest at a weighted average
   rate of 10.35% as of December 28, 1997,
   due through 2016 (b)...............................  52,136       3,818
  Equipment notes payable to FFCA, bearing interest at
   10 1/2% at December 28, 1997, due through 2003 (b).   6,236         479
  Notes, bearing interest at 7.94% to 9.69%,
   due through 1999...................................   4,865       1,396
  Capitalized lease obligations (c)...................  15,928         469
                                                      --------    --------
   Total debt......................................... 354,165     281,162
   Less amounts payable within one year...............  73,055       1,556
                                                      --------    --------
                                                      $281,110    $279,606
                                                      ========    ========

   Notes payable to affiliates consisted of the following (in thousands):

                                                           Year-End
                                                       -----------------
                                                       1996         1997
                                                       ----         ----
  Note payable to Chesapeake Insurance Company
    Limited ("Chesapeake Insurance", an 
    affiliate) bearing interest at 9 1/2%
    due in 1998 (Note 13)..........................   $1,750       $ 1,000
  Note payable to Triarc bearing interest at 11.875%
    due in 1998 (Note 13)..........................    6,700           200
  Note payable to Triarc bearing interest at 11.875%
    due on demand (Note 13)........................   12,015             -
                                                      ------       -------
        Total notes payable to affiliates..........   20,465         1,200
  Less amounts payable within one year.............   13,765         1,200
                                                      ------       -------
                                                      $6,700       $     -
                                                      ======       =======

  Aggregate  annual   maturities  of  long-term  debt  and  notes  payable  to
affiliates,  including  capitalized lease  obligations,  were as follows as of
December 28, 1997 (in thousands):

    1998............................................ $  2,756
    1999............................................      802
    2000............................................  275,187
    2001............................................      208
    2002............................................      232
    Thereafter......................................    3,177
                                                     --------
                                                     $282,362
                                                     ========

(a) Prior to 1995 the Company  entered  into a three-year  interest  rate swap
agreement (the "Swap Agreement") in the amount of $137,500,000. Under the Swap
Agreement, interest on $137,500,000 was paid by the Company at a floating rate

                                     40

<PAGE>


                 RC/ARBY'S CORPORATION AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                            December 28, 1997


(the "Floating Rate") based on the 180-day London  Interbank  Offered Rate and
the Company received  interest at a fixed rate of 4.72%. The Floating Rate was
set at the  inception  of the Swap  Agreement  through  January  31,  1994 and
thereafter was  retroactively  reset at the end of each six-month  calculation
period  through  July 31, 1996 and at the  maturity of the Swap  Agreement  on
September 24, 1996. The transaction effectively changed the Company's interest
rate on  $137,500,000 of the 9 3/4% senior secured notes due 2000 (the "Senior
Notes") from a fixed rate to a floating-rate basis through September 24, 1996.
Under the Swap Agreement during 1994 the Company  received  $614,000 which was
determined at the inception of the Swap Agreement.  Subsequently,  the Company
paid (i) $2,271,000  during 1995 in connection  with such year's two six-month
reset periods and (ii)  $1,631,000  during 1996 in connection with such year's
two six-month  reset periods and the reset period ending with the  agreement's
maturity on September 24, 1996.

(b) ARDC and ARHC  maintained  loan and financing  agreements  with FFCA which
permitted  borrowings in the form of mortgage notes (the "Mortgage Notes") and
equipment notes (the  "Equipment  Notes" and,  collectively  with the Mortgage
Notes,  the "FFCA Loan  Agreements").  As discussed in Note 3, in May 1997 RTM
assumed an aggregate  $54,682,000  of Mortgage  Notes and  Equipment  Notes in
connection with the RTM Sale. The remaining Mortgage Notes and Equipment Notes
are repayable in equal monthly installments,  including interest,  over twenty
and seven years through 2016 and 2003, respectively.

(c) As discussed in Note 3, in May 1997 RTM assumed $14,955,000 of capitalized
lease obligations associated with the restaurants sold.

  Under the  indenture  (the  "Senior Note  Indenture")  pursuant to which the
Senior Notes were issued, substantially all of the Company's assets other than
cash and cash  equivalents are pledged as security.  In addition,  obligations
under the Senior Notes have been  guaranteed by Royal Crown and TRG and all of
the  stock  of  Royal  Crown  and TRG  are  pledged  as  collateral  for  such
guarantees.  Since the  non-guarantor  subsidiaries,  primarily ARDC, ARHC and
AROC, were not inconsequential,  condensed  consolidating financial statements
of the Company,  reporting  the parent  company  only,  the  guarantors in the
aggregate  and the  non-guarantors  in the aggregate are set forth in Note 15.
Triarc  remains  contingently  liable under its guarantee  for the  borrowings
under the FFCA Loan  Agreements  which were assumed by RTM in connection  with
the RTM sale upon the failure, if any, of RTM to satisfy such obligations. The
Senior Note Indenture  contains  various  covenants  including,  among others,
restrictions  on dividends and other similar  payments and  limitations on (i)
the incurrence of indebtedness, (ii) asset dispositions, (iii) investments and
(iv) affiliate transactions other than in the normal course of business. Under
the terms of such indenture, as of December 28, 1997 the Company could not pay
any dividends or make any loans or advances to CFC Holdings.


                                     41

<PAGE>


                 RC/ARBY'S CORPORATION AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                            December 28, 1997


(6) Fair Value of Financial Instruments

  The Company has the following financial instruments for which the disclosure
of fair values is required: cash and cash equivalents, accounts receivable and
payable,  affiliated  notes  receivable  and  payable,  accrued  expenses  and
long-term debt. The carrying amounts of cash and cash equivalents,  affiliated
notes   receivable  and  payable,   accounts   payable  and  accrued  expenses
approximated  fair value due to the  short-term  maturities of such assets and
liabilities.  The carrying  amount of accounts  receivable  approximated  fair
value due to the related allowance for doubtful accounts. The carrying amounts
and fair values of long-term debt were as follows (in thousands):

                                                 Year-End
                                 ----------------------------------------
                                          1996               1997
                                 -------------------- -------------------
                                   Carrying   Fair     Carrying   Fair
                                    Amount    Value     Amount    Value
                                    ------    -----     ------    -----
Long-term debt (Note 5):
  Senior Notes................... $275,000  $283,000  $275,000   $279,000
  FFCA Loan Agreements...........   58,372    61,814     4,297      4,612
  Other long-term debt...........   20,793    20,793     1,865      1,865
                                  --------  --------  --------   --------
                                  $354,165  $365,607  $281,162   $285,477
                                  ========  ========  ========   ========

  The fair values of the Senior Notes are based on quoted market prices at the
respective  reporting  dates.  The  fair  values  of the  Mortgage  Notes  and
Equipment  Notes under the FFCA Loan Agreements were determined by discounting
the future monthly  payments using the then rate of interest  available  under
such  agreements at December 31, 1996 and a rate assumed to be available given
the same spread over a current Treasury bond yield for securities with similar
durations at December 28, 1997.  The fair values of all other  long-term  debt
were assumed to reasonably  approximate  their carrying  amounts since (i) for
capitalized  lease  obligations,  the weighted average implicit  interest rate
approximates current levels and (ii) for other notes, the remaining maturities
are relatively short-term.

(7) Income Taxes

  As discussed in Note 1, the Company is included in the consolidated  Federal
income tax return of Triarc. Pursuant to a tax sharing agreement,  the Company
provides for Federal  income taxes on the same basis as if it filed a separate
consolidated  return.  As of December  31, 1996 and  December  28,  1997,  the
Company  was  in a net  operating  loss  position  and,  as  such,  all of the
Company's income tax related balances are reported as deferred income taxes.

  The income (loss) before income taxes and extraordinary  charge consisted of
the following components (in thousands):

                                               1995       1996      1997
                                             --------   --------  --------

    Domestic..............................   $(44,191)  $(70,496)  $  4,534
    Foreign...............................     (1,948)    (3,408)       214
                                             --------   --------   --------
                                             $(46,139)  $(73,904)  $  4,748
                                             ========   ========   ========

                                     42

<PAGE>


                 RC/ARBY'S CORPORATION AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                            December 28, 1997



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

                                               1995       1996       1997
                                             --------   -------    --------

  Current:
    Federal.................................  $ 1,986    $    39   $ (3,383)
    State...................................      383       (700)      (891)
    Foreign.................................     (357)      (370)      (444)
                                              -------    --------  --------
                                                2,012     (1,031)    (4,718)
                                              -------    --------  --------

 Deferred:
    Federal.................................    9,642     21,963        202
    State...................................      835      2,414       (416)
    Foreign.................................        -          -          -
                                             --------   --------   --------
                                               10,477     24,377       (214)
                                             --------   --------   --------
                                             $ 12,489   $ 23,346   $ (4,932)
                                             ========   ========   ========

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

                                                           Year-End
                                                       ----------------
                                                       1996        1997
                                                       ----        ----
 Current deferred income tax assets:
    Net operating loss carryforward under tax
      sharing agreement with Triarc and state 
      net operating loss carryforwards.............. $     -      $11,809
    Accrued employee benefit costs..................   2,525        1,794
    Allowance for doubtful accounts.................   1,729        2,478
    Accrued rent and other costs on closed
      restaurants not sold to RTM...................     834        1,919
    Facilities relocation and corporate restructuring    806        1,185
    Accrued interest relating to income tax matters.   1,176          773
    Accrued advertising and promotion...............     628          102
    Other, net......................................     870        1,477
                                                     -------      -------
                                                       8,568       21,537
                                                     -------      -------

 Non-current deferred income tax assets (liabilities):
    Net operating loss carryforward under tax
      sharing agreement with Triarc and state 
      net operating loss carryforwards..............   9,198       23,687
    Depreciation and other properties
      basis differences.............................  27,737         (314)
    Reserve for income tax contingencies............  (6,794)      (6,388)
    Deferred franchise fees.........................   1,330        1,581
    Other, net......................................   1,958        1,680
                                                     -------      -------
                                                      33,429       20,246
                                                     -------      -------
                                                     $41,997      $41,783
                                                     =======      =======


                                     43

<PAGE>


                 RC/ARBY'S CORPORATION AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                            December 28, 1997


   As of December 28, 1997 the Company  had net operating  loss  carryforwards
for Federal income tax purposes under its tax sharing agreement with Triarc of
approximately  $94,175,000.   Such  carryforwards  will  expire  approximately
$11,134,000,  $6,827,000,  $13,575,000,  $1,956,000  and  $60,683,000 in 2008,
2009, 2010, 2011 and 2012.

   The difference  between the reported  benefit from  (provision for)  income
taxes and the tax benefit  (provision) that would result from applying the 35%
Federal   statutory  rate  to  the  income  (loss)  before  income  taxes  and
extraordinary charge is reconciled as follows (in thousands):

                                                    1995      1996    1997
                                                   ------    ------  ------

     Income tax benefit (provision) computed at
        Federal statutory rate....................$16,149   $25,866 $(1,662)
     Decrease (increase) in Federal tax
      provision resulting from:
       Amortization of non-deductible Goodwill.... (2,005)   (2,005) (2,005)
       State income (taxes) benefit, net of
         Federal income tax effect................    792     1,114    (850)
       Foreign tax rate in excess of United States
         Federal statutory rate and foreign
         withholding taxes, net of Federal
         income tax benefit.......................   (307)     (241)   (233)
       Effect of net operating losses of foreign
         subsidiary for which no tax carryback
         benefit is available.....................   (548)   (1,193)      -
       Provision for income tax contingencies..... (1,100)        -       -
       Non-deductible amortization of restricted
         stock....................................   (418)        -       -
       Other, net.................................    (74)     (195)   (182)
                                                  -------   ------- -------
                                                  $12,489   $23,346 $(4,932)
                                                  =======   ======= =======

  The Federal income tax returns of Triarc and its subsidiaries, including the
Company,  have been  examined by the IRS for the tax years 1985 through  1988.
Triarc resolved all issues related to such audit and, in connection therewith,
the Company paid  $407,000 in 1996 in final  settlement  of such  examination.
Such  amount  had been  fully  reserved  in years  prior to 1995.  The IRS has
completed its  examination of the Federal income tax returns of Triarc and its
subsidiaries  for the tax years from 1989 through 1992 and has issued  notices
of proposed  adjustments  relating to the Company increasing taxable income by
approximately  $13,000,000.  Triarc,  on behalf of the  Company,  has resolved
approximately  $10,000,000  of such  proposed  adjustments  and, in connection
therewith, the Company paid $4,576,000,  including interest, during the fourth
quarter of 1997. The Company intends to contest the unresolved  adjustments of
approximately $3,000,000, the tax effect of which has not yet been determined,
at the  appellate  division  of the  IRS.  During  1995 the  Company  provided
$1,100,000 included in "Benefit from (provision for) income taxes" and in 1995
through 1997 provided $1,000,000 per year, included in "Interest expense",  in
addition to amounts provided prior to 1995,  relating to such examinations and
other tax matters.  Management of the Company believes that adequate aggregate
provisions  have been made in 1997 and prior periods for any tax  liabilities,
including interest, that may result from the 1989 through 1992 examination and
other tax matters.


                                     44

<PAGE>


                 RC/ARBY'S CORPORATION AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                            December 28, 1997


(8) Facilities Relocation and Corporate Restructuring

  The  1996  facilities  relocation  and  corporate  restructuring  charge  of
$6,350,000  related to costs  associated with (i) estimated  losses on planned
subleases  (principally  for  the  write-off  of  nonrecoverable   unamortized
leasehold  improvements and furniture and fixtures) of surplus office space as
a  result  of the  then  planned  sale of  company-owned  restaurants  and the
relocation (the "Royal Crown Relocation") of Royal Crown's  headquarters which
were centralized  with the offices of Triarc's other beverage  subsidiaries in
White Plains, New York ($3,700,000),  (ii) employee severance costs associated
with the Royal Crown  Relocation  ($2,200,000)  and (iii) the  shutdown of the
beverage segment's Ohio production facility ($450,000).

  The  1997  facilities  relocation  and  corporate  restructuring  charge  of
$7,034,000 related to (i) employee severance and related termination costs and
employee  relocation  associated with  restructuring the restaurant segment in
connection  with the RTM Sale  ($5,597,000),  (ii) costs  associated  with the
Royal Crown  Relocation  ($1,137,000) and (iii) the write-off of the remaining
unamortized costs of certain beverage  distribution rights reacquired in prior
years and no longer  being  utilized by the Company as a result of the sale or
liquidation  of the assets and  liabilities  of MetBev,  Inc.  ("MetBev"),  an
affiliate ($300,000).

(9) Extraordinary Charge

  The Company  recognized an  extraordinary  charge of $1,800,000 in 1997 from
the early  extinguishment of debt resulting from the assumption of $54,682,000
of the borrowings  under the FFCA Loan  Agreements by RTM associated  with the
sold  restaurants  consisting  of  the  write-off  of  previously  unamortized
deferred   financing  costs  of  $2,950,000  net  of  income  tax  benefit  of
$1,150,000.

(10) Pension and Other Benefit Plans

  Triarc maintains a 401(k) defined  contribution  plan (the "Plan") covering,
among other  employees of Triarc and its  subsidiaries,  all of the  Company's
employees  who meet certain  minimum  requirements  and elect to  participate.
Under the provisions of the Plan, employees may contribute various percentages
of their compensation up to a maximum of 15%, subject to certain  limitations.
The Plan  provides  for  Company  matching  contributions  of 50% of  employee
contributions up to the first 5% of an employee's contributions. The Plan also
provides for additional annual Company contributions at an arbitrary aggregate
amount to be determined by the  employers.  In connection  with these employer
contributions,  the Company  provided  $1,175,000,  $1,020,000 and $878,000 in
1995, 1996 and 1997, respectively.

  The Company's  employees who were eligible to participate  prior to 1989 are
covered under a defined  benefit  pension plan which covers  employees of both
the Company and certain affiliates. Prior to 1995 the plan was frozen.


                                     45

<PAGE>


                 RC/ARBY'S CORPORATION AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                            December 28, 1997


  The Company's  portion of the  components  of the net periodic  pension cost
were as follows (in thousands):

                                                1995      1996      1997
                                               ------    ------    ------

 Current service cost (represents 
   plan expenses)..............................$    84  $     83   $    83
 Interest cost on projected benefit obligation.    267       264       244
 Return on plan assets.........................   (674)     (369)     (643)
 Net amortization and deferrals................    472       138       384
                                               -------  --------   -------
   Net periodic pension cost...................$   149  $    116   $    68
                                               =======  ========   =======

 The  following  table sets forth the  Company's  portion of the plan's funded
status (in thousands):

                                                            Year-End
                                                       ------------------
                                                       1996          1997
                                                       ----          ----

 Actuarial present value of benefit obligations:
   Vested benefit obligation......................... $ 3,749      $ 3,540
   Nonvested benefit obligation......................      18           16
                                                      -------      -------
        Accumulated and projected benefit obligation.   3,767        3,556
 Plan assets at fair value...........................  (3,374)      (3,744)
                                                      -------      -------
 Funded status.......................................     393         (188)
 Unrecognized net gain from plan experience..........      51          496
                                                      -------      -------
        Accrued pension cost......................... $   444      $   308
                                                      =======      =======

  Significant assumptions used in measuring the net periodic pension cost  for
the plan included the following:  (i) the expected long-term rate of return on
plan assets was 8% and (ii) the  discount  rate was 8% for 1995,  7% for 1996,
and 7 1/2% for  1997.  The  discount  rate  used in  determining  the  benefit
obligations above was 7 1/2% at December 31, 1996 and 7% at December 28, 1997.
The effects of the 1996  decrease and the 1997  increase in the discount  rate
did not materially  affect the net periodic pension cost. The 1997 decrease in
the discount rate used in determining  the benefit  obligation  resulted in an
increase in the accumulated and projected benefit obligation of $190,000.

  Plan assets as of December  28,  1997  are  invested  in managed  portfolios
consisting of government and government agency obligations (51%), common stock
(37%), corporate debt securities (10%) and other investments (2%).

  The Company maintains unfunded postretirement medical and death benefit plans
for a limited  number of employees who have retired and have provided  certain
minimum years of service.  The medical  benefits are principally  contributory
while death benefits are noncontributory.  The net postretirement benefit cost
for 1995,  1996 and 1997, as well as the  accumulated  postretirement  benefit
obligation as of December 28, 1997, were insignificant.

  Prior to 1995, Triarc granted  133,750  restricted  shares of Triarc Class A
common stock to certain Royal Crown and TRG senior  executives  under Triarc's
1993 Equity  Participation Plan (the "1993 Triarc Equity Plan"). The aggregate
values of the awards at the respective dates of grant of $2,774,000 were being
charged to the Company as  compensation  expense over the  applicable  vesting
periods through 1996.  On  December  7, 1995,  the  Compensation  Committee of

                                     46

<PAGE>


                 RC/ARBY'S CORPORATION AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                            December 28, 1997


Triarc's Board of Directors authorized  management of Triarc to accelerate the
vesting of all of the then outstanding  shares of restricted stock. On January
16, 1996 management of Triarc accelerated the vesting and the Company recorded
the resulting  additional  amortization expense of $662,000 in its entirety in
1995.  In addition,  Triarc has granted stock options to certain key employees
of the Company  under the 1993 Triarc  Equity  Plan and  Triarc's  1997 Equity
Participation Plan. Of such options,  165,000 granted prior to 1995 were at an
option  price of $20.00 per share which was below the $31.75 fair market value
of  Triarc's  Class A  common  stock  at the  date of  grant  representing  an
aggregate  difference  of  $1,939,000  and  298,000  granted in 1997 were at a
weighted  average option price of $12.56 which was below the weighted  average
fair market value of Triarc's Class A common stock on the respective  dates of
grant of $14.63,  resulting  in an  aggregate  difference  of  $618,000.  Such
differences are being charged to the Company as compensation  expense over the
applicable  vesting  periods  through 2002,  net of reversals of prior charges
arising from the  forfeiture of certain of those  options in  connection  with
employee  terminations (the "Forfeiture  Adjustments").  Compensation  expense
resulting from the grants of restricted  shares and below market stock options
aggregated  $1,612,000 (including the $662,000 from the accelerated vesting of
the restricted stock and net of $231,000 of Forfeiture  Adjustments),  $74,000
(net of $173,000 of  Forfeiture  Adjustments)  and $51,000 (net of $308,000 of
Forfeiture  Adjustments)  during  1995,  1996 and 1997,  respectively,  and is
included in "General  and  administrative"  in the  accompanying  consolidated
statements of operations.

(11) Lease Commitments

  The Company leases  buildings and  improvements and machinery and equipment.
Prior to the RTM Sale, some leases provided for contingent  rentals based upon
sales volume.  In connection with the RTM Sale in May 1997,  substantially all
operating  and  capitalized  lease   obligations   associated  with  the  sold
restaurants  were assumed by RTM,  although the Company  remains  contingently
liable if the future  lease  payments  (which  could  potentially  aggregate a
maximum of approximately $100,000,000 as of December 28, 1997) are not made by
RTM.  The Company  provided  $9,677,000  in  "Reduction  in carrying  value of
long-lived  assets  impaired or to be disposed  of" in 1996  representing  the
present value of future operating lease payments relating to certain equipment
transferred to RTM but the obligations for which remain with the Company.

  Rental expense under operating leases consisted of the following  components
(in thousands):

                                            1995      1996      1997
                                          -------   --------   -------

   Minimum rentals......................  $19,727    $23,164   $12,650
   Contingent rentals...................      879        794       204
                                          -------    -------   -------
                                           20,606     23,958    12,854
   Less sublease income.................    5,358      5,460     5,509
                                          -------    -------   -------
                                          $15,248    $18,498   $ 7,345
                                          =======    =======   =======


                                     47

<PAGE>


                 RC/ARBY'S CORPORATION AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                            December 28, 1997


  The Company's future minimum rental  payments and sublease rental income for
leases  having an initial  lease term in excess of one year as of December 28,
1997,  excluding $7,925,000 of those future operating lease payments for which
the Company has provided as set forth above, are as follows (in thousands):

                                   Rental Payments       Sublease Income
                                --------------------- ---------------------
                                Capitalized Operating Capitalized  Operating
                                   Leases     Leases     Leases      Leases
                                   ------     ------     ------      ------

    1998.......................... $  105    $ 4,373    $    60     $ 3,298
    1999..........................     87      2,147         60       1,246
    2000..........................     87      1,606         55         861
    2001..........................     87      1,576         41         720
    2002..........................     86      1,475         44         616
    Thereafter....................    317      3,363        160       1,337
                                   ------   --------    -------     -------   
      Total minimum payments......    769   $ 14,540    $   420     $ 8,078
                                            ========    =======     =======
    Less interest.................    300
                                   ------
    Present value of minimum
      capitalized lease payments.. $  469
                                   ======

  The present  value of minimum  capitalized  lease  payments is  included, as
applicable,  with "Long-term  debt" or "Current  portion of long-term debt" in
the accompanying consolidated balance sheets (see Note 5).

(12) Legal and Environmental Matters

  The  Company is involved  in litigation,  claims and  environmental  matters
incidental  to its  businesses.  The Company has  reserves  for such legal and
environmental matters aggregating  approximately $1,073,000 as of December 28,
1997.  Although the outcome of such matters cannot be predicted with certainty
and some of these may be  disposed of  unfavorably  to the  Company,  based on
currently  available  information  and  given  the  Company's   aforementioned
reserves,  the  Company  does not  believe  that such legal and  environmental
matters will have a material  adverse  effect on its  consolidated  results of
operations or financial position.

                                     48

<PAGE>


                 RC/ARBY'S CORPORATION AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                            December 28, 1997


(13) Transactions with Related Parties

  The  following  is a summary of  transactions  between  the  Company and its
related parties (in thousands):

                                                 1995      1996       1997
                                               -------   --------   -------
 Costs allocated to the Company by Triarc
   under a management services agreement (a).  $ 9,000   $  7,000   $ 7,000
 Capital contributions (b)...................    8,865          -    29,390
 Interest expense on notes payable to:
   Triarc (c)................................    2,169      2,588     1,278
   Chesapeake Insurance (c)..................      243        208       130
   Southeastern Public Service Company
      ("SEPSCO") (c).........................      750          -         -
 Interest income on notes receivable from
   Triarc (c)................................      212        261       230
 Repurchase of $720 principal amount of
   promissory notes due from franchisees
   from SEPSCO at fair value.................        -          -       690
 Net sales to MetBev, net of marketing
   support credits (d).......................      551      8,985         -
 Provision for uncollectible receivables from
   sales to MetBev, guarantee of MetBev
   accounts payable and advance
   to MetBev (d).............................    1,745      2,000       975
 Investment in preferred stock of MetBev
   and write-off thereof (d).................    1,000          -         -
 Shared services allocation from Triarc
    beverage affiliates, net (e).............        -          -       547
 Compensation costs charged to the Company by
   Triarc for restricted stock and below
   market stock options (Note 10)............    1,612         74        51
 Payments to Triarc for usage of aircraft....       73          -        32
 Lease payments to NPC Leasing Corp., 
   an affiliate..............................       21          -         -
-------------

   (a)  The  Company  receives  from  Triarc  certain   management   services,
including legal,  accounting,  tax, insurance,  financial and other management
services, under a management services agreement.  Such costs were allocated to
the Company by Triarc  based upon the  Company's  pro rata share of the sum of
the greater of income before income taxes,  depreciation  and amortization and
10% of revenues of Triarc's principle  operating  subsidiaries.  Management of
the Company  believes  that such  allocation  method is  reasonable.  Further,
management of the Company believes that such allocation approximates the costs
that would have been incurred by the Company on a stand alone basis.

   (b)  In  February  1995,  CFC  Holdings  made  a  capital  contribution  of
$8,865,000 of cash to the Company using funds  contributed to it by Triarc. In
May 1997,  in  connection  with the RTM Sale,  ARHC and AROC issued 950 common
shares  (approximately  49% of the common stock after such  issuances) each to
Triarc in exchange for aggregate  consideration  of $31,999,000  consisting of
cash  of  $6,211,000  and  forgiveness  of  the  then  outstanding  amount  of
$23,150,000  plus related accrued  interest of $2,638,000 under a note payable
by the  Company  to Triarc as of May 5, 1997.  Triarc's  49%  interest  in the
equity of ARHC and AROC is included in "Deferred income and other liabilities"

                                     49

<PAGE>


                 RC/ARBY'S CORPORATION AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                            December 28, 1997


in the accompanying  condensed  consolidated  balance sheet as of December 28,
1997. The excess of $29,390,000 of the  consideration  for the stock issued to
Triarc of $31,999,000  over such minority  interest of $2,609,000 as of May 5,
1997  was  accounted  for  as a  capital  contribution  and  is  reflected  in
"Additional paid-in capital".  The 49% minority interest in the losses of ARHC
and AROC for the year  ended  December  28,  1997  aggregated  $39,000  and is
included in "Other income  (expense),  net" in the  accompanying  consolidated
statement of  operations.  Also in connection  with the RTM Sale,  the Company
repaid $6,500,000 of the $6,700,000 note due February 1998 to Triarc.

   (c)  The Company  borrowed cash under various  promissory notes with Triarc
and two of its subsidiaries,  SEPSCO and Chesapeake Insurance.  See Note 5 for
details  involving such promissory notes which were outstanding as of December
31, 1996 and  December  28,  1997.  Also,  the Company  made cash  advances to
Triarc,  of which  $1,650,000 and $2,000,000 were  outstanding at December 31,
1996 and December 28, 1997,  respectively,  under a promissory note receivable
due upon demand. All such promissory notes payable and receivable bear or bore
interest at 11.875% per annum,  payable  quarterly,  except for the promissory
note to Chesapeake Insurance which bears interest at 9 1/2% per annum, payable
quarterly.

   (d)  During 1995 the Company paid  $1,000,000 and contributed a license for
a period  of five  years  for the  Royal  Crown  distribution  rights  for its
products  in New York  City and  certain  surrounding  counties  to  MetBev in
exchange for preferred  stock in MetBev  representing a 37.5% voting  interest
and a warrant to acquire  37.5% of the common stock of MetBev.  The  remaining
62.5%  was  owned  by  other  parties  and  was  subject  to  certain  vesting
provisions.  Upon consummation of the sale of the MetBev  distribution  rights
(see below), the Company's voting interest in MetBev was 44.7% principally due
to the  cancellation of nonvested  stock.  In December 1996, the  distribution
rights  of MetBev  were sold to a third  party  for  minimum  payments  over a
three-year period aggregating  $1,050,000 and MetBev commenced the liquidation
of its  remaining  assets and  liabilities.  During 1997 the Company  advanced
MetBev  $539,000 for costs  incurred in liquidating  the remaining  assets and
liabilities and related close-down costs of its facility.  The Company has not
received  any  payments  on the  $1,050,000  from the  purchaser  of  MetBev's
distributor   rights  and  does  not  expect  to  collect  due  to   financial
difficulties of the purchaser which the Company believes is due to competitive
pressures on the purchaser  following Triarc's  acquisition of Snapple and its
revitalization of Snapple. In connection therewith,  in 1995 the Company wrote
off its $1,000,000  investment to "Other income  (expense),  net" since MetBev
had incurred  significant  losses from its inception  and had a  stockholders'
deficit as of December 31, 1996 of $8,943,000.  Further,  the Company provided
$1,745,000  and  $2,000,000  (included  in "General  and  administrative"  and
"Advertising,  selling and distribution") in 1995 and 1996, respectively,  for
uncollectible  receivables  from sales (with minimal gross profit) of finished
product to MetBev (and in 1995 a guarantee  of a MetBev  third party  accounts
payable) resulting in remaining accounts receivable of $997,000 as of December
31, 1996. In 1997 the Company wrote off its remaining receivables from MetBev,
after  offsetting  amounts  otherwise  payable to the purchaser,  amounting to
$975,000 (included in "General and administrative").

   (e)  During 1997, Royal Crown was charged $702,000 for an allocated portion
of the salaries  and related  benefit  costs of certain  employees of Triarc's
other beverage  subsidiaries who performed shared finance,  administrative and
operational  functions for Royal Crown and for office space  utilized by Royal
Crown in their centralized  headquarters in White Plains,  NY. Such allocation
was based on the  estimated  proportion  of time  expended  on the  respective
businesses.  Royal Crown was also credited  $155,000 in 1997 for the allocated
cost of shared legal services that employees of Royal Crown provided  Triarc's
other beverage subsidiaries.


                                     50

<PAGE>


                 RC/ARBY'S CORPORATION AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                            December 28, 1997


(14) Business Segments

   The Company has two major segments,  beverages and restaurants  (see Note 2
for a description  of each  segment).  Information  concerning the segments in
which the  Company  operates  is shown in the table  below.  Operating  profit
(loss) is total  revenues  less  operating  expenses.  In computing  operating
profit or loss, interest expense, general corporate expenses and non-operating
income and expenses,  including  interest  income,  have not been  considered.
Operating loss for the restaurant segment in 1995 and 1996 reflects provisions
of $14,647,000 and $58,900,000, respectively, for reductions in carrying value
of long-lived assets impaired or to be disposed of (see Note 3).  Identifiable
assets by segment are those assets that are used in the  Company's  operations
in  each  segment.   General   corporate  assets  consist  primarily  of  cash
equivalents and deferred financing costs.

   No customer  accounted for more than 10% of consolidated  revenues in 1995,
1996 or 1997.

                                            1995      1996      1997
                                          -------   --------   -------
                                                 (In thousands)
 Revenues:
   Beverages............................  $172,644  $178,059  $146,881
   Restaurants..........................   272,739   288,293   140,429
                                          --------  --------  --------
     Consolidated revenues..............  $445,383  $466,352  $287,310
                                          ========  ========  ========

 Operating profit (loss):
   Beverages............................ $  1,852   $ 11,947   $12,164
   Restaurants..........................   (6,437)   (43,341)   28,532
                                         --------   --------   -------
     Segment operating profit (loss)....   (4,585)   (31,394)   40,696
 Interest expense.......................  (39,565)   (42,883)  (35,749)
 Non-operating income (expense), net....   (1,818)       562       (50)
 General corporate expenses.............     (171)      (189)     (149)
                                         --------   --------   -------
     Consolidated income (loss) before
       income taxes and extraordinary
       charge........................... $(46,139)  $(73,904)  $ 4,748
                                         ========   ========   =======

 Identifiable assets:
   Beverages............................ $195,272   $193,300  $202,618
   Restaurants..........................  187,199    162,223    73,223
                                         --------   --------  --------
     Total identifiable assets..........  382,471    355,523   275,841
   General corporate assets.............   11,749     14,119    11,635
                                         --------   --------  --------
     Consolidated assets................ $394,220   $369,642  $287,476
                                         ========   ========  ========



                                     51

<PAGE>


                 RC/ARBY'S CORPORATION AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                            December 28, 1997


                                            1995      1996      1997
                                          -------   --------   -------
                                                 (In thousands)
 Capital expenditures:
   Beverages............................  $ 1,474   $    591   $   517
   Restaurants..........................   47,444     15,584       963
                                          -------   --------   -------
     Consolidated capital expenditures..  $48,918   $ 16,175   $ 1,480
                                          =======   ========   =======

 Depreciation and amortization of properties:
   Beverages............................  $   841   $    999   $ 1,101
   Restaurants..........................   12,927     13,096       702
                                          -------   --------   -------
     Consolidated depreciation and
         amortization of properties.....  $13,768   $ 14,095   $ 1,803
                                          =======   ========   =======


(15) Condensed Consolidating Financial Information

  The following  condensed  consolidating  financial  statements set forth, in
separate columns,  (i) RCAC (parent company only), (ii) the aggregate of those
subsidiaries   which  have  fully  and   unconditionally   guaranteed   RCAC's
obligations  with respect to the Senior Notes as of the end of the  respective
years presented,  principally Royal Crown and TRG, (the  "Guarantors"),  (iii)
those  subsidiaries  which have not guaranteed RCAC's obligations with respect
to the Senior Notes, including ARDC, ARHC, AROC and certain other subsidiaries
of RCAC and TRG, (the  "Non-Guarantors"),  (iv) the aggregate of consolidating
eliminations  and  reclassifications  ("Eliminations")  and  (v)  consolidated
totals of RC/Arby's  Corporation  and  subsidiaries  ("Consolidated").  During
1995,  two of the  Company's  less  significant  subsidiaries  which  had  not
previously  been  guarantors  of RCAC's  obligations  under the  Senior  Notes
executed the necessary  instruments  under the Senior Note Indenture to become
guarantors.

                                     52

<PAGE>


                 RC/ARBY'S CORPORATION AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                            December 28, 1997

CONDENSED CONSOLIDATING BALANCE SHEETS
--------------------------------------

December 31, 1996:                                     Non-    Elimin- Consol-
------------------                 RCAC  Guarantors Guarantors  ations  idated
                                   ----  ---------- ----------  ------  ------
        ASSETS

Current assets:
   Cash......................... $    56   $ 4,890  $  2,465  $      -  $ 7,411
   Receivables, net.............       -    34,640       511         -   35,151
   Note receivable from 
     affiliate..................       -         -     1,650         -    1,650
   Inventories..................       -    11,462       648         -   12,110
   Assets held for sale.........       -    47,596    23,520         -   71,116
   Deferred income tax benefit..    (112)    8,504       176         -    8,568
   Prepaid expenses and other
    current assets..............      15     6,030       716         -    6,761
                                --------   -------  -------- --------- --------
      Total current assets......     (41)  113,122    29,686         -  142,767

Properties, net.................       -    11,926        17         -   11,943
Unamortized costs in excess of
  net assets of acquired 
  companies.....................       -   159,123         -         -  159,123
Intercompany receivables........ 214,343         -         -  (214,343)       -
Investment in subsidiaries...... (33,442)        -         -    33,442        -
Deferred income tax benefit.....  (6,990)   25,143    15,276         -   33,429
Deferred costs and other assets.   7,736    11,279     3,365         -   22,380
                                --------  --------  -------- --------- --------
                                $181,606  $320,593  $ 48,344 $(180,901)$369,642
                                ========  ========  ======== ========= ========

    LIABILITIES AND STOCKHOLDER'S DEFICIT

Current liabilities:
   Current portion of long-
     term debt.................. $     -   $17,802  $ 55,253  $      -  $73,055
   Notes payable to affiliates..  13,765         -         -         -   13,765
   Purchase option deposit......       -     6,700    (6,700)        -        -
   Accounts payable.............       -    22,996     1,031         -   24,027
   Due to affiliates............  (8,807)   21,090         -         -   12,283
   Accrued expenses.............  15,616    41,489     1,554         -   58,659
                                --------   -------  --------  --------  -------
    Total current liabilities...  20,574   110,077    51,138         -  181,789

Intercompany payables...........       -   205,495     8,918  (214,413)       -
Long-term debt.................. 275,000     2,991     3,119         -  281,110
Note payable to affiliate.......       -         -     6,700         -    6,700
Deferred income and other
  liabilities...................       -    15,184    (1,173)        -   14,011

Stockholder's equity (deficit):
   Common stock.................       1         3       535      (538)       1
   Additional paid-in capital...  44,300    70,932     7,861   (78,793)  44,300
   Accumulated deficit..........(158,269)  (84,089)  (28,754)  112,843 (158,269)
                                --------   -------  --------  -------- --------
    Total stockholder's deficit.(113,968)  (13,154)  (20,358)   33,512 (113,968)
                                --------   -------  --------  -------- --------
                                $181,606  $320,593  $ 48,344 $(180,901)$369,642
                                ========  ========  ========  ======== ========

                                            53

<PAGE>


                 RC/ARBY'S CORPORATION AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                            December 28, 1997



December 28, 1997:                                     Non-    Elimin- Consol-
------------------                 RCAC  Guarantors Guarantors  ations  idated
                                   ----  ---------- ----------  ------  ------
        ASSETS

Current assets:
   Cash and cash equivalents.... $ 3,609   $ 6,231  $    623  $      -  $10,463
   Receivables, net.............       -    33,782     1,209         -   34,991
   Note receivable from 
     affiliate..................       -         -     2,000         -    2,000
   Inventories..................       -    12,443         1         -   12,444
   Deferred income tax benefit.    9,618    11,915         4         -   21,537
   Prepaid expenses and other
    current assets..............      15     2,878       690         -    3,583
                                --------  --------  -------- --------- --------
      Total current assets......  13,242    67,249     4,527         -   85,018

Properties, net.................       -     8,805         -         -    8,805
Unamortized costs in excess
  of net assets of acquired
  companies.....................       -   153,396         -         -  153,396
Intercompany receivables........ 224,060    31,190         -  (255,250)       -
Investment in subsidiaries......     515         -         -      (515)       -
Deferred income tax benefit.....  (7,234)    7,962    19,518         -   20,246
Deferred costs and other assets.   5,626    12,779     1,606         -   20,011
                                --------  --------  -------- --------- --------
                                $236,209  $281,381  $ 25,651 $(255,765)$287,476
                                ========  ========  ======== ========= ========

    LIABILITIES AND STOCKHOLDER'S DEFICIT

Current liabilities:
   Current portion of long-
     term debt.................. $     -   $   813  $    743  $      -  $ 1,556
   Notes payable to affiliates..   1,000         -       200         -    1,200
   Accounts payable.............       -    13,579         5         -   13,584
   Due to affiliates............   1,463     6,599         -         -    8,062
   Accrued expenses.............  14,416    37,073       357         -   51,846
                                --------   -------  --------  --------  -------
    Total current liabilities...  16,879    58,064     1,305         -   76,248

Intercompany payables...........  31,190   211,212    12,918  (255,320)       -
Long-term debt.................. 275,000     1,052     3,554         -  279,606
Deferred income and other
  liabilities...................       -    15,912         -     2,570   18,482

Stockholder's equity (deficit):
   Common stock.................       1         3       534      (537)       1
   Additional paid-in capital...  73,690    70,932    38,294  (109,226)  73,690
   Accumulated deficit..........(160,253)  (75,799)  (30,651)  106,450 (160,253)
   Currency translation 
     adjustment.................    (298)        5      (303)      298     (298)
                                --------   -------  --------  --------  -------
    Total stockholder's 
      equity (deficit).......... (86,860)   (4,859)    7,874    (3,015) (86,860)
                                --------  --------  -------- --------- --------
                                $236,209  $281,381  $ 25,651 $(255,765)$287,476
                                ========  ========  ======== ========= ========


                                            54

<PAGE>


                 RC/ARBY'S CORPORATION AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                            December 28, 1997


CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
------------------------------------------------

Year ended December 31, 1995:                          Non-    Elimin- Consol-
-----------------------------      RCAC  Guarantors Guarantors  ations  idated
                                   ----  ---------- ----------  ------  ------
Revenues:
   Net sales....................$     -   $360,747  $ 28,844  $      - $389,591
   Royalties, franchise fees
    and other revenues..........      -     56,933    (1,141)        -   55,792
                                --------  --------  --------  -------- --------
                                       -   417,680    27,703         -  445,383
                                --------  --------  --------  -------- --------

Costs and expenses:
   Cost of sales................       -   216,191    23,679         -  239,870
   Advertising, selling and 
     distribution...............       -   105,864     2,720         -  108,584
   General and administrative...     171    86,645       222         -   87,038
   Reduction in carrying value of
    long-lived assets impaired or
    to be disposed of...........       -    11,527     3,120         -   14,647
                                --------  --------  --------  -------- --------
                                     171   420,227    29,741         -  450,139
                                --------  --------  --------  -------- --------
    Operating loss..............    (171)   (2,547)   (2,038)        -   (4,756)

Interest expense................ (33,742)   (2,164)   (3,659)        -  (39,565)
Allocation of interest expense
   from RCAC....................  23,985   (23,985)        -         -        -
Other income (expense), net.....      16    (2,138)      304         -   (1,818)
Equity in net losses of
  subsidiaries.................. (26,107)        -         -    26,107        -
                                --------  --------  --------  -------- --------

   Loss before income taxes..... (36,019)  (30,834)   (5,393)   26,107  (46,139)

Benefit from income taxes.......   2,369     8,608     1,512         -   12,489
                                --------  --------  --------  -------- --------

   Net loss.....................$(33,650) $(22,226) $ (3,881) $ 26,107 $(33,650)
                                ========  ========  ========  ======== ========

                                            55

<PAGE>


                 RC/ARBY'S CORPORATION AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                            December 28, 1997


Year ended December 31, 1996:                          Non-    Elimin- Consol-
-----------------------------      RCAC  Guarantors Guarantors  ations  idated
                                   ----  ---------- ----------  ------  ------
Revenues:
   Net sales....................$      -  $357,282 $ 51,818  $      -  $409,100
   Royalties, franchise fees
     and other revenues.........       -    59,321    (2,069)        -   57,252
                                --------  --------  --------  --------  -------
                                       -   416,603    49,749         -  466,352
                                --------  --------  --------  --------  -------

Costs and expenses:
   Cost of sales................       -   209,994    42,817         -  252,811
   Advertising, selling and
     distribution ..............       -    97,215     5,320         -  102,535
   General and administrative...     188    77,004       147         -   77,339
   Reduction in carrying value of
    long-lived assets impaired or
    to be disposed of...........       -    27,886    31,014         -   58,900
   Facilities relocation and 
     corporate restructuring....       -     6,350         -         -    6,350
                                --------  --------  --------  --------  -------
                                     188   418,449    79,298         -  497,935
                                --------  --------  --------  --------  -------
    Operating loss..............    (188)   (1,846)  (29,549)        -  (31,583)

Interest expense................ (32,869)   (2,457)   (7,557)        -  (42,883)
Allocation of interest expense
   from RCAC....................  23,592   (23,592)        -         -        -
Other income (expense), net.....       2       808      (248)        -      562
Equity in net losses of
  subsidiaries.................. (44,407)        -         -    44,407        -
                                --------  --------  --------  --------  -------

   Loss before income taxes..... (53,870)  (27,087)  (37,354)   44,407  (73,904)

Benefit from income taxes.......   3,312     5,562    14,472         -   23,346
                                --------  --------  --------  --------  -------

   Net loss.....................$(50,558) $(21,525) $(22,882) $ 44,407 $(50,558)
                                ========  ========  ========  ======== ========



                                            56

<PAGE>


                 RC/ARBY'S CORPORATION AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                            December 28, 1997



Year ended December 28, 1997:                          Non-    Elimin- Consol-
-----------------------------      RCAC  Guarantors Guarantors  ations  idated
                                   ----  ---------- ----------  ------  ------
Revenues:
   Net sales....................$      -  $204,653  $ 16,424  $      - $221,077
   Royalties, franchise fees
     and other revenues.........       -    66,883      (650)        -   66,233
                                 -------   -------  --------  --------  -------
                                       -   271,536    15,774         -  287,310
                                 -------   -------  --------  --------  -------

Costs and expenses:
   Cost of sales................       -    87,905    12,565         -  100,470
   Advertising, selling and 
     distribution...............       -    75,289     2,208         -   77,497
   General and administrative...     149    61,578        35         -   61,762
   Facilities relocation and
     corporate restructuring....       -     7,034         -         -    7,034
                                 -------   -------  --------  --------  -------
                                     149   231,806    14,808         -  246,763
                                 -------   -------  --------  --------  -------
    Operating profit (loss).....    (149)   39,730       966         -   40,547

Interest expense................ (31,043)   (1,900)   (2,806)        -  (35,749)
Allocation of interest expense
   from RCAC, net...............  20,219   (20,219)        -         -        -
Other income (expense), net.....      68       922    (1,079)       39      (50)
Equity in net earnings of
  subsidiaries..................   5,104         -         -    (5,104)       -
                                 -------   -------  --------  --------  -------
   Income (loss) before income
     taxes and extraordinary 
     charge.....................  (5,801)   18,533    (2,919)   (5,065)   4,748

Benefit from (provision for)
   income taxes.................   3,817    (9,918)    1,169         -   (4,932)
                                 -------   -------  --------  --------  -------

   Income (loss) before
    extraordinary charge........  (1,984)    8,615    (1,750)   (5,065)    (184)

Extraordinary charge............       -         -    (1,800)        -   (1,800)
                                 -------   -------  --------  --------  -------

   Net income (loss)............ $(1,984)  $ 8,615  $ (3,550) $ (5.065) $(1,984)
                                 =======   =======  ========  ========  =======


                                            57

<PAGE>


                 RC/ARBY'S CORPORATION AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                            December 28, 1997


CONDENSED CONSOLIDATING STATEMENTS OF STOCKHOLDER'S EQUITY (DEFICIT)

                                                       Non-    Elimin- Consol-
                                   RCAC  Guarantors Guarantors  ations  idated
                                   ----  ---------- ----------  ------  ------
Common stock:
   Balance at December 31, 1994. $     1   $     2  $    531  $   (533) $     1
     Capital contributions......       -         -         6        (6)       -
     Designation of certain Non-
       Guarantors as Guarantors.       -         1        (2)        1        -
                                 -------   -------  --------  --------  -------
   Balance at December 31, 1995
     and 1996...................       1         3       535      (538)       1
     Capital contributions......       -         -         2        (2)       -
     Dissolution of subsidiaries       -         -        (3)        3        -
                                 -------   -------  --------  --------  -------
   Balance at December 28, 1997. $     1   $     3  $    534  $   (537) $     1
                                 =======   =======  ========  ========  =======

Additional paid-in capital:
   Balance at December 31, 1994. $35,435   $67,298  $  6,036  $(73,334) $35,435
   Capital contributions........   8,865         -    14,733   (14,733)   8,865
   Return of capital............       -         -    (5,500)    5,500        -
   Designation of certain Non-
     Guarantors as Guarantors...       -     3,634    (3,658)       24        -
                                 -------   -------  --------  --------  -------
   Balance at December 31, 1995.  44,300    70,932    11,611   (82,543)  44,300
     Return of capital..........       -         -    (3,750)    3,750        -
                                 -------   -------  --------  --------  -------
   Balance at December 31, 1996.  44,300    70,932     7,861   (78,793)  44,300
     Capital contributions......  29,390         -    32,322   (32,322)  29,390
     Dissolution of subsidiaries       -         -    (1,889)    1,889        -
                                 -------   -------  --------  --------  -------
   Balance at December 28, 1997. $73,690   $70,932  $ 38,294 $(109,226) $73,690
                                 =======   =======  ========  ========= =======

Accumulated deficit:
   Balance at December 31, 1994.$(74,061) $(21,908) $ (5,688) $ 27,596 $(74,061)
     Designation of certain Non-
       Guarantors as Guarantors.       -    (3,697)    3,697         -        -
     Dividend...................       -   (14,733)        -    14,733        -
     Net loss................... (33,650)  (22,226)   (3,881)   26,107  (33,650)
                                --------   -------  --------  --------  -------
   Balance at December 31, 1995.(107,711)  (62,564)   (5,872)   68,436 (107,711)
     Net loss................... (50,558)  (21,525)  (22,882)   44,407  (50,558)
                                --------   -------  --------  --------  -------
   Balance at December 31, 1996.(158,269)  (84,089)  (28,754)  112,843 (158,269)
     Net loss...................  (1,984)    8,615    (3,550)   (5,065)  (1,984)
     Dividend...................       -      (325)        -       325        -
     Dissolution of subsidiaries       -         -     1,653    (1,653)       -
                                --------   -------  --------  --------  -------
   Balance at December 28,
     1997......................$(160,253) $(75,799) $(30,651) $106,450$(160,253)
                                ========  ========  ========  ======== ========

Currency translation adjustment:
   Balance at December 31,
     1994, 1995 and 1996.......  $     -   $     -  $      -  $      -  $     -
     Net change in currency
       translation adjustment..     (298)        5      (303)      298     (298)
                                 -------   -------  --------  --------  -------
   Balance at December 28,1997.  $  (298)  $     5  $   (303) $    298  $  (298)
                                 =======   =======  ========  ========  =======

                                            58

<PAGE>


                 RC/ARBY'S CORPORATION AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                            December 28, 1997



CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

Year ended December 31, 1995:                          Non-    Elimin- Consol-
-----------------------------      RCAC  Guarantors Guarantors  ations  idated
                                   ----  ---------- ----------  ------  ------

Net cash provided by (used in)
  operating activities..........$(24,449)  $17,901  $  6,571  $      -  $    23
                                 -------   -------  --------  --------  -------

Cash flows from investing activities:
   Capital expenditures.........       -   (32,442)  (16,114)        -  (48,556)
   Business acquisitions........       -   (14,335)        -         -  (14,335)
   Proceeds from sales of
     properties.................       -    33,599   (31,602)        -    1,997
   Investment in affiliate......       -    (1,000)        -         -   (1,000)
   Return of capital............   5,500         -    (5,500)        -        -
   Other........................      (6)        -         6         -        -
                                 -------   -------  --------  --------  -------
Net cash provided by (used in)
   investing activities.........   5,494   (14,178)  (53,210)        -  (61,894)
                                 -------   -------  --------  --------  -------

Cash flows from financing activities:
   Proceeds from long-term debt.       -     2,950    58,670         -   61,620
   Net borrowings from (repayments
     to) affiliates.............   9,576    (4,826)    1,200         -    5,950
   Capital contribution.........   8,865         -         -         -    8,865
   Repayments of long-term debt.       -    (2,918)     (440)        -   (3,358)
   Deferred financing costs.....       -         -    (3,347)        -   (3,347)
   Purchase option deposit......       -     6,700    (6,700)        -        -
                                 -------   -------  --------  --------  -------
Net cash provided by financing
  activities....................  18,441     1,906    49,383         -   69,730
                                 -------   -------  --------  --------  -------

Net increase (decrease) in cash.    (514)    5,629     2,744         -    7,859
Designation of certain Non-
  Guarantors as Guarantors......       -        30       (30)        -        -
Cash at beginning of year.......     888       225       772         -    1,885
                                 -------   -------  --------  --------  -------
Cash at end of year............. $   374   $ 5,884  $  3,486  $      -  $ 9,744
                                 =======   =======  ========  ========  =======

                                            59

<PAGE>


                 RC/ARBY'S CORPORATION AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                            December 28, 1997




Year ended December 31, 1996:                          Non-    Elimin- Consol-
-----------------------------      RCAC  Guarantors Guarantors  ations  idated
                                   ----  ---------- ----------  ------  ------

Net cash provided by (used in)
   operating activities......... $(4,982)  $18,354  $     95  $      -  $13,467
                                 -------   -------  --------  --------  -------

Cash flows from investing activities:
   Capital expenditures.........       -   (13,543)   (2,632)        -  (16,175)
   Business acquisitions........       -    (4,754)    2,782         -   (1,972)
   Proceeds from sales of
     properties.................       -     2,591    (1,183)        -    1,408
   Return of capital............   3,750         -    (3,750)        -        -
                                 -------   -------  --------  --------  -------
Net cash provided by (used in)
   investing activities.........   3,750   (15,706)   (4,783)        -  (16,739)
                                 -------   -------  --------  --------  -------

Cash flows from financing activities:
   Proceeds from long-term debt.       -         -     4,027         -    4,027
   Net borrowings from (repayments
     to) affiliates.............     914    (1,074)    3,850         -    3,690
   Repayments of long-term debt.       -    (2,568)   (3,885)        -   (6,453)
   Deferred financing costs.....       -         -      (325)        -     (325)
                                 -------   -------  --------  --------  -------
Net cash provided by (used in)
   financing activities.........     914    (3,642)    3,667         -      939
                                 -------   -------  --------  --------  -------

Net decrease in cash............    (318)     (994)   (1,021)        -   (2,333)
Cash at beginning of year.......     374     5,884     3,486         -    9,744
                                 -------   -------  --------  --------  -------
Cash at end of year............. $    56   $ 4,890  $  2,465  $      -  $ 7,411
                                 =======   =======  ========  ========  =======


                                            60

<PAGE>


                 RC/ARBY'S CORPORATION AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                            December 28, 1997


Year ended December 28, 1997:                          Non-    Elimin- Consol-
-----------------------------      RCAC  Guarantors Guarantors  ations  idated
                                   ----  ---------- ----------  ------  ------

Net cash provided by (used in)
  operating activities..........$(13,898)  $18,152  $ (8,378) $      -  $(4,124)
                                --------   -------  --------  --------  -------

Cash flows from investing activities:
   Proceeds from sales of
    properties and businesses...       -     3,175         -         -    3,175
   Capital expenditures.........       -    (1,421)      (59)        -   (1,480)
                                 -------   -------  --------  --------  -------
Net cash provided by (used in)
   investing activities.........       -     1,754       (59)        -    1,695
                                 -------   -------  --------  --------  -------

Cash flows from financing activities:
   Capital contribution.........       -         -     6,211         -    6,211
   Net borrowings from (repayments 
     to) affiliates.............  17,451    (9,341)   (4,575)        -    3,535
   Return of purchase option
     deposit....................       -    (6,500)    6,500         -        -
   Repayments of long-term debt.       -    (2,724)   (1,541)        -   (4,265)
                                 -------   -------  --------  --------  -------
Net cash provided by (used in)
   financing activities.........  17,451   (18,565)    6,595         -    5,481
                                 -------   -------  --------  --------  -------

Net increase (decrease) in cash.   3,553     1,341    (1,842)        -    3,052
Cash at beginning of year.......      56     4,890     2,465         -    7,411
                                 -------   -------  --------  --------  -------
Cash and cash equivalents
    at end of year.............. $ 3,609   $ 6,231  $    623  $      -  $10,463
                                 =======   =======  ========  ========  =======

                                            61

<PAGE>



Item 9. Changes in and Disagreements with Accountants on Accounting and 
        Financial Disclosure.

    Not applicable.


                                   PART III

Items 10, 11, 12 and 13.

    Items 10, 11, 12 and 13 are omitted  because RCAC meets the conditions set
forth in General Instruction J(1)(a) and (b) of Form 10-K.

                                   PART  IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

    (a) 1. Financial Statements

           See Index to Financial Statements (Item 8)

        2. Financial Statement Schedules:

           All  schedules are omitted  because they are not  applicable or the
           required  information is contained  elsewhere in "Item 8. Financial
           Statements and Supplementary Data".

        3. Exhibits:

           Copies of the following  exhibits are available at a charge of $.25
           per  page  upon  written  request  to the  Secretary  of  RC/Arby's
           Corporation  at 1000  Corporate  Drive,  Fort  Lauderdale,  Florida
           33334.


           Exhibit
             No.                   Description

            3.1   Certificate  of  Incorporation   of  RC/Arby's   Corporation
                  ("RCAC"), incorporated herein by reference to RCAC's Current
                  Report on Form 8-K  dated  November  14,  1996 (SEC file No.
                  0-20286).

            3.2   Articles  of  Amendment  of  RCAC  incorporated   herein  by
                  reference  to Exhibit 3.2 to the Annual  Report on Form 10-K
                  of RCAC for the year  ended  December  31,  1993 (the  "1993
                  10-K") (SEC file No. 0-20286).

            3.3   Certificate  of Merger  Merging  RCAC into RCC  Investments,
                  Inc.  incorporated herein by reference to Exhibit 3.3 to the
                  1993 10-K (SEC file No. 0-20286).

            3.4   By-Laws of RCAC, incorporated herein by reference to Exhibit
                  3.2 to RCAC's  Current Report on Form 8-K dated November 14,
                  1996 (SEC file No. 0-20286).

            3.5   Certificate of Incorporation  of Royal Crown Company,  Inc.,
                  then  known  as  Royal  Crown  Cola  Co.  ("Royal   Crown"),
                  incorporated  herein by  reference  to Exhibit 3.3 to RCAC's
                  Registration Statement on Form S-1 (the "S-1") dated May 13,
                  1993 (Registration No. 33-62778).

                                      62

<PAGE>



            3.6   Certificate of Amendment of Certificate of  Incorporation of
                  Royal Crown incorporated  herein by reference to Exhibit 3.6
                  to the 1993 10-K (SEC file No. 0-20286).

            3.7   By-Laws of Royal Crown, incorporated herein by reference  to 
                  Exhibit 3.4 to the S-1 (Registration No. 33-62778).

            3.8   Restated   Certificate  of  Incorporation  of  Arby's,  Inc.
                  ("Arby's"), incorporated herein by reference to Exhibit  3.5
                  to the S-1 (Registration No. 33-62778).

            3.9   Amended Code of Regulations of Arby's,  incorporated  herein
                  by  reference  to Exhibit 3.6 to the S-1  (Registration  No.
                  33-62778).

            3.10  Certificate of Merger Merging Arby's, Inc. into Arby's Merger
                  Corp. incorporated herein by reference to Exhibit 3.10 to the
                  1993 10-K (SEC file No. 0-20286).

            4.1   Indenture  dated as of  August  1, 1993  among  RCAC,  Royal
                  Crown, Arby's and The Bank of New York, as Trustee, relating
                  to the 9-3/4% Senior  Secured  Notes Due 2000,  incorporated
                  herein by reference to Exhibit 4.2 to the Triarc  Companies,
                  Inc.  ("Triarc")  Registration  Statement  on Form S-4 dated
                  October 22, 1997 (SEC file No. 1-2207).

            4.2   Master Agreement dated as of May 5,  1997,  among  Franchise 
                  Finance Corporation of America, FFCA Acquisition Corporation,
                  FFCA   Mortgage   Corporation,  Triarc,   Arby's  Restaurant
                  Development Corporation ("ARDC"), Arby's Restaurant  Holding
                  Company  ("ARHC"),  Arby's  Restaurant   Operations  Company 
                  ("AROC"),  Arby's,   RTM Operating  Company  ("RTMOC"),  RTM
                  Development  Company,  RTM Partners,  Inc.  ("Holdco"),  RTM
                  Holding Company, Inc. ("RTM Parent"), RTM Management Company,
                  LLC ("RTMM") and RTM, Inc. ("RTM"),  incorporated herein  by
                  reference to Exhibit 4.16 to Triarc's Registration Statement
                  on Form S-4 dated October 22, 1997 (SEC file No. 1-2207).

            10.1  Tax Sharing  Agreement  dated as of April 23,  1993  between
                  RCAC and Triarc, incorporated herein by reference to Exhibit
                  10.1 to the S-1 (Registration No. 33-62778).

            10.2  Management  Services  Agreement  dated as of April 23,  1993
                  between  Triarc  and  Royal  Crown,  incorporated  herein by
                  reference  to  Exhibit  10.3 to  Amendment  No. 1 to the S-1
                  dated July 12, 1993 (the  "Amendment  No. 1")  (Registration
                  No. 33-62778).

            10.3  Management  Services  Agreement  dated as of April 23,  1993
                  between Triarc and Arby's,  incorporated herein by reference
                  to  Exhibit  10.4  to  Amendment  No.  1  (Registration  No.
                  33-62778).

            10.4  Employment  Agreement  dated as of April 24, 1993 among John
                  C.  Carson,  Royal Crown and Triarc  incorporated  herein by
                  reference  to Exhibit 8 to Triarc's  Current  Report on Form
                  8-K dated April 23, 1993 (SEC file No.1-2207).


                                      63

<PAGE>



            10.5  Concentrate  Sales  Agreement  dated as of January  28, 1994
                  between  Royal  Crown  and  Cott   Corporation--Confidential
                  treatment  has been granted for portions of the  agreement--
                  incorporated   herein  by  reference  to  Exhibit  10.12  to
                  Amendment No. 1 to Triarc's  Registration  Statement on Form
                  S-4 dated March 11, 1994 (SEC file No. 1-2207).

            10.6  Stock  Purchase  Agreement  dated  February  13, 1997 by and
                  among Arby's, ARDC, ARHC, AROC, Holdco and RTM, incorporated
                  herein by reference to Exhibit 10.1 to RCAC's Current Report
                  of Form 8-K dated February 20, 1997 (SEC file No. 0-20286).

            10.7  Option  granted by Holdco in favor of ARHC,  together with a
                  schedule   identifying   other  documents  omitted  and  the
                  material   details   in   which   such   documents   differ,
                  incorporated   herein  by  reference  to  Exhibit  10.30  to
                  Triarc's  Registration  Statement on Form S-4 dated  October
                  22, 1997 (SEC file No. 1-2207).

            10.8  Guaranty dated as of May 5, 1997 by RTM, RTM Parent, Holdco,
                  RTMM and  RTMOC in favor of  Arby's,  ARDC,  ARHC,  AROC and
                  Triarc, incorporated herein by reference to Exhibit 10.31 to
                  Triarc's  Registration  Statement on Form S-4 dated  October
                  22, 1997 (SEC file No. 1-2207).

            27.1  Financial  Data Schedule for the fiscal year ended  December
                  28,  1997,   submitted  to  the   Securities   and  Exchange
                  Commission in electronic format.*

            *     Filed herewith

      (b) Reports on Form 8-K:

            The  registrant  did not file any  reports  on Form 8-K during the
            three months ended December 28, 1997.

      (d) Financial Statements:

            Consolidated  financial  statements  of Arby's as of December  31,
            1996 and  December  28, 1997 and for the years ended  December 31,
            1995 and 1996 and the fiscal year ended December 28, 1997.

            Consolidated  financial  statements  of Royal Crown as of December
            31, 1996 and  December  28, 1997 and for the years ended  December
            31, 1995 and 1996 and the fiscal year ended December 28, 1997.

                                      64

<PAGE>


                                  SIGNATURES


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

                                          RC/ARBY'S CORPORATION
                                               (Registrant)


                                                /s/ NELSON PELTZ
                                          By:..................................
                                                Nelson Peltz
Dated:  April 9, 1998                           Chairman and Chief Executive
                                                Officer

      Pursuant to the  requirements  of the  Securities  Exchange Act of 1934,
this report has been signed below on April 9, 1998 by the following persons on
behalf of the registrant in the capacities indicated.

      Signature                                       Titles
      ---------                                       ------



      /s/ NELSON PELTZ                          Chairman and Chief Executive
 ................................                Officer, and Director
      (Nelson Peltz)                            (Principal Executive Officer)



      /s/ PETER W. MAY                          President and Chief Operating
 ................................                Officer, and Director
      (Peter W. May)                            (Principal Operating Officer)



      /s/ JOHN L. BARNES, JR.                   Executive Vice President and
 ................................                Chief Financial Officer
      (John L. Barnes, Jr.)                     (Principal Financial Officer)



      /s/ FRED H. SCHAEFER                      Vice President and Chief
 ................................                Accounting Officer
      (Fred H. Schaefer)                        (Principal Accounting Officer)



      /s/ ALEXANDER E. FISHER                   Director
 ................................
      (Alexander E. Fisher)

                                      65

<PAGE>






                                 ARBY'S, INC.
                                 ------------
                        CONSOLIDATED FINANCIAL STATEMENTS
                        ---------------------------------
                               DECEMBER 28, 1997
                               -----------------






<PAGE>



                  INDEX TO CONSOLIDATED FINANCIAL STATEMENTS




                                                                          PAGE
                                                                          ----

Independent Auditors' Report...............................................  1
Consolidated Balance Sheets as of December 31, 1996 and December 28, 1997..  2
Consolidated Statements of Operations for the years ended
    December 31, 1995 and 1996 and the fiscal year ended December 28, 1997.  3
Consolidated Statements of Stockholder's Equity for the years ended
    December 31, 1995 and 1996 and the fiscal year ended December 28, 1997.  4
Consolidated Statements of Cash Flows for the years ended
    December 31,1995 and 1996 and the fiscal year ended December 28, 1997..  5
Notes to Consolidated Financial Statements.................................  7

                                     (i)


<PAGE>










INDEPENDENT AUDITORS' REPORT



To the Board of Directors and Stockholder of
Arby's, Inc.:

   We have audited the  accompanying  consolidated  balance  sheets of Arby's,
Inc. (a wholly-owned  subsidiary of RC/Arby's Corporation) and subsidiaries as
of December  28, 1997 and  December  31,  1996,  and the related  consolidated
statements of operations,  stockholder's equity and cash flows for each of the
three  fiscal years in the period ended  December  28, 1997.  These  financial
statements  are  the   responsibility   of  Arby's,   Inc.   management.   Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

   In our opinion,  such consolidated  financial statements present fairly, in
all material respects, the financial position of Arby's, Inc. and subsidiaries
as of  December  28,  1997 and  December  31,  1996 and the  results  of their
operations  and their  cash  flows for each of the three  fiscal  years in the
period  ended  December  28,  1997  in  conformity  with  generally   accepted
accounting principles.




DELOITTE & TOUCHE LLP
Certified Public Accountants

Fort Lauderdale, Florida
March 10, 1998

                                      1

<PAGE>



                                 ARBY'S, INC.
                          CONSOLIDATED BALANCE SHEETS


                                                       DECEMBER 31, DECEMBER 28,
                                                          1996        1997
                                                          ----        ----
                                                            (IN THOUSANDS)
                                    ASSETS

Current assets:
  Cash and cash equivalents ($-0- and $3,500,000)........  $ 4,090   $ 5,330
  Receivables, net (Note 4)..............................    6,821     6,761
  Inventories............................................    2,157         -
  Assets held for sale (Note 3)..........................   47,596         -
  Deferred income tax benefit (Note 7)...................    4,026     5,782
  Prepaid expenses and other current assets..............    2,341       228
                                                          --------   -------
    Total current assets.................................   67,031    18,101

Properties, net (Note 4).................................    6,699     4,249
Unamortized costs in excess of net assets
  of acquired companies (Note 4).........................   21,666    20,856
Note receivable from Parent (Notes 3 and 12).............        -    31,190
Deferred income tax benefit (Note 7).....................   15,840        80
Deferred costs and other assets (Note 4).................    7,324     5,996
                                                          --------   -------
                                                          $118,560   $80,472
                                                          ========   =======

            LIABILITIES AND STOCKHOLDER'S EQUITY

Current liabilities:
  Current portion of long-term debt (Note 5).............  $17,802   $   813
  Due to Parent and affiliates, net (Notes 7 and 12).....   21,090     6,599
  Accounts payable.......................................   10,306     2,730
  Purchase option deposit from affiliate (Note 12).......    6,700         -
  Accrued expenses (Notes 4 and 7).......................   20,849    19,683
                                                          --------   -------
    Total current liabilities............................   76,747    29,825

Long-term debt (Note 5)..................................    2,991     1,052
Deferred income and other liabilities....................   14,258    11,109
Commitments and contingencies (Notes 7, 9, 10 and 11)

Stockholder's equity (Note 5):
  Common stock, $1.00 par value; 1,000 shares authorized,
    issued and outstanding...............................        1         1
  Additional paid-in capital.............................   24,872    24,872
  Retained earnings (accumulated deficit)................     (309)   13,608
  Currency translation adjustment........................        -         5
                                                          --------   -------
    Total stockholder's equity...........................   24,564    38,486
                                                          --------   -------
                                                          $118,560   $80,472
                                                          ========   =======

         See accompanying notes to consolidated financial statements.


                                        2

<PAGE>



                                   ARBY'S, INC.
                     CONSOLIDATED STATEMENTS OF OPERATIONS

                                                             YEAR ENDED
                                                  ------------------------------
                                                    DECEMBER 31,
                                                  ----------------- DECEMBER 28,
                                                    1995      1996       1997
                                                    ----      ----       ----
                                                         (IN THOUSANDS)
Revenues:
   Net sales.....................................$188,144   $179,275   $ 57,818
   Royalties.....................................  51,277     55,708     63,038
   Franchise fees................................   4,648      2,834      3,149
   Other revenues................................   1,008        779        696
                                                  -------   --------   --------
                                                  245,077    238,596    124,701
                                                  -------   --------   --------

Costs and expenses:
   Cost of sales................................. 159,119    148,374     46,695
   Advertising and selling (Note 1)..............  19,638     20,292      7,215
   General and administrative....................  59,204     53,288     37,997
   Reduction in carrying value of long-lived
      assets impaired or to be disposed of
      (Note 3)...................................  11,527     27,886          -
   Corporate restructuring (Note 8)..............       -      2,400      5,597
                                                  -------   --------   --------
                                                  249,488    252,240     97,504
                                                  -------   --------   --------

      Operating profit (loss)....................  (4,411)   (13,644)    27,197

Interest expense.................................  (2,188)    (2,457)    (1,806)
Allocation of interest expense, net of
  interest income, from Parent (Note 12).........  (3,985)    (3,592)      (219)
Other income (expense), net......................  (1,341)       522       (836)
                                                  -------    -------    -------

      Income (loss) before income taxes ......... (11,925)   (19,171)    24,336

Benefit from (provision for) income taxes (Note 7)  3,764      4,606    (10,094)
                                                  -------    -------    -------

      Net income (loss).......................... $(8,161)   $(14,565)  $14,242
                                                  =======    ========   =======

         See accompanying notes to consolidated financial statements.


                                        3

<PAGE>



                                   ARBY'S, INC.
                  CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
                  FOR THE THREE YEARS ENDED DECEMBER 28, 1997




<TABLE>
<CAPTION>




                                 COMMON STOCK                  RETAINED
                             -------------------  ADDITIONAL   EARNINGS       CURRENCY
                               NUMBER              PAID-IN   (ACCUMULATED    TRANSLATION
                              OF SHARES   AMOUNT   CAPITAL      DEFICIT)      ADJUSTMENT
                              ---------   -----    ------     ----------      ---------
                                                      (DOLLARS IN THOUSANDS)


<S>                             <C>     <C>      <C>          <C>           <C>
Balance at December 31, 1994.    1,000   $     1   $ 24,872     $37,150      $       -
   Dividend (Note 12)........        -         -          -     (14,733)             -
   Net loss..................        -         -          -      (8,161)             -
                              --------   -------   --------     -------      ---------
Balance at December 31, 1995.    1,000         1     24,872      14,256              -
   Net loss..................        -         -          -     (14,565)             -
                              --------   -------   --------     -------      ---------
Balance at December 31, 1996.    1,000         1     24,872        (309)             -
   Dividend (Note 12)........        -         -          -        (325)             -
   Net income................        -         -          -      14,242              -
   Net change in currency
     translation adjustment..        -         -          -           -              5
                              --------   -------   --------     -------      ---------
Balance at December 28, 1997.    1,000   $     1   $ 24,872     $13,608      $       5
                              ========   =======   ========     =======      =========

</TABLE>

         See accompanying notes to consolidated financial statements.


                                          4

<PAGE>




                                 ARBY'S, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                            YEAR ENDED
                                                   ----------------------------
                                                      DECEMBER 31,
                                                    --------------- DECEMBER 28,
                                                    1995       1996     1997
                                                    ----       ----     ----
                                                          (IN THOUSANDS)

Cash flows from operating activities:
   Net income (loss).............................  $ (8,161) $(14,565) $14,242
   Adjustments to reconcile net income (loss)
     to net cash provided by operating activities:
      Amortization of costs in excess of net assets
        of acquired companies and other intangibles   3,334     2,919    1,966
      Depreciation and amortization of properties    11,098     8,947      702
      Reduction in carrying value of long-lived
        assets...................................    11,527    27,886        -
      Provision for corporate restructuring......         -     2,400    5,597
      Payments on corporate restructuring........         -         -   (3,555)
      Provision for doubtful accounts............       566       424      582
      Provision for (benefit from) deferred
        income taxes.............................    (3,524)  (11,332)  14,004
      Other, net.................................    (3,290)     (518)  (2,122)
      Changes in operating assets and liabilities:
        Decrease (increase) in:
          Receivables............................    (1,173)     (279)   1,323
          Inventories............................       444        46      219
          Prepaid expenses and other current assets     675    (1,168)   1,925
        Increase (decrease) in accounts payable and
          accrued expenses.......................       832     2,994  (16,398)
                                                   --------  --------  -------
Net cash provided by operating activities........    12,328    17,754   18,485
                                                   --------  --------  -------

Cash flows from investing activities:
   Proceeds from sales of properties.............    33,012     2,563    2,224
   Capital expenditures..........................   (30,968)  (12,952)    (904)
   Business acquisitions.........................   (11,412)   (4,754)       -
                                                   --------  --------  -------
Net cash provided by (used in) investing
   activities......................................  (9,368)  (15,143)   1,320
                                                   --------  --------  -------

Cash flows from financing activities:
   Net repayments to Parent and affiliates.......    (4,826)   (1,074)  (9,341)
   Purchase option deposit received from
      (returned to) affiliate....................     6,700         -   (6,500)
   Repayments of long-term debt..................    (2,918)   (2,568)  (2,724)
   Proceeds from issuance of long-term debt......     2,950         -        -
                                                   --------  --------  -------
Net cash provided by (used in) financing activities   1,906    (3,642) (18,565)
                                                   --------  --------  -------

Net increase (decrease) in cash .................     4,866    (1,031)   1,240
Cash at beginning of year........................       255     5,121    4,090
                                                   --------  --------  -------
Cash and cash equivalents at end of year.........  $  5,121  $  4,090  $ 5,330
                                                   ========  ========  =======

                                  (continued)

                                        5

<PAGE>




                                  ARBY'S, INC.
               CONSOLIDATED STATEMENTS OF CASH FLOWS - (CONTINUED)


                                                            YEAR ENDED
                                                   ----------------------------
                                                      DECEMBER 31,
                                                    --------------- DECEMBER 28,
                                                    1995       1996     1997
                                                    ----       ----     ----

Supplemental  disclosures of cash flow information:
  Cash paid during the year for:
     Interest..................................   $ 2,537   $  2,440   $ 1,810
                                                  =======   ========   =======
     Income taxes..............................   $   685   $    142   $   633
                                                  =======   ========   =======

Supplemental disclosures of noncash investing 
  and financing activities:
     Total capital expenditures................   $31,330   $ 12,952   $   904
     Amounts representing capitalized leases...      (362)         -         -
                                                  -------   --------   -------
      Capital expenditures paid in cash........   $30,968   $ 12,952   $   904
                                                  =======   ========   =======

   As described in Note 12, in May 1995 Arby's,  Inc. made a non-cash dividend
aggregating  $14,733,000 to the Parent  consisting of the land,  buildings and
related  improvements  of 39  restaurants.  As described in Notes 3 and 12, in
connection  with the sale of all of its 274 company owned  restaurants  to the
Parent in May 1997, Arby's,  Inc. received demand promissory notes aggregating
$31,190,000 from the Parent and the Parent assumed  $14,955,000 in capitalized
lease obligations.  Arby's, Inc. also recorded a $325,000 non-cash dividend to
the Parent in connection with such sale.

          See accompanying notes to consolidated financial statements.


                                        6

<PAGE>


                                 ARBY'S, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               DECEMBER 28, 1997




(1)SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

   The consolidated  financial statements include the accounts of Arby's, Inc.
(together with its  subsidiaries,  d/b/a Triarc  Restaurant  Group - "TRG"), a
wholly-owned  subsidiary of RC/Arby's  Corporation (the "Parent"),  which is a
direct  wholly-owned  subsidiary of CFC Holdings Corp. ("CFC Holdings") and an
indirect  wholly-owned  subsidiary of Triarc Companies,  Inc. ("Triarc").  All
significant  intercompany  balances and  transactions  have been eliminated in
consolidation.  The Parent has certain  wholly-owned  subsidiaries  other than
TRG,  including  Royal  Crown  Company,   Inc.  ("Royal  Crown")  and  certain
subsidiaries   which,  prior  to  the  May  1997  sale  of  all  company-owned
restaurants,  owned and/or operated  Arby's  restaurants,  principally  Arby's
Restaurant Development Corporation ("ARDC"), Arby's Restaurant Holding Company
("ARHC") and Arby's Restaurant Operations Company ("AROC").

CHANGE IN FISCAL YEAR

   Effective January 1, 1997, TRG changed its fiscal year from a calendar year
to a year  consisting  of 52 or 53  weeks  ending  on the  Sunday  closest  to
December 31. In accordance therewith, TRG's 1997 fiscal year commenced January
1, 1997 and ended December 28, 1997. Such period is referred to herein as "the
year ended  December 28,  1997" or "1997".  December 28, 1997 and December 31,
1996  are  referred  to  herein  as  "Year-End  1997"  and  "Year-End   1996",
respectively.

CASH EQUIVALENTS

   All highly liquid  investments with a maturity of three months or less when
acquired are considered  cash  equivalents.  TRG typically  invests its excess
cash in a U.S. Treasury money market fund.

INVENTORIES

   Inventories,  consisting  principally of raw materials,  were stated at the
lower of cost (determined on the first-in, first-out basis) or market.

PROPERTIES AND DEPRECIATION AND AMORTIZATION

   Properties   are  stated  at  cost  less   accumulated   depreciation   and
amortization.  Depreciation and amortization is computed on the  straight-line
basis  using the  estimated  useful  lives of the  related  major  classes  of
properties:  15-20  years  for  buildings  and 3-8  years  for  machinery  and
equipment.  Leased assets capitalized and leasehold improvements are amortized
over  the  shorter  of  their  estimated  useful  lives  or the  terms  of the
respective leases.

AMORTIZATION OF INTANGIBLES

   Costs in excess of net assets of acquired companies  ("Goodwill") are being
amortized on the straight-line basis over 31 to 40 years.  Goodwill associated
with certain  restaurant  acquisitions  was  amortized  over 15 years prior to
being written off as of December 31, 1996.  Trademarks are being  amortized on
the  straight-line   basis   over  15  years.  Deferred  financing  costs  are

                                      7

<PAGE>


                                 ARBY'S, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                               DECEMBER 28, 1997



being  amortized  as interest  expense over the lives of the  respective  debt
using the interest rate method.

IMPAIRMENTS

   Intangible Assets

     The amount of  impairment,  if any, in  unamortized  Goodwill is measured
based on projected future results of operations.  To the extent future results
of  operations  through  the  period  such  Goodwill  is being  amortized  are
sufficient to absorb the related  amortization,  TRG has deemed there to be no
impairment of Goodwill.

   Long-Lived Assets

   Effective  October 1, 1995 TRG adopted  Statement of  Financial  Accounting
Standards  ("SFAS") No. 121,  "Accounting  for the  Impairment  of  Long-Lived
Assets and for  Long-Lived  Assets to Be Disposed Of". This standard  requires
that long-lived assets and certain  identifiable  intangibles held and used by
an  entity  be  reviewed  for  impairment   whenever   events  or  changes  in
circumstances  indicate  that  the  carrying  amount  of an  asset  may not be
recoverable (see Note 3).

FOREIGN CURRENCY TRANSLATION

   Financial  statements of TRG's Canadian subsidiary are prepared in Canadian
dollars and  translated  into United  States  dollars at the current  exchange
rates  for  assets  and  liabilities  and an  average  rate  for the  year for
revenues,  costs  and  expenses.  Net  gains  and  losses  resulting  from the
translation of such financial  statements are charged or credited  directly to
the "Currency translation adjustment" component of "Stockholder's equity".

ADVERTISING COSTS

   TRG accounts for advertising  production costs by expensing such production
costs the first time the related  advertising  takes place.  Advertising costs
amounted to  $19,072,000,  $19,868,000 and $6,633,000 for 1995, 1996 and 1997,
respectively.

INCOME TAXES

   TRG is  included in the  consolidated  Federal  income tax return  filed by
Triarc.  Under a tax sharing  agreement  between  Triarc and the  Parent,  TRG
provides for Federal  income taxes on the same basis as if it filed a separate
consolidated  return.  Deferred income taxes are provided to recognize the tax
effect of temporary  differences  between the bases of assets and  liabilities
for tax and financial statement purposes.

FRANCHISE FEES AND ROYALTIES

   Franchise  fees are  recognized  as income when a franchised  restaurant is
opened.  Franchise fees for multiple area development agreements represent the
aggregate  of the  franchise  fees for the number of  restaurants  in the area
development and are recognized as income when each restaurant is opened in the

                                      8

<PAGE>


                                 ARBY'S, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                               DECEMBER 28, 1997



same manner as franchise fees for individual restaurants.  Royalties are based
on a percentage of restaurant  sales of the franchised  outlet and are accrued
as earned.

RECLASSIFICATIONS

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

(2)SIGNIFICANT RISKS AND UNCERTAINTIES

NATURE OF OPERATIONS

   TRG primarily franchises  Arby's(R) quick service restaurants  representing
the largest franchise restaurant system specializing in roast beef sandwiches.
Prior to the May 1997 sale of all company-owned restaurants, TRG also operated
Arby's restaurants (see Note 3). TRG's franchisees  principally are throughout
the United States.

USE OF ESTIMATES

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

SIGNIFICANT ESTIMATES

   TRG has not used any estimates it considers  significant in the preparation
of its consolidated financial statements as of December 28, 1997.

CERTAIN RISK CONCENTRATIONS

   TRG  has  one   significant   franchisee   which  accounted  for  11.5%  of
consolidated  revenues  in 1997.  No customer  accounted  for more that 10% of
consolidated  revenues in 1995 or 1996. TRG believes that its vulnerability to
risk  concentrations  related to  significant  vendors  and sources of its raw
materials  for  its  franchisees  is not  significant.  Risk  of  geographical
concentration  is also minimized  since TRG's  franchisees  generally  operate
throughout the United States with limited foreign exposure.

(3)DISPOSITION AND PRIOR YEARS BUSINESS ACQUISITIONS

SALE OF RESTAURANTS

   On May 5, 1997 certain  subsidiaries  of the Parent sold to an affiliate of
RTM, Inc. ("RTM"),  the largest  franchisee in the Arby's system, all of their
355 company-owned  restaurants (the "RTM Sale"), including the 274 restaurants
owned  by TRG.  The  sales  price  consisted  of cash  and a  promissory  note
(discounted   value)   aggregating   $3,471,000   (including   $2,092,000   of
post-closing adjustments) and the assumption by RTM of an aggregate $54,682,000

                                      9

<PAGE>


                                 ARBY'S, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                               DECEMBER 28, 1997



in mortgage and equipment notes payable and  $14,955,000 in capitalized  lease
obligations.  TRG sold its 274  company-owned  restaurants  to the  Parent  in
exchange for 11.875% demand notes  aggregating  $31,190,000 and the assumption
of $14,955,000 in capitalized lease  obligations.  RTM now operates all of the
355  restaurants  as a franchisee and pays royalties to TRG at a rate of 4% of
those  restaurants'  net sales  effective  May 5, 1997. In 1997 TRG recorded a
$2,712,000 loss on the sale included in "Other income  (expense),  net", which
includes  a  $1,457,000  provision  for the  fair  value  of  TRG's  effective
guarantee of future lease  commitments and debt repayments  assumed by RTM for
which TRG or Triarc remains  contingently  liable if the payments are not made
by RTM. The results of operations of the sold  restaurants  have been included
in the  accompanying  consolidated  statements of operations  until the May 5,
1997 date of sale.  Following the RTM Sale, TRG continues as the franchisor of
the more than 3,000 store Arby's system.  See below under "Pro Forma Operating
Data" for the unaudited  supplemental  pro forma condensed  summary  operating
data of TRG (the "Pro Forma  Data") for the years ended  December 31, 1996 and
December 28, 1997 giving effect to the RTM Sale.

   In 1996 TRG  recorded  a  $27,886,000  charge  reported  as  "Reduction  in
carrying  value of  long-lived  assets  impaired or to be disposed  of" to (i)
reduce the carrying  value of the  long-lived  assets to be sold  (reported as
"Assets held for sale" in the  accompanying  consolidated  balance sheet as of
December  31,  1996) by  $15,469,000  to estimated  fair value  consisting  of
adjustments to "Properties,  net" of $5,812,000,  "Unamortized costs in excess
of net assets of acquired  companies"  of $5,214,000  and "Deferred  costs and
other assets" of $4,443,000 and (ii) provide for associated net liabilities of
$12,417,000,  principally  reflecting  the present value of certain  equipment
operating  lease  obligations  which would not be assumed by the purchaser and
estimated  closing costs. The estimated fair value was determined based on the
terms of the  February  1997  agreement  for the RTM Sale  including  the then
anticipated sales price. During 1996 the operations of TRG's restaurants to be
disposed of had net sales of $179,275,000 and a pretax loss of $651,000.  Such
loss reflected  $10,071,000 of allocated general and  administrative  expenses
and  $1,930,000  of  interest   expense  related  to  the  capitalized   lease
obligations directly related to the operations of the restaurants sold to RTM.

   In  1995,  TRG  recorded  a  provision  of  $11,527,000  consisting  of  an
$8,899,000  reduction in the net  carrying  value of certain  restaurants  and
other  restaurant-related  long-lived  assets  which  were  determined  to  be
impaired  and a $2,628,000  reduction  to a net carrying  value of $975,000 of
certain  restaurants  and related  equipment  to be disposed.  Such  provision
reduced "Properties, net" by $10,347,000,  "Unamortized costs in excess of net
assets of acquired  companies"  by $1,040,000  and  "Deferred  costs and other
assets" by $140,000 to reflect the fair value of the  respective  assets.  The
fair value was generally  determined by applying a fair market  capitalization
rate to the  estimated  expected  future  annual  cash  flows.  The results of
operations of the  restaurants to be disposed as of December 31, 1995 resulted
in a pretax loss of $806,000 for the year ended December 31, 1995.

PRO FORMA OPERATING DATA (UNAUDITED)

   The following  Pro Forma Data of TRG for the years ended  December 31, 1996
and December 28, 1997 have been prepared by adjusting the  historical  data as
set forth in the  accompanying  consolidated  statements of operations to give
effect to the RTM Sale as if such sale had been  consummated  as of January 1,
1996. Such Pro Forma Data is presented for comparative  purposes only and does
not purport to be indicative of TRG's actual results of operations had the RTM
Sale actually been  consummated  on January 1, 1996 or of TRG's future results
of operations and are as follows (in thousands):

                                      10

<PAGE>


                                 ARBY'S, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                               DECEMBER 28, 1997




                                      1996                      1997
                           -------------------------  -------------------------
                           AS REPORTED  PRO FORMA(a)  AS REPORTED  PRO FORMA(a)
                           -----------  ------------  -----------  ------------

  Revenues................... $238,596    $ 69,236      $124,701    $ 69,196
  Operating profit (loss)....  (13,644)     16,919        27,197      32,774
  Net income (loss)..........  (14,565)      5,387        14,242      20,528
--------------------
  (a)The  effect of the RTM Sale consists of (i) the  elimination  of revenues
and expenses  (including the reduction in carrying value of long-lived  assets
impaired or to be disposed of for 1996 and the elimination of loss on sale for
1997  related to the sold  Arby's  restaurants),  (ii) a decrease  to interest
expense  associated with the assumption of debt by RTM and the forgiveness and
repayment of certain  amounts then  outstanding  under notes payable to Triarc
(see Note 12) and (iii) the income tax effects of the above. The effect of the
elimination of income and expenses of the sold  restaurants  is  significantly
greater in 1996 as compared with 1997 principally due to two 1996 eliminations
which did not recur in 1997 for (i) a $27,886,000  reduction in carrying value
of  long-lived   assets   associated  with  the  restaurants   sold  and  (ii)
depreciation and amortization on the long-lived  restaurant assets sold, which
had been written down to their  estimated  fair values as of December 31, 1996
and were no longer depreciated or amortized while they were held for sale.

PURCHASE PRICE ALLOCATIONS OF PRIOR YEARS ACQUISITIONS

   TRG consummated several business acquisitions during 1995 and 1996 for cash
of $11,412,000 and $4,754,000,  respectively.  All such acquisitions have been
accounted  for in  accordance  with the  purchase  method  of  accounting.  In
accordance  therewith,  the following  table sets forth the  allocation of the
aggregate  purchase price and a reconciliation  to "Business  acquisitions" in
the accompanying consolidated statements of cash flows (in thousands):

                                                           1995        1996
                                                           ----        ----

    Deferred costs and other assets..................... $ 1,876      $ 4,268
    Properties..........................................   9,219        2,782
    Goodwill............................................   2,708            -
    Net current assets (liabilities)....................     335         (358)
    Other liabilities...................................       -         (188)
    Long-term debt assumed including current portion....  (2,726)           -
                                                         -------      -------
                                                          11,412        6,504
    Less: Long-term debt issued to sellers.............        -       (1,750)
                                                         -------      -------
                                                         $11,412      $ 4,754
                                                         =======      =======

CANCELLATION OF SPINOFF TRANSACTIONS

    In October 1996 Triarc had announced that its Board of Directors  approved
a plan to offer up to  approximately  20% of the  shares of its  beverage  and
restaurant  businesses  (including  those  of TRG) to the  public  through  an
initial  public  offering and to spin off the  remainder of the shares of such
businesses to Triarc stockholders (collectively,  the "Spinoff Transactions").
In  May  1997  Triarc   announced  it  would  not  proceed  with  the  Spinoff
Transactions  as a result of its  acquisition  of Snapple  Beverage  Corp. and
other issues.

                                       11

<PAGE>


                                 ARBY'S, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                               DECEMBER 28, 1997



(4) BALANCE SHEET DETAIL

    RECEIVABLES, NET

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

                                                              YEAR-END
                                                         ------------------
                                                           1996       1997
                                                           ----       ----
       Receivables:
           Trade.......................................  $ 6,837     $ 6,938
           Other.......................................    1,004       1,140
                                                         -------     -------
                                                           7,841       8,078
       Less allowance for doubtful accounts............    1,020       1,317
                                                         -------     -------
                                                         $ 6,821     $ 6,761
                                                         =======     =======

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

                                                 1995       1996        1997
                                                 ----       ----        ----

       Balance at beginning of year...........  $    748   $   974    $  1,020
       Provision for doubtful accounts........       566       424         582
       Recoveries of doubtful accounts........        44        21           -
       Uncollectible accounts written off.....      (384)     (399)       (285)
                                                --------   -------    --------
       Balance at end of year.................  $    974   $ 1,020    $  1,317
                                                ========   =======    ========

   Substantially all receivables are pledged as collateral for certain debt of
the Parent (see Note 5).

    PROPERTIES, NET

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

                                                              YEAR-END
                                                         -------------------
                                                           1996        1997
                                                           ----        ----

       Land............................................  $ 2,689      $1,562
       Buildings and improvements and leasehold
         improvements..................................    6,918       3,371
       Machinery and equipment.........................    7,016       2,679
       Leased assets capitalized.......................      888         493
                                                         -------      ------
                                                          17,511       8,105
       Less accumulated depreciation and amortization..   10,812       3,856
                                                         -------      ------
                                                         $ 6,699      $4,249
                                                         =======      ======

    Substantially all properties are pledged as collateral for certain debt of
the Parent or TRG (see Note 5).


                                      12

<PAGE>


                                 ARBY'S, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                               DECEMBER 28, 1997



UNAMORTIZED COSTS IN EXCESS OF NET ASSETS OF ACQUIRED COMPANIES

    The  following  is a summary of the  components  of  unamortized  costs in
excess of net assets of acquired companies (in thousands):

                                                               YEAR-END
                                                         --------------------
                                                           1996         1997
                                                           ----         ----

       Costs in excess of net assets of acquired
          companies....................................  $29,188      $29,188
       Less accumulated amortization...................    7,522        8,332
                                                         -------      -------
                                                         $21,666      $20,856
                                                         =======      =======

DEFERRED COSTS AND OTHER ASSETS

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

                                                               YEAR-END
                                                         -------------------
                                                           1996        1997
                                                           ----        ----

       Trademarks......................................  $ 4,620      $4,615
       Less accumulated amortization of trademarks.....      198         604
                                                         -------      ------
         Trademarks, net...............................    4,422       4,011
       Notes receivable................................        -         690
       Other...........................................    2,902       1,295
                                                         -------      ------
                                                         $ 7,324      $5,996
                                                         =======      ======

ACCRUED EXPENSES

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

                                                               YEAR-END
                                                         -------------------
                                                          1996          1997
                                                          ----          ----

       Accrued rent and other costs on
          closed restaurants not sold to RTM...........  $ 2,145      $4,932
       Accrued compensation and related benefits.......    8,972       4,589
       Accrued rent on equipment no longer used........    2,036       3,187
       Accrued restructuring costs.....................        -       2,182
       Other...........................................    7,696       4,793
                                                         -------     -------
                                                         $20,849     $19,683
                                                         =======     =======


                                      13

<PAGE>


                                 ARBY'S, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                               DECEMBER 28, 1997



(5) LONG-TERM DEBT

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

                                                               YEAR-END
                                                         --------------------
                                                           1996         1997
                                                           ----         ----

    Notes, bearing interest at 7.94% to 9.69%, due
     through 1999....................................... $ 4,865      $ 1,396
    Capitalized lease obligations.......................  15,928          469
                                                         -------      -------
       Total debt ......................................  20,793        1,865
       Less amounts payable within one year.............  17,802          813
                                                         -------      -------
                                                         $ 2,991      $ 1,052
                                                         =======      =======

    Aggregate annual maturities of long-term debt, including capitalized lease
obligations, are as follows as of December 28, 1997 (in thousands):

       1998............................................  $   813
       1999............................................      674
       2000............................................       44
       2001............................................       49
       2002............................................       55
       Thereafter......................................      230
                                                         -------
                                                         $ 1,865
                                                         =======

   As discussed in Note 3, in May 1997 RTM assumed  $14,955,000 of capitalized
lease obligations associated with the restaurants sold.

   The Parent has outstanding  $275,000,000 of 9 3/4% senior secured notes due
2000 (the "Senior  Notes")  which mature on August 1, 2000.  TRG has fully and
unconditionally guaranteed the Parent's obligations with respect to the Senior
Notes  jointly  and  severally  with  Royal  Crown.  TRG's  common  stock  and
substantially all of its personal property secure such guarantee.

(6)FAIR VALUE OF FINANCIAL INSTRUMENTS

   TRG has the following  financial  instruments  for which the  disclosure of
fair values is required:  cash and cash equivalents,  accounts  receivable and
payable,  affiliated  notes  receivable  and  payable,  accrued  expenses  and
long-term debt. The carrying amounts of cash and cash equivalents,  affiliated
notes   receivable  and  payable,   accounts   payable  and  accrued  expenses
approximated  fair value due to the  short-term  maturities of such assets and
liabilities.  The carrying  amount of accounts  receivable  approximated  fair
value due to the related allowance for doubtful  accounts.  The fair values of
long-term debt are assumed to reasonably  approximate  their carrying  amounts
since (i) for capitalized  lease  obligations,  the weighted  average implicit
interest rates  approximate  current  levels and (ii) for notes  payable,  the
remaining maturities are relatively short-term.


                                      14

<PAGE>


                                 ARBY'S, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                               DECEMBER 28, 1997



(7)INCOME TAXES

   As discussed in Note 1, TRG is included in the consolidated  Federal income
tax return of Triarc.  Pursuant to a tax sharing  agreement between Triarc and
the Parent,  TRG provides for Federal  income taxes on the same basis as if it
filed a separate  consolidated  return.  Amounts currently payable for Federal
income  taxes of  $10,680,000  and  $6,469,000  as of  December  31,  1996 and
December  28,  1997,  respectively,  have been  included in "Due to Parent and
affiliates" in the accompanying consolidated balance sheets.

   The income (loss) before income taxes consisted of the following components
(in thousands):

                                        1995        1996      1997
                                        ----        ----      ----

      Domestic....................   $(11,554)   $(15,933)  $24,230
      Foreign.....................       (371)     (3,238)      106
                                     --------    --------   -------
                                     $(11,925)   $(19,171)  $24,336
                                     ========    ========   =======

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

                                                    1995      1996      1997
                                                    ----      ----      ----

    Current:
      Federal...................................  $   543  $ (5,368)  $ 4,262
      State.....................................       59      (988)       92
      Foreign...................................     (362)     (370)     (444)
                                                  -------  --------  --------
                                                      240    (6,726)    3,910
                                                  -------  --------  --------
    Deferred:
      Federal...................................    2,936    10,931   (12,424)
      State.....................................      588       401    (1,580)
      Foreign...................................        -         -         -
                                                  -------  --------  --------
                                                    3,524    11,332   (14,004)
                                                  -------  --------  --------
                                                  $ 3,764  $  4,606  $(10,094)
                                                  =======  ========  ========


                                      15

<PAGE>


                                 ARBY'S, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                               DECEMBER 28, 1997



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

                                                              YEAR-END
                                                        --------------------
                                                         1996          1997
                                                         ----          ----

    Current deferred income tax assets:
       Accrued employee benefit costs.................  $ 1,922      $ 1,226
       Accrued rent and other costs on closed
          restaurants not sold to RTM.................      834        1,919
       Accrued restructuring costs....................        -          849
       State net operating loss carryforwards.........        -          655
       Allowance for doubtful accounts................      397          512
       Other, net.....................................      873          621
                                                        -------      -------
                                                          4,026        5,782
                                                        -------      -------

    Non-current deferred income tax assets (liabilities):
       Reserve for income tax contingencies...........   (1,475)      (1,650)
       Deferred franchise fees........................    1,330        1,581
       Depreciation and other properties basis
          differences.................................   15,279         (311)
       Other, net.....................................      706          460
                                                        -------      -------
                                                         15,840           80
                                                        -------      -------
                                                        $19,866      $ 5,862
                                                        =======      =======

    The difference  between the reported  benefit from  (provision for) income
taxes and the tax benefit  (provision) that would result from applying the 35%
Federal  statutory rate to the income (loss) before income taxes is reconciled
as follows (in thousands):

                                                    1995      1996      1997
                                                    ----      ----      ----
    Income tax benefit (provision) computed at
      Federal statutory rate....................  $ 4,174  $  6,710   $(8,518)
    Decrease (increase) in Federal tax provision
       resulting from:
      State income (taxes) benefit, net of Federal
        income tax effect.......................      421      (382)     (967)
      Amortization of non-deductible Goodwill...     (284)     (284)     (284)
      Foreign tax rate in excess of United States
        Federal  statutory rate and foreign
        withholding taxes, net of Federal income
        tax benefit..............................    (308)     (241)     (271)
      Effect of foreign net operating losses for
       which no tax carryback benefit is
       available................................        -    (1,133)        -
      Non-deductible amortization of restricted
       stock....................................     (274)        -         -
      Other, net................................       35       (64)      (54)
                                                  -------  --------  --------
                                                  $ 3,764  $  4,606  $(10,094)
                                                  =======  ========  ========


                                       16

<PAGE>


                                 ARBY'S, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                               DECEMBER 28, 1997



    The Federal income tax returns of Triarc and its  subsidiaries,  including
TRG, have been examined by the Internal  Revenue  Service  ("IRS") for the tax
years 1989 through 1992 and the IRS had issued notices of proposed adjustments
prior to 1997  relating  to TRG  increasing  taxable  income by  approximately
$600,000.  Triarc,  on behalf of TRG, has resolved such  proposed  adjustments
and, in connection therewith,  the Parent made a settlement payment of related
taxes and interest in the fourth quarter of 1997 on behalf of itself,  TRG and
Royal Crown.

(8) CORPORATE RESTRUCTURING

    The 1996 corporate restructuring charge of $2,400,000 related to estimated
losses on planned  subleases  (principally for the write-off of nonrecoverable
unamortized  leasehold  improvements  and  furniture  and fixtures) of surplus
office  space  as  a  result  of  the  then  planned  sale  of   company-owned
restaurants. The 1997 corporate restructuring charge of $5,597,000 principally
related to employee  severance  and  related  termination  costs and  employee
relocation associated with restructuring in connection with the RTM Sale.

(9) PENSION AND STOCK COMPENSATION PLANS

    Triarc maintains a 401(k) defined contribution plan (the "Plan") covering,
among other employees of Triarc and its  subsidiaries,  all of TRG's employees
who meet certain  minimum  requirements  and elect to  participate.  Under the
provisions of the Plan,  employees may contribute various percentages of their
compensation up to a maximum of 15%, subject to certain limitations.  The Plan
provides for company matching  contributions of 50% of employee  contributions
up to the first 5% of an employee's contributions.  The Plan also provides for
additional annual company contributions at an arbitrary aggregate amount to be
determined by the employers.  In connection with these employer contributions,
TRG  provided  $959,000,  $689,000  and  $602,000  in  1995,  1996  and  1997,
respectively.

    TRG's employees who were eligible to participate prior to 1989 are covered
under a defined  benefit  pension  plan  sponsored  by the Parent which covers
employees of TRG, Royal Crown and certain other affiliates.  Prior to 1995 the
plan was  frozen.  Net  periodic  pension  cost  (credit)  under  the plan was
immaterial in each of the years presented.

    Prior to 1995,  Triarc granted 76,750  restricted shares of Triarc Class A
common  stock to certain  TRG senior  executives  under  Triarc's  1993 Equity
Participation  Plan (the "1993 Triarc Equity Plan").  The aggregate  values of
the awards at the respective  dates of grant of $1,613,000  were being charged
to TRG as  compensation  expense over the applicable  vesting  periods through
1996. On December 7, 1995,  the  Compensation  Committee of Triarc's  Board of
Directors authorized  management of Triarc to accelerate the vesting of all of
the  then  outstanding  shares  of  restricted  stock.  On  January  16,  1996
management  of Triarc  accelerated  the vesting and TRG recorded the resulting
additional  amortization  expense of  $454,000  in its  entirety  in 1995.  In
addition,  Triarc has granted  stock  options to certain key  employees of TRG
under the 1993 Triarc Equity Plan and Triarc's 1997 Equity Participation Plan.
Of such  options,  100,000  granted  prior to 1995 were at an option  price of
$20.00 per share which was lower than the $31.75 fair market value of Triarc's
Class  A  common  stock  at the  date  of  grant,  representing  an  aggregate
difference  of  $1,175,000  and  162,000  granted  in 1997 were at a  weighted
average  option  price of $12.57  which was below the  weighted  average  fair
market value of Triarc's Class A common stock on the respective dates of grant
of $14.53,  resulting in an aggregate difference of $317,000. Such differences
are being charged to TRG as compensation  expense over the applicable  vesting

                                      17

<PAGE>


                                 ARBY'S, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                               DECEMBER 28, 1997



periods  through  2002,  net of  reversals of prior  charges  arising from the
forfeiture  of  certain  of  those   options  in   connection   with  employee
terminations  (the "Forfeiture  Adjustments").  Compensation  expense (credit)
resulting from the grants of restricted  shares and below market stock options
aggregated  $870,000  (including the $454,000 from the accelerated  vesting of
the  restricted  stock  and  net  of  $231,000  of  Forfeiture   Adjustments),
$(104,000)  (net of $173,000 of  Forfeiture  Adjustments)  and $32,000 (net of
$154,000 of Forfeiture Adjustments) during 1995, 1996 and 1997,  respectively,
and  is  included  in  "General  and   administrative"   in  the  accompanying
consolidated statements of operations.

(10) LEASE COMMITMENTS

     TRG leases buildings and improvements and machinery and equipment.  Prior
to the RTM Sale, some leases provided for contingent  rentals based upon sales
volume.  In  connection  with  the RTM  Sale in May  1997,  substantially  all
operating  and  capitalized  lease   obligations   associated  with  the  sold
restaurants were assumed by RTM, although TRG remains  contingently  liable if
the future  lease  payments  (which could  potentially  aggregate a maximum of
approximately  $100,000,000  as of December 28, 1997) are not made by RTM. TRG
provided  $9,677,000  in "Reduction  in carrying  value of  long-lived  assets
impaired  or to be disposed  of" in 1996  representing  the  present  value of
future operating lease payments relating to certain  equipment  transferred to
RTM but the obligations for which remain with TRG.

     Rental  expense  under  operating   leases  consisted  of  the  following
components (in thousands):

                                               1995      1996      1997
                                               ----      ----      ----

      Minimum rentals......................  $14,873   $ 16,190   $ 7,020
      Contingent rentals...................      879        793       204
                                             -------   --------   -------
                                              15,752     16,983     7,224
      Less sublease income.................      688        489       509
                                             -------   --------   -------
                                             $15,064   $ 16,494   $ 6,715
                                             =======   ========   =======

    TRG's future minimum rental payments and sublease rental income for leases
having an initial  lease term in excess of one year as of December  28,  1997,
excluding  $7,925,000 of those future  operating  lease payments for which TRG
has provided as set forth above, are as follows (in thousands):


                                      18

<PAGE>


                                 ARBY'S, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                               DECEMBER 28, 1997



                                       RENTAL PAYMENTS        SUBLEASE INCOME
                                   ---------------------- ---------------------
                                    CAPITALIZED OPERATING CAPITALIZED OPERATING
                                     LEASES      LEASES     LEASES      LEASES
                                     ------      ------     ------      ------

   1998........................... $   105      $ 1,375    $    60     $   567
   1999...........................      87        1,090         60         463
   2000...........................      87        1,043         55         442
   2001...........................      87        1,047         41         359
   2002...........................      86          945         44         255
   Thereafter.....................     317        2,740        160       1,127
                                   -------      -------    -------     -------
     Total minimum payments.......     769      $ 8,240    $   420     $ 3,213
                                                =======    =======     =======
   Less interest..................     300
                                   -------
   Present value of minimum
     capitalized lease payments... $   469
                                   =======

   The present value of minimum  capitalized  lease  payments is included,  as
applicable,  with "Long-term  debt" or "Current  portion of long-term debt" in
the accompanying consolidated balance sheets (see Note 5).

(11) LEGAL MATTERS

   TRG is involved in litigation  and claims  incidental to its business.  TRG
has reserves for such legal matters aggregating  approximately  $823,000 as of
December  28, 1997.  Although the outcome of such matters  cannot be predicted
with  certainty and some of these may be disposed of unfavorably to TRG, based
on currently available  information and given TRG's  aforementioned  reserves,
TRG does not  believe  that such legal  matters  will have a material  adverse
effect on its consolidated results of operations or financial position.


                                      19

<PAGE>


                                 ARBY'S, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                               DECEMBER 28, 1997



(12)TRANSACTIONS WITH RELATED PARTIES

   The  following  is a summary of  transactions  between  TRG and its related
parties (in thousands):

                                                   1995      1996      1997
                                                   ----      ----      ----
    Costs allocated to TRG by Triarc under a
      management services agreement (a).........  $ 4,100  $ 3,850   $ 3,850
    Interest expense allocated to TRG
      from Parent (b)...........................    3,985    3,592     2,634
    Interest income on note receivable from
      Parent (c)................................       -         -     2,415
    Proceeds from sales of restaurants to
      affiliates (c)............................   31,602    1,600    31,190
    Receipt (return) of purchase option
      deposit from affiliate (d)................    6,700        -    (6,500)
    Option premium income from affiliate (d)....        -        -       200
    Repurchase of $720 principal amount of
      promissory notes due from franchisees
      from Southeastern Public Service Company,
      a subsidiary of Triarc, at fair value.....        -         -      690
    Royalty income from affiliates (e)..........    1,132     2,067      650
    Dividend of restaurants to Parent (f).......   14,733         -      325
    Compensation costs charged (credited) to
      TRG by Triarc for restricted stock and
      below market stock options (Note 9).......      870      (104)      32
    Payments to Triarc for usage of aircraft....       58         -       32
    Purchase of restaurants from affiliates (g).        -     2,782        -

   (a) TRG receives from Triarc certain management services,  including legal,
accounting,  tax, insurance,  financial and other management services, under a
management  services  agreement.  Such costs were  allocated  to TRG by Triarc
based  upon TRG's pro rata  share of the sum of the  greater of income  before
income taxes,  depreciation  and  amortization and 10% of revenues of Triarc's
principal  operating  subsidiaries.  Management  of  TRG  believes  that  such
allocation method is reasonable. Further, management of TRG believes that such
allocation  approximates  the costs that would have been  incurred by TRG on a
stand-alone basis.

  (b)A  substantial  portion of  interest  expense  on the  Senior  Notes (the
"Senior  Notes  Interest")  has been  allocated by the Parent to TRG and Royal
Crown based upon the  approximate  proportion of Goodwill pushed down to those
subsidiaries in connection  with their original  acquisition by Triarc and its
subsidiaries, which resulted in interest allocated to TRG of $1,800,000 during
each of the years 1995,  1996 and 1997.  In addition,  during  1995,  1996 and
1997, the Parent allocated to TRG interest  expense of $2,185,000,  $1,792,000
and $834,000,  respectively incurred in connection with borrowings from Triarc
in 1995  through  May 5,  1997 and  Southeastern  Public  Service  Company,  a
subsidiary of Triarc, in 1995 (the "Triarc and SEPSCO Interest"), the proceeds
of which  were  principally  advanced  by the  Parent  to TRG to fund  capital
expenditures,  acquisitions and other cash requirements of TRG.  Management of
TRG believes such  allocations  are reasonable and, with respect to the Triarc
and SEPSCO Interest,  approximated the interest TRG would have incurred in the
open market.  However,  the allocation of the Senior Notes Interest may not be
indicative of interest  expense which TRG would have incurred on a stand-alone
basis, the amounts of which would be dependent upon TRG's capital structure on
such stand-alone basis.


                                      20

<PAGE>


                                 ARBY'S, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                               DECEMBER 28, 1997


  (c)During  1995,  TRG sold the land,  buildings and related  equipment of an
aggregate 29 restaurants  and the equipment of the 39 restaurants  referred to
in (f) below to ARDC and ARHC for proceeds of  $31,602,000,  representing  the
approximate  net book value of the  related  assets.  During 1996 TRG sold the
land,  buildings and related  equipment of 3 restaurants with a net book value
of $785,000 to ARHC for  proceeds of  $1,600,000.  As  described in Note 3, in
connection  with the RTM Sale in May 1997,  TRG sold the land,  buildings  and
related equipment of all of its 274  company-owned  restaurants at approximate
net book value in exchange for demand promissory notes aggregating $31,190,000
which bear interest at 11.875% per annum and the  assumption of $14,955,000 in
capitalized  lease  obligations.  The $2,415,000 of interest income represents
interest on the $31,190,000 of notes from May 5 through December 28, 1997.

  (d)In  connection  with the  acquisition by TRG of 35 previously  franchised
restaurants in February 1995, TRG received a $6,700,000  non-interest  bearing
refundable purchase option deposit from Arby's Restaurants,  Inc. ("ARINC"), a
wholly-owned  subsidiary of the Parent, which gave ARINC the right to purchase
any or all of such 35 acquired  restaurants and apply up to the full amount of
the option  payment  against the  purchase  price.  The option  terminated  in
connection  with the RTM  Sale  and TRG  returned  $6,500,000  of such  option
deposit and recognized $200,000 of option premium income.

  (e)TRG entered into franchise license agreements for each of the restaurants
operated  by AROC  (51  restaurants)  and ARHC (30  restaurants)  under  terms
similar to those for  unaffiliated  parties except that franchise fees are not
required.  During 1995,  1996 and 1997, TRG recognized  royalties of $879,000,
$1,347,000  and $415,000  from AROC and  $253,000,  $720,000 and $235,000 from
ARHC,  respectively.  TRG also entered into management agreements with each of
AROC,  ARDC and  ARHC  pursuant  to  which  TRG  provided  certain  management
services,  as well as financial and accounting services, to such companies for
reimbursement  of the direct costs to TRG of such  services plus an annual fee
of $10,000 from each of those companies. Such franchise license and management
service  agreements  were  terminated in May 1997 in  connection  with the RTM
Sale.

  (f)In May 1995, TRG dividended land,  buildings and related  improvements of
39  restaurants  with a net  book  value  of  $14,733,000  to the  Parent.  In
connection with the RTM Sale in May 1997, TRG recorded a $325,000  dividend of
restaurant assets to the Parent.

  (g)During 1996, TRG purchased the land, buildings and related equipment of 4
restaurants  from ARDC and AROC for cash of $2,782,000,  representing  the net
book value of the related assets.


                                      21

<PAGE>








                           ROYAL CROWN COMPANY, INC.
                           -------------------------
                       CONSOLIDATED FINANCIAL STATEMENTS
                       ---------------------------------
                               DECEMBER 28, 1997
                               -----------------









<PAGE>



                  INDEX TO CONSOLIDATED FINANCIAL STATEMENTS




                                                                           PAGE
                                                                           ----

Independent Auditors' Report...............................................  1
Consolidated Balance Sheets as of December 31, 1996 and December 28, 1997..  2
Consolidated Statements of Operations for the years ended
    December 31, 1995 and 1996 and the fiscal year ended December 28, 1997.  3
Consolidated Statements of Stockholder's Equity (Deficit) for the years ended
    December 31, 1995 and 1996 and the fiscal year ended December 28, 1997.  4
Consolidated Statements of Cash Flows for the years ended
    December 31, 1995 and 1996 and the fiscal year ended December 28, 1997.  5
Notes to Consolidated Financial Statements.................................  7

                                      (i)


<PAGE>






INDEPENDENT AUDITORS' REPORT



To the Board of Directors and Stockholder of
Royal Crown Company, Inc.:

    We have  audited the  accompanying  consolidated  balance  sheets of Royal
Crown Company, Inc. (a wholly-owned  subsidiary of RC/Arby's  Corporation) and
subsidiary  ("Royal  Crown") as of December 28, 1997 and December 31, 1996 and
the  related  consolidated  statements  of  operations,  stockholder's  equity
(deficit)  and cash  flows for each of the three  fiscal  years in the  period
ended December 28, 1997. These financial  statements are the responsibility of
Royal Crown's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

    In our opinion, such consolidated  financial statements present fairly, in
all material  respects,  the financial  position of Royal Crown as of December
28, 1997 and December 31, 1996 and the results of their  operations  and their
cash flows for each of the three fiscal years in the period ended December 28,
1997 in conformity with generally accepted accounting principles.




DELOITTE & TOUCHE LLP

Parsippany, New Jersey
March 10, 1998

<PAGE>



                           ROYAL CROWN COMPANY, INC.
                          CONSOLIDATED BALANCE SHEETS


                                                    DECEMBER 31,    DECEMBER 28,
                                                        1996           1997
                                                        ----           ----
                                                           (IN THOUSANDS)
    ASSETS

Current assets:
  Cash................................................  $    800        $   901
  Receivables, net (Note 4)...........................    27,819         27,021
  Inventories (Note 4)................................     9,305         12,443
  Deferred income tax benefit (Note 7)................     4,478          6,133
  Prepaid expenses and other current assets...........     3,746          2,650
                                                        --------       --------
    Total current assets..............................    46,148         49,148

Properties, net (Note 4)..............................     5,227          4,556
Unamortized costs in excess of net assets of
  acquired companies (Note 4).........................   137,457        132,540
Deferred income tax benefit (Note 7)..................     9,365          7,944
Deferred costs and other assets (Note 4)..............     3,955          6,783
                                                        --------       --------
                                                        $202,152       $200,971
                                                        ========       ========

          LIABILITIES AND STOCKHOLDER'S DEFICIT

Current liabilities:
  Accounts payable....................................  $ 12,677        $10,849
  Accrued expenses (Note 4)...........................    20,704         17,186
                                                        --------       --------
    Total current liabilities.........................    33,381         28,035

Due to Parent and affiliates, net (Note 12)...........   206,855        212,770
Other liabilities.....................................       926          4,803
Commitments and contingencies (Notes 7, 9, 10 and 11)

Stockholder's equity (deficit) (Note 5):
  Common stock, $1.00 par value; 1,000 shares authorized,
    issued and outstanding............................         1              1
  Additional paid-in capital..........................    42,426         42,426
  Accumulated deficit.................................   (81,437)       (87,064)
                                                        --------       --------
    Total stockholder's deficit.......................   (39,010)       (44,637)
                                                        --------       --------
                                                        $202,152       $200,971
                                                        ========       ========

         See accompanying notes to consolidated financial statements.


<PAGE>

                           ROYAL CROWN COMPANY, INC.
                     CONSOLIDATED STATEMENTS OF OPERATIONS

                                                           YEAR ENDED
                                                -------------------------------
                                                     DECEMBER 31,
                                                   ---------------  DECEMBER 28,
                                                   1995       1996      1997
                                                   ----       ----      ----
                                                          (IN THOUSANDS)

Net sales......................................  $172,603   $178,007  $ 146,835
                                                 --------   --------  ---------

Costs and expenses:
   Cost of sales...............................    57,072     61,620     41,210
   Advertising, selling and distribution (Note 1)  86,226     76,923     68,074
   General and administrative..................    27,441     23,716     23,581
   Facilities relocation and corporate
     restructuring (Note 8)....................         -      3,950      1,437
                                                 --------   --------  ---------
                                                  170,739    166,209    134,302
                                                 --------   --------  ---------

     Operating profit..........................     1,864     11,798     12,533

Interest expense...............................       (13)         -        (94)
Allocation of interest expense from Parent
  (Note 12)....................................   (20,000)   (20,000)   (20,000)
Other income (expense), net....................      (760)       286      1,758
                                                 ---------  --------  ---------

   Loss before income taxes....................   (18,909)    (7,916)    (5,803)

Benefit from income taxes (Note 7).............     4,844        956        176
                                                 --------   --------  ---------
   Net loss....................................  $(14,065)  $ (6,960) $  (5,627)
                                                 ========   ========  =========

         See accompanying notes to consolidated financial statements.

                                        3

<PAGE>


                           ROYAL CROWN COMPANY, INC.
           CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY (DEFICIT)
                   FOR THE THREE YEARS ENDED DECEMBER 28, 1997



                                       COMMON STOCK
                                   -------------------  ADDITIONAL
                                     NUMBER               PAID-IN   ACCUMULATED
                                    OF SHARES  AMOUNT     CAPITAL     DEFICIT
                                    ---------  ------     -------     -------
                                                  (DOLLARS IN THOUSANDS)

Balance at December 31, 1994.......    1,000   $     1   $ 42,426    $(60,412)
   Net loss........................        -         -          -     (14,065)
                                    --------   -------   --------    --------
Balance at December 31, 1995.......    1,000         1     42,426     (74,477)
   Net loss........................        -         -          -      (6,960)
                                    --------   -------   --------    --------
Balance at December 31, 1996.......    1,000         1     42,426     (81,437)
   Net loss........................        -         -          -      (5,627)
                                    --------   -------   --------    --------
Balance at December 28, 1997.......    1,000   $     1   $ 42,426    $(87,064)
                                    ========   =======   ========    ========


         See accompanying notes to consolidated financial statements.


                                        4

<PAGE>



                           ROYAL CROWN COMPANY, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                            YEAR ENDED
                                                  ------------------------------
                                                    DECEMBER 31,
                                                  ----------------  DECEMBER 28,
                                                    1995     1996       1997
                                                  --------  ------      ----
                                                          (IN THOUSANDS)

Cash flows from operating activities:
   Net loss..................................... $(14,065) $(6,960)    $(5,627)
   Adjustments to reconcile net loss to net cash
     provided by (used in) operating  activities:
      Amortization of costs in excess of net
         assets acquired and other intangibles..    5,961    5,432       5,239
      Depreciation and amortization of properties     838      999       1,101
      Provision for facilities relocation and
         corporate restructuring................        -    3,950       1,437
      Payments on facilities relocation and
         corporate restructuring................     (711)    (224)     (2,542)
      Provision for doubtful accounts...........    1,402    2,655       1,820
      Benefit from deferred income taxes........   (2,457)  (1,076)       (234)
      Noncash charges (benefit) from Parent.....   15,874   (1,966)      5,915
      Other, net................................    1,524     (403)       (164)
      Changes in operating assets and liabilities:
         Decrease (increase) in:
           Receivables..........................   (4,078)  (7,004)       (180)
           Inventories..........................   (2,256)     926      (3,182)
           Prepaid expenses and other current
            assets..............................     (180)     137         904
         Increase (decrease) in accounts payable
           and accrued expenses.................    3,721    4,134      (4,820)
                                                  -------   ------     -------
Net cash provided by (used in) operating
  activities....................................    5,573      600        (333)
                                                  -------   ------     -------

Cash flows from investing activities:
   Proceeds from sales of properties and business     587       28         951
   Capital expenditures.........................   (1,474)    (591)       (517)
   Business acquisition.........................   (2,923)       -           -
   Investment in affiliate......................   (1,000)       -           -
                                                  -------   ------     -------
Net cash provided by (used in) investing
   activities                                      (4,810)    (563)        434
                                                  -------   ------     -------

Cash flows from financing activities............        -        -           -
                                                  -------   ------     -------

Net increase in cash ...........................      763       37         101
Cash at beginning of year.......................        -      763         800
                                                  -------   ------     -------
Cash at end of year.............................  $   763   $  800     $   901
                                                  =======   ======     =======

Supplemental disclosures of cash flow information: 
  Cash paid (received) during the year for:
     Interest...................................  $    13   $    -     $     -
                                                  =======   ======     =======
     Income taxes (refunds), net................  $    55   $ (245)    $     -
                                                  =======   =======    =======

         See accompanying notes to consolidated financial statements.


                                        5

<PAGE>


                           ROYAL CROWN COMPANY, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               DECEMBER 28, 1997




(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

     The consolidated financial statements include the accounts of Royal Crown
Company,   Inc.  (together  with  its  subsidiary,   "Royal  Crown")  and  its
wholly-owned  subsidiary,  TriBev  Corporation  ("TriBev").  Royal  Crown is a
wholly-owned  subsidiary of RC/Arby's  Corporation (the "Parent"),  which is a
direct  wholly-owned  subsidiary of CFC Holdings Corp. ("CFC Holdings") and an
indirect  wholly-owned  subsidiary of Triarc Companies,  Inc. ("Triarc").  All
significant  intercompany  balances and  transactions  have been eliminated in
consolidation.

CHANGE IN FISCAL YEAR

     Effective  January 1, 1997,  Royal  Crown  changed its fiscal year from a
calendar  year to a year  consisting  of 52 or 53 weeks  ending on the  Sunday
closest to December 31. In  accordance  therewith,  Royal  Crown's 1997 fiscal
year  commenced  January 1, 1997 and ended  December 28, 1997.  Such period is
referred to herein as "the year ended  December 28, 1997" or "1997".  December
28, 1997 and December  31, 1996 are referred to herein as "Year-End  1997" and
"Year-End 1996", respectively.

INVENTORIES

     Inventories are stated at the lower of cost  (determined on the first-in,
first-out basis) or market.

PROPERTIES AND DEPRECIATION AND AMORTIZATION

     Properties  are  stated  at  cost  less   accumulated   depreciation  and
amortization.  Depreciation and amortization is computed on the  straight-line
basis  using the  estimated  useful  lives of the  related  major  classes  of
properties:  3-15  years for  machinery  and  equipment  and  15-40  years for
buildings.  Leasehold  improvements  are  amortized  over the shorter of their
estimated useful lives or the terms of the respective leases.

AMORTIZATION OF INTANGIBLES

     Costs in excess of net  assets of  acquired  companies  ("Goodwill")  are
being amortized on the straight-line basis over 40 years. Trademarks are being
amortized on the straight-line basis principally over 15 years.

IMPAIRMENTS

     Intangible Assets

     The amount of  impairment,  if any, in  unamortized  Goodwill is measured
based on projected future results of operations.  To the extent future results
of  operations  through  the  period  such  Goodwill  is being  amortized  are
sufficient to absorb the related amortization, Royal Crown has deemed there to
be no impairment of Goodwill.


                                      6

<PAGE>


                           ROYAL CROWN COMPANY, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                               DECEMBER 28, 1997





     Long-Lived Assets

     Effective  October 1, 1995,  Royal Crown  adopted  Statement of Financial
Accounting  Standards  ("SFAS") No. 121,  "Accounting  for the  Impairment  of
Long-Lived  Assets and for Long-Lived Assets to be Disposed Of". This standard
requires that long-lived assets and certain identifiable  intangibles held and
used by an entity be reviewed  for  impairment  whenever  events or changes in
circumstances  indicate  that  the  carrying  amount  of an  asset  may not be
recoverable.  The  adoption of this  standard  had no effect on Royal  Crown's
consolidated  results of  operations  or  financial  position  in the  periods
presented.

ADVERTISING COSTS

     Royal Crown accounts for advertising  production  costs by expensing such
production  costs  the  first  time  the  related   advertising  takes  place.
Advertising costs amounted to $15,274,000, $5,724,000 and $7,601,000 for 1995,
1996 and 1997,  respectively.  In addition  Royal Crown  supports its beverage
bottlers and distributors with promotional  allowances,  a portion of which is
utilized  for  indirect   advertising  by  such  bottlers  and   distributors.
Promotional  allowances  amounted to $58,431,000,  $55,982,000 and $48,528,000
for 1995, 1996 and 1997, respectively.

INCOME TAXES

     Royal  Crown is included in the  consolidated  Federal  income tax return
filed by Triarc. Under a tax-sharing agreement between Triarc and the Parent,
Royal Crown provides for Federal income taxes on the same basis as if it filed
a  separate  consolidated  return.  Deferred  income  taxes  are  provided  to
recognize the tax effect of temporary  differences between the bases of assets
and liabilities for tax and financial statement purposes.

RECLASSIFICATIONS

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

(2)  SIGNIFICANT RISKS AND UNCERTAINTIES

NATURE OF OPERATIONS

     Royal Crown  produces and sells  concentrates  used in the production and
distribution  of soft drinks by independent  bottlers under the brand names RC
Cola(R), Diet RC Cola(R),  Diet Rite Cola(R),  Diet Rite(R) flavors,  Nehi(R),
Upper 10(R),  and  Kick(R).  Royal Crown  operates  its  business  principally
throughout the United States with minimal foreign exposure.

USE OF ESTIMATES

     The preparation of consolidated  financial  statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and

                                      7

<PAGE>


                           ROYAL CROWN COMPANY, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                               DECEMBER 28, 1997




disclosure  of  contingent   assets  and   liabilities  at  the  date  of  the
consolidated  financial  statements  and the  reported  amount of revenues and
expenses during the reporting  period.  Actual results could differ from those
estimates.

SIGNIFICANT ESTIMATES

     Royal Crown has not used any  estimates it considers  significant  in the
preparation of its consolidated financial statements as of December 28, 1997.

CERTAIN RISK CONCENTRATIONS

     Royal Crown had two significant customers which accounted for 11% and 12%
of net  sales in 1995,  17% and 13% in 1996 and  three  significant  customers
which  accounted for 16%, 13% and 10% of net sales in 1997.  While Royal Crown
has  chosen to  purchase  certain  raw  materials  (such as  aspartame)  on an
exclusive  basis  from  single  suppliers,   Royal  Crown  believes  that,  if
necessary, adequate raw materials can be obtained from alternate sources. Risk
of geographical concentration is also minimized since Royal Crown products are
produced  in the United  States and  principally  sold  throughout  the United
States.  However,  the industry Royal Crown competes in contains a small group
of competitors and Royal Crown's  proportionate  market share is comparatively
small.

(3)  DISPOSITION AND PRIOR YEAR ACQUISITION

C&C SALE

     On July 18, 1997,  Royal Crown completed the sale (the "C&C Sale") of its
rights to the C&C beverage  line of mixers,  colas and flavors,  including the
C&C trademark and equipment related to the operation of the C&C beverage line,
to  Kelco  Sales &  Marketing  Inc.  ("Kelco"),  for  $750,000  in cash and an
$8,650,000  note (the "Kelco  Note")  with a  discounted  value of  $6,003,000
consisting of $3,623,000  relating to the C&C Sale and $2,380,000  relating to
future  revenues.   The  $2,380,000  of  deferred  revenues  consists  of  (i)
$2,096,000   relating  to  minimum   take-or-pay   commitments  for  sales  of
concentrate  for C&C  products to Kelco and (ii)  $284,000  relating to future
technical  services to be performed  for Kelco by Royal Crown,  both under the
contract  with  Kelco.  The  excess of the  proceeds  of  $4,373,000  over the
carrying value of the C&C trademark of $1,575,000 and the related equipment of
$2,000 resulted in a pretax gain of $2,796,000 which,  commencing in the third
quarter of 1997, is being recognized pro rata between the gain on sale and the
carrying  value of the assets sold based on the cash proceeds and  collections
under the Kelco  Note  since  realization  of the Kelco  Note is not yet fully
assured.  Accordingly,  a gain of $576,000  was  recognized  in "Other  income
(expense),  net" in the accompanying  consolidated statement of operations for
the year ended December 28, 1997. See below under "Pro Forma  Operating  Data"
for the unaudited  supplemental pro forma condensed  summary operating data of
Royal Crown (the "Pro Forma  Data") for the years ended  December 31, 1996 and
December 28, 1997 giving effect to the C&C Sale.



                                      8

<PAGE>


                           ROYAL CROWN COMPANY, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                               DECEMBER 28, 1997


PRO FORMA OPERATING DATA (UNAUDITED)

     The following Pro Forma Data of Royal Crown for the years ended  December
31, 1996 and December 28, 1997 have been prepared by adjusting the  historical
data as set forth in the accompanying consolidated statements of operations to
give effect to the C&C Sale as if such sale had been consummated as of January
1, 1996.  Such Pro Forma Data is presented for  comparative  purposes only and
does  not  purport  to be  indicative  of  Royal  Crown's  actual  results  of
operations had the C&C Sale actually been consummated on January 1, 1996 or of
Royal Crown's future results of operations and are as follows (in thousands):

                                      1996                      1997
                            -------------------------- ------------------------
                            AS REPORTED  PRO FORMA (a) AS REPORTED PRO FORMA(a)
                            -----------  ------------- ----------- ------------


  Revenues                     $178,007   $166,904       $146,835     $139,992
  Operating profit               11,798     12,951         12,533       12,700
  Net loss                       (6,960)    (5,959)        (5,627)      (5,697)
--------------------
  (a)The  effect of the C&C Sale consists of (i) the  elimination  of revenues
and expenses  related to the C&C beverage line,  (ii)  realization of deferred
revenues based on the portion of the minimum take-or-pay  commitment for sales
of  concentrate  for C&C  products to Kelco and from fees related to technical
services  performed,  both under the contract with Kelco,  (iii) imputation of
interest expense on the deferred revenues, (iv) recognition of the cost of the
concentrate to be sold, (v) elimination of the aforementioned $576,000 gain on
the sale of C&C  recorded  in 1997,  (vi)  accretion  of the  discount  on the
portion  of the Kelco Note  relating  to the C&C Sale and (vii) the income tax
effects of the above.

PURCHASE PRICE ALLOCATION OF PRIOR YEAR ACQUISITION

     Royal Crown  consummated a business  acquisition  during 1995 for cash of
$2,923,000. Such acquisition was accounted for in accordance with the purchase
method of accounting.  In accordance therewith, the following table sets forth
the  allocation  of  the  aggregate  purchase  price  reflected  in  "Business
acquisitions" in the accompanying  1995  consolidated  statement of cash flows
(in thousands):

       Deferred costs and other assets.........................  $ 2,500
       Net current assets......................................      423
                                                                 -------
                                                                 $ 2,923
                                                                 =======
CANCELLATION OF SPINOFF TRANSACTIONS

    In October 1996 Triarc had announced that its Board of Directors  approved
a plan to offer up to  approximately  20% of the  shares of its  beverage  and
restaurant  businesses  (including those of Royal Crown) to the public through
an initial public offering and to spin off the remainder of the shares of such
businesses to Triarc stockholders (collectively,  the "Spinoff Transactions").
In  May  1997  Triarc   announced  it  would  not  proceed  with  the  Spinoff
Transactions  as  a  result  of  its  acquisition  of  Snapple  Beverage  Corp.
("Snapple") and other issues.


                                      9

<PAGE>


                           ROYAL CROWN COMPANY, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                               DECEMBER 28, 1997




(4) BALANCE SHEET DETAIL

RECEIVABLES, NET

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

                                                               YEAR-END
                                                         --------------------
                                                          1996           1997
                                                          -----          ----
       Receivables:
           Trade.......................................  $28,394      $26,116
           Other.......................................    3,054        5,773
                                                         -------      -------
                                                          31,448       31,889
       Less allowance for doubtful accounts...........     3,629        4,868
                                                         -------      -------
                                                         $27,819      $27,021
                                                         =======      =======

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

                                                     1995      1996      1997
                                                   --------  --------  ------

       Balance at beginning of year............... $    239  $    936  $ 3,629
       Provision for doubtful accounts (Note 12)..    1,402     2,655    1,820
       Recoveries of doubtful accounts............        -       174      130
       Uncollectible accounts written off.........     (705)     (136)    (711)
                                                   --------  --------  -------
       Balance at end of year..................... $    936  $  3,629  $ 4,868
                                                   ========  ========  =======

     Substantially  all receivables are pledged as collateral for certain debt
of the Parent (see Note 5).

INVENTORIES

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

                                                              YEAR-END
                                                          -----------------
                                                           1996       1997
                                                           ----       ----

        Raw materials.................................  $ 5,394     $  5,904
        Work in process...............................      467          214
        Finished goods................................    3,444        6,325
                                                        -------     --------
                                                        $ 9,305     $ 12,443
                                                        =======     ========

    Substantially  all  inventories are pledged as collateral for certain debt
of the Parent (see Note 5).


                                       10

<PAGE>


                           ROYAL CROWN COMPANY, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                               DECEMBER 28, 1997




PROPERTIES

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

                                                               YEAR-END
                                                         -------------------
                                                          1996          1997
                                                          ----          ----

           Land.......................................  $   724     $    789
           Buildings and leasehold improvements.......    4,487        4,906
           Machinery and equipment....................    6,343        6,259
                                                        -------     --------
                                                         11,554       11,954
           Less accumulated depreciation and
             amortization.............................    6,327        7,398
                                                        -------     --------
                                                        $ 5,227     $  4,556
                                                        =======     ========

    Substantially all properties are pledged as collateral for certain debt of
the Parent (see Note 5).

UNAMORTIZED COSTS IN EXCESS OF NET ASSETS OF ACQUIRED COMPANIES

    The  following  is a summary of the  components  of  unamortized  costs in
excess of net assets of acquired companies (in thousands):

                                                              YEAR-END
                                                        --------------------
                                                         1996          1997
                                                         ----          ----

       Costs in excess of net assets of acquired
         companies....................................  $194,533    $194,533
       Less accumulated amortization..................    57,076      61,993
                                                        --------    --------
                                                        $137,457    $132,540
                                                        ========    ========

DEFERRED COSTS AND OTHER ASSETS

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

                                                              YEAR-END
                                                        --------------------
                                                         1996          1997
                                                         ----          ----

       Trademarks.....................................  $  3,128    $  1,186
       Less accumulated amortization of trademarks....       736         495
                                                        --------    --------
         Trademarks, net..............................     2,392         691
       Note receivable................................         -       5,047
       Other..........................................     1,563       1,045
                                                        --------    --------
                                                        $  3,955    $  6,783
                                                        ========    ========


                                       11

<PAGE>


                           ROYAL CROWN COMPANY, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                               DECEMBER 28, 1997




ACCRUED EXPENSES

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

                                                              YEAR-END
                                                         -------------------
                                                          1996         1997
                                                          ----         ----

       Accrued advertising............................  $ 11,609    $  9,401
       Deferred revenue...............................       751       2,355
       Accrued compensation and related benefits......     1,989       1,912
       Facilities relocation and corporate restructuring   2,650         917
       Other...........................................    3,705       2,601
                                                        --------    --------
                                                        $ 20,704    $ 17,186
                                                        ========    ========

(5) GUARANTY

    The Parent has  outstanding  $275,000,000  of 9 3/4% rate  senior  secured
notes due 2000 (the  "Senior  Notes")  which  mature on August 1, 2000.  Royal
Crown has fully and unconditionally  guaranteed the Parent's  obligations with
respect to the Senior Notes jointly and  severally  with Arby's,  Inc.  (d/b/a
Triarc  Restaurant  Group - "TRG"),  a wholly-owned  subsidiary of the Parent.
Royal  Crown's  common stock and  substantially  all of its personal  property
secure such guarantee.

(6) FAIR VALUE OF FINANCIAL INSTRUMENTS

    Royal  Crown  has  the  following  financial  instruments  for  which  the
disclosure of fair values is required:  cash,  accounts  receivable,  accounts
payable and accrued expenses.  The carrying amounts of cash,  accounts payable
and accrued expenses  approximated fair value due to the short-term maturities
of such assets and  liabilities.  The carrying  amount of accounts  receivable
approximated fair value due to the related allowance for doubtful accounts.

(7)  INCOME TAXES

     As  discussed  in Note 1, Royal  Crown is  included  in the  consolidated
Federal  income tax  return of Triarc.  Pursuant  to a  tax-sharing  agreement
between  Triarc and the Parent,  Royal Crown provides for Federal income taxes
on the  same  basis  as if it  filed a  separate  consolidated  return.  As of
December 31, 1996 and December  28, 1997,  Royal Crown was in a net  operating
loss position and, as such, all of Royal Crown's  income tax related  balances
are reported as deferred income taxes.

     Royal  Crown's  loss  before  income  taxes was  entirely  from  domestic
operations.


                                      12

<PAGE>


                           ROYAL CROWN COMPANY, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                               DECEMBER 28, 1997




     The benefit from income taxes  consisted of the following  components (in
thousands):

                                                    1995       1996      1997
                                                  -------   --------   ------
    Current:
      Federal...................................  $ 2,173   $      -   $     -
      State.....................................      214       (120)      (58)
                                                  -------   --------   -------
                                                    2,387       (120)      (58)
                                                  -------   --------   -------

    Deferred:
      Federal...................................    2,331        891       164
      State.....................................      126        185        70
                                                  -------   --------   -------
                                                    2,457      1,076       234
                                                  -------   --------   -------
                                                  $ 4,844   $    956   $   176
                                                  =======   ========   =======

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

                                                              YEAR-END
                                                        --------------------
                                                         1996          1997
                                                         ----          ----
    Current deferred income tax assets:
      Net operating loss carryforward under Parent's
          tax sharing agreement with Triarc and
          state net operating loss carryforwards......  $      -    $  1,983
      Allowance for doubtful accounts.................     1,333       1,966
      Deferred revenue................................       275         689
      Accrued employee benefit costs..................       507         568
      Facilities relocation and corporate restructuring      806         336
      Accrued advertising and promotions..............       526         102
      Other, net......................................     1,031         489
                                                        --------    --------
                                                           4,478       6,133
                                                        --------    --------
    Non-current deferred income tax assets (liabilities):
      Net operating loss carryforward under Parent's
          tax sharing agreement with Triarc...........    10,636       9,260
      Reserve for income tax contingencies............    (1,433)     (1,433)
      Write-off of investment in affiliate............       366         366
      Other, net......................................      (204)       (249)
                                                        --------    --------
                                                           9,365       7,944
                                                        --------    --------
                                                        $ 13,843    $ 14,077
                                                        ========    ========

    As of December 28, 1997 Royal Crown had net operating  loss  carryforwards
for Federal income tax purposes under the Parent's tax sharing  agreement with
Triarc  of  approximately   $29,077,000.   Such   carryforwards   will  expire
approximately  $10,326,000,  $7,602,000,  $9,312,000  and  $1,837,000 in 2008,
2009, 2010 and 2012, respectively.

                                      13

<PAGE>


                           ROYAL CROWN COMPANY, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                               DECEMBER 28, 1997




    The difference  between the reported benefit from income taxes and the tax
benefit that would result from applying the 35% Federal  statutory rate to the
loss before income taxes is reconciled as follows (in thousands):

                                                     1995       1996      1997
                                                   --------   -------   ------
    Income tax benefit computed at Federal
      statutory rate.............................  $  6,618   $ 2,771   $ 2,031
    Decrease (increase) in Federal tax provision 
     resulting from:
      Amortization of non-deductible Goodwill....    (1,721)   (1,721)   (1,721)
      State income taxes, net of Federal
        income tax effect........................       221        42         8
      Other, net.................................      (274)     (136)     (142)
                                                   --------   -------   -------
                                                   $  4.844   $   956   $   176
                                                   ========   =======   =======

    The Federal income tax returns of Triarc and its  subsidiaries,  including
Royal Crown,  have been examined by the Internal  Revenue  Service ("IRS") for
the tax years 1989  through  1992 and the IRS had issued  notices of  proposed
adjustments prior to 1997 relating to Royal Crown increasing taxable income by
approximately $3,000,000.  Triarc, on behalf of Royal Crown, has resolved such
proposed  adjustments  and,  in  connection  therewith,   the  Parent  made  a
settlement payment of related taxes and interest in the fourth quarter of 1997
on behalf of itself, Royal Crown and TRG.

(8) FACILITIES RELOCATION AND CORPORATE RESTRUCTURING

    The 1996  facilities  relocation  and  corporate  restructuring  charge of
$3,950,000  related to costs  associated with (i) estimated  losses on planned
subleases  (principally  for  the  write-off  of  nonrecoverable   unamortized
leasehold  improvements and furniture and fixtures) of surplus office space as
a result of the  relocation  (the "Royal Crown  Relocation")  of Royal Crown's
headquarters  which  were  centralized  with the  offices  of  Triarc's  other
beverage  subsidiaries in White Plains, New York  ($1,300,000),  (ii) employee
severance costs  associated with the Royal Crown  Relocation  ($2,200,000) and
(iii) the shutdown of Royal Crown's Ohio production facility ($450,000).

     The 1997  facilities  relocation  and corporate  restructuring  charge of
$1,437,000  related  to costs  associated  with  the  Royal  Crown  Relocation
($1,137,000) and the write-off of the remaining  unamortized  costs of certain
beverage  distribution  rights  reacquired  in prior years and no longer being
utilized by Royal Crown as a result of the sale or  liquidation  of the assets
and liabilities of MetBev, Inc. ("MetBev"), an affiliate ($300,000).

(9)  PENSION AND OTHER BENEFIT PLANS

     Triarc  maintains  a  401(k)  defined   contribution  plan  (the  "Plan")
covering,  among other employees of Triarc and its subsidiaries,  all of Royal
Crown's  employees  who  meet  certain  minimum   requirements  and  elect  to
participate.  Under the  provisions  of the  Plan,  employees  may  contribute
various  percentages of their  compensation up to a maximum of 15%, subject to
certain limitations.  The Plan provides for company matching  contributions of
50%  of  employee   contributions   up  to  the  first  5%  of  an  employee's
contributions.   The  Plan  also  provides  for   additional   annual  company
contributions  at an  arbitrary  aggregate  amount  to be  determined  by  the
employers.  In  connection  with these  employer  contributions,  Royal  Crown
provided $216,000, $331,000 and $276,000 in 1995, 1996 and 1997, respectively.

                                   14

<PAGE>


                           ROYAL CROWN COMPANY, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                               DECEMBER 28, 1997




     Royal Crown's  employees who were eligible to  participate  prior to 1989
are covered under a defined benefit pension plan sponsored by the Parent which
covers  employees of Royal Crown, TRG and certain other  affiliates.  Prior to
1995 the plan was frozen.

     Royal Crown's portion of the components of the net periodic  pension cost
were as follows (in thousands):

                                                     1995      1996      1997
                                                   --------  --------  --------

   Current service cost (represents plan expenses) $     61  $     61  $    61
   Interest cost on projected benefit obligation        212       205      190
   Return on plan assets........................       (483)     (264)    (444)
   Net amortization and deferrals...............        340       101      251
                                                   --------  --------  -------
       Net periodic pension cost................   $    130  $    103  $    58
                                                   ========  ========  =======

     The following table sets forth Royal Crown's portion of the plan's funded
status (in thousands):

                                                              YEAR-END
                                                         ------------------
                                                           1996       1997
                                                           ----       ----

   Actuarial present value of benefit obligations:
     Vested benefit obligation........................  $  2,906    $  2,736
     Nonvested benefit obligation.....................        14          14
                                                        --------    --------
         Accumulated and projected benefit obligation.     2,920       2,750
   Plan assets at fair value..........................    (2,462)     (2,753)
                                                        --------    --------
   Funded status......................................       458          (3)
   Unrecognized net gain from plan experience.........       316         632
                                                        --------    --------
         Accrued pension cost.........................  $    774    $    629
                                                        ========    ========

     Significant  assumptions  used in measuring the net periodic pension cost
for the plan included the following: (i) the expected long-term rate of return
on plan assets was 8% and (ii) the discount  rate was 8% for 1995, 7% for 1996
and 7 1/2% for  1997.  The  discount  rate  used in  determining  the  benefit
obligations above was 7 1/2% at December 31, 1996 and 7% at December 28, 1997.
The effects of the 1996  decrease and the 1997  increase in the discount  rate
did not materially  affect the net periodic pension cost. The 1997 decrease in
the discount rate used in determining the benefit  obligations  resulted in an
increase in the accumulated and projected benefit obligation of $122,000.

     Plan assets as of December  28, 1997 are  invested in managed  portfolios
consisting of government and government agency obligations (51%), common stock
(37%), corporate debt securities (10%) and other investments (2%).


                                      15

<PAGE>


                           ROYAL CROWN COMPANY, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                               DECEMBER 28, 1997




     Royal Crown maintains unfunded  postretirement  medical and death benefit
plans for a limited  number of employees  who have  retired and have  provided
certain  minimum  years of  service.  The  medical  benefits  are  principally
contributory while death benefits are noncontributory.  The net postretirement
benefit  cost  for  1995,   1996  and  1997,   as  well  as  the   accumulated
postretirement benefit obligation as of December 28, 1997, were insignificant.

     Prior to 1995,  Triarc granted 57,000 restricted shares of Triarc Class A
common stock to certain  Royal Crown senior  executives  under  Triarc's  1993
Equity  Participation  Plan (the "1993 Triarc  Equity  Plan").  The  aggregate
values of the awards at the respective dates of grant of $1,161,000 were being
charged to Royal Crown as  compensation  expense over the  applicable  vesting
periods  through  1996.  On December 7, 1995,  the  Compensation  Committee of
Triarc's Board of Directors authorized  management of Triarc to accelerate the
vesting of all of the then outstanding  shares of restricted stock. On January
16, 1996 management of Triarc accelerated the vesting and Royal Crown recorded
the resulting  additional  amortization expense of $208,000 in its entirety in
1995.  In addition,  Triarc has granted stock options to certain key employees
of Royal  Crown under the 1993 Triarc  Equity  Plan and  Triarc's  1997 Equity
Participation  Plan. Of such options,  65,000 granted prior to 1995 were at an
option  price of $20.00 per share which was below the $31.75 fair market value
of  Triarc's  Class A  common  stock  at the  date of  grant  representing  an
aggregate  difference  of  $764,000  and  136,000  granted  in 1997  were at a
weighted  average option price of $12.54 which was below the weighted  average
fair market value of Triarc's Class A common stock on the respective  dates of
grant of $14.75,  resulting  in an  aggregate  difference  of  $301,000.  Such
differences are being charged to Royal Crown as compensation  expense over the
applicable  vesting  periods  through 2000,  net of reversals of prior charges
arising from the  forfeiture of certain of those  options in  connection  with
employee  terminations (the "Forfeiture  Adjustments").  Compensation  expense
resulting from the grants of restricted  shares and below market stock options
aggregated  $742,000  (including the $208,000 from the accelerated  vesting of
the  restricted  stock),  $178,000 and $19,000 (net of $154,000 of  Forfeiture
Adjustments)  during  1995,  1996 and 1997,  respectively,  and is included in
"General and  administrative" in the accompanying  consolidated  statements of
operations.

(10) LEASE COMMITMENTS

     Royal  Crown  leases   buildings  and   improvements  and  machinery  and
equipment.  Rental expense under operating  leases  consisted of the following
components (in thousands):

                                                     1995      1996      1997
                                                     ----      ----      ----

        Minimum rentals.........................   $    725  $    866  $   559
        Less sublease income....................        447       313      374
                                                   --------  --------  -------
                                                   $    278  $    553  $   185
                                                   ========  ========  =======


                                       16

<PAGE>


                           ROYAL CROWN COMPANY, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                               DECEMBER 28, 1997




    Royal Crown's future minimum  rental  payments and sublease  rental income
for operating  leases having an initial lease term in excess of one year as of
December 28, 1997 are as follows (in thousands):

                                                            RENTAL     SUBLEASE
                                                           PAYMENTS     INCOME
                                                           --------     ------

    1998................................................   $   562     $   404
    1999................................................       586         433
    2000................................................       563         403
    2001................................................       529         361
    2002................................................       530         361
    Thereafter..........................................       623         210
                                                           -------     -------
                                                           $ 3,393     $ 2,172
                                                           =======     =======

(11) LEGAL AND ENVIRONMENTAL MATTERS

     Royal Crown is involved in litigation,  claims and environmental  matters
incidental  to its  businesses.  Royal Crown has  reserves  for such legal and
environmental  matters aggregating  approximately  $250,000 as of December 28,
1997.  Although the outcome of such matters cannot be predicted with certainty
and some of these may be  disposed of  unfavorably  to Royal  Crown,  based on
currently  available  information  and  given  Royal  Crown's   aforementioned
reserves,  Royal  Crown does not  believe  that such  legal and  environmental
matters will have a material  adverse  effect on its  consolidated  results of
operations or financial position.


                                      17

<PAGE>


                           ROYAL CROWN COMPANY, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                               DECEMBER 28, 1997




(12) RELATED PARTY TRANSACTIONS

     The  following is a summary of  transactions  between Royal Crown and its
related parties (in thousands):

                                                    1995      1996      1997
                                                  --------  --------  --------
       Interest expense allocated to Royal
        Crown from Parent (a)....................  $20,000  $ 20,000   $20,000
       Costs allocated to Royal Crown by Triarc
        under a management services agreement (b)    4,900     3,150     3,150
       Net sales to MetBev, net of marketing
         support credits (c)....................       551     8,985         -
       Provision for uncollectible receivables
        from sales to MetBev and guarantee of
        MetBev accounts payable and advance to
        MetBev (c)..............................     1,745     2,000       975
       Investment in preferred stock of MetBev
        and write-off thereof (c)...............     1,000         -         -
       Shared services allocation from Triarc
        beverage affiliates, net (d)............         -         -       547
       Compensation costs charged to Royal
        Crown by Triarc for restricted stock
        and below market stock options (Note 9).       742       178        19
       Lease payments to NPC Leasing Corp.,
        an affiliate............................        21         -         -
       Payments to Triarc for usage of aircraft.        15         -         -

     (a) A  substantial  portion of interest  expense on the Senior  Notes has
been allocated by the Parent to Royal Crown and TRG based upon the approximate
proportion of Goodwill  pushed down to those  subsidiaries  in connection with
their  original  acquisition  by Triarc and its  subsidiaries,  an  allocation
method which management of Royal Crown believes is reasonable. Such allocation
may not be  indicative  of  interest  expense  which  Royal  Crown  would have
incurred on a stand-alone  basis, the amounts of which would be dependent upon
Royal Crown's capital structure on such stand-alone basis.

     (b)  Royal  Crown  receives  from  Triarc  certain  management  services,
including legal,  accounting,  tax, insurance,  financial and other management
services, under a management services agreement.  Such costs were allocated to
Royal  Crown by Triarc  based upon Royal  Crown's pro rata share of the sum of
the greater of income before income taxes,  depreciation  and amortization and
10% of revenues of Triarc's principal  operating  subsidiaries.  Management of
Royal Crown  believes  that such  allocation  method is  reasonable.  Further,
management of Royal Crown believes that such allocation approximates the costs
that would have been incurred by Royal Crown on a stand-alone basis.

     (c) During 1995 Royal Crown paid $1,000,000 and contributed a license for
a period  of five  years  for the  Royal  Crown  distribution  rights  for its
products  in New York  City and  certain  surrounding  counties  to  MetBev in
exchange for preferred  stock in MetBev  representing a 37.5% voting  interest
and a warrant to acquire  37.5% of the common stock of MetBev.  The  remaining
62.5%  was  owned  by  other  parties  and  was  subject  to  certain  vesting
provisions.  Upon consummation of the sale of the MetBev  distribution  rights

                                      18

<PAGE>

                           ROYAL CROWN COMPANY, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                               DECEMBER 28, 1997


(see below), Royal Crown's voting interest in MetBev was 44.7% principally due
to the  cancellation of nonvested  stock.  In December 1996, the  distribution
rights  of MetBev  were sold to a third  party  for  minimum  payments  over a
three-year period aggregating  $1,050,000 and MetBev commenced the liquidation
of its  remaining  assets and  liabilities.  During 1997 Royal Crown  advanced
MetBev  $539,000 for costs  incurred in liquidating  the remaining  assets and
liabilities and related close-down costs of its facility.  Royal Crown has not
received  any  payments  on the  $1,050,000  from the  purchaser  of  MetBev's
distributor   rights  and  does  not  expect  to  collect  due  to   financial
difficulties of the purchaser which Royal Crown believes is due to competitive
pressures on the purchaser  following Triarc's  acquisition of Snapple and its
revitalization of Snapple. In connection therewith,  in 1995 Royal Crown wrote
off its $1,000,000  investment to "Other income  (expense),  net" since MetBev
had incurred  significant  losses from its inception  and had a  stockholders'
deficit as of December 31, 1996 of $8,943,000.  Further,  Royal Crown provided
$1,745,000  and  $2,000,000  (included  in "General  and  administrative"  and
"Advertising,  selling and distribution") in 1995 and 1996, respectively,  for
uncollectible  receivables  from sales (with minimal gross profit) of finished
product to MetBev (and in 1995 a guarantee  of a MetBev  third party  accounts
payable) resulting in remaining accounts receivable of $997,000 as of December
31, 1996. In 1997 Royal Crown wrote off its remaining receivables from MetBev,
after  offsetting  amounts  otherwise  payable to the purchaser,  amounting to
$975,000 (included in "General and administrative").

     (d) During  1997,  Royal  Crown was  charged  $702,000  for an  allocated
portion of the  salaries  and related  benefit  costs of certain  employees of
Triarc's   other  beverage   subsidiaries   who  performed   shared   finance,
administrative and operational  functions for Royal Crown and for office space
utilized by Royal Crown in their centralized headquarters in White Plains, NY.
Such allocation was based on the estimated  proportion of time expended on the
respective businesses.  Royal Crown was also credited $155,000 in 1997 for the
allocated cost of shared legal services that employees of Royal Crown provided
Triarc's other beverage subsidiaries.

     The "Due to Parent and affiliates,  net" of $206,855,000 and $212,770,000
as set forth in the  accompanying  consolidated  balance sheets as of December
31, 1996 and December 28, 1997, respectively, carries no stated maturity.

                                      19