Carrols Corp – ‘10-K’ for 12/31/00

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Annual Report   —   Form 10-K
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Document/Exhibit                   Description                      Pages   Size 

 1: 10-K        Annual Report                                         71    400K 
 2: EX-21.1     Subsidiaries of the Registrant                         1      5K 

10-K   —   Annual Report
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UNITED STATES 
SECURITIES AND EXCHANGE COMMISSION  
WASHINGTON, D.C. 20549  

FORM 10-K 

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

For Fiscal Year Ended December 31, 2000 

Commission File Number: 0-25629 

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

CARROLS CORPORATION 
(Exact name of Registrant as specified in its charter)  

Delaware                              16-0958146  
 (State or other jurisdiction        (I.R.S. EmployerIdentification No.)
ofincorporation or organization)                                          

968 James Street                             13203        
Syracuse, New York                          (Zip Code)      
(Address of principal executive                                         
office)                                         

Registrant's telephone number, including area code: (315) 424-0513  

Securities registered pursuant to Section 12(b) of the Act: None  

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

9 1/2% SENIOR SUBORDINATED NOTES DUE 2008 

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 the 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]                                                

The aggregate market value of the voting stock held by non-affiliates of the
Registrant: No voting stock is held by non-affiliates.                          

The number of shares outstanding of each of the Registrant's classes of     
common stock, as of March 26, 2001: 10.                                         

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The Company uses a 52-53 week fiscal year ending on the Sunday closest to   
December 31. All references herein to the fiscal years ended January 3, 1999,   
January 2, 2000 and December 31, 2000 will hereinafter be referred to as the    
fiscal years ended December 31, 1998, 1999 and 2000, respectively.              

PART I  

This 2000 Annual Report on Form 10-K contains statements which constitute   
forward-looking statements within the meaning of Section 27A of the Securities  
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of      
1934, as amended. Those statements include statements regarding the intent,     
belief or current expectations of the Registrant and its management team.       
Investors are cautioned that any such forward-looking statements are not        
guarantees of future performance and involve risks and uncertainties, and that  
actual results may differ materially from those projected in the forward-       
looking statements. Such risks and uncertainties include, among other things,   
competitive conditions, economic and regulatory factors, general economic       
conditions, fluctuations in commodity prices, availability of restaurant        
supply and distribution of product, liquidity of major distributors, labor      
costs, the ability of the Registrant to manage its growth and successfully      
implement its business strategy and other risks and uncertainties that are      
discussed herein.                                                               

Item 1. Business                                                                

Overview                                                                        

Who We Are                                                                    

  We are one of the largest restaurant companies in the U.S. operating more than
520 restaurants in 17 states. We are the second largest Burger King(R)          
franchisee in the world and have operated Burger King restaurants since 1976. As
of December 31, 2000, we operated 355 Burger King restaurants located in 13     
Northeastern, Midwestern and Southeastern states. We also operate two regional  
Hispanic restaurant chains, Taco Cabana and Pollo Tropical, that operate or     
franchise more than 200 restaurants.                                            

We have acquired and constructed Burger King restaurants resulting in a 53% 
increase in the number of restaurants we operate since the end of fiscal 1996.  
We have also enhanced the quality of operations and have grown our Burger King  
restaurant sales from $240.8 million in 1996 to $371.3 million in 2000.         

We have also expanded our operations during the past three years through the
acquisition of two regional quick-casual Hispanic restaurant chains. In July    
1998 we acquired Pollo Tropical Inc., a restaurant chain featuring grilled      
marinated chicken and authentic "made from scratch" side dishes, for a cash     
purchase price of approximately $95 million. Since the acquisition we have      
expanded this concept almost 40% by opening 14 new Pollo Tropical restaurants.  
At December 31, 2000 we had 49 company owned Pollo Tropical restaurants in      
Florida and 24 franchised Pollo Tropical restaurants, primarily in Puerto Rico. 
Total Pollo Tropical revenues were $90.0 million in 2000.                       

On December 19, 2000 we acquired Taco Cabana Inc., a restaurant chain       
featuring Tex-Mex style food including flame-grilled beef and chicken fajitas,  
quesadillas, and fresh flour tortillas, for a total purchase price of           
approximately $154.7 million. As of December 31, 2000 we had 117 company owned  
Taco Cabana restaurants located in Texas, Oklahoma and Arizona and 10 franchised
Taco Cabana restaurants. Although not included in our results for the entire    
year, Taco Cabana's revenues were $170.7 million in 2000. See Note 9 "Business  
Segment Information" in Item 14.                                                

Due to our acquisitions and the increase in the number of Burger King       
restaurants over the past five years, our total revenues have increased         
approximately 94% from $240.8 million in 1996 to $466.9 million in 2000 and     
our EBITDA (earnings before interest, income taxes, depreciation, amortization  
and other income) has increased approximately 90% from $31.5 million in 1996    
to $59.9 million in 2000.                                                       

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Burger King                                                                   

Burger King is the second largest quick-service hamburger restaurant chain  
in the world, with approximately 11,300 restaurants throughout the U.S. and in  
58 foreign countries as of January 31, 2001. In fiscal 2000, Burger King        
Corporation ("BKC") reported worldwide sales of approximately $11.4 billion     
including $8.7 billion from its restaurants in the U.S. Burger King             
restaurants are quick-service restaurants of distinctive design which feature   
flame-broiled hamburgers and serve several widely known, trademarked products,  
the most popular being the WHOPPER(R) sandwich.                                 

We believe that the primary competitive advantages of Burger King           
restaurants are:                                                                

. convenience of location;                                                  
. speed of service;                                                         
. quality; and                                                              
. price.                                                                    

Pollo Tropical                                                                

We operate and franchise Pollo Tropical quick-casual restaurants featuring  
fresh grilled chicken marinated in a proprietary blend of tropical fruit        
juices and spices and authentic "made from scratch" side dishes. The menu       
emphasizes freshness and quality with a focus on flavorful chicken served "hot  
off the grill." Pollo Tropical restaurants combine high quality, distinctive    
menu items and an inviting tropical setting with the convenience and value of   
quick-service restaurants.                                                      

Pollo Tropical opened its first company-owned restaurant in 1988 in Miami   
and its first international franchised restaurant in 1995 in Puerto Rico. As    
of December 31, 2000, we owned and operated 49 Pollo Tropical restaurants, all  
located in south and central Florida, and we franchised 24 Pollo Tropical       
restaurants, 18 of which are located in Puerto Rico, three in Ecuador and one   
location each in Aruba, El Salvador and Miami. For the year ended December 31,  
2000, Pollo Tropical's average restaurant sales were approximately $2 million,  
which we believe is among the highest in the quick-service restaurant industry. 

Our acquisition of Pollo Tropical has allowed us to:                        

. broaden our opportunities to build additional restaurants;                
. expand our geographic presence;                                           
. diversify our revenue base;                                               
. increase our cash flow; and                                               
. enhance our operating margins.                                            

Taco Cabana                                                                   

Acquired in December 2000, our Taco Cabana restaurants feature fresh,       
premium quality Tex-Mex and traditional Mexican style food. Menu items include  
flame-grilled beef and chicken fajitas, rotisserie chicken, quesadillas,        
traditional Mexican and American breakfasts, other Tex-Mex dishes and fresh-    
made flour tortillas. Many of Taco Cabana's menu items are "sharing" foods      
designed for families and large groups. Unlike many of its competitors, most    
menu items are made fresh daily in each of our Taco Cabana restaurants. Taco    
Cabana restaurants also offer a variety of beverage choices, including          
margaritas and beer.                                                            

Taco Cabana pioneered the Mexican patio cafe concept with its first         
restaurant in 1978 and as of December 31, 2000 operated 117 restaurants, 106 of 
which are located in Texas. For the year ended December 31, 2000, Taco Cabana's 
average restaurant sales were approximately $1.5 million.                       

Our acquisition of Taco Cabana will allow us to:                            

. further expand our geographic presence in areas with high population      
growth;                                                                 
. further diversify our revenue base into the Tex-Mex restaurant segment;   
. enhance our overall operating margins and cash flow; and                  
. capitalize on the significant growth of the Hispanic population in the    
United States.                                                          

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The Industry                                                                  

The quick-service restaurant industry, which includes hamburgers, pizza,    
chicken, various types of sandwiches and Mexican and other ethnic foods, has    
experienced consistent growth. The National Restaurant Association estimated    
that sales at quick-service restaurants would reach approximately $114.7        
billion in 2000, compared with approximately $61.4 billion in 1988. This        
growth in the quick-service restaurant industry reflects consumers' increasing  
desire for a convenient, reasonably priced restaurant experience. In addition,  
consumer need for meals and snacks prepared outside of the home has increased   
as a result of the greater numbers of working women and single parent           
families. According to the National Restaurant Association, the percentage of   
the average family's food budget spent on meals consumed "away from home" has   
grown from approximately 25% of the food budget in 1955 to almost 50% in 2000.  

Competitive Strengths                                                           

We attribute our success in the quick-service restaurant industry to the    
following competitive strengths:                                                

One of the Largest Burger King Franchisees. We are the second largest Burger
King franchisee in the world. We believe that our leadership position,          
together with our experienced management team, effective management             
information systems, an extensive infrastructure and a proven track record for  
integrating acquisitions and new restaurants, provide us with attractive        
opportunities to build and acquire additional restaurants. In addition, we      
believe that these factors enable us to enhance restaurant margins and overall  
performance and allow us to operate more efficiently than most other Burger     
King franchisees.                                                               

Strong Brand Names. We believe all of our restaurant concepts are highly    
recognized brands in their market areas.                                        

Burger King                                                                   

Since the formation of BKC in 1954, the Burger King brand has become one of 
the most recognized brands in the restaurant industry. BKC spends between 4%    
and 5% of total system sales on advertising per year (approximately $500        
million in 2000 and approximately $2.2 billion over the past five years). The   
strong Burger King brand, coupled with the quality and value of the food and    
convenience of its restaurants, has provided growth for the Burger King system. 

Pollo Tropical                                                                

Pollo Tropical is one of the most highly recognized quick-service restaurant
brands in Pollo Tropical's core markets of south and central Florida. We        
believe that the following factors have led to the success of the Pollo         
Tropical concept:                                                               

. strong brand awareness in Pollo Tropical's core markets;                  
. high frequency of visits and loyalty among our Hispanic customers; and    
. positioning of our menu to capitalize on the growing consumer preference  
for both healthier and ethnic foods.                                    

Taco Cabana                                                                   

Taco Cabana is a highly recognized brand in its Texas core markets. Of the  
117 Taco Cabana restaurants we operated as of December 31, 2000, a total of     
101 restaurants are concentrated in four major markets: San Antonio, Houston,   
Dallas/Fort Worth and Austin. Taco Cabana has converted or re-imaged            
substantially all of its existing restaurants over the past three years. This   
new design enhances Taco Cabana's unique patio cafe image.                      

Stable Cash Flows. We believe that the stability of our operating cash flow 
is due to the proven success of our Burger King, Pollo Tropical and Taco        
Cabana restaurant concepts and our consistent focus on restaurant operations.   
During the past five years, our restaurant level EBITDA (EBITDA before general  
and administrative expenses) margins for our Burger King restaurants ranged     
between 14.5% and 17.4% and averaged 15.9%. In addition, over the same period,  
restaurant level EBITDA margins for our Pollo Tropical restaurants has ranged   

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between 18.7% and 25.6% and averaged 23.9%. Aggregate cash flow from total      
Company operations has increased from $14.3 million in 1996 to $49.7 million in 
2000.  We believe that the stability and diversification of our cash flow       
provides us with adequate liquidity to meet our cash flow needs and to pursue   
additional growth.                                                              

Diversified Locations and Restaurant Concepts. Over the past five years, we 
have increased the number of Burger King restaurants we own by over 50% and we  
have increased our geographic presence from nine states to 13 states. Our       
acquisitions of Pollo Tropical with its restaurants in Florida, the Caribbean   
and Central and South America and Taco Cabana with its restaurants in Texas     
and the Southwest have further expanded our geographic presence. We believe     
this geographic expansion and continued restaurant growth from these concepts   
enable us to capitalize on regions that have rapidly growing populations and    
to further reduce our dependence on the economic performance of any one         
particular region or restaurant concept.                                        

Experienced Management Team with a Significant Equity Stake. Our senior     
management team, headed by Chairman and Chief Executive Officer Alan Vituli     
and President and Chief Operating Officer Daniel T. Accordino, has a long and   
successful history of developing, acquiring and operating quick-service         
restaurants. Under their leadership and direction, we have become one of the    
world's largest Burger King franchisees. Mr. Accordino oversees all Company     
operations. For our Burger King restaurants he leads a team of five regional    
operating directors who have an average of 26 years of restaurant industry      
experience and 48 district managers who have an average of 16 years of          
restaurant management experience in the Burger King system. In addition,        
Nicholas A. Castaldo, President and Chief Operating Officer of our Pollo        
Tropical Division has over 20 years experience in the restaurant industry. Our  
management owns (on a fully diluted basis) approximately 12% of Carrols         
Holdings, which owns 100% of our stock. Our regional and district managers      
also hold options to acquire equity in Carrols Holdings.                        

Business Strategy                                                               

Our business strategy is to continue to increase revenues and cash flow     
through the construction of new restaurants and selective acquisitions, and to  
increase operating efficiencies. Based on our historical performance, we believe
that our business strategy represents a low-risk growth plan. Our strategy is   
based on the following components:                                              

Leverage Brand Names. We realize significant benefits as a Burger King      
franchisee and owner of the Pollo Tropical and Taco Cabana restaurant           
concepts. These benefits are the result of the following:                       

. widespread recognition of the Burger King brand;                          
. the size and penetration of BKC's advertising;                            
. BKC's management of the Burger King brand, including new product          
development; and                                                        
. strong recognition of the Pollo Tropical and Taco Cabana brands in their  
core markets.                                                           

We believe that all three of our brands provide opportunities to expand our     
operations both within and outside our existing geographic markets.             

Develop Additional Restaurants in Existing Markets. We believe that our     
existing markets will continue to provide opportunities for the development of  
new restaurants. We look to develop restaurants in those of our markets that    
we believe are underpenetrated and where the demographic characteristics are    
favorable for the development of new restaurants. Our own staff of real estate  
and construction professionals conduct our new restaurant development. Before   
developing a new restaurant, we conduct an extensive site selection and         
evaluation process which includes in-depth demographic, market and financial    
analysis. By selectively increasing the number of restaurants we operate in a   
particular market, we can effectively leverage our management, corporate        
infrastructure and local marketing while increasing brand awareness.            

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Selectively Acquire Burger King Restaurants. The Burger King system is      
highly fragmented in the U.S., with approximately 7,800 Burger King             
restaurants being operated by approximately 1,600 franchisees. We expect to     
continue to be a buyer of Burger King restaurants and we believe that           
opportunities for selective acquisitions will continue in both existing and     
new geographic markets as smaller franchisees seek liquidity through the sale   
of their restaurants. As one of the largest Burger King franchisees with a      
demonstrated ability to effectively integrate acquisitions, we believe that we  
are better positioned to capitalize on potential acquisitions than many other   
Burger King franchisees. We believe that by acquiring additional Burger King    
restaurants, we can achieve operating efficiencies from our ability to improve  
controls over restaurant food costs, more efficiently utilize labor, and        
achieve economies of scale by leveraging our corporate infrastructure.          

Achieve Operating Efficiencies. We maintain a disciplined commitment to     
increasing the profitability of our existing restaurants. Our large base of     
restaurants, management structure and management information systems enable us  
to optimize operating efficiencies for our new and existing restaurants. We are 
able to control restaurant and corporate level costs, capture economies of scale
by leveraging our existing corporate infrastructure and use our sophisticated   
management information and point-of-sale systems to more efficiently manage our 
restaurant operations and to ensure consistent application of operating         
controls. Our size enables us to realize benefits with improved bargaining power
for purchasing and cost management activities. We believe these factors provide 
the basis for increased unit and Company profitability.                         

Consistently Provide Superior Customer Satisfaction. Our operations are     
focused on achieving a high level of customer satisfaction through quick,       
accurate and high-quality customer service. We and BKC have uniform operating   
standards and specifications relating to the following:                         

. quality;                                                                  
. preparation and selection of menu items;                                  
. maintenance and cleanliness; and                                          
. employee conduct.                                                         

We closely supervise the operation of all of our restaurants to help ensure     
that standards and policies are followed and that product quality, customer     
service and cleanliness of the restaurants are maintained at high levels.       

Overview of Restaurant Concepts                                                 

Burger King Restaurants                                                       

"Have It Your Way"(R) service, flame-broiling, generous portions and        
competitive prices characterize the Burger King system marketing strategy.      
Burger King restaurants feature flame-broiled hamburgers, the most popular of   
which is the WHOPPER(R) sandwich. The WHOPPER is a large, flame-broiled         
hamburger on a toasted bun garnished with a combination of mayonnaise,          
lettuce, onions, pickles and tomatoes. The basic menu of all Burger King        
restaurants consists of hamburgers, cheeseburgers, chicken and fish             
sandwiches, breakfast items, french fried potatoes, salads, shakes, desserts,   
soft drinks, milk and coffee. In addition, promotional menu items are           
introduced periodically for limited periods. BKC continually seeks to develop   
new products as it endeavors to enhance the menu and service of Burger King     
restaurants.                                                                    

Our Burger King restaurants are typically open seven days per week with     
minimum operating hours from 6:00 AM to 11:00 PM. Burger King restaurants are   
quick-service restaurants of distinctive design and are generally located in    
high-traffic areas throughout the U.S. We believe that the primary competitive  
advantages of Burger King restaurants are:                                      

. convenience of location;                                                  
. quality;                                                                  
. price; and                                                                
. speed of service.                                                         

Burger King restaurants appeal to a broad spectrum of consumers, with multiple  
day-part meal segments that appeal to different groups of consumers.            

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Our Burger King restaurants consist of one of several building types with   
various seating capacities. BKC's traditional restaurant contains               
approximately 2,800 to 3,200 square feet with seating capacity for 90 to 100    
customers, has drive-thru service windows, and has adjacent parking areas. At   
December 31, 2000, 340 of our 355 Burger King restaurants were freestanding.    

Pollo Tropical Restaurants                                                    

Pollo Tropical restaurants combine high quality, distinctive taste and an   
inviting tropical setting with the convenience and value pricing of quick-      
service restaurants. Pollo Tropical restaurants offer a unique selection of     
food items reflecting tropical and Caribbean influences and feature grilled     
fresh chicken marinated in a proprietary blend of tropical fruit juices and     
spices. Chicken is grilled in view of customers on large, custom, open-flame    
grills. Pollo Tropical broadened its selection in 1996 by adding "island" pork  
to the menu, and in 1997 by adding a line of "TropiChops(R)," a bowl            
containing rice, black beans, chicken or pork and other ingredients at an       
attractive price point to the menu. In 1998, grilled shrimp was added to the    
menu. We also feature an array of distinctive and popular side dishes,          
including black beans and rice, yucatan fries and sweet plantains, as well as   
more traditional menu items such as french fries, corn, and tossed and caesar   
salads. We also offer freshly prepared tropical desserts, such as flan and      
tres leches.                                                                    

Our Pollo Tropical restaurants incorporate high ceilings, large windows,    
tropical plants, light colored woods, decorative tiles, a visually distinctive  
exterior entrance tower, lush landscaping and other signature architectural     
features, all designed to create an airy, inviting and tropical atmosphere. We  
design our restaurants to conveniently serve a high volume of customer traffic  
while retaining an inviting, casual atmosphere.                                 

Our Pollo Tropical restaurants are generally open for lunch and dinner seven
days per week from 11:00 AM to 10:00 PM (11:00 PM on Friday and Saturday) and   
offer sit-down dining, counter take-out and drive-thru service to accommodate   
the varied schedules of families, business people, students and other time-     
sensitive individuals. Our menu offers a variety of portion sizes to            
accommodate a single customer, family or large group. Pollo Tropical            
restaurants also offer an economical catering menu, with special prices and     
portions to serve 25 to 500 persons.                                            

Our Pollo Tropical restaurants typically provide seating for 80 to 100      
customers and provide drive-thru service. All of our Pollo Tropical             
restaurants are free-standing buildings except for three locations contained    
within strip shopping centers and one street-level storefront location in an    
office building. Our current prototypical freestanding Pollo Tropical           
restaurant ranges between 2,800 and 3,200 square feet in size.                  

Taco Cabana                                                                   

Taco Cabana restaurants feature generous portions of fresh, premium quality 
Tex-Mex and traditional Mexican style food at an exceptional value. The         
restaurants provide interior, semi-enclosed and patio dining areas with a       
festive Mexican theme. Menu items include flame-grilled beef and chicken        
fajitas served on sizzling iron skillets, "Chicken Flameante"(TM) (a marinated  
rotisserie chicken), quesadillas, traditional Mexican and American breakfasts,  
other Tex-Mex dishes and fresh, hot flour tortillas. The menu items offered at  
our Taco Cabana restaurants are prepared at that restaurant from fresh meat     
and produce ingredients delivered by suppliers to most restaurants three times  
each week. Taco Cabana is committed to differentiating itself from other quick  
service competitors by utilizing fresh, high quality ingredients as well as     
the preparation of most items "from scratch". In order to simplify operations   
and provide a more consistent product, Taco Cabana also uses a number of pre-   
prepared items.                                                                 

Taco Cabana restaurants average approximately 3,200 square feet (exclusive  
of the exterior dining area) and provide seating for approximately 80           
customers, with additional patio seating for approximately 50 customers. Taco   
Cabana restaurants are typically distinctive in appearance, conveying a         
Mexican theme and permitting easy identification by passing motorists. During   
1997, Taco Cabana initiated a re-image program for its existing restaurants     
which incorporated many of the features of a new prototype restaurant design    
introduced in 1996 and utilized for subsequent restaurant development.          
Substantially all of Taco Cabana's restaurants have been                        

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converted or re-imaged over the past three years. The new prototype features    
rounded fronts, as well as Southwest accents such as a clay tile roof, heavy    
wood beams and a trellis that shades the patio area, and add the use of bright  
colors outside and inside, including colored tiles, doors, windows and          
awnings. Corrugated metal wall panels, aged wood finishes and distressed        
stainless steel counter tops are featured inside, all of which are intended to  
replicate an old Mexican cafe.                                                  

Taco Cabana's interior restaurant design enables customers to observe fresh 
fajitas cooking on a charcoal grill, a machine making fresh, hot flour          
tortillas, Chicken Flameante(TM) rotating on spits and the preparation of       
other food items. Upon entry, the customer places an order selected from an     
overhead menu board, proceeds down a service line to where the order is picked  
up, and then passes a Salsa Bar en route to the dining area. The distinctive    
Salsa Bar offers Taco Cabana customers freshly prepared, authentic Tex-Mex      
ingredients such as Salsa de Fuego (made with charred peppers and tomatoes,)    
pico de gallo and salsa (all "made from scratch" throughout the day at each     
restaurant), cilantro, pickled jalapeno slices, crisp chopped onions, and       
fresh sliced limes. According to the season, time of day and personal           
preference, our customers can choose to dine in the restaurant's brightly       
colored and festive interior dining area or in either the semi-enclosed or      
outdoor patio areas.                                                            

We operate our Taco Cabana restaurants to enable customers to dine-in or    
take-out, as they choose. In most cases, the restaurants also provide the       
convenience of drive-thru windows which, in the aggregate, accounted for 42.4%  
of restaurant sales for the year ended December 31, 2000. A majority of our     
Taco Cabana restaurants are open 24 hours a day. This strategy is continually   
evaluated for economic viability on a restaurant by restaurant basis.           

Restaurant Economics                                                            

Burger King Restaurants                                                       

For fiscal 2000, our Burger King restaurants generated average sales of     
$1,055,000 and average restaurant level EBITDA of $174,000. Drive-thru sales    
contributed 57.4% of restaurant sales. In all but 19 locations, which are       
primarily in malls, our Burger King restaurants have a drive-thru window.       
Percentages of total sales by day part were as follows for the year ended       
December 31, 2000:                                                              

                                                                [Download Table]
                                                                           
Breakfast........................................................     14.7%
Lunch............................................................     33.3%
Dinner...........................................................     27.0%
Late Afternoon & Late Night Snacks............................... Remainder

The average sales transaction was $4.16 in 2000.                                

The cost of the franchise fee, equipment, seating, signage and other        
interior costs of a standard new Burger King restaurant is approximately        
$265,000 (excluding the cost of the land, building, and site improvements).     
The cost of land generally ranges from $200,000 to $500,000. The cost of        
building and site improvements generally ranges from $500,000 to $550,000. We   
typically lease the real estate associated with our Burger King restaurants.    

Pollo Tropical Restaurants                                                    

For the year ended December 31, 2000, our Pollo Tropical restaurants        
generated average sales of $1,951,000 and average restaurant level EBITDA of    
$499,000. Pollo Tropical restaurant sales are well balanced by method of        
service and by day part. For 2000, drive-thru sales contributed 37.3% of        
restaurant sales and take-out sales accounted for 23.2% of total sales.         
Percentages of total sales by day part are as follows:                          

                                                                [Download Table]
                                                                           
Lunch................................................................ 45.8%
Dinner............................................................... 54.2%

The average sales transaction was $7.95 in 2000.                                

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The cost of equipment, seating, signage and other interior costs of a       
standard new Pollo Tropical restaurant is approximately $240,000 (excluding     
the cost of the land, building, and site improvements). The cost of land        
generally ranges from $450,000 to $700,000. The cost of building and site       
improvements generally ranges from $550,000 to $650,000. We typically lease     
the real estate associated with our Pollo Tropical restaurants.                 

Taco Cabana Restaurants                                                       

Although not included in our results for the entire year, for the year ended
December 31, 2000, Taco Cabana generated average restaurant sales of            
$1,510,000 and average restaurant level EBITDA of $329,000.                     

The majority of our Taco Cabana restaurants are open 24 hours a day. Sales  
at the restaurants are well balanced by day part. Percentages of total sales    
by day part are as follows:                                                     

                                                                [Download Table]
                                                                           
Breakfast........................................................     15.2%
Lunch............................................................     22.1%
Dinner...........................................................     23.6%
Late Night (9pm to 2am)..........................................     17.0%
Other (2pm to 5pm and 2am to 6:30am)............................. Remainder

The average sales transaction was $6.29 in 2000.                                

The cost of equipment, seating, signage and other interior costs of a       
standard new Taco Cabana restaurant is approximately $400,000 (excluding the    
cost of the land, building and site improvements). The cost of the land         
generally ranges from $450,000 to $750,000. The cost of building and site       
improvements generally ranges from $550,000 to $650,000. We will typically      
lease the real estate associated with our Taco Cabana restaurants.              

Restaurant Locations                                                            

Burger King                                                                   

The following table sets forth the locations of the 355 Burger King         
restaurants we operated at December 31, 2000.                                   

                                                                [Download Table]

                                                                   Total   
State                                                           Restaurants
-----                                                           -----------
                                                                           
Connecticut....................................................       1    
Indiana........................................................       5    
Kentucky.......................................................      10    
Maine..........................................................       5    
Massachusetts..................................................       2    
Michigan.......................................................      27    
New Jersey.....................................................       2    
New York.......................................................     153    
North Carolina.................................................      38    
Ohio...........................................................      75    
Pennsylvania...................................................      14    
South Carolina.................................................      22    
Vermont........................................................       1    
                                                                    ---    
  Total........................................................     355    
                                                                    ===    

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Pollo Tropical                                                                

As of December 31, 2000, we owned and operated 49 Pollo Tropical            
restaurants, all located in Florida. In addition, of our 24 franchised Pollo    
Tropical restaurants, 19 are located in Puerto Rico, three are located in       
Ecuador and Aruba, El Salvador and Miami each have one location.                

Taco Cabana                                                                   

As of December 31, 2000, we owned and operated 117 Taco Cabana restaurants  
and franchised 10 Taco Cabana restaurants located in the following states:      

                                                                [Download Table]

                                                     Owned Franchised Total
                                                     ----- ---------- -----
                                                                           
Texas...............................................  106       6      112 
Oklahoma............................................    8     --         8 
Arizona.............................................    3     --         3 
New Mexico..........................................  --        2        2 
Georgia.............................................  --        1        1 
Indiana.............................................  --        1        1 
                                                      ---     ---      --- 
  Total.............................................  117      10      127 
                                                      ===     ===      === 

Operations                                                                      

Management Structure                                                          

We conduct substantially all of our executive management, finance, marketing
and operations support functions from our corporate headquarters in Syracuse,   
New York, or our Pollo Tropical headquarters in Miami, Florida or our Taco      
Cabana headquarters in San Antonio, Texas. With respect to our Burger King      
operations, we currently have five regional directors with an average of 26     
years of restaurant industry experience, three of whom are vice presidents.     
Each of our regional directors is responsible for the operations of our Burger  
King restaurants in their assigned region. We have employed four of our         
regional directors for over 20 years. Forty-eight district supervisors support  
the regional directors. Our district supervisors have an average of 16 years    
of restaurant management experience in the Burger King system. The management   
structure for Pollo Tropical consists of a Vice President of Operations who is  
supported by five district supervisors. The management structure of Taco        
Cabana consists of two regional vice presidents supported by 17 district        
supervisors.                                                                    

For each of a our brands a district supervisor is responsible for the direct
oversight of the day-to-day operations of an average of seven restaurants.      
Typically, district supervisors have previously served as restaurant managers   
at one of our restaurants. Both regional directors and district supervisors     
are compensated with a fixed salary plus an incentive bonus based upon the      
performance of the restaurants under their supervision. Typically, our          
restaurants are staffed with hourly employees who are supervised by a salaried  
manager and two or three salaried assistant managers.                           

Training                                                                      

We maintain a comprehensive training and development program for all of our 
personnel and provide both classroom and in-restaurant training for our         
salaried and hourly personnel. The program emphasizes system-wide operating     
procedures, food preparation methods and customer service standards for each    
of the concepts. In addition, BKC's training and development programs are also  
available to us.                                                                

Management Information Systems                                                

We believe that our management information systems, which are more          
sophisticated than those typically utilized by smaller Burger King franchisees  
and other small quick-service restaurant operators, provide us with the         
ability to more efficiently manage our restaurants and to ensure consistent     
application of operating controls                                               

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throughout the chain. We also believe that our size affords us the ability to   
maintain an in-house staff of information and restaurant systems professionals  
dedicated to continuously enhancing our existing systems. These capabilities    
also allow us to quickly integrate newly acquired restaurants and to leverage   
our investments in information technology over a large base of restaurants.     

Both our Burger King and Taco Cabana restaurants employ state-of-the-art,   
touch-screen point-of-sale (POS) that are designed to facilitate accuracy and   
speed of order taking. These systems are user-friendly, require limited cashier 
training and improve speed-of-service through the use of conversational order-  
taking techniques. The POS systems are integrated with PC-based applications at 
the restaurant that are designed to facilitate financial and management control 
of our restaurant operations.                                                   

Our restaurant systems provide daily tracking and reporting of traffic      
counts, menu item sales, labor and food data, and other key operating           
information for each restaurant. We electronically communicate with our         
restaurants on a daily basis enabling us to collect this information for use in 
our corporate systems. Our Corporate and divisional administrative headquarters 
house client/server-based systems that support all of our accounting, operating 
and reporting systems. We also operate a 24-hour, 7-day help desk at our        
Corporate headquarters which enables us to provide systems and operational      
support to our Burger King restaurant operations as required. Among other       
things, our Burger King and Taco Cabana restaurant information systems provide  
us with the ability to:                                                         

. monitor labor utilization and sales trends on a real-time basis at each   
restaurant enabling the store manager to effectively manage to corporate
established labor standards on a timely basis;                          
. minimize shrinkage using restaurant-level inventory management and        
centralized standard costing systems;                                   
. analyze sales and product mix data and help restaurant management         
personnel forecast production levels;                                   
. systematically communicate payroll transactions and human resource data   
to our divisional administrative offices for efficient centralized      
management of labor costing and payroll processing;                     
. employ centralized control over price, menu and inventory management      
activities at the restaurant utilizing the remote access capabilities of
our systems;                                                            
. take advantage of electronic commerce including our ability to place      
orders with suppliers and to integrate detailed invoice, receiving and  
product data with our inventory and accounting systems;                 
. provide analyses, reporting and tools to enable all levels of management  
to review a wide-range of financial and operating data; and             
. monitor day-part drive-thru speed of service at each of our restaurants.  

Information from our systems is available daily to the restaurant manager,  
who is expected to react quickly to trends or situations in his or her          
restaurant. Our district supervisors also receive daily information for all     
restaurants under their control and have access to key operating data on a      
remote basis using our corporate intranet and laptop computers. Each management 
level, from the restaurant manager through senior management, monitors key      
restaurant performance indicators.                                              

Our Pollo Tropical restaurants utilize in-store computerized point-of-sale  
systems to control cash, collect customer and sales statistics, and to track    
labor and other restaurant data. We believe that we have the ability to         
continue improving the operating efficiencies of the Pollo Tropical restaurants 
as we deploy systems and technology with capabilities similar to those in our   
Burger King and Taco Cabana restaurants. Since our acquisition of Pollo         
Tropical in 1998, we have begun to establish the foundation for these systems   
by installing new versions of POS software, implementing recipe files to        
capture inventory costing data, and by the initial introduction of PC-based     
applications for the restaurant managers.                                       

Site Selection                                                                

We believe that the location of our restaurants is a critical component of  
each restaurant's success. We evaluate potential new development sites based    
upon accessibility, visibility, costs, surrounding traffic patterns,            

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competition and demographic characteristics. Our senior management determines   
the acceptability of all acquisition and new development sites, based upon      
analyses prepared by our real estate professionals and operations personnel.    

Burger King Franchise Agreements                                                

Each of our Burger King restaurants operates under a separate franchise     
agreement. Our franchise agreements with BKC require, among other things, that  
all restaurants be of standardized design and be operated in a prescribed       
manner, including utilization of the standard Burger King menu. Our franchise   
agreements with BKC generally provide for an initial term of 20 years and       
currently have an initial fee of $50,000. BKC may grant a successor franchise   
agreement (renewal) for an additional 20-year term, provided the restaurant     
meets the then current BKC operating standards. The successor BKC franchise     
agreement fee is currently $50,000. Our franchise agreements with BKC are non-  
cancelable except for failure to abide by their terms. We are not in default    
under our franchise agreements with BKC.                                        

In order to obtain a successor franchise agreement with BKC, a franchisee is
typically required to make capital improvements to the Burger King restaurant   
to bring the Burger King restaurant up to BKC's then-current design standards.  
The required capital improvements will vary widely depending upon the magnitude 
of the required changes and the degree to which we have made interim changes to 
the restaurant. Our average remodeling costs for the 105 restaurants we have    
remodeled in the past three years was approximately $258,000. We have four      
franchise agreements expiring in 2001, five franchise agreements expiring in    
2002 and seven franchise agreements expiring in 2003.                           

We believe that we enjoy a good relationship with BKC and that we will      
satisfy BKC's normal successor franchise agreement policies. Accordingly, we    
believe that successor franchise agreements with BKC will be granted on a       
timely basis by BKC at the expiration of our existing franchise agreements with 
BKC. Historically, BKC has granted each of our requests for a successor         
franchise agreement for our restaurants. We cannot assure you, however, that    
BKC will continue to grant each of our requests for successor franchise         
agreements.                                                                     

In addition to the initial franchise fee, we currently pay a monthly royalty
of 3 1/2% of the gross revenues from our Burger King restaurants to BKC. We     
currently also contribute 4% of gross revenues from our Burger King restaurants 
to fund BKC's national and regional advertising. BKC engages in substantial     
national advertising and promotional activities and other efforts to maintain   
and enhance the Burger King brand. We supplement BKC's marketing with local     
advertising and promotional campaigns. See "Business--Advertising and           
Promotion."                                                                     

Our franchise agreements with BKC do not give us exclusive rights to operate
a Burger King restaurant in any defined territory. We believe that BKC          
generally seeks to ensure that newly granted franchises do not materially       
adversely affect the operations of existing Burger King restaurants. There is   
no assurance that a franchise given by BKC to a third party will not adversely  
effect any single Burger King restaurant that we operate.                       

We are required to obtain BKC's consent before we acquire or develop new    
Burger King restaurants. BKC also has the right of first refusal to purchase    
any Burger King restaurant that is being offered for sale by a franchisee. To   
date, BKC has approved all of our acquisitions of Burger King restaurants,      
except for two instances when it exercised its right of first refusal.          

Franchise Fee Changes and Early Successor Program                             

On July 1, 2000, BKC increased its royalty and franchise fees for most new  
restaurants. The franchise fee for new restaurants increased from $40,000 to    
$50,000 for a 20-year agreement and the royalty rate will increase from 3 1/2%  
of sales to 4 1/2% of sales, after a transitional period. For franchise         
agreements entered into during the transitional period, the royalty rate will   
be 4% of sales for the first 10 years and 4 1/2% of sales for the balance of    
the term.                                                                       

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For new restaurants, the transitional period will be from July 1, 2000      
through June 30, 2003. As of July 1, 2003, the royalty rate will become 4 1/2%  
of sales for the full term of new restaurant franchise agreements. For renewals 
of existing franchise agreements, the transitional period will be from July 1,  
2000 through June 30, 2001. As of July 1, 2001, existing restaurants that renew 
their franchise agreements will pay a royalty of 4 1/2% of sales for the full   
term of the renewed agreement. The advertising contribution will remain at 4%   
of sales. The royalty rates under existing franchise agreements are not         
affected by these changes until the time of renewal.                            

BKC is also offering a voluntary program to encourage franchisees to        
accelerate the renewal of their franchise agreements. Franchisees that elect to 
participate in the Early Successor Incentive Program will be required to make   
capital improvements in the restaurants to bring them up to BKC's current       
design image. Franchise agreements entered into under this program will have    
special provisions regarding the royalty rates including a reduction in the     
royalty for a period of time.                                                   

For commitments made prior to July 1, 2000 to renew franchise agreements    
under BKC's Fiscal 2000 early successor program, the renewal franchise fee      
remained at $40,000. The royalty rate under this program will remain at 3 1/2%  
through March 31, 2002, at which time it will then be reduced to 2 3/4% for the 
following five-year period. The royalty rate reverts back to 3 1/2% effective   
April 1, 2007 for the remainder of any of the initial franchise term, and then  
increases to 4 1/2% for the balance of the new agreement. The capital           
improvements required in conjunction with the successor franchise renewal under 
this program must be completed by December 31, 2001.                            

For commitments made between July 1, 2000 and June 30, 2001 to renew        
franchise agreements under BKC's Fiscal 2001 early successor program, the       
renewal franchise fee will increase to $50,000. The royalty rate will remain at 
3 1/2% through September 30, 2002, at which time it will be reduced to 3% for a 
three-year period. The royalty rate reverts back to 3 1/2% effective October 1, 
2005 for the remainder of any of the initial franchise term, and then increases 
to 4 1/2% for the balance of the new agreement. The capital improvements        
required in conjunction with the successor franchise renewal under this program 
must be completed by June 30, 2002.                                             

After evaluating the applicable royalty reductions and the acceleration of  
the required capital improvements, we elected to renew 45 franchise agreements  
under BKC's Fiscal 2000 early successor program. The capital investments and    
franchise fees related to these 45 renewals were $6.7 million in 2000 and are   
estimated to be approximately $8.2 million in 2001. It is our intention to      
elect to renew 15 franchise agreements under the Fiscal 2001 early successor    
program. The capital investments and franchise fees for these 15 renewals are   
estimated to be approximately $6 million and will be invested in 2002.          

Transformation Initiatives                                                    

BKC has initiatives underway to encourage and facilitate franchisees'       
investment in certain upgrades to their restaurants. These transformation       
initiatives include the installation of new signage with the new Burger King    
logos, and where necessary, expenditures for painting, parking lot maintenance  
and landscaping. In addition, BKC is in the process of approving a drive-thru   
equipment package. BKC is also evaluating potential changes to the kitchen      
including a new flexible broiler capable of cooking at different speeds and     
temperatures facilitating the preparation of a wider variety of menu items. By  
an amendment to our franchise agreements, we have committed:                    

. to install the new signage in substantially all of our restaurants by     
December 31, 2001;                                                      
. to "spruce up" our restaurants in 2000 to the extent necessary, including 
painting, parking lot sealing/striping, and landscaping;                
. to install the drive-thru package, once mandated for use by BKC, no later 
than December 31, 2001; and                                             
. to roll-out and install the new kitchen initiatives if and when approved  
and mandated by BKC.                                                    

 BKC has also arranged for the Coca-Cola Company and Dr. Pepper/Seven-Up, Inc.
to make funds available to franchisees to be used in connection with the        
transformation initiatives. By agreeing to make the investments associated with 
the transformation initiatives, we received in 2000 $56,000 per restaurant or   
approximately $19.8 million in the aggregate, from the fund established by      
Coca-Cola and Dr. Pepper.                                                       

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In 2000 we had total expenditures of $1.6 million related to these          
activities. We are presently evaluating, in detail, the nature, timing and      
amount of the remaining required capital investments. Excluding expenditures    
that relate to changes to the kitchen, which are not yet finalized by BKC, we   
estimate total expenditures in 2001 of $5.6 million relating to these           
activities.                                                                     

Pollo Tropical Franchise Operations                                             

 At December 31, 2000 Pollo Tropical had five franchisees operating a total of
24 Pollo Tropical restaurants located in Puerto Rico, Ecuador, Aruba, El        
Salvador and Miami. We are currently evaluating our international franchising   
opportunities.                                                                  

Our standard franchise agreement under which we franchise Pollo Tropical    
restaurants to independent restaurant operators has a 15-year term (with one    
15-year renewal option) and provides for an initial payment by the franchisee   
of a portion of all franchise fees upon signing of the area development and     
franchise agreements, with the remainder due before the opening of the          
franchisee's Pollo Tropical restaurants. The franchisee also pays a continuing  
royalty, based upon gross sales. The terms and conditions of these franchise    
agreements will vary depending upon a number of factors, including:             

. the experience and resources of the franchisee;                           
. the size and density of the covered territory;                            
. the number of units to be developed;                                      
. the schedule for development;                                             
. capital requirements; and                                                 
. fee and royalty arrangements.                                             

All franchisees are required to operate their restaurants in compliance with
certain methods, standards and specifications developed by Pollo Tropical       
regarding such matters as menu items, recipes, food preparation, materials,     
supplies, services, fixtures, furnishings, decor and signs, although the        
franchisee has discretion to determine the prices to be charged to customers.   
In addition, all franchisees are required to purchase substantially all food,   
ingredients, supplies and materials from suppliers approved by us.              

Taco Cabana Franchise Operations                                                

As of December 31, 2000, Taco Cabana had five franchisees operating a total 
of 10 Taco Cabana restaurants. Taco Cabana did not enter into any new           
franchise agreements during 2000 and does not currently anticipate entering     
into any new franchise agreements during 2001.                                  

Advertising and Promotion                                                       

The efficiency and quality of advertising and promotional programs can      
significantly affect quick-service restaurant businesses. We believe that one   
of the major advantages of being a Burger King franchisee is the value of the   
extensive regional and national advertising and promotional programs conducted  
by BKC. In addition to the benefits derived from BKC's advertising spending,    
which according to information published by BKC was approximately $500 million  
for fiscal 2000, we supplement BKC's advertising and promotional activities     
with local advertising and promotions, including the purchase of additional     
television, radio and print advertising. Our concentration of restaurants in    
many of our markets permits us to leverage advertising in those markets. We     
also utilize promotional programs, such as combination value meals and          
discounted prices, targeted to our customers, in order to create a flexible     
and directed marketing program.                                                 

We are generally required to contribute 4% of gross revenues from restaurant
operations to an advertising fund utilized by BKC for its advertising,          
promotional programs and public relations activities. BKC's advertising         
programs consist of national campaigns supplemented by local advertising.       
BKC's advertising campaigns are generally carried on television, radio and in   
circulated print media (national and regional newspapers and magazines).        

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We believe that brand awareness for our Pollo Tropical restaurants is       
extremely high because of the concentration of our restaurants in the south     
Florida markets. Pollo Tropical restaurants are clustered in target markets in  
order to maximize the effectiveness of our advertising efforts. Pollo Tropical  
advertises in both English and Spanish media throughout the year, including     
television, radio and print advertising. Pollo Tropical also has marketed at    
the individual restaurant level through special price offerings, coupon         
discounts and unique promotional and public relations programs. Pollo Tropical  
spent approximately 3.9%, 4.0% and 4.1% of restaurant sales on advertising in   
fiscal 2000, 1999, and 1998, respectively.                                      

Taco Cabana utilizes an integrated, multi-level marketing approach that     
includes periodic chain-wide promotions, direct mail, in-store promotions,      
local store marketing and other strategies, including the use of radio          
advertising in its major markets. Going forward we also intend to utilize       
television advertising. Taco Cabana has spent approximately 3.8% of restaurant  
sales on advertising over the past three years.                                 

Supplies and Distribution                                                       

We are a member of a national purchasing cooperative created for the Burger 
King system known as Restaurant Services, Inc. Restaurant Services is a non-    
profit independent cooperative which acts as the purchasing agent for approved  
distributors to the system and serves to negotiate the lowest cost for the      
Burger King system. We use our purchasing power to negotiate directly with      
certain other vendors, to obtain favorable pricing and terms for supplying our  
restaurants.                                                                    

For our Burger King restaurants we are required to purchase all of our      
foodstuffs, paper goods and packaging materials from BKC-approved suppliers. We 
may purchase non-food items such as kitchen utensils, equipment maintenance     
tools and other supplies from any suitable source provided that such items meet 
BKC product uniformity standards. All BKC-approved suppliers are required to    
purchase foodstuffs and supplies from BKC-approved manufacturers and purveyors. 
BKC is responsible for monitoring quality control and supervision of these      
manufacturers and conducts regular visits to observe the preparation of         
foodstuffs, and to run various tests to ensure that only high quality foodstuffs
are sold to BKC-approved suppliers. In addition, BKC coordinates and supervises 
audits of approved suppliers and distributors to determine continuing product   
specification compliance and to ensure that manufacturing plant and distribution
center standards are met.                                                       

We previously obtained substantially all of our foodstuffs for our Burger   
King restaurants (other than bread products which we purchase from local        
bakeries), paper goods, promotional premiums and packaging materials from       
AmeriServe Food Distribution, Inc. under a supply contract which expired on     
May 15, 2000. We have entered into new supply agreements each for terms of up   
to five years with four BKC-approved suppliers who are servicing our            
restaurants utilizing a total of seven distribution centers in various          
geographical regions. The transition to our new suppliers was completed in      
June 2000.                                                                      

For our Pollo Tropical and Taco Cabana restaurants, we have negotiated      
directly with local and national suppliers for the purchase of food and         
beverage products and supplies to ensure consistent quality and freshness and   
to obtain competitive prices. Pollo Tropical and Taco Cabana restaurant's food  
and supplies are ordered from approved suppliers and are shipped directly to    
the restaurants. Both brands are responsible for monitoring quality control     
and supervision of these suppliers and conduct inspections to observe the       
preparation and quality of products purchased. For a majority of our Taco       
Cabana restaurants, SYGMA Network, Inc. (SYGMA) serves as the primary           
distributor of food and beverage products and supplies. SYGMA purchases,        
warehouses and distributes products for these restaurants under a distribution  
service agreement that expires on August 9, 2003.                               

If a significant disruption in service or supply by any of our suppliers    
were to occur, it could create disruptions in the operations of our             
restaurants, which could have a material adverse effect on us.                  

Quality Assurance                                                               

At each of our three brands we focus our operations on achieving a high     
level of customer satisfaction with speed, accuracy and quality of service      
that is closely monitored. Our senior management and restaurant                 

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management staff are principally responsible for ensuring compliance with our   
operating policies, and with respect to our Burger King restaurants, BKC's      
required operating procedures as well. We have uniform operating standards and  
specifications relating to the quality, preparation and selection of menu items,
maintenance and cleanliness of the premises and employee conduct. In order to   
help maintain compliance with these operating standards and specifications, we  
distribute to our restaurant operations management team detailed reports        
measuring compliance with various customer service standards and objectives.    

We also operate in accordance with quality assurance and health standards   
set by Federal, state and local governmental laws and regulations. These        
standards include food preparation rules regarding, among other things,         
minimum cooking times and temperatures, maximum time standards for holding      
prepared food, food handling guidelines and cleanliness. To maintain these      
standards, we conduct unscheduled inspections of our restaurants In addition,   
restaurant managers conduct internal inspections for taste, quality, cleanliness
and food safety on a regular basis.                                             

Trademarks                                                                      

Taco Cabana has registered its principal Taco Cabana logo and design with   
the United States Patent and Trademark Office on the Principal Register as a    
service mark for its restaurant services. It also has secured or has applied    
for state and federal registrations of several other advertising or             
promotional marks, including variations of its principal mark and has applied   
for registrations in foreign countries of its principal mark and several other  
marks.                                                                          

Pollo Tropical has registered its principal trademarks for "Pollo           
Tropical(R)," "TropiGrill(R)" and "TropiChops(R)" in the United States and      
presently has applications pending or registrations granted in various foreign  
countries in which it conducts business or may conduct business through its     
franchise system. In certain foreign countries, Pollo Tropical has been         
involved in trademark opposition proceedings to defend its rights to register   
certain trademarks. We intend to protect both Taco Cabana and Pollo Tropical    
trademarks by appropriate legal action whenever necessary.                      

Other than the Pollo Tropical and Taco Cabana trademarks, we have no        
proprietary intellectual property other than the logo and trademark of Carrols  
Corporation. As a franchisee of Burger King, we also have contractual rights    
to use certain BKC-owned trademarks, servicemarks and other intellectual        
property relating to the Burger King concept.                                   

Government Regulation                                                           

Various Federal, state and local laws affect our business, including various
health, sanitation, fire and safety standards. Restaurants to be constructed    
or remodeled are subject to state and local building code and zoning            
requirements. In connection with the construction and remodeling of our         
restaurants, we may incur costs to meet certain Federal, state and local        
regulations, including regulations promulgated under the Americans with         
Disabilities Act.                                                               

We are subject to the Federal Fair Labor Standards Act and various state    
laws governing such matters as:                                                 

. minimum wage requirements;                                                
. overtime; and                                                             
. other working conditions and citizenship requirements.                    

A significant number of our food service personnel are paid at rates related
to the Federal minimum wage and, accordingly, increases in the minimum wage     
have increased wage rates at our restaurants.                                   

We are also subject to various Federal, state and local environmental laws, 
rules and regulations. We believe that we conduct our operations in             
substantial compliance with applicable environmental laws and regulations. In   
an effort to prevent and, if necessary, to correct environmental problems, we   
conduct environmental audits of proposed restaurant sites and restaurants we    
seek to acquire. None of the applicable environmental laws or regulations have  
had a material adverse effect on our operations or financial condition.         

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Taco Cabana is subject to state "dram-shop" laws in the states in which     
it operates. Dram-shop laws provide a person injured by an intoxicated person   
the right to recover damages from an establishment that wrongfully served       
alcoholic beverages to the intoxicated person. Our general liability insurance  
covers claims arising under dram-shop laws.                                     

With respect to the franchising of Pollo Tropical and Taco Cabana           
restaurants, we are subject to franchise and related regulations in the U.S.    
and certain foreign jurisdictions where we offer and sell franchises. These     
regulations include obligations to provide disclosure about our two concepts,   
the franchise agreements and the franchise system. The regulations also         
include obligations to register certain franchise documents in the U.S. and     
foreign jurisdictions, and obligations to disclose the substantive              
relationship between the parties to the agreements.                             

Competition                                                                     

The quick-service and quick-casual restaurant industries are highly         
competitive with respect to price, service, location and food quality. In each  
of our markets, our restaurants compete with a large number of national and     
regional restaurant chains, as well as locally-owned restaurants, offering low  
and medium-priced fare. Convenience stores, grocery store delicatessens and     
food counters, cafeterias and other purveyors of moderately priced and quickly  
prepared foods also compete with us.                                            

We believe that:                                                            

. product quality and taste;                                                
. brand recognition;                                                        
. convenience of location;                                                  
. speed of service;                                                         
. menu variety;                                                             
. price; and                                                                
. ambiance                                                                  

are the most important competitive factors in the quick-service restaurant      
industry and that our three concepts effectively compete in each category.      

With respect to our Burger King restaurants, which are part of the quick-   
service hamburger segment, our largest competitors are McDonald's and Wendy's.  
According to publicly available information, as of December 31, 1999,           
McDonald's U.S. operations comprised 12,629 restaurants and had U.S.            
systemwide sales for the year ended December 31, 1999 of $19.0 billion. As of   
December 31, 1999, Wendy's U.S. operations comprised 4,868 restaurants and had  
total U.S. systemwide sales for the year ended December 31, 1999 of $5.3        
billion.                                                                        

In addition to quick-service hamburger restaurant chains, Pollo Tropical's  
competitors include national and regional chicken-based concepts, such as       
Boston Market and KFC, as well as other types of quick-service restaurants.     

  Taco Cabana's restaurants compete both with quick-service operators, including
those in the quick-service Mexican segment such as Taco-Bell, and traditional   
casual dining Mexican restaurants. We believe that Taco Cabana's combination of 
freshly prepared food, distinctive ambiance and superior service help to        
distinguish Taco Cabana restaurants from quick-service operators, while Taco    
Cabana's price-value relationship enables it to compete favorably with more     
expensive casual dining Mexican restaurants.                                    

Employees                                                                       

At December 31, 2000, we employed approximately 17,200 persons of which     
approximately 370 were supervisory and administrative personnel and 16,830      
were restaurant operating personnel. None of our employees are covered by       
collective bargaining agreements. We believe that our relations with our        
employees are good.                                                             

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Item 2. Properties                                                              

At December 31, 2000 we owned or leased the following restaurant properties:

                                                                [Download Table]

                                    Owned Land; Leased land; Leased Land;      
                                       Owned       Owned        Leased         
                                     Building     Building     Building   Total
                                    ----------- ------------ ------------ -----
                                                                               
Restaurants--operating.............      45          67          409(a)    521 
Restaurants under construction.....       3           1                      4 
Excess properties:                                                             
  Leased to others.................     --          --             6         6 
  Available for sale or lease......       2         --             5         7 
                                        ---         ---          ---       --- 
Total restaurant properties........      50          68          420       538 
                                        ===         ===          ===       === 

--------                                                                        
(a) Includes 17 restaurants located in mall shopping centers.                   

As of December 31, 2000 we leased 94% of our Burger King restaurant         
locations, 88% of our Pollo Tropical restaurant locations and 94% of our Taco   
Cabana restaurant locations. We typically enter into leases (including options  
to renew) from 20 to 40 years. The average remaining term for all leases,       
excluding options, is approximately 20 years. Generally, we have been able to   
renew leases, upon or prior to their expiration, at the prevailing market       
rates.                                                                          

Most of our Burger King restaurant leases are coterminous with the related  
Franchise Agreements. We believe that we generally will be able to renew, at    
commercially reasonable rates, the leases whose terms expire prior to the       
subject Burger King Franchise Agreements.                                       

Most leases require us, as lessee, to pay utility and water charges,        
premiums on insurance and real estate taxes. Certain leases also require        
contingent rentals based upon a percentage of gross sales that exceed           
specified minimums.                                                             

In addition to the restaurant locations set forth under "Business--         
Restaurant Locations," we own an approximately 22,000 square foot building at   
968 James Street, Syracuse, New York, which houses our executive offices and    
most of our administrative operations for our Burger King restaurants. We       
lease five small regional offices that support the management of our Burger     
King restaurants. We also lease 13,449 square feet at 7300 North Kendall        
Drive, 8th Floor, Miami, Florida, which houses most of our administrative       
operations for our Pollo Tropical restaurants. In addition, we lease            
approximately 17,200 square feet of office space at 8918 Tesoro Drive, Suite    
200, San Antonio, Texas, which houses most of our administrative operations     
for our Taco Cabana restaurants.                                                

Item 3. Legal Proceedings                                                       

On November 16, 1998, the Equal Employment Opportunity Commission ("EEOC")  
filed suit in the United States District Court for the Northern District of     
New York, under Title VII of the Civil rights Act of 1964, as amended, against  
the Company.                                                                    

The case is in discovery, with the nominal deadline for written and         
documentary discovery having passed and the parties being engaged in an         
attempt to resolve discovery disputes. Further discovery may follow, after      
which the parties may file motions for summary judgment late in 2001 or early   
in 2002. It is too early to make an evaluation of the likelihood of an          
unfavorable outcome and/or an estimate of the amount or range of potential      
loss. We intend to contest the case vigorously and believe it is without        
merit.                                                                          

We are a party to various other litigation matters incidental to the conduct
of our business. We do not believe that the outcome of any of these matters     
will have a material adverse effect on our financial condition or results of    
operations and cash flows.                                                      

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

None                                                                        

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PART II 

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

There is no established trading market for the Company's capital stock.     
Carrols Holdings Corporation owns 10 shares of common stock of the Company      
(representing 100% of the capital stock of the Company).                        

There were no cash dividends paid during fiscal 2000 and 1999.              

Item 6. Selected Financial Data                                                 

The selected historical financial information presented below at the end of 
and for each of the fiscal years ended December 31, 1996, 1997, 1998, 1999 and  
2000 have been derived from the Carrols' audited consolidated financial         
statements. Our acquisition of Pollo Tropical was completed in July 1998 and,   
as a result, Carrols' audited financial statements as of and for the year       
ended December 31, 1998 include the results of operations for Pollo Tropical    
since July 10, 1998. Our acquisition of Taco Cabana was completed in December,  
2000 and, as a result Carrols' audited financial statements as of and for       
the year ended December 31, 2000 include the results of operations for Taco     
Cabana since December 20, 2000. The following selected financial information    
should be read in conjunction with Carrols' Consolidated Financial Statements   
and accompanying Notes as of December 31, 1999 and 2000 and for the fiscal      
years ended December 31, 1998, 1999 and 2000 and "Management's Discussion and   
Analysis of Financial Condition and Results of Operations".                     

                                                                [Download Table]

                                           Year Ended December 31,             
                                 --------------------------------------------- 
                                   1996     1997     1998(1)   1999     2000   
                                 -------- -------- --------  -------- -------- 
                                            (Dollars in thousands)             
                                                                               
Statement of Operations Data:                                                  
Revenues:                                                                      
  Restaurant sales.............  $240,809 $295,436 $416,190  $455,440 $465,862 
  Franchise revenues...........       --       --       395     1,039    1,039 
                                 -------- -------- --------  -------- -------- 
    Total revenues.............   240,809  295,436  416,585   456,479  466,901 
Costs and expenses:                                                            
  Cost of sales................    68,031   85,542  122,620   137,279  132,646 
  Restaurant wages and related                                                 
   expenses....................    70,894   89,447  121,732   134,125  135,787 
  Other restaurant operating                                                   
   expenses....................    48,683   61,691   82,710    89,093   91,595 
  Advertising expense..........    10,798   13,122   18,615    20,618   20,554 
  General and administrative...    10,387   13,121   19,219    23,102   26,403 
  Depreciation and                                                             
   amortization................    11,015   15,102   20,005    23,898   28,856 
  Other income(3)..............       --       --       --        --    (1,365)
  Other costs(2)...............       509      --       --        --       --  
                                 -------- -------- --------  -------- -------- 
    Total costs and expenses...   220,317  278,025  384,901   428,115  434,476 
                                 -------- -------- --------  -------- -------- 
Income from operations.........    20,492   17,411   31,684    28,364   32,425 
Refinancing expenses...........       --       --     1,639       --       --  
Interest expense...............    14,209   14,598   21,068    22,386   23,666 
                                 -------- -------- --------  -------- -------- 
Income before income taxes and                                                 
 extraordinary loss............     6,283    2,813    8,977     5,978    8,759 
Provision for income taxes.....     3,100      655    4,847     3,826    4,441 
                                 -------- -------- --------  -------- -------- 
Income before extraordinary                                                    
 loss..........................     3,183    2,158    4,130     2,152    4,318 
Extraordinary loss on                                                          
 extinguishment of debt, net of                                                
 tax benefit...................       --       --     3,701     1,099      350 
                                 -------- -------- --------  -------- -------- 
Net income.....................  $  3,183 $  2,158 $    429  $  1,053 $  3,968 
                                 ======== ======== ========  ======== ======== 

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                                                                [Download Table]

                                     Year Ended December 31,                     
                          -----------------------------------------------------  
                            1996       1997       1998(1)    1999       2000     
                          --------   --------   ---------  --------   ---------  
                                      (Dollars in thousands)                     
                                                                                 
Balance Sheet Data (At                                                           
 Period End):                                                                    
Total assets............  $138,588   $215,328   $ 318,810  $320,027   $ 476,912  
Working capital                                                                  
 deficiency.............   (15,004)   (18,293)    (10,633)  (21,696)    (25,943) 
Total long-term                                                                  
 debt(4)................   121,265    160,287     261,522   253,494     371,138  
Stockholder's equity                                                             
 (deficit)..............   (11,662)    17,447      13,998    15,051      19,019  

Other Financial Data:                                                            
EBITDA(5)...............  $ 31,507   $ 32,513   $  45,411  $ 52,262   $  59,916  
Adjusted EBITDA(6)......    32,016     32,513      51,689    52,262      59,916  
Adjusted EBITDA margin..      13.3%      11.0%       12.4%     11.4%       12.8% 

Cash provided from                                                               
 operating activities...    14,322     19,940      23,273    38,173      49,720  
Cash used for investing                                                          
 activities.............   (20,238)   (95,383)   (126,504)  (48,935)   (190,818) 
Cash provided from                                                               
 financing activities...     5,767     76,381     107,756     5,886     141,909  
Capital expenditures,                                                            
 excluding                                                                       
 acquisitions...........    15,255     18,210      33,295    45,332      36,157  

Operating Statistics:                                                            
Total number of                                                                  
 restaurants............       232        335         383       397         521  

Burger King:                                                                     
  Number of restaurants                                                          
   (at end of period)...       232        335         343       352         355  
  Average number of                                                              
   restaurants..........       225        280         339       344         352  
  Average annual sales                                                           
   per restaurant.......  $  1,070   $  1,055   $   1,124  $  1,082   $   1,055  
  Percentage change in                                                           
   comparable restaurant                                                         
   sales(1).............       3.2%      (1.4)%       6.2%     (2.5)%      (2.5)%

Pollo Tropical(7):                                                               
  Number of restaurants                                                          
   (at end of period)...        35         36          40        45          49  
  Average number of                                                              
   restaurants..........        38         35          37        42          46  
  Average annual sales                                                           
   per restaurant.......  $  1,677   $  1,861   $   1,985  $  1,952   $   1,951  
  Percentage change in                                                           
   comparable restaurant                                                         
   sales(1)(7)..........       7.9%       4.2%        7.8%      0.7%        1.7% 

Taco Cabana(7):                                                                  
  Number of restaurants                                                          
   (at end of period)...       104         98         102       109         117  
  Average number of                                                              
   restaurants..........       104        107         101       106         113  
  Average annual sales                                                           
   per restaurant.......  $  1,247   $  1,220   $   1,402  $  1,487   $   1,510  
  Percentage change in                                                           
   comparable restaurant                                                         
   sales(1)(7)..........      (2.0)%     (2.5)%       6.3%      5.5%        3.4% 

--------                                                                        
(1) The year ended December 31, 1998 includes 53 weeks. All other years         
  presented include 52 weeks. The percentage change in comparable restaurant
sales for the year ended December 31, 1998 has been calculated using a  
comparable number of weeks from the prior year. The percentage change in
comparable Burger King restaurant sales using the actual number of weeks
in the year ended December 31, 1998 is 7.9%. The percentage change in   
comparable restaurant sales is calculated using only those restaurants  
that have been open since the beginning of the earliest period being    
compared (12 months in the case of Burger King and 18 months for Pollo  
Tropical and Taco Cabana)                                               
(2) Other costs represent costs associated with a change in control associated  
with the sale of the Company to BIB Holdings.                           
(3) Other income in 2000 was from the recognition of previously deferred        
   contractual payments received from Ameriserve Food Distribution, Inc. which
 were recognized upon termination of the related supply agreement in 2000.
(4) Includes capital lease obligations and other debt which was $5.5 million    
at December 31, 2000.                                                   
(5) EBITDA is defined as income before income taxes, interest, depreciation     
and amortization, non-cash extraordinary items and non-cash other costs.
 EBITDA is presented because we believe it is a useful financial indicator
for measuring a company's ability to service and/or incur indebtedness; 
however,                                                                

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    EBITDA should not be considered as an alternative to net income as a measure
of operating results or to cash flows as a measure of liquidity in      
accordance with generally accepted accounting principles.               
(6) Adjusted EBITDA is defined as EBITDA plus $509,000 of other costs in 1996   
associated with the sale of the Company to BIB Holdings, refinancing    
expenses of $1,639,000 in 1998 and the redemption premium of $4,639,000 
associated with the retirement of debt in 1998.                         
(7) Pollo Tropical was acquired in July, 1998 and Taco Cabana was acquired in   
   December 2000. Average restaurants, average sales and comparable sales data
for periods prior to the respective acquisition is presented for        
   informational purposes only. The percentage change in comparable restaurant
  sales has been calculated using a comparable number of weeks in all years.

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

Overview                                                                        

    We are one of the largest restaurant companies in the U. S. operating more
than 520 restaurants in 17 states. We are the second largest Burger King        
franchisee in the world, and have operated Burger King restaurants since 1976.  
As of December 31, 2000, we operated 355 Burger King restaurants located in 13  
Northeastern, Midwestern and Southeastern states. We also operate two regional  
Hispanic restaurant chains, Taco Cabana and Pollo Tropical, which operate or    
franchise more than 200 restaurants.                                            

We have acquired and constructed additional Burger King restaurants   
resulting in a 53% increase in the number of Burger King restaurants we operate 
since the end of fiscal 1996. Burger King restaurant sales have grown from      
$240.8 million in 1996 to $371.3 million in 2000.                               

  We have also expanded our operations during the past three years through
the acquisition of two regional quick-casual Hispanic restaurant chains.  In    
July 1998, we acquired Pollo Tropical Inc., a restaurant chain featuring grilled
marinated chicken and authentic "made from scratch" side dishes.  Since the     
acquisition we have opened 14 new Pollo Tropical restaurants and at December 31,
2000 we had 49 company owned Pollo Tropical restaurants in Florida and 24       
franchised Pollo Tropical restaurants, primarily in Puerto Rico.  Due to our    
acquisition of Pollo Tropical in July 1998, our results for the year ended      
December 31, 1998 include the operations of Pollo Tropical from July 10, 1998.  

On December 19, 2000 we acquired Taco Cabana Inc., a restaurant chain 
featuring Tex-Mex style food including flame-grilled beef and chicken fajitas,  
quesadillas, and fresh flour tortillas.  As of December 31, 2000 we had 117     
company owned Taco Cabana restaurants located in Texas, Oklahoma and Arizona and
10 franchised Taco Cabana restaurants.  Due to our acquisition of Taco Cabana in
December, 2000 our results for the year ended December 31, 2000 include the     
operations of Taco Cabana from December 20, 2000.                               

  We use a 52-53 week fiscal year ending on the Sunday closest to December
31. As a result of our fiscal calendar, the years ended December 31, 2000, 1999 
and 1998 contain 52, 52, and 53 weeks, respectively.                            

Results of Operations                                                           

The following table sets forth, for fiscal years 1998, 1999 and 2000, 
selected operating results of Carrols as a percentage of restaurant sales:      

                                                        [Enlarge/Download Table]

                                                             Year Ended December 31,         
                                                     ----------------------------------------
                                                                                             
                                                            1998          1999          2000 
                                                           -----         -----         ----- 
Restaurant sales:                                                                            
    Burger King                                            91.6 %        81.8 %         79.7%
    Pollo Tropical                                          8.4 %         18.2%         19.1%
    Taco Cabana                                               --            --           1.2%
                                                           -----         -----         ----- 

Total restaurant sales                                     100.0%        100.0%        100.0%

Costs and expenses:                                                                          
    Cost of sales                                           29.5%         30.1%         28.5%
    Restaurant wages and related expenses                   29.2%         29.4%         29.1%
    Other restaurant expenses including advertising         24.3%         24.1%         24.1%
    General and administrative                               4.6%          5.1%          5.7%
    Depreciation and amortization                            4.8%          5.2%          6.2%
    Other income                                              --            --          (.3)%
                                                           -----         -----         ----- 
Income from restaurant operations                           7.6 %         6.1 %          6.7%
                                                           =====         =====         ===== 

Fiscal 2000 Compared to Fiscal 1999                                             

   In addition to our acquisition of Taco Cabana in December 2000, we opened
seven Burger King restaurants and five Pollo Tropical restaurants in 2000. We   
also closed four underperforming Burger King restaurants and one Pollo Tropical 
restaurant was closed due to a fire. The results of operations for Taco Cabana  
from December 20, 2000 are included in our consolidated operating results for   
2000. Taco Cabana had restaurant sales for this period of $5.6 million, pretax  
income of $.5 million and EBITDA of $.9 million.                                

 Restaurant Sales.  Total revenues increased 2.3% from $456.5 million in
1999 to $466.9 in 2000 due to the increase in the number of restaurants we      
operate and due to Taco Cabana restaurant sales of $5.6 million since our       
acquisition in December 2000. Burger King restaurant sales for the year ended   
December 31, 2000 decreased .4% to $371.3 million from $372.7 million in 1999.  
Sales at our comparable Burger King restaurants (those units operating for the  
entirety of the compared periods) decreased 2.5% due to a decrease in customer  
traffic as the 2000 Burger King national promotional activities did not generate
traffic above our 1999 levels. Pollo Tropical restaurant sales increased 7.5%   
for the year ended December 31, 2000 to $89.0 million from $82.8 million in     
1999. The increase was due primarily to the opening of five new Pollo Tropical  
restaurants in 2000 and from a 1.7% sales increase at comparable Pollo Tropical 
restaurants.                                                                    

  Operating Costs and Expenses. Cost of sales (food and paper costs), as a
percentage of total restaurant sales, decreased to 28.5% in 2000 from 30.1% in  
1999. Burger King cost of sales, as a percentage of Burger King sales, decreased
from 29.1% in 1999 to 27.3% in 2000 and Pollo Tropical cost of sales, as a      
percentage of Pollo Tropical sales, decreased from 34.8% in 1999 to 33.2% in    
2000. These decreases, in part, are due to improvements in our food cost        
management systems and related investments in restaurant information systems.   
They also reflect menu price increases since the end of the third quarter of    
1999 at our Burger King restaurants and menu price increases in the first       
quarter of 2000 of approximately 1% at our Pollo Tropical restaurants. These    
decreases are also due to higher supplier rebates for both Burger King and Pollo
Tropical, including the amortization of rebates received in 2000 from our soft  
drink suppliers, and due to favorable commodity costs, particularly chicken, for
Pollo Tropical. These factors were offset, in part, by an increase in beef costs
at our Burger King restaurants in 2000.                                         

    Restaurant wages and related expenses, as a percentage of total restaurant
sales, decreased from 29.4% in 1999 to 29.1% in 2000. Burger King restaurant    
wages and related expenses, as a percentage of Burger King sales, decreased to  
30.5% in 2000 compared to 30.8% in 1999.  The Burger King decrease was due to   
labor efficiencies and to the effects of menu price increases since the end of  
the third quarter of 1999. Labor efficiencies at our Burger King restaurants    
reflected a 9.3% decrease in average restaurant labor hours due to operating    
improvements, partially offset by a 3.3% increase in the hourly labor rate.     
Pollo Tropical restaurant wages and related expenses, as a percentage of Pollo  
Tropical sales, increased to 23.5% of sales in 2000 from 23.2% of sales in 1999.
This increase, as a percentage of sales, was due in part to higher medical      
insurance costs.                                                                

     Other restaurant operating expenses, including advertising, as a percentage
of total restaurant sales, were 24.1% in both 1999 and 2000. Burger King        
restaurant operating expenses were 25.6% of Burger King sales in both 1999 and  
2000 due to slight increases in utility and maintenance costs being offset by   
lower promotional advertising expenditures. Pollo Tropical other restaurant     
expenses increased slightly from 17.6% of Pollo Tropical sales in 1999 to 17.7% 
of Pollo Tropical sales in 2000 due primarily to higher utility costs.          

Administrative expenses, as a percentage of total restaurant sales,   
increased from 5.1% in 1999 to 5.7% in 2000.  This increase is due in part to   
lower sales volumes in our Burger King restaurants in 2000, increased levels    
of information systems support associated with the installation of restaurant   
point-of-sale systems and increases in management incentives.                   

  EBITDA.  EBITDA increased from $52.3 million in 1999 to $59.9 million in
2000. As a percentage of total revenues, EBITDA increased from 11.4% in 1999 to 
12.8% in 2000 as a result of the factors discussed above.                       

 Depreciation and Amortization.  Depreciation and amortization increased
$5.0 million in 2000 compared to 1999 due primarily to our capital expenditures 
of $81.5 million since the beginning of 1999.                                   

   Interest Expense.  Interest expense was $23.7 million in 2000 compared to
$22.4 million in 1999.  The increase in 2000 was due in part to higher interest 
rates in 2000 compared to 1999 and additional interest associated with the      
acquisition of Taco Cabana in December 2000. Our average weighted interest rate 
was 9.4% in 2000 compared to 8.9% in 1999.                                      

  Income Taxes.  The provision for income taxes of $4.4 million in 2000 is
based on an estimated effective income tax rate for 2000 of 50.7%.  This rate is
higher than the Federal statutory tax rate due to state franchise and income    
taxes and the non-deductible amortization of certain franchise rights and       
intangible assets pertaining to our acquisitions.                               

  Net Income.  Net income was $3,968,000 in 2000 compared to $1,053,000 in
1999.  Net income in 2000 includes an extraordinary loss of $350,000, which is  
net of income taxes, for the write-off of unamortized debt issue costs related  
to the refinancing of our senior credit facility.  Net income in 1999 includes  
an extraordinary loss of $1,099,000, which is net of income taxes, for the      
write-off of unamortized debt issue costs related to the refinancing of our     
senior credit facility in 1999.                                                 

Fiscal 1999 Compared to Fiscal 1998                                             

   The results of operations and cash flows for the years ended December 31,
1999 and 1998 include 52 and 53 weeks, respectively.  During 1999, we opened    
eight Burger King restaurants, acquired six Burger King restaurants and closed  
five underperforming Burger King restaurants.  Also during 1999, we opened five 
Pollo Tropical restaurants.                                                     

 Restaurant Sales.  Total revenues increased 9.6% from $416.6 million in
1998 to $456.5 in 1999 due to the increase in the number of restaurants and due 
to the inclusion of Pollo Tropical for a full year in 1999.  Burger King        
restaurant sales for the year ended December 31, 1999 decreased 2.2% to $372.7  
million from $381.0 million in 1998 due, in part, to the additional week        
included in 1998.  Sales at our 299 comparable Burger King restaurants (those   
units operating for the entirety of the compared periods) decreased 2.5% in     
1999, using a comparable number of weeks from the year ended December 31, 1998  
due to a decrease in customer traffic.  In 1999, Burger King national           
promotional activities did not generate a similar level of incremental traffic  
as in 1998.  Pollo Tropical restaurant sales for the year ended December 31,    
1999 were $82.8 million as compared to $35.1 million in 1998, due to our        
acquisition of Pollo Tropical in July 1998.  Compared to the twelve months ended
December 31, 1998, 1999 Pollo Tropical sales increased 13.8%, in total, and 0.7%
on a comparable store basis.                                                    

 Operating Costs and Expenses.  Cost of sales, as a percentage of sales,
were 30.1% in 1999 compared to 29.5% in 1998.  The increase in 1999 was due to  
higher food costs as a percentage of sales, at our Pollo Tropical restaurants,  
relative to our Burger King restaurants, and due to the inclusion of Pollo      
Tropical in all of 1999 operating results as compared to six months in 1998.    
This increased total cost of sales in 1999 by 0.5%.  Pollo Tropical's cost of   
sales, as a percentage of sales, were 34.8% in 1999 and 35.1% in 1998. For our  
Pollo Tropical restaurants lower food costs in 1999, as a percentage of sales,  
were primarily due to a 3.5% decrease in whole chicken prices.  Cost of sales,  
as a percentage of sales, at our Burger King restaurants were 29.1% in 1999 and 
28.9% in 1998.  This increase was due to a 3.7% increase in beef costs over 1998
levels and higher promotional discounts in 1999, as compared to 1998, which were
offset, in part, by menu price increases of approximately 1% of sales late in   
the third quarter of 1999.                                                      

    Restaurant wages and related expenses, as a percentage of sales, increased
from 29.2% in 1998 to 29.4% in 1999.  For our Burger King restaurants,          
restaurant wages and related expenses, as a percentage of sales, were 30.8% in  
1999 compared to 29.8% in 1998.  The Burger King percentage increase was due to 
a 3.7% increase in productive hourly wage rates in 1999 and the effect of lower 
Burger King sales on fixed management costs, offset in part, by menu price      
increases in 1999.  The effect of the Burger King increase, as a percentage of  
total Company sales, was partially offset by the inclusion of Pollo Tropical in 
all of 1999 operating results as compared to six months in 1998.  Pollo         
Tropical's restaurant wages and related expenses, as well as other operating    
expenses, are lower than those of our Burger King restaurants due to Pollo      
Tropical's higher per unit sales volumes.  Pollo Tropical restaurant wages and  
related expenses, as a percentage of sales, were 23.2% in 1999 and 23.5% in     
1998.  This caused a 0.5% decrease, as a percentage of sales, in combined       
restaurant wages and related expenses in 1999.  The decrease, as a percentage of
sales, for Pollo Tropical for 1999 compared to 1998 was due to lower worker's   
compensation payroll insurance.                                                 

     Other restaurant operating expenses, including advertising, as a percentage
of sales, decreased from 24.3% in 1998 to 24.1% in 1999 due to the inclusion of 
Pollo Tropical operating results in all of 1999 as compared to six months in    
1998. This caused a 0.5% decrease, as a percentage of sales, in combined other  
restaurant operating expenses in 1999.  This decrease was partially offset by   
higher occupancy costs in 1999, as a percentage of sales, due to the effect of  
lower sales volumes on fixed costs at our Burger King restaurants and due to the
sale and leaseback of eight Burger King and five Pollo Tropical restaurant      
properties in 1999.                                                             

   Administrative expenses, as a percentage of sales, increased from 4.6% in
1998 to 5.1% in 1999.  This increase is due to lower sales volumes in our Burger
King restaurants in 1999 and administrative functions acquired in the July 1998 
acquisition of Pollo Tropical.                                                  

  EBITDA.  EBITDA increased from $45.4 million in 1998 to $52.3 million in
1999.  Included in EBITDA for the year ended December 31, 1998 are refinancing  
expenses of $1.6 million and a redemption premium of $4.6 million associated    
with the retirement of debt.  EBITDA, as adjusted for these items, was $51.7    
million for the year ended December 31, 1998.  As a percentage of total         
revenues, EBITDA, as adjusted, decreased from 12.4% in 1998 to 11.4% in 1999 as 
a result of the factors discussed above.                                        

 Depreciation and Amortization.  Depreciation and amortization increased
$3.9 million in 1999 compared to 1998 due to the increase in goodwill, purchased
intangibles and other fixed assets associated with the purchase of Pollo        
Tropical in July 1998.  This increased depreciation and amortization by $2.1    
million in 1999 compared to 1998.  The remainder of the increase is due to      
primarily to new restaurant construction and remodeling of Burger King          
restaurants in 1998 and 1999.                                                   

   Interest Expense.  Interest expense was $22.4 million in 1999 compared to
$21.1 million in 1998.  The increase in 1999 was due to higher average debt     
balances in 1999 compared to 1998 due to the acquisition of Pollo Tropical in   
July 1998, offset, in part, by the favorable impact of refinancing our senior   
subordinated notes in the fourth quarter of 1998.  Our average weighted interest
rate was 8.9% in 1999 compared to 9.9% in 1998.                                 

  Income Taxes.  The provision for income taxes of $3.8 million in 1999 is
based on an estimated effective income tax rate for 1999 of 64.0%.  This rate is
higher than the Federal statutory tax rate due to state franchise and income    
taxes, non-deductible amortization of certain franchise rights and intangible   
assets pertaining to our acquisitions.                                          

Net Income.  Net income was $1,053,000 in 1999 compared to $429,000 in
1998.  Net income in 1999 includes an extraordinary loss of $1,099,000, which is
net of tax, for the write-off of unamortized debt issue costs related to the    
Company's previous senior credit facility.  Net income in 1998 includes an      
extraordinary loss of $3,701,000, which is net of tax pertaining to the         
redemption of our 11.5% senior notes.                                           

Liquidity and Capital Resources                                                 

  We do not have significant receivables or inventory and receive trade credit
based upon negotiated terms in purchasing food products and other supplies. We  
are able to operate with a substantial working capital deficit because:         

.  restaurant operations are conducted on a cash basis;                       
.  rapid turnover results in a limited investment in inventories; and         
.  cash from sales is usually received before related accounts for food,      
supplies and payroll become due.                                          

Our cash requirements arise primarily from:                               

.  the need to finance the opening and equipping of new restaurants;          
.  ongoing capital reinvestment in our existing restaurants;                  
.  the acquisition of restaurants; and                                        
.  servicing our debt.                                                        

 Our 2000 operations generated approximately $49.7 million in cash, compared
to $38.2 million during 1999 and $23.3 million in 1998.                         

  Our capital expenditures included the acquisitions of Taco Cabana for $154.7
million in December 2000 and Pollo Tropical in July 1998 for approximately $95  
million.  We also acquired six Burger King restaurants in 1999 and two Burger   
King restaurants in 1998 for a total of $4.4 million.                           

 Capital expenditures, excluding acquisitions, totaled $36.2 million in 2000
as compared to $45.3 million in 1999 and $33.3 million in 1998.  Capital        
expenditures in 2000 included construction costs and related equipment for seven
Burger King and five Pollo Tropical restaurants opened in 2000. Capital         
expenditures in 1999 included construction costs and related equipment for      
eleven new Burger King restaurants, eight that were opened in 1999, and five    
Pollo Tropical restaurants opened in 1999.  Capital expenditures in 1998        
included construction costs for twelve new Burger King restaurants, eleven that 
were opened in 1998, and for five new Pollo Tropical restaurants, four of which 
were open in 1998.                                                              

Our capital expenditures also include remodeling costs and capital        
maintenance projects for the ongoing reinvestment and enhancement of our        
restaurants. Expenditures that relate to remodeling our Burger King restaurants 
have totaled $30.3 million since the beginning of 1998. These expenditures have 
been made to enhance the operations of the 101 Burger King restaurants that we  
have acquired since the beginning of 1997 and to reinvest in properties         
associated with the renewal of franchises that were scheduled to expire. In 2000
we elected to renew 45 franchise agreements under BKC's Fiscal 2000 early       
successor program. The capital investments and franchise fees related to these  
45 renewals were $6.7 million in 2000 and are estimated to be approximately $8.2
million in 2001. It is also our intention to renew 15 franchise agreements under
BKC's Fiscal 2001 early successor program. The capital investments and franchise
fees for these 15 renewals are estimated to be approximately $6 million and will
be invested in 2002.                                                            

In 2000 we completed the installation of restaurant point-of sale and   
management systems for our Burger King restaurants, which began in 1999. In     
1999, we substantially completed the upgrade of corporate information and       
decision support systems for our Burger King restaurants.  These projects have  
resulted in incremental capital investments that totaled $5.7, $11.9 and $4.2   
million in 2000, 1999 and 1998, respectively.                                   

   In December 2000 we generated $29.5 million from the sale and leaseback of 25
Taco Cabana restaurant properties. The proceeds were used to reduce the debt    
associated with the Taco Cabana acquisition. During 1999, we generated $14.8    
million from the sale and leaseback of eight Burger King restaurant properties  
and five Pollo Tropical restaurant properties.  During 1998, the sale and       
leaseback of two Burger King restaurant properties and 13 Pollo Tropical        
restaurant properties generated $20.5 million. The proceeds from the 1999 and   
1998 transactions were used to reduce outstanding debt. We paid dividends to our
parent of $3.9 million in 1998 that included $3.6 million for the redemption of 
its preferred stock.                                                            

 At December 31, 2000, we had total outstanding borrowings of $371.1 million
comprised of the $170.0 million principal amount of outstanding senior          
subordinated notes, borrowings under our senior credit facility of $195.6       
million and other debt, including capital leases, of $5.5 million. In total, our
borrowings were $117.6 million higher than at December 31, 1999 due primarily to
the debt associated with the acquisition of Taco Cabana, as reduced by the      
December 2000 sale leaseback.                                                   

   On November 24, 1998, we issued $170 million of unsecured senior subordinated
notes that bear interest at an annual rate of 9.5% payable on June 1 and        
December 1.  The notes mature on December 1, 2008 and are redeemable, at our    
option, in whole or in part on or after December 1, 2003. In connection with the
issuance of the 9.5% senior subordinated notes, we redeemed all of our          
outstanding 11.5% senior notes.                                                 

On December 19, 2000 we entered into a new senior credit facility with the
Chase Manhattan Bank, as agent and lender, and a syndicate of other lenders.    
This new facility was used to finance the acquisition of Taco Cabana and to     
refinance outstanding borrowings under our previous credit facility. The new    
facility provides for total borrowings of $250 million and consists of a $100   
million revolving credit facility (including a standby letter of credit facility
for up to $10 million), a $70 million term loan A facility and an $80 million   
term loan B facility. At December 31, 2000, $150 million was outstanding on the 
term A and B facilities. At December 31, 2000, $50.3 million was available for  
borrowings under our revolving credit facility, after reserving $4.1 million for
letters of credit guaranteed by the facility.                                   

    The revolving credit and the term loan A facilities expire on December 31,
2005, however the revolving credit facility is eligible for a one-year extension
upon request and unanimous approval of the lenders. The term loan B facility    
expires on December 31, 2007. The term loan A facility is repayable in          
increasing quarterly installments through September 30, 2005 with a final       
payment of $24.6 million due December 31, 2005. The term loan B facility is     
repayable in increasing quarterly installments through September 30, 2007 with a
final payment of $13.8 million due December 31, 2007. Principal repayments      
required in 2001 under the term A and B facilities total $7.0 million.          
Borrowings under our credit facility bear interest, at our option, of either:   

(1)  the greater of the prime rate, or the Federal Funds rate plus .50%, plus a 
     margin ranging from .50% to 1.75% for the revolving credit facility and the
     term loan A facility, based on debt to cash flow ratios, and a fixed margin
of 2.5% for the term loan B facility; or,                             

(2)  LIBOR plus a margin ranging from 2.00% to 3.25% for the revolving credit   
   facility and the term loan A facility, based on debt to cash flow ratios,
and a fixed margin of 4.0% for the term loan B facility.              

   Both the senior subordinated notes and the senior credit facility contain
certain restrictive covenants, including limitations on certain restricted      
payments and dividends.  The senior credit facility also requires maintaining   
certain financial ratios.                                                       

In 2001, we anticipate total capital expenditures of approximately $51
million, excluding the cost of any acquisitions that we may make. These         
expenditures include approximately $22 million for the construction of new      
restaurants and related real estate applicable to our three restaurant concepts 
as follows; $8 million for Burger King; $9.5 million for Taco Cabana and $4.5   
million for Pollo Tropical. Also included in 2001 capital expenditures is       
approximately $12 million for remodeling existing Burger King restaurants; and  
approximately $6 million for expenditures related to Burger King transformation 
initiatives, which include new signage and drive-thru improvements.  See        
Transformation Initiatives on page 12.   Burger King remodeling activities in   
2001 include approximately $8 million of expenditures related to the Burger King
Early Successor Incentive Program.  See Franchise Fee Changes and Early         
Successor Program on page 11.  Other anticipated restaurant level capital       
expenditures in 2001 for ongoing reinvestment in our three concepts total       
approximately $10 million; with approximately $5 million applicable to our      
Burger King restaurants, $3 million for Taco Cabana and $2 million for Pollo    
Tropical.                                                                       

  Interest payments under our senior subordinated notes and other existing
debt obligations represent significant liquidity requirements for us. We believe
that cash generated from our operations and availability under our revolving    
credit facility will provide sufficient cash availability to cover our working  
capital needs, capital expenditures, planned development and debt service       
requirements for fiscal 2001.                                                   

Burger King Corporation arranged for the Coca-Cola Company and Dr.    
Pepper/Seven-Up, Inc. to provide funding to franchisees in connection with      
Burger King's transformation initiatives. We received approximately $19.8       
million in 2000 under this arrangement.                                         

Inflation                                                                       

 The inflationary factors that have historically affected our results of
operations include increases in food and paper costs, labor and other operating 
expenses. Wages paid in our restaurants are impacted by changes in the Federal  
or state hourly minimum wage rates. Accordingly, changes in the Federal or      
states hourly minimum wage rate directly affect our labor cost. We and the      
restaurant industry typically attempt to offset the effect of inflation, at     
least in part, through periodic menu price increases and various cost reduction 
programs. However, no assurance can be given that we will be able to offset such
inflationary cost increases in the future.                                      

Item 7A. Quantitative and Qualitative Disclosures about Market Risks            

To the extent applicable, see Notes 1 and 5 to the Financial Statements     

Item 8. Financial Statements and Supplementary Data                             

The Index to Financial statements attached hereto is set forth in Item 14.  

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

 There have been no changes in or disagreements with the Company's independent
accountants on accounting or financial disclosures.                             

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PART III  

Item 10. Directors and Executive Officers of the Registrant                     

The following table sets forth information about our directors, executive   
officers and other named officers:                                              

                                                                [Download Table]

   Name                  Age               Position with the Company              
   ----                  ---               -------------------------              
                                                                                  
Alan Vituli.............  59 Chairman of the Board and Chief Executive Office     
Daniel T. Accordino.....  50 President, Chief Operating Officer and Director      
Paul R. Flanders........  44 Vice President--Finance and Treasurer                
Joseph A. Zirkman.......  40 Vice President, General Counsel and Secretary        
Timothy J. LaLonde......  44 Vice President--Controller                           
Nicholas A. Castaldo....  49 President and Chief Operating Officer--Pollo Tropical
Benjamin D. Chereskin...  42 Director                                             
James M. Conlon.........  33 Director                                             
David J. Mathies, Jr. ..  53 Director                                             
Robin P. Selati.........  34 Director                                             
Clayton E. Wilhite......  55 Director                                             

Certain biographical information regarding our directors, executive officers
and other officers is set forth below:                                          

Alan Vituli has been Chairman of the Board since 1986 and Chief Executive   
Officer since March 1992. He is also a Director and Chairman of the Board of    
Holdings. Between 1983 and 1985, Mr. Vituli was employed by Smith Barney,       
Harris Upham & Co., Inc. as a Senior Vice President responsible for real        
estate transactions. From 1966 until joining Smith Barney, Mr. Vituli was       
associated with the accounting firm of Coopers & Lybrand, first as an employee  
and for the last ten years as a partner. Among the positions held by Mr.        
Vituli at Coopers & Lybrand was National Director of Mergers and Acquisitions.  
Before joining Coopers & Lybrand, Mr. Vituli was employed in a family-owned     
restaurant business. From 1993 through our acquisition of Pollo Tropical, Mr.   
Vituli served on the Board of Directors of Pollo Tropical.                      

Daniel T. Accordino has been President, Chief Operating Officer and a       
Director since February 1993. Before that, Mr. Accordino served as Executive    
Vice President--Operations from December 1986 and as Senior Vice President      
from April 1984. From 1979 to April 1984 he was Vice President responsible for  
restaurant operations, having previously served as our Assistant Director of    
Restaurant Operations. Mr. Accordino has been employed by us since 1972.        

Paul R. Flanders has been Vice President--Finance and Treasurer since April 
1997. Before joining us, he was Vice President--Corporate Controller of Fay's   
Incorporated, a retailing chain, from 1989 to 1997, and Vice President--        
Corporate Controller for Computer Consoles, Inc., a computer systems            
manufacturer, from 1982 to 1989. Mr. Flanders was also associated with the      
accounting firm of Touche Ross & Co. from 1977 to 1982.                         

Joseph A. Zirkman became Vice President and General Counsel in January 1993.
He was appointed Secretary in February 1993. Before joining us, Mr. Zirkman     
was an associate with the New York City law firm of Baer Marks & Upham          
beginning in 1986.                                                              

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Timothy J. LaLonde has been Vice President--Controller since July 1997.     
Before joining us, he was a controller at Fay's Incorporated, a retailing       
chain, from 1992 to 1997. Before that he was a Senior Audit Manager with the    
accounting firm of Deloitte & Touche LLP, where he was employed since 1978.     

Nicholas A. Castaldo has been the President and Chief Operating Officer of  
the Pollo Tropical Division since our acquisition of Pollo Tropical, Inc. in    
July 1998. At that time, Mr. Castaldo had been the President of Pollo           
Tropical, Inc. since October 1995 and its Chief Operating Officer since         
November 1, 1996. Before joining Pollo Tropical and since August 1993, Mr.      
Castaldo was employed as Vice President of Marketing for Denny's Inc., a        
restaurant company. From 1986 to 1993, Mr. Castaldo was employed by S&A         
Restaurant Corp., which includes Steak & Ale and Bennigan's restaurant chains,  
and ultimately served as Senior Vice President of Marketing and Business        
Development. Mr. Castaldo's career spans 20 years and includes management       
positions at Burger King, Citicorp, and Clairol Inc.                            

Benjamin D. Chereskin has served as a Director since March 1997. Mr.        
Chereskin is a Managing Director of Madison Dearborn Partners, LLC., a private  
equity firm, and co-founded the firm in 1993. Before that, Mr. Chereskin was    
with First Chicago Venture Capital for nine years. Mr. Chereskin also serves    
on the Board of Directors of Cornerstone Brands, Inc.; Tuesday Morning          
Corporation; NWL Holdings, Inc.; Family Christian Stores, Inc. and Agweb.com,   
Inc.                                                                            

James M. Conlon has served as a Director since 1998. Mr. Conlon has served  
as Managing Director of Dilmun Investments, Inc., an investment advisory firm,  
since 1992. Since 1997, Mr. Conlon has been the                                 

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Co-Head of the bank's U.S. Merchant Banking group. Before joining Dilmun        
Investments, Inc., Mr. Conlon was employed as an Investment Analyst in the      
Securities Division of TIAA-CREF. Mr. Conlon also serves on the Boards of       
Directors of Capital Recovery Holdings, Inc; Thompson Products, Inc;            
Independent Pictures, Inc.; Intimates Holdings, Inc; and Springfield Services   
Corporation.                                                                    

David J. Mathies, Jr. has served as a Director since 1996. Mr. Mathies has  
served as President of Dilmun Investments, Inc., an investment advisory firm,   
since its inception in 1988. From 1971 to 1988, he was employed by Mellon       
Bank, where he was head of their Pension Management Group, providing            
investment management services to middle market clients.                        

Robin P. Selati has served as a Director since March 1997. Mr. Selati is a  
Managing Director of Madison Dearborn Partners, LLC., a private equity firm,    
and joined the firm in 1993. Before 1993, Mr. Selati was associated with Alex   
Brown & Sons Incorporated in the consumer/retail investment banking group. Mr.  
Selati also serves on the Board of Directors of Peter Piper, Inc., Tuesday      
Morning Corporation; NWL Holdings, Inc.; Beverages & More, Inc.; Family         
Christian Stores, Inc.; and Ruth's Chris Steak House, Inc.                      

Clayton E. Wilhite has served as a Director since July 1997. Since January  
1998, Mr. Wilhite has been with CFI Group, Inc., has been its Managing Partner  
since May 1998, and has served on its Board of Directors since September 1998.  
CFI Group, Inc. is an international marketing and consulting firm specializing  
in measuring customer satisfaction. Between 1996 and 1998, he was the Chairman  
of Thurloe Holdings, L.L.C. Before 1996, Mr. Wilhite was with the advertising   
firm of D'Arcy Masius Benton & Bowles, Inc. having served as its Vice Chairman  
from 1995 to 1996, as President of DMB&B/North America from 1988 to 1995, and   
as Chairman and Managing Director of DMB&B/St. Louis from 1985 to 1988. From    
August 1996 through our acquisition of Pollo Tropical, Mr. Wilhite served on    
the Board of Directors of Pollo Tropical, Inc.                                  

All directors hold office until the next annual meeting of stockholders or  
until their successors have been elected and qualified. Our executive officers  
are chosen by the Board and serve at its discretion. All of our directors also  
serve as directors of Holdings.                                                 

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Item 11. Executive Compensation                                                 

The following tables set forth certain information for the fiscal years     
ended December 31, 2000, 1999 and 1998 for our Chief Executive Officer and our  
next four most highly compensated executive officers who were serving as        
executive officers at December 31, 2000 and whose annual compensation exceeded  
$100,000. Stock option data refers to the stock options of Holdings.            

SUMMARY COMPENSATION TABLE  

                                                                [Download Table]

                                                                     Long-Term  
                                              Annual Compensation   Compensation
                                             ---------------------- ------------
                                                                     Securities 
                                                                     Underlying 
        Name and Principal Position          Year  Salary  Bonus(a)  Options(#) 
        ---------------------------          ---- -------- -------- ------------
                                                                                
Alan Vituli................................. 2000 $475,008 $498,758       --    
 Chairman of the Board and Chief Executive                                      
  Officer................................... 1999  450,000      --        --    
                                             1998  425,004  297,503       --    

Daniel T. Accordino......................... 2000 $360,000 $324,000       --    
 President, Chief Operating Officer and                                         
  Director.................................. 1999  340,000      --        --    
                                             1998  320,004  192,002       --    

Nicholas A. Castaldo........................ 2000 $315,000 $121,276       --    
 President and Chief Operating Officer,..... 1999  300,000  300,000       --    
 Pollo Tropical Division.................... 1998  144,230  150,000    50,000   

Paul R. Flanders............................ 2000 $162,500 $121,875       325   
 Vice President, Finance and Treasurer...... 1999  152,503      --        300   
                                             1998  143,759   71,880       500   

Joseph A. Zirkman........................... 2000 $154,000 $115,500       300   
 Vice President, General Counsel and                                            
  Secretary................................. 1999  140,000      --        272   
                                             1998  131,000   65,500       400   

--------                                                                        
(a) We provide bonus compensation to executive officers based on an             
individual's achievement of certain specified objectives and our        
achievement of specified increases in stockholder value. Under the      
Company's executive bonus plans, bonuses earned above certain specified 
  percentages of each executive's compensation are subject to deferral to be
paid out in the three succeeding years provided that stockholder value  
  (division stockholder value in the case of Mr. Castaldo) is at least equal
 to what it was in the year that the bonus was earned. Of the bonus earned
in 2000 by Mr. Vituli, Mr. Accordino, Mr. Flanders and Mr. Zirkman,     
$166,252, $108,000, $40,625 and $38,500, respectively, was subject to   
deferral. Mr. Castaldo's 2000 bonus was not subject to any deferral;    
$150,000 of his 1999 bonus was subject to deferral.                     

                                                        [Enlarge/Download Table]

                                  Options Grants in Last Fiscal Year                                 
                         ----------------------------------------------------                        
                                                                               Potential Realizable  
                         Number of   % of Total                               Value at Assumed Rates 
                         Securities   Options                                  of Stock Appreciation 
                         Underlying  Granted to                                 for Option Term(b)   
                          Options   Employees in  Exercise Price   Expiration -----------------------
   Name                  Granted(a)     2000     (Price per Share)    Date        5%          10%    
   ----                  ---------- ------------ ----------------- ---------- ----------- -----------
                                                                                                     
Paul R. Flanders........    325         4.3%          $124.00      3/31/2010  $    25,344 $    64,228
Joseph A. Zirkman.......    300         4.0%          $124.00      3/31/2010       23,395      59,287

--------                                                                        
(a) Stock option grants were granted under the 1996 Long-Term Incentive Plan.   
 These options become exercisable at the rate of 25% per year beginning on
December 31, 2000.                                                      
(b) Potential realizable value is based on an assumption that the price of      
Holdings' common shares appreciate at 5% and 10% annually (compounded)  
from the date of grant until the end of the option term. These          
calculations are based on requirements promulgated by the Commission and
are not intended to forecast possible future appreciation of the stock  
price.                                                                  

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Compensation Committee Interlocks and Insider Participation                     

During the last fiscal year, no executive officer of ours served as a       
director of or member of a compensation committee of any entity for which any   
of the persons serving on our Board of Directors or on the Compensation         
Committee of the Board of Directors is an executive officer. The Compensation   
Committee is comprised of Messrs. Chereskin, Mathies and Wilhite.               

Board of Directors                                                              

Directors' Compensation. Directors who are our employees do not receive any 
additional compensation for serving as directors. Directors who are not our     
employees receive a fee of $15,000 per annum. All directors are reimbursed for  
all reasonable expenses they incur while acting as directors, including as      
members of any committee of the Board of Directors.                             

Liability Limitation. As permitted under the Delaware General Corporation   
Law, our Restated Certificate of Incorporation provides that a director will    
not be personally liable to us or our stockholders for monetary damages for     
breach of a fiduciary duty owed to us or our stockholders. By its terms and in  
accordance with the laws of the State of Delaware, however, this provision      
does not eliminate or limit the liability of any of our directors:              

. for any breach of the director's duty of loyalty to us or our             
stockholders;                                                           
. for an act or omission not in good faith or involving intentional         
misconduct or a knowing violation of law;                               
. for any transaction from which the director derived an improper personal  
benefit; or                                                             
. for an improper declaration of dividends or purchase or redemption of our 
securities.                                                             

Indemnification. Our Restated Certificate of Incorporation provides that we 
will indemnify our directors and officers to the fullest extent permitted by    
Delaware law.                                                                   

Description of Plans                                                            

Employee Retirement Plan. We offer salaried employees, excluding those of   
Pollo Tropical, the option to participate in the Carrols Corporation            
Retirement Savings Plan, which as amended April 1, 1999, offers both a post-    
tax savings option and a savings option pursuant to section 401(k) of the       
Internal Revenue Code. Participating employees may contribute up to 18% of      
their salary annually to either savings option, subject to certain              
limitations. In accordance with the plan, we match up to $1,040 of an           
employee's mandatory contributions by contributing $0.50 for each dollar        
contributed by the employee. Employees are fully vested in their own            
contributions; employees become vested in our contributions beginning in the    
fourth year of service and are fully vested after seven years of service or     
upon retirement at age 65 with five years service, death, or permanent or       
total disability. If any of the foregoing events occurs, benefits may be paid   
out in a single cash lump sum or in periodic installments over not more than    
the employee's assumed life expectancy. The employee's contributions may be     
withdrawn at any time, subject to restrictions on future contributions. Our     
matching contributions may be withdrawn under certain conditions of financial   
necessity or hardship as defined in the plan. Our contributions to the plan     
totaled $344,000, $245,000 and $216,000 for the years ended December 31, 2000,  
1999 and 1998, respectively.                                                    

Pollo Tropical 401(k) Savings Plan. Pollo Tropical has an employee savings  
plan pursuant to Section 401(k) of the Internal Revenue Code. All employees     
who are age 21 or older and who have been credited with at least 1,000 hours    
of service within twelve consecutive months are eligible to participate in the  
plan. Employees may elect to contribute to the plan through payroll deductions  
in an amount not to exceed the amount permitted under the Internal Revenue      
Code. We make discretionary matching contributions, which are allocated to      
participants based on the participant's eligible deferrals during the plan      
year. Employees are fully vested in their contributions. Our contributions      
vest at a rate of 33% for each complete year of service. Our contributions to   
the 401(k) plan totaled $39,000, $29,000 and $17,000 for the years ended        
December 31, 2000, 1999 and 1998, respectively.                                 

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Taco Cabana 401(k) Savings Plan. Under the Taco Cabana Savings and          
Retirement Plan, all employees who are age 21 or older and who have been        
credited with at least 1,000 hours of service within 12 consecutive months are  
eligible to participate in the plan. Employees may contribute up to 15% of      
their salary on a pre-tax basis, and may self-direct contributions to various   
investment options. During 2000, the plan was modified to include a             
contribution equal to $.25 for every $1.00 contributed to the plan up to 3% of  
an employee's salary. Contributions vest at a rate of 20% per year over 5       
years.                                                                          

Bonus Plans. We have cash bonus plans designed to promote and reward        
excellent performance by providing employees with incentive compensation. Key   
senior management executives of each operating division can be eligible for     
bonuses equal to varying percentages of their respective annual salaries        
determined by our performance as well as the division's performance.            

1996 Long-Term Incentive Plan. In connection with the investment by Madison 
Dearborn Capital Partners, L.P. and Madison Dearborn Capital Partners II, L.P.  
in 1997, Holdings adopted the Carrols Holdings Corporation 1996 Long-Term       
Incentive Plan pursuant to which we may grant awards such as "Incentive Stock   
Options" (as defined under Section 422 of the Internal Revenue Code),           
nonqualified stock options, stock appreciation rights, restricted stock,        
performance shares and performance units and other stock-based awards to        
certain of our and our subsidiaries' officers and employees. The 1996 Long-     
Term Incentive Plan replaced a prior long-term incentive plan which was         
adopted December 26, 1996. The plan is designed to advance our interests and    
the interests of Holdings by providing an additional incentive to attract,      
retain and motivate qualified and competent persons through the encouragement   
of stock ownership or stock appreciation rights in Holdings.                    

The 1996 Long-Term Incentive Plan permits the Compensation Committee of the 
Board of Directors of Holdings to grant, from time to time, options to          
purchase an aggregate of up to 106,250 shares of Holdings' Carrols common       
stock. The vesting periods for options and the expiration dates for             
exercisability of options granted under the 1996 Long-Term Incentive Plan are   
determined by Holdings' Compensation Committee; however, the exercise period    
for an option granted under the 1996 Long-Term Incentive Plan may not exceed    
ten years from the date of the grant. Holdings' Compensation Committee is       
authorized to grant options under the plan to all of our and our subsidiaries'  
eligible officers and employees, including executive officers and directors     
(other than outside directors and members of Holdings' Compensation             
Committee).                                                                     

Holdings' Compensation Committee determines the option exercise price per   
share of any option granted under the 1996 Long-Term Incentive Plan; however,   
the option price per share of an option intended to qualify as an Incentive     
Stock Option shall not be less than the fair market value of the Holdings'      
Carrols common stock on the date such option is granted. Payment of such        
option exercise price shall be made:                                            

(1) in cash;                                                                

(2) by delivering shares of Holdings' Carrols common stock already owned by 
the holder of such options;                                         

(3) by delivering a promissory note;                                        

(4) by a combination of any of the foregoing, in accordance with the terms  
of the 1996 Long-Term Incentive Plan, the applicable stock option   
agreement and any applicable guidelines of Holdings' Compensation   
Committee in effect at the time; or                                 

(5) by any other means approved by Holdings' Compensation Committee.        

If the holder of an option issued pursuant to the plan elects to pay the    
exercise price of such option by delivering a promissory note, such promissory  
note may be either:                                                             

(1) unsecured and fully recourse against the holder of such option; or      

(2) nonrecourse but secured by the shares of Holdings' Carrols common stock 
being purchased by such exercise and by other assets having a fair  
 market value equal to not less than 40% of the exercise price of such
option. In either event, such note shall mature on the fifth        
anniversary of the date of the note and bear interest at the rate   
   provided under Section 1274(d) of the Internal Revenue Code of 1986, as
amended from time to time.                                          

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Pursuant to the 1996 Long-Term Incentive Plan, in the event of a Change of  
Control (as defined in the plan) any and all options issued and outstanding     
will vest and become exercisable in full on the date of such Change of          
Control. In addition, as soon as practicable but no later than thirty days      
before such Change of Control, Holdings' Compensation Committee shall notify    
any holder of an option granted under the plan of such Change of Control.       
Further, upon a Change of Control that qualifies as an Approved Sale (as        
defined in the plan) in which the outstanding Holdings' Carrols common stock    
is converted or exchanged for or becomes a right to receive any cash, property  
or securities other than Illiquid Consideration (as defined in the plan),       

(1) each option granted under the plan shall become exercisable solely for  
   the amount of such cash, property or securities that the holder of such
option would have been entitled to had such option been exercised   
immediately prior to such event;                                    

(2) the holder of such option shall be given an opportunity to either:      

(a) exercise such option prior to the consummation of the Approved Sale 
and participate in such sale as a holder of Holdings' Carrols   
common stock; or                                                

(b) upon consummation of the Approved Sale, receive in exchange for     
such option consideration equal to the amount determined by     
multiplying:                                                    

(x) the same amount of consideration per share of Holdings' Carrols 
common stock received by the holders in connection with the 
  Approved Sale less the exercise price per share of such option
to acquire Holdings' Carrols common stock by                

(y) the number of shares of Holdings' Carrols common stock          
represented by such option; and                             

(3) to the extent such option is not exercised prior to or simultaneous     
with such Approved Sale, any such option shall be canceled.         

1998 Directors' Stock Option Plan. During 1998, Holdings adopted the Carrols
Holdings Corporation 1998 Directors' Stock Option Plan pursuant to which we     
may grant "Incentive Stock Options" (as defined under Section 422 of the        
Internal Revenue Code), nonqualified stock options, stock appreciation rights,  
restricted stock, and other stock-based awards to certain non-employee          
directors of Holdings. The plan is designed to advance the interests of         
Holdings and us by providing an additional incentive to attract, retain and     
motivate non-employee individuals as directors of our Board and the Board of    
Holdings.                                                                       

The 1998 Directors' Stock Option Plan permits Holdings' Compensation        
Committee to grant, from time to time, options to purchase an aggregate of up   
to 10,000 shares of Holdings' Carrols common stock. The vesting periods for     
these options and the expiration dates for exercisability of the options        
granted under the plan are determined by the Compensation Committee; however,   
the exercise period for an option granted under the plan may not exceed ten     
years from the date of the grant. Holdings' Compensation Committee is           
authorized to grant options under the plan to all eligible non-employee         
directors of Holdings. Directors that are our employees or employees of         
Holdings, Madison Dearborn Capital Partners, L.P., Madison Dearborn Capital     
Partners II, L.P. or BIB Holdings, or any of their respective affiliates are    
not eligible under the plan.                                                    

The option exercise price per share of any option granted under the 1998    
Directors' Stock Option Plan is determined by Holdings' Compensation            
Committee; however, the option price per share of an option intended to         
qualify as an Incentive Stock Option shall not be less than the fair market     
value of Holdings' Carrols common stock on the date such option is granted.     
Payment of such option exercise price shall be made:                            

(1) in cash;                                                                

(2) by delivering shares of Holdings' Carrols common stock already owned by 
the holder of such options;                                         

(3) by delivering a promissory note;                                        

(4) by a combination of any of the foregoing, in accordance with the terms  
 of the plan, the applicable stock option agreement and any applicable
guidelines of the Holdings Compensation Committee in effect at the  
time; or                                                            

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(5) by any other means approved by the Holdings Compensation Committee.     

If the holder of an option issued pursuant to the plan elects to pay the    
exercise price of such option by delivering a promissory note, such promissory  
note may be either:                                                             

(1) unsecured and fully recourse against the holder of such options; or     

(2) nonrecourse but secured by the shares of Holdings' Carrols common stock 
being purchased by such exercise and by other assets having a fair  
 market value equal to not less than 40% of the exercise price of such
option.                                                             

In either event, such note shall mature on the fifth anniversary of the date    
of the note and bear interest at the rate provided under Section 1274(d) of     
the Internal Revenue Code of 1986, as amended from time to time.                

Pursuant to the 1998 Directors' Stock Option Plan, in the event of a Change 
of Control (as defined in the plan), any and all options issued and             
outstanding shall vest and become exercisable in full on the date of such       
Change of Control. In addition, as soon as practicable but in no event later    
than 30 days prior to a Change of Control, Holdings' Compensation Committee     
shall notify any holder of an option granted under the plan of such Change of   
Control. Further, upon a Change of Control that qualifies as an Approved Sale   
(as defined in the 1998 Directors' Plan) in which the outstanding Holdings'     
Carrols common stock is converted or exchanged for or becomes a right to        
receive any cash, property or securities other than Illiquid Consideration (as  
defined in the 1998 Directors' Plan):                                           

(1) each option granted under the plan shall become exercisable solely for  
   the amount of such cash, property or securities that the holder of such
award would have been entitled to had such award been exercised     
immediately prior to such event;                                    

(2) the holder of such option shall be given an opportunity to either:      

(a) exercise such option prior to the consummation of the Approved Sale 
and participate in such sale as a holder of Holdings' Carrols   
common stock; or                                                

(b) upon consummation of the Approved Sale, receive in exchange for     
such award consideration equal to the amount determined by      
multiplying:                                                    

(x) the same amount of consideration per share of Holdings' Carrols 
common stock received by the holders in connection with the 
    Approved Sale less the exercise price per share of such award to
acquire Holdings' Carrols common stock by                   

(y) the number of shares of Holdings' Carrols common stock          
represented by such option; and                             

(3) to the extent such option is not exercised prior to or simultaneous     
with such Approved Sale, any such award will be canceled.           

1998 Pollo Tropical Long-Term Incentive Plan. Holdings has also adopted the 
Carrols Holdings Corporation 1998 Pollo Tropical Long-Term Incentive Plan       
pursuant to which we may grant awards such as "Incentive Stock Options" (as     
defined under Section 422 of the Internal Revenue Code), nonqualified stock     
options, stock appreciation rights, restricted stock, performance shares and    
performance units and other stock-based awards to certain of our and our        
subsidiaries' officers and employees. The plan is designed to advance our       
interests and the interests of Holdings by providing an additional incentive    
to attract, retain and motivate qualified and competent persons through the     
encouragement of stock ownership or stock appreciation rights in Holdings.      

The 1998 Pollo Tropical Long-Term Incentive Plan permits the Compensation   
Committee of the Board of Directors of Holdings to grant, from time to time,    
options to purchase an aggregate of up to 100,000 shares of Holdings' Pollo     
Tropical class of common stock. The vesting periods for options and the         
expiration dates for exercisability of options granted under the 1998 Pollo     
Tropical Long-Term Incentive Plan are determined by Holdings' Compensation      
Committee; however, the exercise period for an option granted under the 1998    
Pollo Tropical Long-Term Incentive Plan may not exceed ten years from the date  
of the grant. Holdings' Compensation                                            

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Committee is authorized to grant options under the plan to all of our and our   
subsidiaries' eligible officers and employees, including executive officers     
and directors (other than outside directors and members of Holdings'            
Compensation Committee).                                                        

Holdings' Compensation Committee determines the option exercise price per   
share of any option granted under the 1998 Pollo Tropical Long-Term Incentive   
Plan; however, the option price per share of an option intended to qualify as   
an Incentive Stock Option shall not be less than the fair market value of the   
Holdings' Pollo Tropical class of common stock on the date such option is       
granted. Payment of such option exercise price shall be made:                   

(1) in cash;                                                                

(2) by delivering shares of Holdings' Pollo Tropical class of common stock  
already owned by the holder of such options;                        

(3) by delivering a promissory note;                                        

(4) by a combination of any of the foregoing, in accordance with the terms  
of the 1998 Pollo Tropical Long-Term Incentive Plan, the applicable 
stock option agreement and any applicable guidelines of Holdings'   
Compensation Committee in effect at the time; or                    

(5) by any other means approved by Holdings' Compensation Committee.        

If the holder of an option issued pursuant to the plan elects to pay the    
exercise price of such option by delivering a promissory note, such promissory  
note may be either:                                                             

(1) unsecured and fully recourse against the holder of such option; or      

(2) nonrecourse but secured by the shares of Holdings' Pollo Tropical class 
of common stock being purchased by such exercise and by other assets
 having a fair market value equal to not less than 40% of the exercise
price of such option. In either event, such note shall mature on the
   fifth anniversary of the date of the note and bear interest at the rate
   provided under Section 1274(d) of the Internal Revenue Code of 1986, as
amended from time to time.                                          

Pursuant to the 1998 Pollo Tropical Long-Term Incentive Plan, in the event  
of a Change of Control (as defined in the plan) any and all options issued and  
outstanding will vest and become exercisable in full on the date of such        
Change of Control. Under the terms of the 1998 Pollo Tropical Long-Term         
Incentive Plan a change of control includes both a change of control of         
Holdings or a sale of the Pollo Tropical Group. In addition, as soon as         
practicable but no later than thirty days before such Change of Control,        
Holdings' Compensation Committee shall notify any holder of an option granted   
under the plan of such Change of Control. Further, upon a Change of Control     
that qualifies as an Approved Sale (as defined in the plan) in which the        
outstanding common stock of Holdings is converted or exchanged for or becomes   
a right to receive any cash, property or securities other than Illiquid         
Consideration (as defined in the plan),                                         

(1) each option granted under the plan shall become exercisable solely for  
   the amount of such cash, property or securities that the holder of such
option would have been entitled to had such option been exercised   
immediately prior to such event;                                    

(2) the holder of such option shall be given an opportunity to either:      

(a) exercise such option prior to the consummation of the Approved Sale 
and participate in such sale as a holder of Holdings' Pollo     
Tropical common stock; or                                       

(b) upon consummation of the Approved Sale, receive in exchange for     
such option consideration equal to the amount determined by     
multiplying:                                                    

(x) the same amount of consideration per share of Holdings' Pollo   
    Tropical common stock received by the holders of Holdings' Pollo
   Tropical common stock in connection with the Approved Sale less
   the exercise price per share of Holdings' Pollo Tropical common
   stock of such option to acquire Holdings' Pollo Tropical common
stock by                                                    

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(y) the number of shares of Holdings' Pollo Tropical common stock   
represented by such option; and                             

(3) to the extent such option is not exercised prior to or simultaneous     
with such Approved Sale, any such option shall be canceled.         

Description of Employment Agreements                                            

Vituli Employment Agreement. On March 27, 1997, in connection with the      
investment by Madison Dearborn Capital Partners, L.P. and Madison Dearborn      
Capital Partners II, L.P., we entered into a Second Amended and Restated        
Employment Agreement with Alan Vituli, which amended and restated an Amended    
and Restated Employment Agreement dated April 3, 1996 between us and Mr.        
Vituli. Pursuant to the amended employment agreement, Mr. Vituli will continue  
to serve as our Chairman of the Board and Chief Executive Officer. The amended  
employment agreement will be for an initial term of four years, commencing on   
March 27, 1997 and will be subject to automatic renewals for successive one-    
year terms unless either we or Mr. Vituli elect not to renew by giving written  
notice to the other at least 90 days before a scheduled expiration date.        
Pursuant to the amended employment agreement, Mr. Vituli will receive a base    
salary of $400,000 for the first year of the term, which amount increases       
annually by at least $25,000 subject to additional increases that may be        
authorized by the Compensation Committee. Pursuant to the amended employment    
agreement, Mr. Vituli will participate in our Executive Bonus Plan and any of   
our stock option plans applicable to executive employees. The amended           
employment agreement also requires that we are responsible for maintaining the  
premium payments on a split-dollar life insurance policy on the life of Mr.     
Vituli providing a death benefit of $1.5 million payable to an irrevocable      
trust designated by Mr. Vituli. The amended employment agreement provides that  
if Mr. Vituli's employment is terminated without Cause (as defined in the       
amended employment agreement) following a Change of Control (as defined in the  
amended employment agreement),                                                  

(1) Mr. Vituli will receive a cash payment in the amount equal to 2.99      
times his Five Year Compensation Average (as defined in the amended 
   employment agreement) if such Change of Control occurs during the first
  two years of the initial term of the amended employment agreement; and

(2) a cash lump sum equal to his salary during the previous 12 months if    
 terminated thereafter. The amended employment agreement includes non-
 competition and non-solicitation provisions effective during the term
of the amended employment agreement and for two years following its 
termination.                                                        

Accordino Employment Agreement. On March 27, 1997, in connection with the   
investment by Madison Dearborn Capital Partners, L.P. and Madison Dearborn      
Capital Partners II, L.P., we entered into a Second Amended and Restated        
Employment Agreement with Daniel T. Accordino, which amended and restated an    
Amended and Restated Employment Agreement dated April 3, 1996 between us and    
Mr. Accordino. Pursuant to the amended employment agreement, Mr. Accordino      
will continue to serve as our President and Chief Operating Officer. The        
amended employment agreement will be for an initial term of four years,         
commencing on March 27, 1997 and will be subject to automatic renewal for       
successive one-year terms unless either we or Mr. Accordino elect not to renew  
by giving written notice to the other at least 90 days before a scheduled       
expiration date. Pursuant to the amended employment agreement, Mr. Accordino    
will receive a base salary of $300,000 for the first year of the term, which    
amount increases annually by at least $20,000 subject to additional increases   
that may be authorized by the Compensation Committee. Pursuant to the amended   
employment agreement, Mr. Accordino will participate in our Executive Bonus     
Plan and any of stock option plans applicable to executive employees. The       
amended employment agreement also will require that we are responsible for      
maintaining the premium payments on a split-dollar life insurance policy on     
the life of Mr. Accordino providing a death benefit of $1.0 million payable to  
an irrevocable trust designated by Mr. Accordino. The amended employment        
agreement provides that if Mr. Accordino's employment is terminated without     
Cause (as defined in the amended employment agreement) following a Change of    
Control (as defined in the amended employment agreement),                       

(1) Mr. Accordino will receive a cash payment in the amount equal to 2.99   
times his Five Year Compensation Average (as defined in the amended 
   employment agreement) if such change of control occurs during the first
two years of the agreement; and                                     

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(2) a cash lump sum equal to his salary during the previous 12 months if    
  terminated thereafter. The agreement includes non-competition and non-
solicitation provisions effective during the term of the amended    
employment agreement and for two years following its termination.   

Castaldo Employment Agreement. Effective July 20, 1998, in connection with  
our acquisition of Pollo Tropical, we entered into an Amended and Restated      
Employment Agreement with Nicholas A. Castaldo, which amended and restated an   
Employment Agreement dated September 19, 1995, as amended May 5, 1997, between  
Pollo Tropical and Mr. Castaldo. Pursuant to the amended agreement, Mr.         
Castaldo serves as the President and Chief Operating Officer of our Pollo       
Tropical Division. The agreement is for an initial term commencing on           
July 20, 1998 and ending September 30, 2003, and will be subject to renewal     
for up to two additional one-year periods at our option, exercisable by giving  
written notice to Mr. Castaldo by no later than July 31, 2003 or 2004, as       
applicable. Pursuant to the agreement, Mr. Castaldo receives a base salary of   
$300,000 per year during the term, which amount increases on each January 1st   
during the term by at least 5% subject to additional increases that may be      
authorized by our Board of Directors. Pursuant to the agreement, Mr. Castaldo   
is eligible to receive an annual bonus of up to 100% of his base salary (of     
which not more than 50% may be subject to deferral provisions in our Executive  
Bonus Plan (as defined in the agreement)), which bonus will be payable in       
accordance with our Executive Bonus Plan and is based solely upon the           
achievement by Mr. Castaldo of certain corporate and individual performance     
standards during the relevant period as reasonably established by us with Mr.   
Castaldo. Pursuant to the agreement, Mr. Castaldo was granted non-qualified     
options to purchase 5% of Holdings' Pollo Tropical common stock pursuant to     
the 1998 Pollo Tropical Long-Term Incentive Plan. Mr. Castaldo's agreement      
provides that if Mr. Castaldo's employment is terminated by us without Cause    
(as defined in the agreement) or by Mr. Castaldo for Good Reason (as defined    
in the agreement), or if the term of the agreement expires, then Mr. Castaldo   
is entitled to the following payments and benefits:                             

(1) An amount equal to the greater of:                                      

(a) Mr. Castaldo's base salary then in effect, from the date on which   
his employment is terminated or expires under the terms of the  
agreement until 12 months after such termination date; or       

(b) Mr. Castaldo's base salary from such termination date through the   
  end of the initial term. The foregoing will be payable as follows:
a lump sum equal to one year's then current base salary payable 
 within ten days of such termination date and the balance, if any,
payable in 24 equal monthly installments.                       

(2) Mr. Castaldo's stock options granted under the Option Agreement (as     
  defined in the agreement) shall vest as set forth in and in accordance
with the terms and provisions of the Option Agreement;              

(3) Mr. Castaldo's health and medical insurance benefits will be continued  
at our expense through the date which is 24 months following the    
termination date; and                                               

(4) any portion of bonus that was deferred under the Pollo Tropical         
 Executive Bonus Plan will be payable in a lump sum within ten days of
the termination date.                                               

Mr. Castaldo's agreement includes non-competition and non-solicitation      
provisions effective during the term of the agreement and for two years         
following its termination.                                                      

Option Agreements Pursuant to the 1996 Long-term Incentive Plan                 

Vituli Plan Option Agreement. On December 30, 1996, pursuant to the         
Securities Purchase Agreement dated as of March 6, 1996 among Holdings, the     
stockholders of Holdings, BIB Holdings and us, Holdings granted to Alan         
Vituli, under the 1996 Long-Term Incentive Plan, an option to purchase 43,350   
shares of Holdings' common stock. The option:                                   

(1) was immediately exercisable with regard to 15,300 shares of Holdings'   
common stock at an exercise price of $110.00 per share; and         

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(2) was to become exercisable on June 1, 1997 with regard to:               

(a) 15,300 shares of Holdings' common stock at an exercise price of     
$130.00 per share; and                                          

(b) 12,750 shares of Holdings' common stock at an exercise price of     
$140.00 per share; and                                          

On January 22, 1997, Mr. Vituli contributed these options to the Vituli     
Family Trust for the benefit of his children.                                   

In connection with the investment by Madison Dearborn Capital Partners, L.P.
and Madison Dearborn Capital Partners II, L.P. in 1997, Holdings granted an     
option to purchase 43,350 shares of Holdings' common stock under the 1996       
Long-Term Incentive Plan in exchange for the options held by the Vituli Family  
Trust. The Vituli Family Trust agreed to reduce the exercise price to           
$101.7646 per share. The new option:                                            

(1) has a term of ten years from the date of grant;                         

(2) became exercisable:                                                     

(a) on the date of grant with regard to 15,300 shares of Holdings'      
common stock;                                                   

(b) on December 31, 1997 with regard to 5,610 shares of Holdings'       
common stock;                                                   

(c) on December 31, 1998 with regard to 5,610 shares of Holdings'       
common stock;                                                   

(d) on December 31, 1999 with regard to 5,610 shares of Holdings'       
common stock; and                                               

(e) on December 31, 2000 with regard to 11,220 shares of Holdings'      
common stock.                                                   

Accordino Plan Option Agreement. On December 30, 1996, pursuant to the      
Securities Purchase Agreement dated as of March 6, 1996, Holdings granted to    
Daniel T. Accordino, under the 1996 Long-Term Incentive Plan, an option to      
purchase 28,900 shares of Holdings' common stock. The option:                   

(1) was immediately exercisable with regard to 10,200 shares of Holdings'   
common stock at an exercise price of $110.00 per share; and         

(2) was to become exercisable on December 31, 1997 with regard to:          

(a) 10,200 shares of Holdings' common stock at an exercise price of     
$130.00 per share; and                                          

(b) 8,500 shares of Holdings' common stock at an exercise price of      
$140.00 per share.                                              

In connection with the investment by Madison Dearborn Capital Partners, L.P.
and Madison Dearborn Capital Partners II, L.P. in 1997, the option granted to   
Mr. Accordino was canceled and Holdings granted to Mr. Accordino, under the     
1996 Long-Term Incentive Plan, an option to purchase 28,900 shares of           
Holdings' common stock at an exercise price of $101.7646 per share. The new     
option:                                                                         

(1) has a term of ten years from the date of grant;                         

(2) became exercisable:                                                     

(a) on the date of grant with regard to 10,200 shares of Holdings'      
common stock;                                                   

(b) on December 31, 1997 with regard to 3,740 shares of Holdings'       
common stock;                                                   

(c) on December 31, 1998 with regard to 3,740 shares of Holdings'       
common stock;                                                   

(d) on December 31, 1999 with regard to 3,740 shares of Holdings'       
common stock; and                                               

(e) on December 31, 2000 with regard to 7,480 shares of Holdings'       
common stock.                                                   

Other Option Agreements                                                         

Vituli Non-Plan Option Agreement. In connection with the investment by      
Madison Dearborn Partners, L.P. and Madson Dearborn Capital Partners II, L.P.   
in 1997, Holdings granted to Mr. Vituli a nonqualified stock option to          
purchase 29,480 shares of Holdings' common stock at an exercise price of        
$101.7646 per share. The option will have a term of ten years from the date of  
grant and will become exercisable in five equal parts on the                    

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five consecutive anniversaries of the date of grant. The option will have       
substantially the same terms as options issued under the 1996 Long-Term         
Incentive Plan with respect to:                                                 

(1) the method of payment of the exercise price of the option; and          

(2) the effect of a Change of Control (as defined in the 1996 Long-Term     
Incentive Plan).                                                    

Accordino Non-Plan Option Agreement. In connection with the investment by   
Madison Dearborn Partners, L.P. and Madison Dearborn Capital Partners II, L.P.  
in 1997, Holdings granted to Mr. Accordino a nonqualified stock option to       
purchase 2,579 shares of Holdings' common stock at an exercise price of         
$101.7646 per share. The option will have a term of ten years from the date of  
grant and will become exercisable in five equal parts on the five consecutive   
anniversaries of the date of grant. The option will have substantially the      
same terms as the option granted to Mr. Vituli.                                 

Zirkman Non-Plan Option Agreement. In connection with the investment by     
Madison Dearborn Partners, L.P. and Madison Dearborn Capital Partners II, L.P.  
in 1997, Holdings granted to Mr. Zirkman a nonqualified stock option to         
purchase 368 shares of Holdings' common stock at an exercise price of           
$101.7646 per share. The option will have a term of ten years from the date of  
grant and will become exercisable in five substantially equal parts on the      
five consecutive anniversaries of the date of grant. The option will have       
substantially the same terms as the option granted to Mr. Vituli.               

Castaldo Option Agreement. In conjunction with Mr. Castaldo's employment    
agreement Holdings granted Mr. Castaldo a nonqualified stock option to          
purchase 50,000 shares of Holdings' Pollo Tropical class of common stock under  
the 1998 Pollo Tropical Long-Term Incentive Plan. The option:                   

(1) has a term of ten years from the date of grant;                         

(2) became exercisable:                                                     

(a) on July 19, 1999 with regard to 20,000 shares of Holdings' Pollo    
   Tropical common stock at an exercise price of $77.50 per share; and

(b) on July 19, 2000 with regard to 7,500 shares of Holdings' Pollo     
   Tropical common stock at an exercise price of $88.80 per share; and

(3) will become exercisable:                                                

(a) on July 19, 2001 with regard to 7,500 shares of Holdings' Pollo     
Tropical common stock at an exercise price of $102.90 per share;

(b) on July 19, 2002 with regard to 7,500 shares of Holdings' Pollo     
Tropical common stock at an exercise price of $119.50 per share;
and                                                             

(c) on July 19, 2003 with regard to 7,500 shares of Holdings' Pollo     
Tropical common stock at an exercise price of $137.00 per share.

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Item 12. Security Ownership of Certain Beneficial Owners and Management         

The following tables set forth the number and percentage of shares of our   
voting stock and Holdings' voting common stock beneficially owned, as of March  
15, 2001, by:                                                                   

(1) all persons known by us to be the beneficial owners of more than 5% of  
the shares of such voting common stock;                             

(2) each of our directors who owns shares of such voting common stock;      

(3) each of our executive officers included in the Summary Compensation     
Table above; and                                                    

(4) all of our executive officers and directors as a group.                 

                                                                [Download Table]

                           Shares Beneficially Owned                            
                           ----------------------------                         
                             Number        Percentage                           
                           ------------- --------------                         
                                                                                
Stockholders of Carrols                                                         
 Corporation:                                                                   
 Carrols Holdings                     10          100%                          
 Corporation.............                                                       
 968 James Street                                                               
 Syracuse, New York 13203                                                       

                                 Carrols Class          Pollo Tropical Class    
                           ---------------------------- ------------------------
                             Number        Percentage    Number      Percentage 
                           ------------- -------------- ----------- ------------
                                                                                
Stockholders of Carrols                                                         
 Holdings Corporation(a):                                                       
 BIB Holdings (Bermuda)          566,667         44.8%                          
 Ltd.(b).................                                                       
 c/o Dilmun Investments                                                         
 Metro Center                                                                   
 One Station Place                                                              
 Stamford, CT 06902                                                             

 Madison Dearborn Capital        283,333         22.4%                          
 Partners, L.P. .........                                                       
 Three First National                                                           
 Plaza                                                                          
 Suite 3800                                                                     
 Chicago, IL 60602                                                              

 Madison Dearborn Capital        283,334         22.4%                          
 Partners II, L.P. ......                                                       
 (Same address as Madison                                                       
 Dearborn Capital                                                               
 Partners, L.P.)                                                                

Executive Officers and                                                          
 Directors:                                                                     
 Alan Vituli(c)..........         76,761          6.1%                          
 Daniel T. Accordino.....         31,824          2.5%                          
 Nicholas A. Castaldo....            --            --        27,500         2.7%
 Paul R. Flanders........          2,106        *                               
 Joseph A. Zirkman.......          1,679        *                               
 Clayton E. Wilhite......          1,125        *                               
 Directors and executive                                                        
  officers of Carrols as a                                                      
  group (11 persons).....        114,356          9.0%       27,500         2.7%

--------                                                                        
* Less than one percent.                                                      
(a) The number of shares shown in the table includes stock options which are    
currently exercisable or exercisable within 60 days to purchase: 66,934 
shares held by Mr. Vituli; 30,964 shares held by Mr. Accordino; 20,000  
  held by Mr. Castaldo; 2,106 shares held by Mr. Flanders; 1,556 shares held
by Mr. Zirkman; and 1,125 shares held by Mr. Wilhite.                   
(b) These 566,667 shares of Holdings' common stock were previously owned by     
Atlantic Restaurants, Inc. which was formed to effect the acquisition of
 the company in 1996. Atlantic Restaurants, Inc., which was a wholly-owned
subsidiary of BIB Holdings, was merged into BIB Holdings on February 10,
1999.                                                                   
(c) Includes 43,350 vested stock options contributed to and held by the Vituli  
Family Trust.                                                           

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Item 13. Certain Relationships and Related Transactions                         

Stockholders Agreement. On March 27, 1997, in connection with the investment
by Madison Dearborn Capital Partners, L.P. and Madison Dearborn Capital         
Partners II, L.P., all holders of Holdings' voting common stock entered into a  
Stockholders Agreement. The agreement provides that all holders of Holdings'    
voting common stock will vote their common stock in order to cause the          
following individuals to be elected to the Board of Directors of Holdings and   
each of its subsidiaries (including us):                                        

(a) three representatives designated collectively by Madison Dearborn       
Capital Partners, L.P. and Madison Dearborn                         

(b) three representatives designated by BIB Holdings; and                   

(c) two representatives designated by Mr. Vituli as long as Mr. Vituli is   
  our Chief Executive Officer, subject in each case to adjustment if the
percentage holdings of each decreases below a certain threshold.    

In addition, the agreement provides for certain limitations on the ability  
of holders of Holdings' common stock to sell, transfer, assign, pledge or       
otherwise dispose of their common stock. The agreement contains covenants       
requiring us to obtain the prior consent of Madison Dearborn Capital Partners,  
L.P., Madison Dearborn Capital Partners II, L.P., and BIB Holdings before       
taking certain actions including the redemption, purchase or other acquisition  
of Holdings' capital budget approved by Holdings' Board of Directors for that   
year or the entry into the ownership, active management or operation of any     
business other than Burger King franchise restaurants.                          

Registration Rights Agreement. On March 27, 1997, in connection with the    
investment by Madison Dearborn Capital Partners, L.P. and Madison Dearborn      
Capital Partners II, L.P., those entities, BIB Holdings, Alan Vituli, Daniel    
T. Accordino and Joseph A. Zirkman entered into a registration agreement with   
Holdings. The registration agreement provides for demand and piggyback rights   
with respect to Holdings' common stock. The Madison Dearborn Capital Partners,  
L.P. and Madison Dearborn Capital Partners II, L.P. or BIB Holdings may demand  
registration under the Securities Act of all or any portion of their shares of  
Holdings' common stock or options for shares of Holdings' common stock (the     
"Registrable Securities"), provided that:                                       

(1) in the case of the first demand registration, Madison Dearborn Capital  
  Partners, L.P., and Madison Dearborn Capital Partners II, L.P. and BIB
Holdings must consent to a demand registration unless Holdings has  
 completed a registered public offering of the Holdings' common stock;
and                                                                 

(2) all demand registrations on Form S-1 must be underwritten.              

Madison Dearborn Capital Partners, L.P. and Madison Dearborn Capital        
Partners II, L.P., collectively, and BIB Holdings are each entitled to          
request:                                                                        

(1) three demand registrations on Form S-1 in which Holdings will pay all   
registration expenses, provided that the offering value of the      
Registrable Securities is at least $15 million; and                 

(2) an unlimited number of demand registrations on Form S-3 in which        
   Holdings will pay all registration expenses, provided that the offering
value of the Registrable Securities is at least $5 million with an  
underwritten offering equal to at least $10 million.                

Whenever Holdings proposes to register any of its securities (other than    
pursuant to a demand registration) and the registration form may be used for    
the registration of Registrable Securities, Holdings shall give prompt written  
notice to all holders of Registrable Securities of its intention to effect      
such a registration and shall include in such registration all Registrable      
Securities to which Holdings has received written requests for inclusion in     
such registration within 20 days after receipt of Holdings' notice. Holdings    
shall pay the registration expenses of the holders of Registrable Securities    
in all such piggyback registrations. The Registration Agreement contains        
typical "cut back" provisions in connection with both demand registrations and  
piggyback registrations. We will provide the holders of the Registrable         
Securities with typical indemnification in the event of certain misstatements   
or omissions made in connection with both demand registrations and piggyback    
registrations.                                                                  

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

(a) Financial Statements                                                    

                                                                [Download Table]

                                                                    Page    
                                                                    ----    
                                                                            
CARROLS CORPORATION AND SUBSIDIARIES                                        
  Opinion of Independent Certified Public Accountants........... F-1        
  Financial Statements:                                                     
    Consolidated Balance Sheets................................. F-2        
    Consolidated Statements of Operations....................... F-3        
    Consolidated Statements of Stockholder's Equity (Deficit)... F-4        
    Consolidated Statements of Cash Flows....................... F-5 to F-6 
    Notes to Consolidated Financial Statements.................. F-7 to F-20

(b) Financial Statement Schedules                                           

                                                                [Download Table]

       Schedule            Description              Page
       --------            -----------              ----
                                                        
         II     Valuation and Qualifying Accounts   F-21

Schedules other than those listed are omitted for the reason that they are  
not required, not applicable, or the required information is shown in the       
financial statements or notes thereto.                                          

Separate financial statements of the Company are not filed for the reasons  
that (1) consolidated statements of the Company and its consolidated            
subsidiaries are filed and (2) the Company is primarily an operating Company    
and all subsidiaries included in the consolidated financial statements filed    
are wholly-owned, and indebtedness of all subsidiaries included in the          
consolidated financial statements to any person other than the Company does     
not exceed 5% of the total assets as shown by the Consolidated Balance Sheet    
at December 31, 1999.                                                           

Reports on Form 8-K--No current reports on Form 8-K were filed during the   
quarter ended January 2, 2000.                                                  

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(a)(3) Exhibits                                                                 

EXHIBIT INDEX 

                                                                [Download Table]

Exhibit                                                                       
Number                                Description                             
-------                               -----------                             
                                                                              
    2.1 Agreement and Plan of Merger dated June 3, 1998 by and between Carrols
        Corporation and Pollo Tropical, Inc. (incorporated by reference to    
        Exhibit (c)(1) to the Tender Offer Statement on Schedule 14 (d)(1)    
        dated July 3, 1998)                                                   

    2.2 Agreement and Plan of Merger among Carrols Corporation, Spur          
        Acquisition Corp. and Taco Cabana, Inc. dated October 6, 2000         
        (incorporated by reference to Exhibit 2.2 to Carrols Corporation's    
        Form 8-K filed October 11, 2000).                                     

    3.1 Restated By-laws (incorporated by reference to Exhibit 3.(3)(b) to    
        Carrols Corporation's 1986 Annual Report on Form 10-K)                

    3.2 Certificate of Amendment to the Restated Certificate of Incorporation 
        of Carrols Holdings Corporation (incorporated by reference to Exhibit 
        3.1 to Carrols Corporation's September 30, 1999 Quarterly Report on   
        Form 10-Q)                                                            

    4.1 Indenture, dated as of November 24, 1998, between Carrols Corporation,
        the Guarantors named therein and IBJ Schroder Bank & Trust Company, as
        Trustee (incorporated by reference to Exhibit 4.1 to Carrols          
        Corporation's Form S-4 filed February 2, 1999)                        

    4.2 Exchange and Registration Rights Agreement, dated as of November 24,  
        1998, among Carrols Corporation and Chase Securities Inc. and         
        NationsBanc Montgomery Securities LLC (incorporated by reference to   
        Exhibit 4.2 to Carrols Corporation's Form S-4 filed on February 2,    
        1999                                                                  

    4.3 Form of 9 1/2% Senior Subordinated Note due 2008 (incorporated by     
        reference to Exhibit 4.3 to Carrols Corporation's Form S-4 filed      
        February 2, 1999)                                                     

   10.1 Stock Purchase Agreement dated as of February 25, 1997 by and among   
        Madison Dearborn Capital Partners, L.P., Madison Dearborn Capital     
        Partners II, L.P., Atlantic Restaurants, Inc. and Carrols Holdings    
        Corporation (incorporated by reference to Exhibit 10.12 to Carrols    
        Corporation's 1996 Annual Report on Form 10-K)                        

(1)10.2 Amended and Restated Employment Agreement dated as of July 20, 1998 by
        and between Carrols Corporation and Nicholas A. Castaldo (incorporated
        by reference to Exhibit 10.11 to Carrols Corporation's Form S-4 filed 
        February 2, 1999)                                                     

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                                                                [Download Table]

Exhibit                                                                       
 Number                               Description                             
-------                               -----------                             
                                                                              
(1)10.3  Carrols Corporation 1996 Long-Term Incentive Plan (incorporated by   
         reference to Exhibit 10.20 to Carrols Corporation's 1996 Annual      
         Report on Form 10-K)                                                 

(1)10.4  Stock Option Agreement dated as of December 30, 1996 by and between  
         Carrols Corporation and Alan Vituli (incorporated by reference to    
         Exhibit 10.21 to Carrols Corporation's 1996 Annual Report on Form 10-
         K)                                                                   

(1)10.5  Stock Option Agreement dated as of December 30, 1996 by and between  
         Carrols Corporation and Daniel T. Accordino (incorporated by         
         reference to Exhibit 10.22 to Carrols Corporation's 1996 Annual      
         Report on Form 10-K)                                                 

   10.6  Form of Stockholders Agreement by and among Carrols Holdings         
         Corporation, Madison Dearborn Capital Partners, L.P., Madison        
         Dearborn Capital Partners II, L.P., Atlantic Restaurants, Inc., Alan 
         Vituli, Daniel T. Accordino and Joseph A. Zirkman (incorporated by   
         reference to Exhibit 10.23 to Carrols Corporation's 1996 Annual      
         Report on Form 10-K)                                                 

   10.7  Form of Registration Agreement by and among Carrols Holdings         
         Corporation, Atlantic Restaurants, Inc., Madison Dearborn Capital    
         Partners, L.P., Madison Dearborn Capital Partners II, L.P., Alan     
         Vituli, Daniel T. Accordino and Joseph A. Zirkman (incorporated by   
         reference to Exhibit 10.24 to Carrols Corporation's 1996 Annual      
         Report on Form 10-K)                                                 

(1)10.8  Form of Second Amended and Restated Employment Agreement dated March 
         27, 1997 by and between Carrols Corporation and Alan Vituli          
         (incorporated by reference to Exhibit 10.25 to Carrols Corporation's 
         1996 Annual Report on Form 10-K)                                     

(1)10.9  Form of Second Amended and Restated Employment Agreement dated March 
         27, 1997 by and between Carrols Corporation and Daniel T. Accordino  
         (incorporated by reference to Exhibit 10.26 to Carrols Corporation's 
         1996 Annual Report on Form 10-K)                                     

   10.10 Form of Carrols Holdings Corporation 1996 Long-Term Incentive Plan   
         (incorporated by reference to Exhibit 10.27 to Carrols Corporation's 
         1996 Annual Report on Form 10-K)                                     

(1)10.11 Form of Stock Option Agreement by and between Carrols Holdings       
         Corporation and Alan Vituli (incorporated by reference to Exhibit    
         10.28 to Carrols Corporation's 1996 Annual Report on Form 10-K)      

(1)10.12 Form of Stock Option Agreement by and between Carrols Holdings       
         Corporation and Daniel T. Accordino (incorporated by reference to    
         Exhibit 10.29 to Carrols Corporation's 1996 Annual Report on Form 10-
         K)                                                                   

(1)10.13 Form of Unvested Stock Option Agreement by and between Carrols       
         Holdings Corporation and Alan Vituli (incorporated by reference to   
         Exhibit 10.30 to Carrols Corporation's 1996 Annual Report on Form 10-
         K)                                                                   

(1)10.14 Form of Unvested Stock Option Agreement by and between Carrols       
         Holdings Corporation and Daniel T. Accordino (incorporated by        
         reference to Exhibit 10.31 to Carrols Corporation's 1996 Annual      
         Report on Form 10-K)                                                 

(1)10.15 Form of Unvested Stock Option Agreement by and between Carrols       
         Holdings Corporation and Joseph A. Zirkman (incorporated by reference
         to Exhibit 10.32 to Carrols Corporation's 1996 Annual Report on Form 
         10-K)                                                                

   10.16 First Amendment to the Stock Purchase Agreement dated March 27, 1997 
         by and among Carrols Holdings Corporation, Atlantic Restaurants,     
         Inc., Madison Dearborn Capital Partners, L.P. and Madison Dearborn   
         Capital Partners II, L.P. (incorporated by reference to Exhibit 10.38
         to Carrols Corporation's current report on Form 8-K filed March 27,  
         1997)                                                                

   10.17 Purchase and Sale Agreement dated as of January 15, 1997 by and      
         between Carrols Corporation, as Purchaser, Omega Services, Inc. as   
         Seller and Mr. Harold W. Hobgood as Omega's Agent (incorporated by   
         reference to Exhibit 10.39 to Carrols Corporation's current report on
         Form 8-K filed March 27, 1997)                                       

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                                                                [Download Table]

Exhibit                                                                       
 Number                               Description                             
-------                               -----------                             
                                                                              
   10.18 Purchase and Sale Agreement dated as of January 15, 1997 by and      
         between Carrols Corporation, as Purchaser, Omega Services, Inc. as   
         Seller and Mr. Harold W. Hobgood as Omega's Agent (incorporated by   
         reference to Exhibit 10.40 to Carrols Corporation's current report on
         Form 8-K filed March 27, 1997)                                       

   10.19 Purchase Agreement dated as of July 7, 1997 among Carrols            
         Corporation, as Purchaser, and the individuals and trusts listed on  
         Exhibit A attached thereto, as Sellers, the individuals and entities 
         listed on Exhibit B attached thereto, as Affiliated Real Property    
         Owners, and Richard D. Fors, Jr. and Charles J. Mund, as the Seller's
         representatives (incorporated by reference to Exhibit 10.41 to       
         Carrols Corporation's current report on Form 8-K filed August 20,    
         1997)                                                                

(1)10.20 Carrols Holdings Corporation 1998 Directors' Stock Option Plan       
         (incorporated by reference to Exhibit 10.29 to Carrols Corporation's 
         1998 Annual Report on Form 10-K)                                     

   10.21 Supply Agreement between AmeriServe Food Distribution, Inc. and      
         Carrols Corporation dated January 31, 1999 (incorporated by reference
         to Exhibit 10.31 to Carrols Corporation's June 30, 1999 Quarterly    
         Report on Form 10-Q)                                                 

(1)10.22 Carrols Holdings Corporation 1998 Pollo Tropical Long-Term Incentive 
         Plan (incorporated by reference to Exhibit 10.1 to Carrols           
         Corporation's September 30, 1999 Quarterly Report on Form 10-Q)      

(1)10.23 Carrols Corporation Retirement Savings Plan dated April 1, 1999.     

   10.24 Loan Agreement dated as of December 19, 2000 among Carrols           
         Corporation, The Chase Manhattan Bank, Bank of America, N.A.,        
         Suntrust Bank, Atlanta, Manufacturers and Traders Trust Company, and 
         the other lenders now or hereafter parties hereto (incorporated by   
         reference to Exhibit 10.30 to Carrols Corporation's Form 8-K filed   
         January 3, 2001).                                                    

(2)21.1  List of subsidiaries                                                 


--------                                                                        
(1) Management contract or compensatory plan or arrangement identified          
pursuant to this report.                                                

(2) Filed herewith.                                                             

(b) Reports on Form 8-K                                                         

A current report on Form 8-K dated October 6, 2000 was filed during the fourth  
quarter of the fiscal year to report that Carrols Corporation (the "Company")   
entered into a definitive Agreement and Plan of Merger under which the Company  
would purchase, for cash, all of the outstanding common shares of Taco Cabana,  
Inc. Subsequently, on December 19, 2000, the Company completed its acquisition  
of Taco Cabana, Inc.                                                            

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Report of Independent Accountants 
--------------------------------- 

To the Board of Directors and Shareholder                                       
of Carrols Corporation:                                                         

In our opinion, the consolidated financial statements listed in the index       
appearing under Item 14(a)(1) present fairly, in all material respects, the     
financial position of Carrols Corporation and its subsidiaries at December 31,  
2000 and January 2, 2000, and the results of their operations and their cash    
flows for each of the three years in the period ended December 31, 2000 in      
conformity with accounting principles generally accepted in the United States   
of America. In addition, in our opinion, the financial statement schedules      
listed in the index appearing under Item 14(a)(2) present fairly, in all        
material respects, the information set forth therein when read in conjunction   
with the related consolidated financial statements. These financial statements  
and financial statement schedules are the responsibility of the Company's       
management; our responsibility is to express an opinion on these financial      
statements and financial statement schedules based on our audits. We conducted  
our audits of these statements in accordance with auditing standards generally  
accepted in the United States of America, which 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, assessing the accounting principles used and significant estimates  
made by management, and evaluating the overall financial statement              
presentation. We believe that our audits provide a reasonable basis for our     
opinion.                                                                        

/s/ PricewaterhouseCoopers LLP                                                  
Syracuse, New York                                                              
March 2, 2001                                                                   

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CARROLS CORPORATION AND SUBSIDIARIES  
CONSOLIDATED BALANCE SHEETS 
December 31, 2000 and 1999  

ASSETS  

                                                        [Enlarge/Download Table]

Current Assets:                                              2000           1999      
                                                             ----           ----      
                                                                                      
    Cash and cash equivalents                            $   2,712,000  $   1,901,000 
    Trade and other receivables, net of reserves of                                   
      $130,000 and $53,000, respectively                     1,912,000        787,000 
    Inventories                                              5,917,000      4,211,000 
    Prepaid rent                                             2,284,000      1,829,000 
    Prepaid expenses and other current assets                4,122,000      1,629,000 
    Refundable income taxes                                  2,605,000        682,000 
    Deferred income taxes (Note 7)                           8,451,000      6,475,000 
                                                         -------------  ------------- 
Total current assets                                        28,003,000     17,514,000 
                                                         -------------  ------------- 

Property and equipment, at cost less accumulated                                      
    depreciation and amortization of $97,968,000,                                     
    and $91,599,000, respectively (Note 2)                 203,284,000    122,813,000 
Franchise rights, at cost less accumulated amortization                               
    of $38,539,000 and $34,174,000, respectively            98,931,000    101,927,000 
Intangible assets, at cost less accumulated                                           
    amortization of $13,615,000 and $11,328,000,                                      
    respectively (Note 2)                                  127,417,000     67,545,000 
Deferred income taxes (Note 7)                               6,406,000              - 
Other assets                                                12,871,000     10,228,000 
                                                         -------------  ------------- 
                                                         $ 476,912,000  $ 320,027,000 
                                                         =============  ============= 

              LIABILITIES AND STOCKHOLDER'S EQUITY                                    

Current Liabilities:                                                                  
    Accounts payable                                     $  13,369,000  $  19,345,000 
    Accrued interest                                         2,247,000      1,920,000 
    Accrued payroll, related taxes and benefits             12,471,000      7,267,000 
    Accrued acquisition costs                                5,612,000             -- 
    Other liabilities                                       12,104,000      6,302,000 
    Current portion of long-term debt (Notes 4 and 5)        8,143,000      4,376,000 
                                                         -------------  ------------- 
Total current liabilities                                   53,946,000     39,210,000 

Long-term debt, net of current portion (Notes 4 and 5)     362,995,000    249,118,000 
Deferred income--sale/leaseback of real estate (Note 4)      4,171,000      4,463,000 
Accrued postretirement benefits (Note 12)                    2,117,000      1,913,000 
Deferred income taxes (Note 7)                                       -      1,208,000 
Other liabilities (Note 3)                                  34,664,000      9,064,000 
                                                         -------------  ------------- 
Total liabilities                                          457,893,000    304,976,000 

Commitments and contingencies (Notes 4 and 10)                                        

Stockholder's equity (Note 8):                                                        
    Common stock, par value $1; authorized 1,000                                      
      shares, issued and outstanding - 10 shares                    10             10 
    Additional paid-in capital                              24,484,990     24,484,990 
    Accumulated deficit                                     (5,466,000)    (9,434,000)
                                                         -------------  ------------- 
Total stockholder's equity                                  19,019,000     15,051,000 
                                                         -------------  ------------- 
                                                         $ 476,912,000  $ 320,027,000 
                                                         =============  ============= 

The accompanying notes are an integral part of these financial    
statements.                                                                     

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CARROLS CORPORATION AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF OPERATIONS 
Years Ended December 31, 2000, 1999 and 1998  

                                                        [Enlarge/Download Table]

                                                         2000           1999            1998   
                                                         ----           ----            ----   
                                                                                               
Revenues:                                                                                      
    Restaurant sales                               $  465,862,000  $ 455,440,000  $ 416,190,000
    Franchise royalty revenues and franchise fees       1,039,000      1,039,000        395,000
                                                   --------------  -------------  -------------
    Total revenues                                    466,901,000    456,479,000    416,585,000
                                                   --------------  -------------  -------------

Costs and expenses:                                                                            
    Cost of sales                                     132,646,000    137,279,000    122,620,000
    Restaurant wages and related expenses             135,787,000    134,125,000    121,732,000
    Other restaurant operating expenses                91,595,000     89,093,000     82,710,000
    Advertising expense                                20,554,000     20,618,000     18,615,000
    General and administrative                         26,403,000     23,102,000     19,219,000
    Depreciation and amortization                      28,856,000     23,898,000     20,005,000
    Other income (Note 14)                             (1,365,000)            --             --
                                                   --------------  -------------  -------------
    Total operating expenses                          434,476,000    428,115,000    384,901,000
                                                   --------------  -------------  -------------

Income from operations                                 32,425,000     28,364,000     31,684,000
    Interest expense                                   23,666,000     22,386,000     21,068,000
    Refinancing expenses (Note 6)                              --             --      1,639,000
                                                   --------------  -------------  -------------
Income before income taxes and extraordinary loss       8,759,000      5,978,000      8,977,000
Provision for income taxes(Note 7)                      4,441,000      3,826,000      4,847,000
                                                   --------------  -------------  -------------

Income before extraordinary loss                        4,318,000      2,152,000      4,130,000
Extraordinary loss on extinguishment of debt, net                                              
    of tax benefit (Note 5)                               350,000      1,099,000      3,701,000
                                                   --------------  -------------  -------------
Net income                                         $    3,968,000  $   1,053,000  $     429,000
                                                   ==============  =============  =============

The accompanying notes are an integral part of these financial statements.      

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CARROLS CORPORATION AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY 
Years Ended December 31, 2000, 1999 and 1998  

                                                                [Download Table]

                                        Additional                        Total     
                               Common     Paid-          Accumulated   Stockholder's
                               Stock    In-Capital         Deficit        Equity    
                               -----    ----------         -------        ------    
                                                                                    
Balance at January 1, 1998    $    10  $ 28,362,990   $ (10,916,000)  $ 17,447,000  

     Net income                                             429,000        429,000  
     Dividends declared                  (3,878,000)                    (3,878,000) 
                              -------  ------------   -------------   ------------  

Balance at December 31, 1998       10    24,484,990     (10,487,000)    13,998,000  

     Net income                                           1,053,000      1,053,000  
                              -------  ------------   -------------   ------------  
Balance at December 31, 1999       10    24,484,990      (9,434,000)    15,051,000  

     Net income                                           3,968,000      3,968,000  
                              -------  ------------   -------------   ------------  

Balance at December 31, 2000  $    10  $ 24,484,990   $  (5,466,000)  $ 19,019,000  
                              =======  ============   =============   ============  

The accompanying notes are an integral part of these financial statements.  

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CARROLS CORPORATION AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF CASH FLOWS 
Years Ended December 31, 2000, 1999 and 1998  

                                                        [Enlarge/Download Table]

                                                                  2000             1999           1998      
                                                                  ----             ----           ----      
                                                                                                            
Cash flows provided from operating activities:                                                              
    Net income                                                 $  3,968,000     $ 1,053,000     $   429,000 
    Adjustments to reconcile net income to net cash                                                         
      provided from operating activities:                                                                   
     Loss (gain) on disposal of property and equipment                   --         102,000         (96,000)
     Depreciation and amortization                               28,856,000      23,898,000      20,005,000 
     Extraordinary loss on extinguishment of                                                                
         debt, net of tax                                           350,000       1,099,000       3,701,000 
     Deferred income taxes                                        2,922,000       1,675,000         854,000 
    Changes in operating assets and liabilities:                                                            
        Refundable income taxes                                     816,000       4,632,000       2,204,000 
        Accounts payable                                         (8,329,000)      8,183,000      (3,169,000)
        Accrued payroll, related taxes and benefits               1,843,000      (2,123,000)      2,128,000 
        Accrued acquisition costs                                 5,612,000              --              -- 
        Other liabilities - current                                 753,000        (851,000)        383,000 
        Accrued interest                                            327,000         (92,000)     (2,758,000)
        Other liabilities--long-term                             14,852,000       1,953,000              -- 
        Other                                                    (2,250,000)     (1,356,000)       (408,000)
                                                                 ----------      ----------     ------------

Net cash provided from operating activities                      49,720,000      38,173,000      23,273,000 
                                                                 ----------      ----------     ----------- 

Cash flow used for investing activities:                                                                    
    Capital expenditures:                                                                                   
      Purchase of Taco Cabana, Inc. net of cash acquired       (154,668,000)             --              -- 
      Purchase of Pollo Tropical, Inc. net of cash acquired              --              --     (94,632,000)
      New restaurant development                                (11,328,000)    (14,085,000)    (13,297,000)
      Restaurant remodeling                                     (10,957,000)     (9,795,000)     (9,500,000)
      Corporate and restaurant information systems               (5,663,000)    (11,883,000)     (4,246,000)
      Other capital expenditures                                 (8,209,000)     (9,569,000)     (6,252,000)
      Acquisition of Burger King restaurants                             --      (3,833,000)       (629,000)
    Payments received on notes and mortgages                             --              --         715,000 
    Proceeds from dispositions of property and equipment              7,000         230,000       1,337,000 
                                                             --------------   -------------   ------------- 

Net cash used for investing activities                       $ (190,818,000)   $(48,935,000)  $(126,504,000)
                                                             ==============    ============   ============= 

The accompanying notes are an integral part of these financial statements.      

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                CARROLS CORPORATION AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS--(Continued)
                Years Ended December 31, 2000, 1999 and 1998

                                                        [Enlarge/Download Table]

                                                                     2000           1999          1998      
                                                                     ----           ----          ----      
                                                                                                            
Cash flows provided from financing activities:                                                              
    Proceeds from long-term debt, net                            $ 222,113,000   $        --  $ 245,000,000 
    Principal payments and retirements of long-term obligations   (106,167,000)   (8,028,000)  (143,851,000)
    Proceeds from sale-leaseback transactions                       29,523,000    14,800,000     20,532,000 
    Dividends paid                                                          --            --     (3,878,000)
    Financing costs associated with issuance of debt                (3,560,000)     (886,000)    (5,408,000)
    Redemption premium on retirement of debt                                --            --     (4,639,000)
                                                                  ------------  ------------    ----------- 
Net cash provided from financing activities                        141,909,000     5,886,000    107,756,000 
                                                                  ------------  ------------    ----------- 

Net increase (decrease) in cash and cash                                                                    
        equivalents                                                    811,000    (4,876,000)     4,525,000 
Cash and cash equivalents, beginning of year                         1,901,000     6,777,000      2,252,000 
                                                                  ------------  ------------   ------------ 

Cash and cash equivalents, end of year                           $   2,712,000   $ 1,901,000  $   6,777,000 
                                                                  ============   ===========   ============ 
Supplemental disclosures:                                                                                   
    Interest paid on debt                                        $  23,339,000   $22,739,000  $  23,826,000 
    Income taxes paid                                            $   1,294,000   $ 1,594,000  $   3,652,000 

The accompanying notes are an integral part of these financial statements.      

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CARROLS CORPORATION AND SUBSIDIARIES  
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  
Years Ended December 31, 2000, 1999 and 1998  

1. Summary of Significant Accounting Policies                                   

   Basis of Consolidation. The consolidated financial statements include the
accounts of Carrols Corporation and its Subsidiaries (the "Company"). All       
significant intercompany transactions have been eliminated in consolidation. The
Company is a wholly-owned subsidiary of Carrols Holdings Corporation            
("Holdings").                                                                   

     At December 31, 2000 the Company operated, as franchisee, 355 quick-service
restaurants under the trade name "Burger King" in thirteen Northeastern,        
Midwestern and Southeastern states. At December 31, 2000 the Company also owned 
and operated 49 Pollo Tropical restaurants located in Florida and franchised 24 
restaurants in Puerto Rico, Ecuador, Aruba, El Salvador and Florida. As         
described in Note 13, during 2000, the Company purchased Taco Cabana, Inc.      
("Taco Cabana"). At December 31, 2000, the Company owned and operated 117 Taco  
Cabana restaurants located in Texas, Oklahoma and Arizona and franchised 10     
restaurants in Texas, New Mexico, Georgia and Indiana.                          

Cash and Cash Equivalents. The Company considers all highly liquid    
investments with an original maturity of three months or less when purchased to 
be cash equivalents.                                                            

    Inventories. Inventories are stated at the lower of cost (first-in, first-
out) or market. Inventories are primarily comprised of food and paper.          

Property and Equipment. Property and equipment are recorded at cost.  
Depreciation and amortization is provided using the straight-line method over   
the following estimated useful lives:                                           

Buildings and improvements................   5 to 30 years            
Leasehold improvements....................   Remaining life of lease  
                                                including renewal options or
                                              life of asset whichever is
                           shorter
Equipment.................................   3 to 15 years            
Computer hardware and software............   3 to 7 years             
Capital leases............................   Remaining life of lease  

    Burger King Franchise Rights. Fees for initial franchises and renewals are
amortized using the straight-line method over the term of the agreement,        
generally twenty years. Acquisition costs allocated to franchise rights are     
amortized using the straight-line method, principally over the remaining lives  
of the acquired leases including renewal options, but not in excess of 40 years.

   Intangible Assets. Intangible assets consist of the excess purchase price
over net assets acquired, beneficial leases and trademarks. The excess purchase 
price over net assets acquired and trademarks are amortized using the straight  
line method over 40 years with the exception of the excess cost over fair value 
associated with the acquisition of Taco Cabana, Inc. which is amortized over 20 
years. Beneficial leases and unfavorable leases are amortized using the         
straight-line method over the lives of the leases including renewal options, but
not in excess of 40 years.                                                      

    Long-Lived Assets. The Company assesses the recoverability of property and
equipment, franchise rights and intangible assets by determining whether the    
amortization of these assets, over their respective remaining lives, can be     
recovered through undiscounted future operating cash flows. Impairment is       
reviewed whenever events or changes in circumstances indicate the carrying      
amounts of these assets may not be fully recoverable.                           

Deferred Financing Costs. Financing costs, that are included in other 
assets and were incurred in obtaining long-term debt are capitalized and        
amortized over the life of the related debt on an effective interest basis for  
costs associated with the Company's unsecured senior subordinated notes and on a
straight-line basis for costs associated with the Company's senior credit       
facility.                                                                       

Revenue Recognition. On December 3, 1999, the Securities and Exchange 
Commission issued Staff Accounting Bulletin No. 101 (SAB 101), Revenue          
Recognition in Financial Statements, implementation of which was effective in   
the fourth quarter of 2000. SAB 101 reflects the basic principles of revenue    
recognition in existing generally accepted accounting principles (GAAP). The    
Company was in compliance with basic principles of revenue recognition and as   
such, implementation of the SAB 101 did not have an effect on its results.      

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CARROLS CORPORATION AND SUBSIDIARIES  
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 
Years Ended December 31, 2000, 1999 and 1998  

1. Summary of Significant Accounting Policies--(Continued)                      

   Franchise Fees associated with Pollo Tropical restaurants. Franchise fees
are typically collected upon execution of an area development and/or franchise  
agreement. Franchise fees are initially recorded as deferred revenue and are    
recognized in earnings when the franchised restaurants are opened, or upon      
forfeiture of such fees by the franchisees pursuant to the terms of the         
franchise development agreements.                                               

Royalty Revenues associated with Pollo Tropical and Taco Cabana       
restaurants. Royalty revenues are based on a percent of gross sales and are     
recorded as income when earned.                                                 

Income Taxes. The Company and its subsidiaries file consolidated      
federal income tax returns.                                                     

Advertising Costs.  All advertising costs are expensed as incurred.   

Self Insurance. The Company is generally self-insured for workers     
compensation, general liability and medical insurance. The Company maintains    
stop loss coverage for both individual and aggregate claim amounts. Losses are  
accrued based upon the Company's estimates of the aggregate liability for claims
based on Company experience and certain actuarial methods used to measure such  
estimates.                                                                      

 Fair Value of Financial Instruments. The following methods were used to
estimate the fair value of each class of financial instruments for which it is  
practicable to estimate that fair value:                                        

       .    Current Assets and Liabilities. The carrying value of cash and
              cash equivalents and accrued liabilities approximates fair value
 because of the short maturity of those instruments.

         .    Senior Subordinated Notes. The fair values of outstanding senior
            subordinated notes and senior notes are based on quoted market
       prices. The fair values at December 31, 2000 and 1999 are
        approximately $110,075,000 and $153,850,000, respectively.

         .    Revolving and Term Loan Facilities. Rates currently available to
              the Company for debt with similar terms and remaining maturities
          are used to estimate fair value. The recorded amounts, as of
  December 31, 2000 and 1999, approximated fair value.

Stock-Based Compensation. Statement of Financial Accounting Standards 
No. 123, "Accounting for Stock-Based Compensation," (SFAS 123) permits entities 
to recognize as an expense over the vesting period the fair value of all        
stock-based awards on the date of grant. Alternatively, SFAS 123 also allowed   
entities to continue to apply the provisions of APB 25 and provide pro forma net
income disclosures for employee stock option grants as if the fair-value-based  
method defined in SFAS 123 has been applied. The Company has elected to continue
to apply the provisions of APB 25 and provide the pro forma disclosure          
provisions of SFAS 123.                                                         

 Use of Estimates. The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of America   
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 financial statements. Estimates also affect the  
reported amounts of revenues and expenses during the reporting period. Actual   
results could differ from those estimates.                                      

     Fiscal Year. The Company uses a 52-53 week fiscal year ending on the Sunday
closest to December 31. The financial statements included herein are as of      
December 31, 2000 (52 weeks), January 2, 2000 (52 weeks) and January 3, 1999 (53
weeks).                                                                         

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CARROLS CORPORATION AND SUBSIDIARIES  
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 
Years Ended December 31, 2000, 1999 and 1998  

1. Summary of Significant Accounting Policies--(Continued)                      

   Reclassifications. Certain amounts for prior years have been reclassified
to conform to the current year presentation.                                    

2. Property and Equipment and Intangible Assets                                 

    Property and equipment at December 31, net of accumulated depreciation and
amortization, consist of the following:                                         

                                                  2000          1999
                                                  ------        ------

       Land                                     $  22,943,000   $  9,280,000
       Buildings and improvements                  40,576,000     27,044,000
       Leasehold improvements                      89,888,000     61,034,000
       Equipment                                  133,438,000    102,647,000
       Capital leases                              14,407,000     14,407,000
                                                -------------  -------------
                                                  301,252,000    214,412,000
Less accumulated depreciation                                 
         and amortization                          (97,968,000)   (91,599,000)
                                                -------------  -------------
                                                $ 203,284,000  $ 122,813,000
                                                =============  =============

   Depreciation expense for the years ended December 31, 2000, 1999 and 1998
was $17,594,000, $15,314,000 and $12,737,000, respectively.                     

    Intangible assets at December 31, net of accumulated amortization, consist
of the following:                                                               

                                             2000           1999
                                             ----           ----
       Goodwill                                 $ 126,228,000  $  61,912,000
       Trademarks                                     452,000        421,000
       Other                                          737,000      5,212,000
                                                -------------  -------------
                                                $ 127,417,000  $  67,545,000
                                                =============  =============

   Amortization expense for the years ended December 31, 2000, 1999 and 1998
was $2,286,000, $2,183,000 and $1,439,000, respectively.                        

3. Other Liabilities, Long-Term                                                 

 Other liabilities, long-term, at December 31, consist of the following:

                                               2000           1999
                                               ----           ----
       Unearned purchase discounts              $  16,530,000  $   1,544,000
       Accrued occupancy costs                     12,410,000      1,995,000
       Other                                        5,724,000      5,525,000
                                                -------------  -------------
                                                $  34,664,000  $   9,064,000
                                                =============  =============

   Unearned purchase discounts are amortized as a reduction of cost of sales
either over the life of the supplier contract or the estimated purchase         
commitment period. In 2000, Burger King Corporation arranged for the Coca-Cola  
Company and Dr. Pepper/Seven-Up, Inc. to provide funding to franchisees in      
connection with Burger King's transformation initiatives. The Company received  
approximately $19.8 million in 2000 under this arrangement with these suppliers.
The total amount of purchase discounts amortized for the year ended December 31,
2000 was $2,044,000.                                                            

     Accrued occupancy costs include obligations pertaining to closed restaurant
locations, contingent rent and accruals to expense operating lease rental       
payments on a straight-line basis over the lease term.                          

4. Leases                                                                       

 The Company utilizes land and buildings in its operations under various
lease agreements. These leases generally contain an initial term of twenty years
and, in most cases, contain renewal options. The rent payable under such leases 
includes a minimum rent provision and, in some cases, include a percentage of   
sales provision. In addition, most leases require payment of property taxes,    
insurance and utilities.                                                        

Deferred gains have been recorded as a result of sale/leaseback       
transactions and are being amortized over the lives of the related leases. These
related leases have been classified as operating leases and generally contain a 
twenty year initial term with renewal options.                                  

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CARROLS CORPORATION AND SUBSIDIARIES  
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 
Years Ended December 31, 2000, 1999 and 1998  

4. Leases (continued)                                                           

    Minimum rent commitments under capital and non-cancelable operating leases
at December 31, 2000 were as follows:                                           

      Years Ending                                    Capital      Operating
      ------------                                    -------      ---------
        2001                                          $  1,668,000  $ 36,465,000
        2002                                             1,639,000    35,844,000
        2003                                             1,366,000    34,826,000
        2004                                             1,329,000    33,661,000
        2005                                             1,322,000    31,251,000
        Thereafter                                       1,990,000   247,018,000
                                                      ------------  ------------

        Total minimum lease payments                  $  9,314,000  $419,065,000
           Less amount representing interest             6,159,000  ============
                                        ------------

Total obligations under capital leases           3,155,000      
Less current portion                            522,000   
                                        ------------

Long-term obligations under capital leases    $  2,633,000      
                                        ============

   Accumulated amortization pertaining to capital leases for the years ended
December 31, 2000 and 1999 was $11,393,000 and $10,898,000, respectively.       

   Total rent expense on operating leases, including percentage rent on both
operating and capital leases, for the past three years was as follows:          

                                          2000         1999         1998
                                          ----         ----         ----
        Minimum rent on real property      $27,213,000  $25,775,000  $22,441,000
Additional rent based on a                                      
        percentage of sales                  3,113,000    3,901,000    4,328,000
        Equipment rent                          42,000      226,000       39,000
                                           -----------  -----------  -----------

                                           $30,368,000  $29,902,000  $26,808,000
                                           ===========  ===========  ===========

5. Long-Term Debt                                                               

Long-term debt at December 31 consisted of:                           

                                            2000            1999
                                            ----            ----
Collateralized:                                                 
         Revolving credit facility               $  45,600,000   $  34,100,000
         Term loan A facility                       70,000,000      47,000,000
        Term loan B facility                       80,000,000             --
         Other notes payable                         2,383,000         681,000
       Unsecured 9.5% senior subordinated notes    170,000,000     170,000,000
       Capital leases                                3,155,000       1,713,000
                                                 -------------   -------------

                                                   371,138,000     253,494,000
        Less current portion                         (8,143,000)     (4,376,000)
                                                 -------------   -------------
                                                 $ 362,995,000   $ 249,118,000
                                                 =============   =============

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CARROLS CORPORATION AND SUBSIDIARIES  
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 
Years Ended December 31, 2000, 1999 and 1998  

5. Long-Term Debt (continued)                                                   

Senior Credit Facility:                                                         
----------------------                                                          

  On December 19, 2000, the Company entered into a new senior credit
facility with The Chase Manhattan Bank, as agent and lender, and other lenders  
as parties thereto. This new senior credit facility was used to finance the     
acquisition of Taco Cabana, Inc. and to refinance outstanding amounts under the 
Company's previous credit facility. The facility provides for total borrowings  
of $250 million and consists of a $100 million revolving credit facility        
(including a standby letter of credit facility for up to $10 million) a $70     
million term loan A facility and an $80 million term loan B facility.           

     Borrowings under the revolving credit facility may be used to finance
permitted acquisitions and new store development, or for working capital and    
general corporate purposes. At December 31, 2000, $50,350,000 was available for 
borrowings under the revolving credit facility, after reserving $4,050,000 for  
letters of credit guaranteed by the facility.                                   

      Borrowings under the new senior credit facility bear interest at a per
annum rate, at the Company's option, of either:                                 

          1)   the greater of the prime rate or the federal funds rate plus .50%
               plus a margin ranging from .50% to 1.75% for the revolving credit
              facility and the term loan A facility based on debt to cash flow
       ratios, and at a fixed margin of 2.5% for the term loan B
facility; or                                      

          2)   LIBOR plus a margin ranging from 2.00% to 3.25% for the revolving
           credit facility and the term loan A facility based on debt to
               cash flow ratios, and at a fixed margin of 4.0% for the term loan
B facility.                                       

The revolving credit facility and the term loan A facility expire on December   
31, 2005. However, the revolving credit facility is eligible for a one-year     
extension based upon request and unanimous approval of the lenders. The term    
loan B facility expires on December 31, 2007. Amounts under the term loan A     
facility are repayable as follows:                                              

          1)   an aggregate of $6 million payable in four quarterly installments
in 2001;                                          
2)   an aggregate of $7.5 million payable in four quarterly 
installments in 2002;                             
3)   an aggregate of $10.0 million payable in four quarterly
installments in 2003;                             
4)   an aggregate of $12.5 million payable in four quarterly
installments in 2004;                             
5)   an aggregate of $9.4 million payable in three quarterly
installments in 2005; and                         
      6)   a final payment of $24.6 million payable upon the term loan A
facility's maturity on December 31, 2005.         

Amounts under the term loan B facility are repayable as follows:                

1)   an aggregate of $1.0 million payable in four quarterly 
     installments for each year including 2001 through 2005;
2)   an aggregate of $35.0 million payable in four quarterly
installments in 2006;                             
 3)   an aggregate of $26.2 million payable in three quarterly
installments in 2007; and                         
      4)   a final payment of $13.8 million payable upon the term loan B
facility's maturity on December 31, 2007.         

      In general, the Company's obligations under the senior credit facility
are collateralized by all of the Company's assets, a pledge of the Company's    
common stock and the stock of each of the Company's subsidiaries.               

 In connection with the Company's refinancing of its senior credit
facilities in 2000 and 1999, the Company has recognized an extraordinary loss of
$350,000 in 2000 (net of a $225,000 income tax benefit) and $1,099,000 in 1999  
(net of a $726,000 income tax benefit). These losses represent the write off of 
unamortized debt issue costs related to the previously existing senior credit   
facility.                                                                       

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CARROLS CORPORATION AND SUBSIDIARIES  
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 
Years Ended December 31, 2000, 1999 and 1998  

5. Long-Term Debt (continued)                                                   

Senior Subordinated Notes:                                                      
-------------------------                                                       

      The Company issued $170 million of unsecured senior subordinated notes
on November 24, 1998. The senior notes bear interest at a rate of 9.5% payable  
semi-annually on June 1 and December 1 and mature on December 1, 2008. The notes
are redeemable at the option of the Company in whole or in part on or after     
December 1, 2003 at a price of 104.75% of the principal amount if redeemed      
before December 1, 2004, 103.167% of the principal amount if redeemed after     
December 1, 2004 but before December 1, 2005, 101.583% of the principal amount  
if redeemed after December 1, 2005 but before December 1, 2006 and at 100% of   
the principal amount after December 1, 2006.                                    

     Restrictive covenants of the senior subordinated notes and the senior
credit facility include limitations with respect to the Company's ability to    
issue additional debt, incur liens, sell or acquire assets or businesses, pay   
dividends and make certain investments. In addition, the senior credit facility 
requires the Company to meet certain financial ratio tests.                     

      In connection with the issuance of the 9.5% senior subordinated notes,
the Company redeemed all of its outstanding 11.5% senior notes. This redemption 
included aggregate principal amounts of $107,637,000, a redemption premium of   
$4,639,000, and accrued interest to December 24, 1998 of $4,436,000. In         
addition, the Company used the proceeds of the 9.5% notes to repay $47.9 million
of its previous senior credit facility.                                         

  In connection with the redemption of the 11.5% senior notes in the
fourth quarter of 1998, the Company recognized an extraordinary loss of         
$3,701,000, which is net of a $3,281,000 income tax benefit, for the redemption 
premium and the write-off of $2,343,000 in unamortized debt issue costs related 
to the 11.5% notes.                                                             

Other Notes Payable:                                                            
-------------------                                                             

   During 2000, the Company, as mandated by Burger King, has purchased
frozen Coke machines for all of its Burger King restaurants. Burger King has    
made arrangements to allow franchisees to finance these purchases through       
Coca-Cola Financial. These notes are for a four year term and bear interest at  
annual interest rates ranging from 8.2% to 9.5%. At December 31, 2000, these    
notes payable totaled $1,816,000.                                               

        At December 31, 2000, principal payments required on all long-term debt,
including the new senior credit facility, are as follows:                       

                 2001               $  7,621,000
                 2002                  9,177,000
                 2003                 11,499,000
                 2004                 13,519,000
                 2005                 80,600,000
                 Thereafter          245,567,000
                                    ------------
                                    $367,983,000
                                    ============

   The weighted average interest rate for the years ended December 31,
2000, 1999 and 1998 was 9.4%, 8.9% and 9.9%, respectively.                      

6. Refinancing Expenses                                                         

       The Company expensed all costs associated with its efforts to refinance
its existing debt in the third quarter of 1998 as the timing of any future      
refinancing was then uncertain and the related activities had ceased.           
Approximately $1.2 million of these costs related to losses on interest rate    
hedge transactions.                                                             

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CARROLS CORPORATION AND SUBSIDIARIES  
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 
Years Ended December 31, 2000, 1999 and 1998  

7.  Income Taxes                                                                

     The income tax provision was comprised of the following for the years ended
December 31:                                                                    

                                                                [Download Table]

                  2000         1999         1998  
                  ----         ----         ----  
                                                  
Current:                                          
   Federal  $    121,000  $   288,000  $   152,000
   Foreign       260,000      239,000      114,000
   State         848,000      744,000      471,000
            ------------  -----------  -----------
               1,229,000    1,271,000      737,000
            ------------  -----------  -----------
Deferred:                                         
   Federal     2,784,000    2,188,000    3,602,000
   State         428,000      367,000      508,000
            ------------  -----------  -----------
               3,212,000    2,555,000    4,110,000
            ------------  -----------  -----------
            $  4,441,000  $ 3,826,000  $ 4,847,000
            ============  ===========  ===========

        The components of deferred income tax assets and liabilities at December
31, are as follows:                                                             

                                                                [Download Table]

                                                             2000         1999   
                                                             ----         ----   
                                                                                 
Current deferred tax assets:                                                     
     Accounts receivable and other reserves            $   238,000   $   260,000 
     Accrued vacation benefits                           1,083,000       827,000 
     Other non-deductible accruals                       1,564,000       723,000 
     Net operating loss carrryforwards                   5,425,000     4,516,000 
     Other                                                 141,000       149,000 
                                                       -----------   ----------- 
Total current deferred tax assets                        8,451,000     6,475,000 
                                                       -----------   ----------- 

Long term deferred tax assets/(liabilities):                                     
     Deferred income on sale/leaseback of real estate    1,666,000     1,782,000 
     Postretirement benefit expenses                       845,000       764,000 
     Property and equipment depreciation                (7,221,000)   (3,626,000)
     Net operating loss carryforwards                    3,819,000     5,190,000 
     Amortization of intangible assets                  (3,448,000)   (6,772,000)
     Non-deductible occupancy costs                      6,642,000       762,000 
     Tax credit carryforwards                            3,926,000       471,000 
     Other                                                 177,000       221,000 
                                                       -----------   ----------- 
Total long-term net deferred tax assets/(liabilities)    6,406,000    (1,208,000)
                                                       -----------   ----------- 
Total net deferred tax assets                          $14,857,000   $ 5,267,000 
                                                       ===========   =========== 

        The Company has net operating loss carryforwards for income tax purposes
of approximately $24 million, at December 31, 2000. The net operating loss      
carryforwards expire in varying amounts beginning in 2004 through 2010. The     
Company is generally limited, for Federal income tax purposes, to an annual     
utilization of net operating losses of $10,664,000. The Company has net         
operating losses of approximately $16.5 million available to be utilized in 2001
due to this limit not being fully utilized in prior years. In addition, the     
Company has available Federal alternative minimum tax credit carryforwards with 
no expiration date and other Federal tax credit carryforwards which begin to    
expire in 2018. Realization of the deferred income tax assets relating to net   
operating losses and tax credit carryforwards is dependent on generating        
sufficient taxable income prior to the expiration of these carryforwards. Based 
upon results of operations, management believes it is more likely than not that 
the Company will generate sufficient future taxable income to fully realize the 
benefit of deferred tax assets, although there can be no assurance of this.     

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CARROLS CORPORATION AND SUBSIDIARIES  
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 
Years Ended December 31, 2000, 1999 and 1998  

A reconciliation of the statutory federal income tax rate to the
effective tax rates for the years ended December 31, is as follows:             

                                                        [Enlarge/Download Table]

                                   2000                 1999                 1998        
                            -----------------   -------------------   ------------------ 
                                                                                         
Statutory federal income                                                                 
    tax rate                $2,978,000   34.0%  $ 2,034,000    34.0%  $3,053,000    34.0%
State income taxes, net of                                                               
    federal benefit            569,000    6.5       526,000     8.8      515,000     5.7 
Nondeductible expenses       1,003,000   11.4       956,000    16.0      611,000     6.8 
Foreign taxes                  172,000    2.0       158,000     2.6      114,000     1.3 
Miscellaneous                 (281,000)  (3.2)      152,000     2.6      554,000     6.1 
                            ----------   ----   -----------    ----   ----------    ---- 
                            $4,441,000   50.7%  $ 3,826,000    64.0%  $4,847,000    53.9%
                            ==========   ====   ===========    ====   ==========    ==== 

Nondeductible expenses consist primarily of amortization of certain franchise   
rights and other intangibles.                                                   

8.  Stockholder's Equity                                                        

The Company                                                     

   The Company has 1,000 shares of common stock authorized of which 10
shares are issued and outstanding. The Company is 100% owned by Holdings.       
Dividends on the Company's common stock are restricted to amounts permitted by  
various loan agreements.                                                        

Holdings                                                        

       During 1999, Holdings amended its Restated Certificate of Incorporation
and its stockholders approved and adopted the following actions: (1) 7,250      
shares of Holdings' Class A 10% Cumulative Redeemable Preferred Stock which were
authorized but unissued, were canceled; (2) Holdings' authorized common stock   
was increased from 3,000,000 shares to 5,000,000 shares; and, (3) 100,000 shares
of Preferred Stock, par value $0.01, were authorized.                           

Holdings' common stock was designated to consist of two series  
comprising of 3,000,000 shares of Carrols Stock, par value $0.01 per share, and 
2,000,000 shares of Pollo Tropical Stock, par value $0.01 per share. The        
existing common stock of Holdings was redesignated, on a share for share basis, 
for shares of the Carrols class of common stock. The holders of the Carrols     
Stock will have exclusive voting rights; no holders of the Pollo Tropical Stock 
will have voting rights, except as may be required pursuant to Delaware law.    

    The Pollo Tropical class of Holdings' stock is considered a tracking
stock, which is a class of stock intended to track the separate performance of  
the Company's Pollo Tropical division. This tracking stock was adopted as a     
separate series of equity securities in order to provide a framework for        
structuring employee incentive plans and to tie such incentives to the business 
results and performance of the Pollo Tropical division.                         

 The number of shares of Pollo Tropical class stock that initially
represents 100% of the common stockholders' equity of Holdings attributable to  
the Pollo Tropical Group, was established at 1,000,000 shares by the Board of   
Directors. Of the 1,000,000 shares that are issuable, none have been issued, and
100,000 have been reserved for grants under the 1998 Pollo Tropical Long-Term   
Incentive Plan, which is a Holdings stock option plan.                          

The Carrols class of Holdings' stock consists of the interest of
Holdings in all of its assets, liabilities and businesses, other than the       
assets, liabilities and businesses attributed to the Pollo Tropical Group. Until
the issuance of any Pollo Tropical Stock, the rights, preferences and           
liabilities of the Pollo Tropical Stock will be retained by Holdings. To the    
extent that less than 100% of the authorized shares of Pollo Tropical Stock are 
issued, the rights, preferences, assets and liabilities of the shares not issued
remain with Holdings and its existing Carrols class stockholders.               

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CARROLS CORPORATION AND SUBSIDIARIES  
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 
Years Ended December 31, 2000, 1999 and 1998  

8.  Stockholder's Equity (continued)                                            

        Of the 5,000,000 common shares authorized, 1,144,144 shares of Holdings'
Carrols common stock are issued and outstanding. In 1998, all preferred stock   
was redeemed at the option of Holdings, at a price of $1,000 per share, plus    
accrued dividends.                                                              

Stock Options for Carrols Class Stock                           

In 1996, Holdings adopted a stock option plan entitled the 1996 
Long-Term Incentive Plan ("1996 Plan") and authorized a total of 106,250 shares 
to be granted at prices ranging from $101.76 to $140.00 per share. Options under
this plan generally vest over a four year period. In 1998, Holdings adopted the 
1998 Directors' Stock Option Plan ("1998 Directors' Plan") authorizing to grant 
up to 10,000 options to non-employee Directors. Options under this plan are     
exercisable over four years. In addition, in conjunction with the 1997 sale of  
Holdings common stock to Madison Dearborn, additional options not part of the   
1996 Plan for 32,427 shares at a price of $101.76 were granted with vesting over
a five year period. As a result of the adoption of the Pollo Tropical tracking  
stock, the stock options under these plans were redesignated as options of      
Holdings' Carrols class common stock.                                           

Stock Options for Pollo Tropical Tracking Stock                 

     Holdings has also adopted the 1998 Pollo Tropical Long-Term Incentive
Plan ("1998 Pollo Plan") authorizing to grant up to 100,000 shares of Holdings' 
Pollo Tropical class of common stock. Options under this plan generally vest    
over a five year period.                                                        

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CARROLS CORPORATION AND SUBSIDIARIES  
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 
Years Ended December 31, 2000, 1999 and 1998  

8. Stockholder's Equity (continued)                                             

     A summary of all option activity under Holdings' stock option plans for the
years ended December 31, 2000, 1999 and 1998 is as follows:                     

                                                        [Enlarge/Download Table]

                                    NonPlan      1996     Directors           Pollo  
                                    Options      Plan        Plan              Plan  
                                    -------      ----        ----              ----  
                                                                                     
Shares Under Option:                                                                 
Outstanding at December 31, 1997     32,427      86,140           -                 -
    Granted                               -      10,400       2,000            70,000
    Canceled                              -        (775)          -                 -
                                  ---------  ----------   ---------   ---------------
Outstanding at December 31, 1998     32,427      95,765       2,000            70,000
    Granted                               -       6,245         500             6,250
    Canceled                              -      (3,587)     (1,000)                -
                                  ---------  ----------   ---------   ---------------
Outstanding at December 31, 1999     32,427      98,423       1,500            76,250
    Granted                               -       7,590         500             5,000
    Canceled                              -      (1,315)          -                 -
                                  ---------  ----------   ---------   ---------------
Outstanding at December 31, 2000     32,427     104,698       2,000            81,250
Grant Prices:                                                                        
    1998                          $       -      124.78      110.00   77.50 to 137.00
    1999                                  -      126.00      126.00            109.00
    2000                                  -      124.00      124.00            127.00

Average Option Price:                                                                
    At December 31, 1998          $  101.76      105.32      110.00             92.31
    At December 31, 1999             101.76      106.28      115.33             93.68
    At December 31, 2000             101.76      107.37      117.50             95.73

Options Exercisable:                                                                 
    At December 31, 1998              6,486      53,474         500                 -
    At December 31, 1999             12,972      68,057         625            24,000
    At December 31, 2000             19,457      94,275       1,125            36,750

Had compensation cost been determined based upon the fair value of the
stock options at grant date consistent with the method of SFAS 123, the         
Company's pro-forma net income (loss) would have been $3,511,000, $534,000 and  
$(37,000) for the years ended December 31, 2000, 1999 and 1998, respectively.   

   The fair value of each option grant was estimated using the minimum value
option pricing model with the following weighted-average assumptions:           

                                             2000     1999      1998
                                             ----     ----      ----
      Risk-free interest rate                 6.26%    5.51%     5.60%
      Annual dividend yield                      0%       0%        0%
     Expected life                        5 years  5 years   5 years

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CARROLS CORPORATION AND SUBSIDIARIES  
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 
Years Ended December 31, 2000, 1999 and 1998  

9. Business Segment Information                                                 

     The Company is engaged in the quick-service restaurant industry, with three
restaurant concepts: Burger King operating as a franchisee, and Pollo Tropical  
and Taco Cabana, both Company owned concepts. The Company's Burger King         
restaurants are all located in the United States, primarily in the Northeast,   
Southeast and Midwest. Pollo Tropical is a regional quick-service restaurant    
chain featuring grilled marinated chicken and authentic "made from scratch" side
dishes. Pollo Tropical's core markets are located in south and central Florida. 
Taco Cabana is a regional quick-service restaurant chain featuring Mexican style
food, including, flame-grilled beef and chicken fajitas, quesadillas and other  
Tex-Mex dishes. Taco Cabana's core markets are primarily in Texas.              

     For 1998, segment information includes Burger King restaurants for the year
ended December 31, 1998 and Pollo Tropical for the period July 10, 1998 through 
December 31, 1998. For 1999, segment information includes both Burger King and  
Pollo Tropical for the full year. For 2000, segment information includes both   
Burger King and Pollo Tropical for the full year and Taco Cabana for the period 
December 20, 2000 through December 31, 2000. The "Other" column includes        
corporate related items not allocated to reportable segments and for income from
operations, principally corporate depreciation and amortization. Other          
identifiable assets consist primarily of franchise rights and intangible assets.
Non-operating expenses, comprised of interest expense, interest income, and     
refinancing expenses and the extraordinary loss are corporate related items and 
therefore have not been allocated to the reportable segments.                   

                                                        [Enlarge/Download Table]

                                                 Burger                                                    
                                                  King      Pollo       Taco                               
                                              Restaurants  Tropical    Cabana       Other     Consolidated 
                                              -----------  --------   ------        -----     ------------ 
                                                                      ($ in 000's)                         
                                                                                                           
Year Ended December 31, 2000:                                                                              
Revenues                                      $   371,335  $  90,004  $  5,562     $     --   $     466,901
Cost of sales                                     101,520     29,533     1,593           --         132,646
Restaurant wages and related expenses             113,215     20,950     1,622           --         135,787
Depreciation and amortization                      22,057      2,129       255        4,415          28,856
Income from operations                             19,848     16,372       620       (4,415)         32,425
Identifiable assets                               208,533     26,198    67,035      175,146         476,912
Capital expenditures, excluding acquisitions       27,359      7,577        --        1,221          36,157

Year Ended December 31, 1999:                                                                              
Revenues                                      $   372,689  $  83,790   $    --     $     --   $     456,479
Cost of sales                                     108,489     28,790        --           --         137,279
Restaurant wages and related expenses             114,935     19,190        --           --         134,125
Depreciation and amortization                      18,404      1,948        --        3,546          23,898
Income from operations                             17,451     14,459        --       (3,546)         28,364
Identifiable assets                               207,172     21,599        --       91,256         320,027
Capital expenditures, excluding acquisitions       32,159      9,522        --        3,651          45,332

Year Ended December 31, 1998:                                                                              
Revenues                                          381,042     35,543        --           --         416,585
Cost of sales                                     110,269     12,351        --           --         122,620
Restaurant wages and related expenses             113,456      8,276        --           --         121,732
Depreciation and amortization                      17,014      1,018        --        1,973          20,005
Income from operations                             27,940      5,717        --       (1,973)         31,684
Capital expenditures, excluding acquisitions       26,560      4,335        --        2,400          33,295

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CARROLS CORPORATION AND SUBSIDIARIES  
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 
Years Ended December 31, 2000, 1999 and 1998  

10.  Contingencies                                                              

 On November 16, 1998, the Equal Employment Opportunity Commission
("EEOC") filed suit in the United States District Court for the Northern        
District of New York, under Title VII of the Civil rights Act of 1964, as       
amended, against the Company.                                                   

   The case is in discovery, with the nominal deadline for written and
documentary discovery having passed and the parties being engaged in an attempt 
to resolve discovery disputes. Further discovery may follow, after which the    
parties may file motions for summary judgement late in 2001 or early 2002. It is
too early to make an evaluation of the likelihood of an unfavorable outcome     
and/or an estimate of the amount or range of potential loss. The Company is     
contesting the case vigorously and believes it is without merit.                

      The Company is a party to various other legal proceedings arising from
the normal course of business. It is the Company's policy to accrue costs       
associated with significant outstanding legal proceedings, which are able to be 
estimated. Based on information currently available, management believes adverse
decisions relating to litigation and contingencies in the aggregate would not   
materially affect the Company's results of operations, cash flows or financial  
condition.                                                                      

11.  Retirement Plans                                                           

 The Company offers three retirement plans, a savings plan for its
salaried Burger King employees (the "Carrols Corporation Retirement Savings     
Plan") and 401(k) plans for its Pollo Tropical employees (the "Pollo Tropical   
401(k) Retirement Savings Plan") and its Taco Cabana employees (the "Taco Cabana
Savings and Retirement Plan").                                                  

        Effective April 1, 1999, the Carrols Corporation Retirement Savings Plan
was amended. Under this amendment, the plan was modified to include a savings   
option pursuant to section 401(k) of the Internal Revenue Code in addition to a 
post tax savings option. Under the amended plan, participating employees may    
contribute up to 18% of their salary annually to either of the savings options, 
subject to other limitations. The Company's contributions, which begin to vest  
after three years and fully vest after seven years of service, are equal to 50% 
of the employee's contributions to a maximum Company contribution of $520       
annually. The employees have various investment options available under a trust 
established by the plan. The plan expense, including Company contributions, was 
$344,000, $245,000 and $216,000 for the years ended December 31, 2000, 1999 and 
1998, respectively.                                                             

      Under the Pollo Tropical 401(k) Retirement Plan, all employees who are
age 21 or older and who have been credited with at least 1,000 hours of service 
within 12 consecutive months are eligible to participate in the 401K Plan. The  
Company makes discretionary matching contributions, which are allocated to      
participants based on the participant's eligible deferrals during the plan year.
Company contributions vest at a rate of 33% for each year of service. Company   
contributions to the 401K Plan totaled, $39,000, $29,000 and $17,000, for the   
years ended December 31, 2000, 1999 and 1998.                                   

        Under the Taco Cabana Savings and Retirement Plan, all employees who are
age 21 or older and who have been credited with at least 1,000 hours of service 
within 12 consecutive months are eligible to participate in the plan. Employees 
may contribute up to 15% of their salary on a pre-tax basis, and may self-direct
contributions to various investment options. During 2000, the plan was modified 
to include a Company contribution equal to $.25 for every $1.00 contributed to  
the plan up to 3% of an employee's salary. Company contributions vest at a rate 
of 20% per year over 5 years.                                                   

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CARROLS CORPORATION AND SUBSIDIARIES  
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 
Years Ended December 31, 2000, 1999 and 1998  

12.  Postretirement Benefits                                                    

       The Company provides postretirement medical and life insurance benefits
covering substantially all Burger King administrative and restaurant            
management salaried employees. The following is the plan status and accumulated 
postretirement benefit obligation (APBO) at December 31, 2000 and 1999:         

                                                                [Download Table]

                                                       2000          1999        
                                                       ----          ----        
                                                                                 
Change in benefit obligation:                                                    
     Benefit obligation at beginning of the year     $  1,683,000   $  1,723,000 
     Service cost                                         142,000        141,000 
     Interest cost                                        125,000        115,000 
     Plan participant's contributions                       2,000          2,000 
     Amendments, curtailments, special terminations             -          8,000 
     Actuarial loss (gain)                                  4,000       (262,000)
     Benefits paid                                        (55,000)       (44,000)
                                                     ------------   ------------ 
     Benefit obligation at end of the year              1,901,000      1,683,000 

Change in plan assets:                                                           
     Fair value of plan assets at end of year                   -             -- 
                                                     ------------   ------------ 
     Funded status                                      1,901,000      1,683,000 
     Unrecognized prior service cost                      136,000        160,000 
     Unrecognized actuarial net gain                       80,000         70,000 
                                                     ------------   ------------ 
     Accrued benefit cost                            $  2,117,000   $  1,913,000 
                                                     ============   ============ 

Weighted average assumptions as of December 31:                                  
     Discount rate                                            7.5%           7.5%
                                                     ============   ============ 

  For measurement purposes, a 5.75% annual rate of increase in the per
capita cost of covered health care benefits was assumed for 2000, gradually     
decreasing to 5.5% by the year 2001 and remaining at that rate thereafter.      

                                                        [Enlarge/Download Table]

                                                         2000         1999           1998     
                                                         ----         ----           ----     
                                                                                              
Components of net periodic benefit cost:                                                      
     Service cost                                     $   142,000   $   141,000   $   107,000 
     Interest cost                                        125,000       115,000       101,000 
     Amortization of gains and losses                           -         4,000            -- 
     Amortization of unrecognized prior service cost      (24,000)      (24,000)      (25,000)
                                                      -----------   -----------   ----------- 

Net periodic postretirement benefit cost              $   243,000   $   236,000   $   183,000 
                                                      ===========   ===========   =========== 

     Assumed health care cost trend rates have a significant effect on the
amounts reported for the health care plans. A 1% change in the health care cost 
trend rates would have the following effects:                                   

                                                                [Download Table]

                                                         Increase   Decrease   
                                                         --------   --------   
                                                                               
Effect on total of service and interest cost components  $  56,000  $  (45,000)
Effect on postretirement benefit obligation                324,000    (266,000)

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CARROLS CORPORATION AND SUBSIDIARIES  
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 
Years Ended December 31, 2000, 1999 and 1998  

13.  Acquisitions                                                               

        On December 19, 2000, the Company acquired Taco Cabana, Inc. pursuant to
an Agreement and Plan of Merger dated October 6, 2000. On December 18, 2000,    
Taco Cabana, Inc. shareholders approved the merger of Spur Acquisition Corp. (a 
wholly-owned subsidiary of Carrols Corporation) with and into Taco Cabana, Inc. 
The total transaction was valued at approximately $154.7 million including the  
purchase of the 11.9 million outstanding common shares, employee stock options  
and the assumption of Taco Cabana's outstanding debt which was approximately $43
million. The Taco Cabana acquisition has been accounted for by the purchase     
method of accounting and, accordingly, the results of operations of Taco Cabana 
from December 20, 2000 are included in the accompanying consolidated financial  
statements. The excess purchase price over net assets acquired is included in   
intangible assets and is amortized over 20 years using the straight-line method.
The Company entered into a new senior credit facility, as described in Note 5,  
to finance the Taco Cabana acquisition.                                         

The following proforma results of operations for the periods presented          
below assume this acquisition occurred as of the beginning of the respective    
periods presented:                                                              

                                             Year Ended December 31,
                                              ----------------------------
                                            2000            1999
                                            ----            ----
                                           (unaudited)
         Revenues                             $632,030,000    $614,368,000
                                              ============    ============
         Cost of sales                        $181,853,000    $184,818,000
                                              ============    ============
Restaurant wages and                                    
               related expenses               $182,444,000    $177,840,000
                                              ============    ============
         Depreciation and amortization        $ 41,051,000    $ 36,165,000
                                              ============    ============
         Income from operations               $ 46,205,000    $ 41,541,000
                                              ============    ============
Net income before extraordinary                         
               items                          $  6,792,000    $  3,646,000
                                              ============    ============

The preceding proforma financial information is not necessarily 
indicative of the operating results that would have occurred if the acquisition 
had been consummated as of the beginning of the periods presented, nor are they 
necessarily indicative of future operating results. The Company subsequently    
sold 25 fee owned properties in a sale/leaseback transaction, the proceeds from 
which were $29.4 million. The proceeds, which were received in December 2000,   
were used to reduce the debt incurred for the acquisition. The proforma effects 
of that transaction have not been included in these proforma statements.        

      Assets acquired and liabilities assumed in the Taco Cabana acquisition
were as follows:                                                                

        Accounts receivable                            $       901,000
        Inventory                                              971,000
        Prepaid expenses                                     2,483,000
        Refundable income taxes                              2,514,000
        Deferred income taxes, current                       2,700,000
        Property and equipment                              96,807,000
        Intangible assets including goodwill                66,802,000
        Deferred income taxes, long-term                     9,812,000
        Other non-current assets                               756,000
        Accounts payable                                     3,095,000
        Accrued payroll, related taxes and benefits          3,361,000
        Other current liabilities                            5,704,000
        Accrued occupancy costs                             14,907,000
        Other liabilities, long-term                         2,011,000
                                                       ---------------
                                                       $   154,668,000
                                                       ===============
14.  Other Income                                                               

        During 2000, the Company ended its supply agreement with Ameriserve Food
Distribution, Inc. and recognized $1,365,000 in other income representing the   
remaining unrecognized portion of contractual payments previously received and  
deferred at the inception of the agreement.                                     

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CARROLS CORPORATION AND SUBSIDIARIES  
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 
Years Ended December 31, 2000, 1999 and 1998  

15. Guarantor Financial Statements                                              

The $170 million senior subordinated notes of the Company are   
guaranteed by all of the Company's subsidiaries ("Guarantor Subsidiaries"), all 
of which are wholly-owned by the Company. These subsidiaries are:               

.  Carrols Realty Holdings                                      
.  Carrols Realty I Corp.                                       
.  Carrols Realty II Corp.                                      
.  Carrols J.G. Corp.                                           
.  Quanta Advertising Corp.                                     
.  Pollo Franchise Inc.                                         
.  Pollo Operations, Inc.                                       
.  Taco Cabana, Inc.                                            
.  TP Acquisition Corp.                                         
.  T.C. Management, Inc.                                        
.  Taco Cabana Management, Inc.                                 
.  Get Real, Inc.                                               
.  Texas Taco Cabana, L.P.                                      
.  Taco Cabana Multistate, Inc.                                 
.  Taco Cabana Atlanta, Inc.                                    
.  Colorado Cabana, Inc.                                        
.  T.C. Lease Holdings III, V and VI, Inc.                      
.  Cabana Bevco, LLC                                            
.  TC Bevco Management, LLC                                     
.  TC Bevco Holdings, LLC                                       
.  TC Bevco, LLC                                                
.  Cabana Beverages, Inc.                                       
.  Two Pesos Liquor Corporation                                 
.  Rosa Beverages, Inc.                                         

The following supplemental financial information sets forth on a
condensed consolidating basis, consolidating balance sheets, statements of      
operations and statements of cash flows for the Parent Company only, Guarantor  
Subsidiaries and for the Company as of December 1999 and 2000 and for the years 
ended December 31, 1998, 1999 and 2000.                                         

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CARROLS CORPORATION AND SUBSIDIARIES  
CONSOLIDATING BALANCE SHEET 
December 31, 1999 

                                                        [Enlarge/Download Table]

                                                         Parent                                 
                                                        Company        Guarantor     Combined   
                                                          Only       Subsidiaries     Total     
                                                          ----       ------------     -----     
                                                                                                
                                        ASSETS                                                  

Current Assets:                                                                                 
    Cash and cash equivalents                        $    468,000   $   1,433,000  $  1,901,000 
    Trade and other receivables                           677,000         110,000       787,000 
    Inventories                                         3,823,000         388,000     4,211,000 
    Prepaid rent                                        1,430,000         399,000     1,829,000 
    Prepaid expenses and other current assets           1,302,000         327,000     1,629,000 
    Refundable income taxes                               682,000              --       682,000 
    Deferred income taxes                               6,475,000              --     6,475,000 
                                                     ------------   -------------  ------------ 
Total current assets                                   14,857,000       2,657,000    17,514,000 
                                                     ------------   -------------  ------------ 

Property and equipment, net                            96,236,000      26,577,000   122,813,000 
Franchise rights, net                                 101,927,000              --   101,927,000 
Intangible assets, net                                  6,754,000      60,791,000    67,545,000 
Intercompany receivable (payable)                      83,248,000    (83,248,000)            -- 
Other assets                                            8,070,000       2,158,000    10,228,000 
                                                     ------------   -------------  ------------ 
                                                     $311,092,000   $   8,935,000  $320,027,000 
                                                     ============   =============  ============ 

                         LIABILITIES AND STOCKHOLDER'S EQUITY                                   

Current Liabilities:                                                                            
    Accounts payable                                 $ 16,280,000   $   3,065,000    19,345,000 
    Accrued interest                                    1,920,000              --     1,920,000 
    Accrued payroll, related taxes and benefits         5,930,000       1,337,000     7,267,000 
    Other liabilities                                   4,970,000       1,332,000     6,302,000 
    Current portion of long-term debt                   4,376,000              --     4,376,000 
                                                     ------------   -------------  ------------ 
Total current liabilities                              33,476,000       5,734,000    39,210,000 

Long-term debt, net of current portion                249,118,000              --   249,118,000 
Deferred income, sale/leaseback of real estate          4,463,000              --     4,463,000 
Accrued postretirement benefits                         1,913,000              --     1,913,000 
Deferred income taxes                                   1,208,000              --     1,208,000 
Other liabilities                                       6,306,000       2,758,000     9,064,000 
                                                     ------------   -------------  ------------ 
Total liabilities                                     296,484,000       8,492,000   304,976,000 

Commitments and contingencies                                                                   

Stockholder's equity                                                                            
    Common stock                                               10              --            10 
    Additional paid-in-capital                         24,484,990              --    24,484,990 
    Accumulated deficit                                (9,877,000)        443,000    (9,434,000)
                                                     ------------   -------------  ------------ 
Total stockholder's equity                             14,608,000         443,000    15,051,000 
                                                     ------------   -------------  ------------ 
                                                     $311,092,000   $   8,935,000  $320,027,000 
                                                     ============   =============  ============ 

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CARROLS CORPORATION AND SUBSIDIARIES  
CONSOLIDATING BALANCE SHEET 
December 31, 2000 

                                                        [Enlarge/Download Table]

                                                                Parent                                    
                                                               Company        Guarantor        Combined   
                                                                 Only       Subsidiaries         Total    
                                                                 ----       ------------         -----    
                                                                                                          
                                        ASSETS                                                            

Current Assets:                                                                                           
     Cash and cash equivalents                              $     785,000   $   1,927,000   $   2,712,000 
     Trade and other receivables                                  207,000       1,705,000       1,912,000 
     Inventories                                                4,521,000       1,396,000       5,917,000 
     Prepaid rent                                               1,200,000       1,084,000       2,284,000 
     Prepaid expenses and other current assets                  1,311,000       2,811,000       4,122,000 
     Refundable income taxes                                       91,000       2,514,000       2,605,000 
     Deferred income taxes                                      5,984,000       2,467,000       8,451,000 
                                                             ------------   -------------   ------------- 
Total current assets                                           14,099,000      13,904,000      28,003,000 
                                                             ------------   -------------   ------------- 

Property and equipment, net                                   106,599,000      96,685,000     203,284,000 
Franchise rights, net                                          98,931,000              --      98,931,000 
Intangible assets, net                                          6,217,000     121,200,000     127,417,000 
Intercompany receivable (payable)                             207,970,000    (207,970,000)             -- 
Deferred income taxes                                          (3,406,000)      9,812,000       6,406,000 
Other assets                                                   10,275,000       2,596,000      12,871,000 
                                                             ------------   -------------   ------------- 
                                                             $440,685,000   $  36,227,000   $ 476,912,000 
                                                             ============   =============   ============= 

                         LIABILITIES AND STOCKHOLDER'S EQUITY                                             

Current Liabilities:                                                                                      
    Accounts payable                                        $   8,883,000   $   4,486,000   $  13,369,000 
    Accrued interest                                            2,247,000              --       2,247,000 
    Accrued payroll, related taxes and benefits                 7,711,000       4,760,000      12,471,000 
    Accrued acquisition costs                                   4,470,000       1,142,000       5,612,000 
    Other liabilities                                           6,103,000       6,001,000      12,104,000 
    Current portion of long-term debt                           7,902,000         241,000       8,143,000 
                                                            -------------   -------------   ------------- 
Total current liabilities                                      37,316,000      16,630,000      53,946,000 

Long-term debt, net of current portion                        361,538,000       1,457,000     362,995,000 
Deferred income, sale/leaseback of real estate                  4,171,000              --       4,171,000 
Accrued postretirement benefits                                 2,117,000              --       2,117,000 
Other liabilities                                              20,934,000      13,730,000      34,664,000 
                                                            -------------   -------------   ------------- 
Total liabilities                                             426,076,000      31,817,000     457,893,000 

Commitments and contingencies                                                                             

Stockholder's equity:                                                                                     
     Common stock                                                      10              --              10 
     Additional paid-in-capital                                24,484,990              --      24,484,990 
     Accumulated deficit                                       (9,876,000)      4,410,000      (5,466,000)
                                                            -------------   -------------   ------------- 
Total stockholder's equity                                     14,609,000       4,410,000      19,019,000 
                                                            -------------   -------------   ------------- 
                                                            $ 440,685,000   $  36,227,000   $ 476,912,000 
                                                            =============   =============   ============= 

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CARROLS CORPORATION AND SUBSIDIARIES  
CONSOLIDATING STATEMENT OF OPERATIONS 
Year Ended December 31, 1998  

                                                        [Enlarge/Download Table]

                                                     Parent                                     
                                                    Company           Guarantor      Combined   
                                                      Only           Subsidiaries     Total     
                                                      ----           ------------     -----     
                                                                                                
Revenues:                                                                                       
    Restaurant sales                               $ 381,042,000   $  35,148,000   $ 416,190,000
    Franchise royalty revenues and franchise fees             --         395,000         395,000
                                                   -------------   -------------   -------------

    Total revenues                                   381,042,000      35,543,000     416,585,000
                                                   -------------   -------------   -------------
Costs and expenses:                                                                             
    Cost of sales                                    110,269,000      12,351,000     122,620,000
    Restaurant wages and related expenses            113,456,000       8,276,000     121,732,000
    Other restaurant operating expenses               77,995,000       4,715,000      82,710,000
    Advertising expense                               17,372,000       1,243,000      18,615,000
    General and administrative                        16,995,000       2,224,000      19,219,000
    Depreciation and amortization                     18,237,000       1,768,000      20,005,000
                                                   -------------   -------------   -------------

    Total operating expenses                         354,324,000      30,577,000     384,901,000
                                                   -------------   -------------   -------------

Income from operations                                26,718,000       4,966,000      31,684,000
    Interest expense                                  21,181,000        (113,000)     21,068,000
    Intercompany allocations                          (3,437,000)      3,437,000              --
    Refinancing expense                                1,639,000              --       1,639,000
                                                   -------------   -------------   -------------

Income before income taxes and extraordinary loss      7,335,000       1,642,000       8,977,000
Provision for income taxes                             2,114,000       2,733,000       4,847,000
                                                   -------------   -------------   -------------

Income before extraordinary loss                       5,221,000      (1,091,000)      4,130,000
Extraordinary loss on extinguishment of debt,                                                   
    net of tax benefit                                 3,701,000              --       3,701,000
                                                   -------------   -------------   -------------

Net income                                         $   1,520,000   $  (1,091,000)  $     429,000
                                                   =============   =============   =============

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CARROLS CORPORATION AND SUBSIDIARIES  
CONSOLIDATING STATEMENT OF OPERATIONS 
Year Ended December 31, 1999  

                                                        [Enlarge/Download Table]

                                                     Parent                                    
                                                    Company          Guarantor      Combined   
                                                      Only          Subsidiaries     Total     
                                                      ----          ------------     -----     
                                                                                               
Revenues:                                                                                      
    Restaurant sales                               $ 372,689,000   $  82,751,000  $ 455,440,000
    Franchise royalty revenues and franchise fees             --       1,039,000      1,039,000
                                                   -------------   -------------  -------------

    Total revenues                                   372,689,000      83,790,000    456,479,000
                                                   -------------   -------------  -------------
Costs and expenses:                                                                            
    Cost of sales                                    108,489,000      28,790,000    137,279,000
    Restaurant wages and related expenses            114,935,000      19,190,000    134,125,000
    Other restaurant operating expenses               77,839,000      11,254,000     89,093,000
    Advertising expense                               17,285,000       3,333,000     20,618,000
    General and administrative                        18,286,000       4,816,000     23,102,000
    Depreciation and amortization                     20,043,000       3,855,000     23,898,000
                                                   -------------   -------------  -------------

    Total operating expenses                         356,877,000      71,238,000    428,115,000
                                                   -------------   -------------  -------------

Income from operations                                15,812,000      12,552,000     28,364,000
    Interest expense                                  22,386,000              --     22,386,000
    Intercompany allocations                          (7,362,000)      7,362,000             --
                                                   -------------   -------------  -------------

Income before income taxes and extraordinary loss        788,000       5,190,000      5,978,000
Provision for income taxes                             1,810,000       2,016,000      3,826,000
                                                   -------------   -------------  -------------

Income before extraordinary loss                      (1,022,000)      3,174,000      2,152,000
Extraordinary loss on extinguishment of debt,                                                  
    net of tax benefit                                 1,099,000              --      1,099,000
                                                   -------------   -------------  -------------
Net income                                         $  (2,121,000)  $   3,174,000  $   1,053,000
                                                   =============   =============  =============

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CARROLS CORPORATION AND SUBSIDIARIES  
CONSOLIDATING STATEMENT OF OPERATIONS 
Year Ended December 31, 2000  

                                                        [Enlarge/Download Table]

                                                       Parent                                   
                                                      Company       Guarantor       Combined    
                                                        Only       Subsidiaries       Total     
                                                        ----       ------------       -----     
                                                                                                
Revenues:                                                                                       
    Restaurant sales                               $ 371,335,000   $  94,527,000  $ 465,862,000 
    Franchise royalty revenues and franchise fees             --       1,039,000      1,039,000 
                                                   -------------   -------------  ------------- 

    Total revenues                                   371,335,000      95,566,000    466,901,000 
                                                   -------------   -------------  ------------- 

Costs and expenses:                                                                             
    Cost of sales                                    101,520,000      31,126,000    132,646,000 
    Restaurant wages and related expenses            113,216,000      22,571,000    135,787,000 
    Other restaurant operating expenses               78,444,000      13,151,000     91,595,000 
    Advertising expense                               16,854,000       3,700,000     20,554,000 
    General and administrative                        20,764,000       5,639,000     26,403,000 
    Depreciation and amortization                     24,446,000       4,410,000     28,856,000 
    Other income                                      (1,365,000)             --     (1,365,000)
                                                   -------------   -------------  ------------- 

    Total operating expenses                         353,879,000      80,597,000    434,476,000 
                                                   -------------   -------------  ------------- 

Income from operations                                17,456,000      14,969,000     32,425,000 
    Interest expense                                  23,666,000              --     23,666,000 
    Intercompany allocations                          (6,950,000)      6,950,000             -- 
                                                   -------------   -------------  ------------- 

Income before income taxes and extraordinary loss        740,000       8,019,000      8,759,000 
Provision for income taxes                               389,000       4,052,000      4,441,000 
                                                   -------------   -------------  ------------- 

Income before extraordinary loss                         351,000       3,967,000      4,318,000 
Extraordinary loss on extinguishment of debt,                                                   
    net of tax benefit                                   350,000              --        350,000 
                                                   -------------   -------------  ------------- 

Net income                                         $       1,000   $   3,967,000  $   3,968,000 
                                                   =============   =============  ============= 

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CARROLS CORPORATION AND SUBSIDIARIES  
CONSOLIDATING STATEMENT OF CASH FLOWS 
Year Ended December 31, 1998  

                                                        [Enlarge/Download Table]

                                                                      Parent                                    
                                                                     Company        Guarantor         Combined  
                                                                       Only        Subsidiaries         Total   
                                                                       ----        ------------         -----   
                                                                                                                
Cash flows provided from operating activities:                                                                  
    Net income                                                   $   1,520,000   $  (1,091,000)   $     429,000 
    Adjustments to reconcile net income to net cash                                                             
        provided from operating activities:                                                                     
     Loss (gain) on disposal of property and equipment                 (96,000)             --          (96,000)
     Depreciation and amortization                                  18,237,000       1,768,000       20,005,000 
     Extraordinary loss on extinguishment of debt, net of tax        3,701,000              --        3,701,000 
     Deferred income taxes                                             215,000         639,000          854,000 
    Changes in operating assets and liabilities                    ( 5,492,000)     (3,872,000)      (1,620,000)
                                                                 -------------   -------------    ------------- 

Net cash provided from operating activities                         18,085,000       5,188,000       23,273,000 
                                                                 -------------   -------------    ------------- 

Cash flow used for investing activities                                                                         
    Capital expenditures:                                                                                       
     Purchase of Pollo Tropical, Inc., net of cash acquired        (94,632,000)             --      (94,632,000)
     New restaurant development                                     (9,154,000)     (4,143,000)     (13,297,000)
     Restaurant remodeling                                          (9,387,000)       (113,000)      (9,500,000)
     Corporate and restaurant information systems                   (4,246,000)             --       (4,246,000)
     Other capital expenditures                                     (6,151,000)       (101,000)      (6,252,000)
     Acquisition of Burger King restaurants                           (629,000)             --         (629,000)
    Payments received on notes and mortgages                           715,000              --          715,000 
    Proceeds from dispositions of property and equipment             1,337,000              --        1,337,000 
                                                                 -------------   -------------    ------------- 

Net cash used for investing activities                            (122,147,000)     (4,357,000)    (126,504,000)
                                                                 -------------   -------------    ------------- 

Cash flows provided from financing activities:                                                                  
    Proceeds from long-term debt, net                              245,000,000              --      245,000,000 
    Principal payments and retirements of long-term obligations   (143,851,000)             --     (143,851,000)
    Proceeds from sale/leaseback transactions                       20,532,000              --       20,532,000 
    Dividends paid                                                  (3,878,000)             --       (3,878,000)
    Financing costs associated with issuance of debt                (5,408,000)             --       (5,408,000)
    Redemption premium on retirement of debt                        (4,639,000)             --       (4,639,000)
                                                                 -------------   -------------    ------------- 

Net cash provided from financing activities                        107,756,000              --      107,756,000 
                                                                 -------------   -------------    ------------- 

Net increase (decrease) in cash and cash equivalents                 3,694,000        831,000         4,525,000 
Cash and cash equivalents, beginning of year                         2,252,000              --        2,252,000 
                                                                 -------------   -------------    ------------- 

Cash and cash equivalents, end of year                           $   5,946,000   $    831,000    $    6,777,000 
                                                                 =============   =============    ============= 

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CARROLS CORPORATION AND SUBSIDIARIES  
CONSOLIDATING STATEMENT OF CASH FLOWS 
Year Ended December 31, 1999  

                                                        [Enlarge/Download Table]

                                                                  Parent                                     
                                                                  Company       Guarantor         Combined   
                                                                   Only        Subsidiaries        Total     
                                                                   ----        ------------        -----     
                                                                                                             
Cash flows provided from operating activities:                                                               
  Net income                                                   $  (2,121,000)  $   3,174,000   $   1,053,000 
  Adjustments to reconcile net income to net cash                                                            
    provided from operating activities:                                                                      
   Loss (gain) on disposal of property and equipment                 102,000              --         102,000 
   Depreciation and amortization                                  20,043,000       3,855,000      23,898,000 
   Extraordinary loss on extinguishment of debt, net of tax        1,099,000              --       1,099,000 
   Deferred income taxes                                          (1,482,000)      3,157,000       1,675,000 
  Changes in operating assets and liabilities                      9,551,000         795,000      10,346,000 
                                                               -------------   -------------   ------------- 

Net cash provided from operating activities                       27,192,000      10,981,000      38,173,000 
                                                               -------------   -------------   ------------- 

Cash flow used for investing activities:                                                                     
  Capital expenditures:                                                                                      
   New restaurant development                                     (9,194,000)     (4,891,000)    (14,085,000)
   Restaurant remodeling                                          (9,795,000)             --      (9,795,000)
   Corporate and restaurant information systems                  (10,845,000)     (1,038,000)    (11,883,000)
   Other capital expenditures                                     (5,119,000)     (4,450,000)     (9,569,000)
   Acquisition of Burger King restaurants                         (3,833,000)             --      (3,833,000)
  Proceeds from dispositions of property and equipment               230,000              --         230,000 
                                                               -------------   -------------   ------------- 

Net cash used for investing activities                           (38,556,000)    (10,379,000)    (48,935,000)
                                                               -------------   -------------   ------------- 

Cash flows provided from financing activities:                                                               
  Principal payments and retirements of long-term obligations     (8,028,000)             --      (8,028,000)
  Proceeds from sale/leaseback transactions                       14,800,000              --      14,800,000 
  Financing costs associated with issuance of debt                  (886,000)             --        (886,000)
                                                               -------------   -------------   ------------- 

Net cash provided from financing activities                        5,886,000              --       5,886,000 
                                                               -------------   -------------   ------------- 

Net increase (decrease) in cash and cash equivalents              (5,478,000)        602,000      (4,876,000)
Cash and cash equivalents, beginning of year                       5,946,000         831,000       6,777,000 
                                                               -------------   -------------   ------------- 

Cash and cash equivalents, end of year                         $     468,000   $   1,433,000   $   1,901,000 
                                                               =============   =============   ============= 

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CARROLS CORPORATION AND SUBSIDIARIES  
CONSOLIDATING STATEMENT OF CASH FLOWS 
Year Ended December 31, 2000  

                                                        [Enlarge/Download Table]

                                                                    Parent                                       
                                                                    Company        Guarantor          Combined   
                                                                     Only         Subsidiaries         Total     
                                                                     ----         ------------         -----     
                                                                                                                 
Cash flows provided from operating activities:                                                                   
  Net income                                                     $        1,000   $  3,967,000    $    3,968,000 
  Adjustments to reconcile net income to net cash                                                                
    provided from operating activities:                                                                          
   Depreciation and amortization                                     24,446,000      4,410,000        28,856,000 
   Extraordinary loss on extinguishment of debt, net of tax             350,000             --           350,000 
   Deferred income taxes                                              2,689,000        233,000         2,922,000 
  Changes in operating assets and liabilities                        13,754,000       (130,000)       13,624,000 
                                                                 --------------   ------------    -------------- 

Net cash provided from operating activities                          41,240,000      8,480,000        49,720,000 
                                                                 --------------   ------------    -------------- 

Cash flow used for investing activities:                                                                         
  Capital expenditures:                                                                                          
    Purchase of Taco Cabana, Inc. net of cash acquired             (154,668,000)            --      (154,668,000)
    New restaurant development                                       (4,610,000)    (6,718,000)      (11,328,000)
    Restaurant remodeling                                           (10,957,000)            --       (10,957,000)
    Corporate and restaurant information systems                     (5,266,000)      (397,000)       (5,663,000)
    Other capital expenditures                                       (7,338,000)      (871,000)       (8,209,000)
  Proceeds from dispositions of property and equipment                    7,000             --             7,000 
                                                                 --------------   ------------    -------------- 

Net cash used for investing activities                             (182,832,000)    (7,986,000)     (190,818,000)
                                                                 --------------   ------------    -------------- 

Cash flows provided from financing activities:                                                                   
    Proceeds from long-term debt, net                               222,113,000             --       222,113,000 
    Principal payments and retirements of long-term obligations    (106,167,000)            --      (106,167,000)
    Proceeds from sale/leaseback transactions                        29,523,000             --        29,523,000 
    Financing costs associated with issuance of debt                 (3,560,000)            --        (3,560,000)
                                                                 --------------   ------------    -------------- 

Net cash provided from financing activities                         141,909,000             --       141,909,000 
                                                                 --------------   ------------    -------------- 

Net increase (decrease) in cash and cash equivalents                    317,000        494,000          811,000  
Cash and cash equivalents, beginning of year                            468,000      1,433,000        1,901,000  
                                                                 --------------   ------------    -------------- 

Cash and cash equivalents, end of year                           $      785,000   $  1,927,000   $     2,712,000 
                                                                 ==============   ============    ============== 

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CARROLS CORPORATION AND SUBSIDIARIES  
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS  
Years Ended December 31, 2000, 1999 and 1998  

                                                        [Enlarge/Download Table]

Col. A                                               Col. B       Col. C         Col. D          Col. E    
------                                               ------       ------         ------          ------    
                                                   Balance at   Charged to                     Balance at  
                                                    Beginning    Costs and                       End of    
Description                                         of Period    Expenses      Deductions        Period    
-----------                                         ---------    --------      ----------        ------    
                                                                                                           
Year ended December 31, 2000:                                                                              
   Reserve for doubtful trade accounts receivable   $   53,000   $  14,000     $  (43,000)(c)    $  130,000
                                                                   106,000(d)                              
   Reserve for note receivable (a)                     238,000          --             --           238,000
   Reserve for inventory(b)                            293,000      42,000       (185,000)          150,000

Year ended December 31, 1999:                                                                              
   Reserve for doubtful trade accounts receivable       93,000          --        (40,000)(c)        53,000
   Reserve for note receivable (a)                     238,000          --             --           238,000
   Reserve for inventory(b)                             78,000     286,000        (71,000)          293,000

Year ended December 31, 1998:                                                                              
   Reserve for doubtful trade accounts receivable      130,000      64,000(d)    (101,000)(c)        93,000
   Reserve for note receivable (a)                     238,000          --             --           238,000
   Reserve for inventory(b)                             91,000     149,000       (162,000)           78,000


(a) Included in other assets.                                                   
(b) Included in inventory.                                                      
(c) Represents write-offs of accounts.                                          
(d) Represents reserves acquired in the 1999 Pollo Tropical acquistion and the  
2000 Taco Cabana acquistion.                                            

F-30  

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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 on the second day of April, 
2001.                                                                           

                   CARROLS CORPORATION

                            By:          /s/ Alan Vituli
                                            ------------------------------------
                                          Alan Vituli,
                                            Chairman and Chief Executive Officer

   Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the          
Registrant and in the capacities and on the dates indicated.                    

                                                        [Enlarge/Download Table]

                  Signature                                    Title                            Date    
                  ---------                                    -----                            ----    
                                                                                                        
               /s/ Alan Vituli                 Director, Chairman and Chief Executive      April 2, 2001
---------------------------------------------                                                           
                 Alan Vituli                   Officer (Principal Executive Officer)                    

           /s/ Daniel T. Accordino             Director, President and Chief Operating     April 2, 2001
---------------------------------------------                                                           
             Daniel T. Accordino               Officer                                                  

          /s/ Benjamin D. Chereskin            Director                                    April 2, 2001
---------------------------------------------                                                           
            Benjamin D. Chereskin                                                                       

             /s/ James M. Conlon               Director                                    April 2, 2001
---------------------------------------------                                                           
               James M. Conlon                                                                          

          /s/ David J. Mathies, Jr.            Director                                    April 2, 2001
---------------------------------------------                                                           
            David J. Mathies, Jr.                                                                       

             /s/ Robin P. Selati               Director                                    April 2, 2001
---------------------------------------------                                                           
               Robin P. Selati                                                                          

           /s/ Clayton E. Wilhite              Director                                    April 2, 2001
---------------------------------------------                                                           
             Clayton E. Wilhite                                                                         

            /s/ Paul R. Flanders               Vice President - Finance and Treasurer      April 2, 2001
---------------------------------------------                                                           
              Paul R. Flanders                 (Principal Financial Officer and Principal               
                                               Accounting Officer)                                      

           /s/ Timothy J. LaLonde              Vice President - Controller                 April 2, 2001
---------------------------------------------                                                           
             Timothy J. LaLonde                                                                         

F-31  

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘10-K’ Filing		Date		First		Last			Other Filings
		12/1/08		21		52
		12/31/07		21		51
		9/30/07		21					10-Q
		4/1/07		13					10-Q
		12/1/06		52
		12/31/05		21		51
		12/1/05		52
		10/1/05		13
		9/30/05		21
		12/1/04		52
		12/1/03		21		52
		9/30/03		32					10-Q
		8/9/03		15
		7/31/03		32
		7/19/03		34
		7/1/03		13
		6/30/03		13					10-Q
		9/30/02		13					10-Q
		7/19/02		34
		6/30/02		13					10-Q
		3/31/02		13					10-Q
		12/31/01		13					10-K405
		7/19/01		34
		7/1/01		13
		6/30/01		13					10-Q
Filed as of:		4/3/01							NT 10-K
Filed on:		4/2/01		71
		3/26/01		1
		3/15/01		35
		3/2/01		41
		1/31/01		3
		1/3/01		40					8-K
For Period End:		12/31/00		1		70			NT 10-K
		12/20/00		19		60
		12/19/00		2		60			8-K,  8-K/A
		12/18/00		60
		10/11/00		38					8-K
		10/6/00		38		60			8-K
		7/19/00		34
		7/1/00		12		13
		5/15/00		15
		1/2/00		2		48			10-K405
		12/31/99		2		70
		12/3/99		47
		9/30/99		38		40			10-Q
		7/19/99		34
		6/30/99		40
		4/1/99		26		58			10-K405
		2/10/99		35
		2/2/99		38					S-4
		1/31/99		40
		1/3/99		2		48			10-K405,  10-K405/A
		12/31/98		2		70			15-12B
		12/24/98		52
		11/24/98		21		52
		11/16/98		18		58			10-Q
		7/20/98		32		38
		7/10/98		19		57
		7/3/98		38
		6/3/98		38
		1/1/98		44
		12/31/97		19		33			10-K
		8/20/97		40
		7/7/97		40
		6/1/97		33
		5/5/97		32
		3/27/97		31		40			10-K,  8-K,  8-K/A
		2/25/97		38
		1/22/97		33
		1/15/97		39		40
		12/31/96		19
		12/30/96		32		39
		12/26/96		27
		11/1/96		23
		4/3/96		31					8-K
		3/6/96		32		33			8-K
		9/19/95		32
									List all Filings