♦ 1998 ANNUAL REPORT ¨ n 1998, we continued to focus DEAR STOCKHOLDERS on increasing the value of our beverage and restaurant franchising businesses. Our principal goals were to: IReturn Snapple® to sustainable growth; • • Build our other beverage brands through creative marketing and new products; • Continue to enhance distributor and bottler relationships; • Increase our restaurant franchisees’ annual unit volumes through extensive brand support and co-branding; and • Expand the number of our restaurant franchisee units. The disposition of the last of Triarc’s non-core businesses also crystallized recently, with the announcement that Triarc had entered into a definitive agreement to sell the company’s 43% stake in National Propane Partners, L.P. (NYSE: NPL) to a subsidiary of Columbia Energy Group, (NYSE: CG). The sale, which is expected to be completed during the second half of 1999, will finalize our transformation into a consumer products company with leading brands. At Triarc, we are committed to maximiz- ing the free cash flow of our consumer products businesses and enhancing growth through strategic acquisitions and invest- ments. In the last four years, we have seen our consumer products’ EBITDA more than triple, while we have reduced consolidated net debt by nearly 40% and capital expendi- tures by over 85%. 1 Indeed, Snapple’s top ten best selling THE SNAPPLE TURNAROUND products, all in 16 ounce glass bottles, have In 1998, our team at Triarc Beverage Group represented 55% of Snapple’s total volume put the “snap” back into Snapple, the lead- for the past three years and we expect this ing premium beverage brand which we trend to continue. acquired in 1997. Following several years We also pride ourselves on innovation. of double-digit volume declines under its Perhaps our best example of innovation in previous owner, Snapple’s volume rebounded 1998 was WhipperSnapple®, a shelf stable over 8% in 1998, with the last three quarters fruit smoothie made from fruit juices and posting a cumulative double-digit increase. dairy ingredients and packaged in a propri- The Snapple turnaround was the result etary wrapped bottle. The product was of concentrating on several basic operating launched in April 1998 with six exciting principles. We rebuilt relationships with the flavors, and achieved sales of nearly three distributors. We quickly introduced new million cases during its first eight months. innovative products consistent with the WhipperSnapple was named Convenience Snapple brand tradition. We reconnected Store News’ New Beverage Product of the with the consumer by rehiring spokesperson Year and won the American Marketing Wendy Kaufman, “The Snapple Lady.” We Association’s Edison Award for Best New focused on the critical “up and down the Beverage in 1998. Two new WhipperSnapple street” cold bottle segment (e.g. delis, pizze- flavors were introduced in the fourth quarter rias, convenience stores, etc.). We managed of 1998 and we believe the product will the international business for profitability. continue to have strong momentum in 1999. And, we approached the business as fast We also recently launched three new moving entrepreneurs. Snapple flavors: At the heart of Snapple’s 1998 turn- • Lemonade Iced Tea, which combines around were our lemon, peach and diet the number one premium iced tea with teas. These core lines are stable and growing. the number one premium lemonade for a taste that is tart and sweet; Growth of Snapple Case Sales • Sweet Tea, specially formulated in percent for southern tastes; and 8 • Diet Ruby Red, aimed at capturing 0 a piece of the fast-growing Ruby Red grapefruit taste market. Because of our in-house product develop- (15) ment and packaging capabilities, we can (18) bring these products to market quickly and (22) with minimal investment. 1995 1996 1997 1997 1998 (1st half) (2nd half) Prior Ownership Triarc Ownership 2 In mid-April, we will introduce Snapple We acquired Mistic from its founder in Elements™, a line of all natural juice drinks 1995. And, like Snapple when we acquired and teas enhanced with herbal ingredients, it, Mistic at that time was in a downtrend. packaged in a stunning 20 ounce glass We were able to use the same techniques – bottle. With intriguing names new packaging, new products and creative like Sun, Fire and Lightning, advertising – that we later employed with this new Snapple line has Snapple to turn Mistic around in 1996. already captured rave reviews The 1997 acquisition of Snapple, from our distributors. We will nevertheless, hurt Mistic in 1998. As we be launching another major worked to both integrate Snapple with Mistic new Snapple product line later and reverse Snapple’s significant volume this spring and we believe it, declines, we were less focused on Mistic and too, has tremendous potential. Mistic’s new product activity was minimal. As we go forward, we are committed to For 1999, we have a renewed focus on achieving continued growth at Snapple Mistic and we’re optimistic. We have a new through focus on four basic strategies: marketing team in place, and we’ve added • New product and package development, new packaging to our core line as well as such as a new proprietary, hot fill plastic some new flavors and products. In the Pacific bottle; Northwest region, which is underdeveloped for the brand, we’ve linked up with stronger • Use of innovative advertising and Snapple distributors. We’re also shifting promotions, to continue to enhance our marketing emphasis from national our trademarks’ value; television advertising to local radio. Expansion of distribution in our • Our biggest Mistic success in 1998 was existing markets and the continued the repackaging of our Mistic iced tea and strengthening of our distributor lemonade lines in a 16 ounce carafe bottle. relationships; and The repackaging led to double-digit volume • An increase in cold equipment place- growth in these two flavor segments which ment where we sell our products. we believe can continue into 1999. We’ve also redesigned the label on our signature 16 ounce tapered bottle which MISTIC®–EXCITING NEW PRODUCTS IN 1999 represents approximately 44% of our total Our second largest premium brand is Mistic, Mistic volume. The new label was rolled out a leader in the fruit drink segment of the in early 1999 and we believe it will provide premium beverage category. We believe significantly enhanced trademark and flavor Mistic is an excellent complement to the recognition. Snapple lines. In general, Mistic appeals to In the new product arena, our distribu- an urban consumer and is a sweeter product tors are excited about two new Mistic with stronger fruit flavors than Snapple. entries that we will be launching in April. 3 Mistic Italian Ice Smoothies™ In summary, we’re excited about the will use the WhipperSnapple future potential of our premium beverage technology, but will be brands. We will continue to employ and positioned and packaged refine the strategies that have contributed in a different manner. to our success. We will: Our second new Mistic • Continue to develop innovative new product, Sun Valley products and packages; Squeeze™, will be a “very • Focus on the consumers who continue juicy” tasting fruit drink packaged to build their loyalty to our trademarks; in a proprietary 20 ounce plastic Further strengthen relationships with bottle with dramatic graphics. • our distributor networks; So, in 1999, we believe Mistic can make a strong comeback with a combi- • Expand points of availability for all nation of renewed focus, enhanced distribu- of our products; tion support and some great new product • Improve our margins by controlling concepts and packaging. our costs; • Utilize copackers to maximize our STEWART’S®– 25 QUARTERS OF DOUBLE- flexibility; DIGIT VOLUME GROWTH AND COUNTING! • Minimize our capital expenditures; and Stewart’s, our third premium brand and our • Look to acquire premium brands that fastest growing beverage product, is led by can offer us long-term growth potential. its classic root beer and comes in nine other gourmet soda flavors. Stewart’s has recorded 25 consecutive quarters of double-digit BUILDING MOMENTUM AT ROYAL CROWN® volume growth. With increasing volume At Royal Crown, we produce and sell soft distributed through company-owned opera- drink concentrates to a global licensed tions, the brand has received additional bottler network. We enjoy strong brand focus and attention since we acquired it in recognition led by our flagship RC Cola® and late 1997. our Diet Rite® line of diet flavors and colas. Stewart’s recently introduced a Classic We have three RC businesses. Grape soda. Initial indications, based on Domestically, we’re the primary cola of the early distributor shipments, are that we have independent bottling system. Internationally, a big winner in this terrific grape flavor. we sell our products in 65 countries and have With the opportunity to further lever- experienced significant growth in recent age Triarc’s existing distributor relationships and the early success of Stewart’s Classic Grape soda, we expect 1999 will be another strong growth period for Stewart’s. 4 years. We are also the exclusive supplier INCREASING ARBY’S® FRANCHISEES’ UNIT VOLUME of cola concentrate and a primary supplier of flavor concentrates to Cott Corporation, Arby’s is a “cut above” quick service restau- the largest supplier of premium retailer rant (“QSR”) franchisor – the leader in the branded beverages in North America and roast beef sandwich market, with a chicken the United Kingdom. menu second to none, the only appetizer 1998 was a year of positive change for line in the QSR segment, a strong lineup RC. We introduced a new look for RC, the of subs and an unequaled menu of potato brand’s first package upgrade in nearly a products. In addition, through co-brands decade, which has dramatically increased T.J.