A true partnership with the management of an acquired company offers a new owner the best chance of maximizing the company's success and its shareholders' return on their investment. In considering an acquisition candidate, we at Castle Harlan always view the potential for creating such a partnership as a highly desirable attribute. Ideally, in such a partnership, the management team of the acquired company invests in the transaction on the same basis as Castle Harlan, and shares the rewards of success, thereby aligning management's interests closely with those of the controlling shareholders. In an effective working partnership, each party brings to bear its special strengths to help the acquired business grow and succeed, the management team applying its operating experience and understanding of the market, and Castle Harlan contributing capital, financial, strategic and management expertise, and industry knowledge.

Gary B. Appel, David B. Pittaway and Joyce M. Demonteverde

Our acquisition of Caribbean Restaurants Holdings, Inc. (CRI) in July 2004 for $340 million created just such a partnership. We had known and respected the management of CRI - Burger King's third largest and most profitable franchisee - since 1996. Led by CEO Luis Arenas, who has been with the company throughout its four decades, CRI's highly experienced management team knows the market intimately, and has achieved a consistent edge over its fragmented competition in revenue, profitability and product quality. Well connected and involved in their communities, these managers have been able to secure prime locations for their restaurants throughout the commonwealth, including every major mall.

As the market leader and exclusive Burger King franchisee for Puerto Rico, CRI has also been able to produce its own locally oriented advertising and marketing materials, while competing chains, often with multiple franchisees, have had to rely on commercials that are produced in the U.S. then dubbed in Spanish. CRI has also developed menu items specifically tailored for local tastes. And having been through the buyout process several times in building their business, the CRI team knows how to manage in a leveraged environment and understands the value of true partnership. Given Puerto Rico's continuing economic growth, we are confident of CRI's long-term success.