Triarc Reports First Quarter 2008 Results

Business Wire, May 9, 2008

ATLANTA -- Triarc Companies, Inc. (NYSE: TRY; TRY.B), the parent company of the Arby's([R]) restaurant system, announced today the results of operations for its fiscal first quarter ended March 30, 2008.

Highlights for the first quarter of 2008 as compared to the first quarter of 2007 include:

* Sales increased 5.7% to $281.6 million for Company-owned restaurants;

* Franchise revenues increased 8.1% to $21.3 million;

* Same-store sales increased 0.4% system wide;

* Operating profit of $8.1 million increased 18.4% as compared to $6.8 million adjusted operating profit*;

* Consolidated EBITDA** of $24.1 million increased 11.7% as compared to $21.5 million adjusted consolidated EBITDA*; and

* Net loss of $67.5 million, which included net investment loss of $65.9 million, as compared to net income of $7.1 million.

* Adjusted to exclude 2007 amounts related to the asset management segment, which was sold on December 21, 2007. A reconciliation of Non-GAAP measurements to GAAP results is included below.

** Operating profit plus depreciation and amortization.

Other significant corporate highlights include:

* Signing of definitive merger agreement with Wendy's International, Inc. (NYSE: WEN or "Wendy's") for an all stock transaction in which Wendy's shareholders will receive 4.25 shares of Triarc's Class A Common Stock for each share of Wendy's common stock; and

* Distribution of Deerfield Capital Corp. (NYSE: DFR or "DFR") common stock to Triarc stockholders.

First Quarter 2008 Results

Consolidated revenues were $302.9 million in the first quarter of 2008 compared to $302.0 million in the first quarter of 2007. The prior-year period included $15.9 million in asset management and related fees, for which there was no comparable amount in the current quarter due to the sale of the asset management segment in December 2007.

Sales for the first quarter of 2008 increased 5.7% to $281.6 million from $266.5 million in the first quarter of 2007. This growth in sales was primarily attributable to the 83 Company-owned restaurants added since April 1, 2007, including 50 net acquired from franchisees, and was partially offset by a $4.1 million reduction in sales, due to a 1.6% decrease in same-store sales at Company-owned restaurants during the period. System wide same-store sales increased 0.4%.

Same-store sales at Company-owned restaurants decreased compared to the year-ago quarter primarily due to a decline in customer traffic related to a continuing softening of the economy, competitive price discounting, and more temporary store closings in 2008 due to poor winter weather conditions primarily in the Midwest, where many of our Company-owned stores are located. These negative factors were partially offset by the effect of selective price increases that were implemented subsequent to the first quarter of 2007.

Franchise revenues for the first quarter of 2008 increased 8.1% to $21.3 million from $19.7 million for the first quarter of 2007. This growth in revenue was attributable to $0.7 million in higher royalties from the net franchised restaurants added since April 1, 2007, $0.5 million in rental income from properties leased to franchisees, and $0.3 million due to a 1.4% increase in same-store sales at franchised restaurants during the period.

Same-store sales at franchised restaurants increased compared to the year-ago quarter due primarily to incremental national media advertising initiatives, which had a greater positive effect on franchised restaurants than Company-owned restaurants because of the increased exposure in many franchise markets, and the continued implementation of operational best practices in areas such as advertising and training.

Gross profit (difference between sales and cost of sales) was $68.7 million in the first quarter of 2008, representing a gross margin of 24.4%, compared to $71.5 million, or 26.8% of sales, in the first quarter of 2007. The decrease in gross margin was primarily due to increases in our cost of beef and other menu items, and higher distribution, utilities, and labor costs. These negative factors were partially offset by the effect of selective price increases.

General and administrative expenses decreased 22.0% to $44.9 million in the first quarter of 2008, from $57.6 million in the first quarter of 2007, primarily due to reductions related to the effects of corporate restructuring and the sale of the asset management segment. Approximately $8.2 million represents general corporate expenses (see reconciliation of consolidated EBITDA to net income (loss)). This amount includes non-recurring salary, consulting and severance expenses of $2.3 million and $3.0 million of M&A advisory and public company services under a contract with Trian Fund Management, L.P. which expires in June 2009. We expect further reductions of general corporate expenses during the remainder of 2008. By mid-2009, general corporate expenses on a standalone basis (before the merger with Wendy's), are expected to approximate $8.5 million per annum, or $3.5 million more than is presently allocated and included in Restaurant EBITDA.