-------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended July 2, 2000
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ____________________ to_________________
Commission file number: 333-78625-11
------------
TRIARC CONSUMER PRODUCTS GROUP, LLC
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 38-0471180
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
280 Park Avenue, New York, New York 10017
----------------------------------- -----
(Address of principal executive offices) (Zip Code)
(212) 451-3000
---------------------------------------------------
(Registrant's telephone number, including area code)
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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 ( )
All of the membership interests in the registrant are held by the
registrant's parent, Triarc Companies, Inc.
--------------------------------------------------------------------------------
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
<TABLE>
<CAPTION>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
January 2, July 2,
2000 (A) 2000
-------- ----
(In thousands)
(Unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents.............................................................$ 60,173 $ 22,321
Receivables........................................................................... 77,476 122,310
Inventories........................................................................... 61,736 85,011
Deferred income tax benefit .......................................................... 16,422 16,422
Prepaid expenses and other current assets ............................................ 6,362 7,695
------------ -----------
Total current assets................................................................ 222,169 253,759
Properties................................................................................ 25,261 31,680
Unamortized costs in excess of net assets of acquired companies........................... 261,666 256,067
Trademarks................................................................................ 251,117 245,817
Other intangible assets................................................................... 31,511 33,208
Deferred costs and other assets........................................................... 36,491 33,464
------------ -----------
$ 828,215 $ 853,995
============ ===========
LIABILITIES AND MEMBER'S DEFICIT
Current liabilities:
Current portion of long-term debt.....................................................$ 41,894 $ 41,064
Accounts payable...................................................................... 35,397 56,968
Accrued expenses...................................................................... 90,573 100,285
Due to Triarc Companies, Inc.......................................................... 22,591 18,928
------------ -----------
Total current liabilities........................................................... 190,455 217,245
Long-term debt............................................................................ 736,866 723,336
Deferred income taxes..................................................................... 56,680 56,680
Deferred income and other liabilities..................................................... 18,099 18,532
Member's deficit:
Contributed capital................................................................... -- 3,691
Accumulated deficit................................................................... (173,533) (165,049)
Accumulated other comprehensive deficit............................................... (352) (440)
------------ -----------
Total member's deficit ............................................................. (173,885) (161,798)
------------ -----------
$ 828,215 $ 853,995
============ ===========
(A) Derived from the audited consolidated financial statements as of January 2, 2000
</TABLE>
See accompanying notes to condensed consolidated financial statements.
2
<PAGE>
<TABLE>
<CAPTION>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended Six months ended
------------------------ --------------------------
July 4, July 2, July 4, July 2,
1999 2000 1999 2000
---- ---- ---- ----
(In thousands)
(Unaudited)
<S> <C> <C> <C> <C>
Revenues:
Net sales...................................................$ 230,379 $ 244,522 $ 390,267 $ 414,867
Royalties, franchise fees and other revenues................ 20,447 21,647 38,750 41,320
----------- ---------- ------------ -----------
250,826 266,169 429,017 456,187
----------- ---------- ------------ -----------
Costs and expenses:
Cost of sales, excluding depreciation and amortization
related to sales of $501,000, $553,000, $951,000 and
$1,052,000................................................ 120,753 128,294 202,893 217,567
Advertising, selling and distribution....................... 66,290 68,246 114,046 114,618
General and administrative ................................. 23,025 25,329 45,308 50,053
Depreciation and amortization, excluding amortization
of deferred financing costs............................... 7,986 8,508 15,838 16,831
Capital structure reorganization related charges ........... 750 204 3,000 408
----------- ---------- ------------ -----------
218,804 230,581 381,085 399,477
----------- ---------- ------------ -----------
Operating profit ......................................... 32,022 35,588 47,932 56,710
Interest expense................................................ (19,861) (21,163) (36,562) (41,896)
Other income, net............................................... 1,096 751 4,337 1,813
----------- ---------- ------------ -----------
Income before income taxes and extraordinary
charges................................................ 13,257 15,176 15,707 16,627
Provision for income taxes...................................... (6,628) (7,434) (7,841) (8,143)
----------- ---------- ------------ -----------
Income before extraordinary charges....................... 6,629 7,742 7,866 8,484
Extraordinary charges........................................... -- -- (11,772) --
----------- ---------- ------------ ----------
Net income (loss).........................................$ 6,629 $ 7,742 $ (3,906) $ 8,484
=========== ========== ============ ===========
See accompanying notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended
----------------------------
July 4, July 2,
1999 2000
---- ----
(In thousands)
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income (loss)........................................................................$ (3,906) $ 8,484
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Amortization of costs in excess of net assets of acquired companies,
trademarks and certain other items ............................................... 11,444 12,911
Depreciation and amortization of properties......................................... 4,394 3,920
Amortization of deferred financing costs ........................................... 2,202 1,981
Write-off of unamortized deferred financing costs and interest rate cap
agreement costs................................................................... 10,938 --
Provision for doubtful accounts..................................................... 1,699 948
Capital structure reorganization related charges.................................... 3,000 408
Provision for deferred income taxes................................................. 2,480 --
Other, net.......................................................................... (831) 955
Changes in operating assets and liabilities:
Increase in receivables........................................................... (49,263) (45,572)
Increase in inventories........................................................... (22,318) (23,085)
Decrease (increase) in prepaid expenses and other current assets.................. 446 (1,250)
Increase in accounts payable and accrued expenses ............................... 24,895 31,248
Increase (decrease) in due to Triarc Companies, Inc............................... 6,332 (3,675)
--------- ---------
Net cash used in operating activities.......................................... (8,488) (12,727)
--------- ---------
Cash flows from investing activities:
Capital expenditures..................................................................... (3,688) (10,259)
Business acquisitions.................................................................... (17,376) (177)
Other.................................................................................... 428 (329)
--------- ---------
Net cash used in investing activities.......................................... (20,636) (10,765)
--------- ---------
Cash flows from financing activities:
Repayments of long-term debt............................................................. (563,143) (42,360)
Proceeds from long-term debt............................................................. 775,000 28,000
Dividends................................................................................ (204,746) --
Deferred financing costs................................................................. (28,458) --
--------- --------
Net cash used in financing activities.......................................... (21,347) (14,360)
--------- ---------
Net decrease in cash and cash equivalents.................................................... (50,471) (37,852)
Cash and cash equivalents at beginning of period............................................. 72,792 60,173
--------- ---------
Cash and cash equivalents at end of period...................................................$ 22,321 $ 22,321
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
July 2, 2000
(Unaudited)
(1) Basis of Presentation
Triarc Consumer Products Group, LLC ("Triarc Consumer Products Group," and
together with its subsidiaries, the "Company"), a wholly-owned subsidiary of
Triarc Companies, Inc. ("Triarc"), was formed on January 15, 1999 and commenced
operations on February 23, 1999 with the acquisition through a capital
contribution of all of the capital stock previously owned directly or indirectly
by Triarc of RC/Arby's Corporation ("RC/Arby's"), Snapple Beverage Group, Inc.
("Snapple Beverage Group"), formerly Triarc Beverage Holdings Corp., and
Stewart's Beverages, Inc. ("Stewart's") and their subsidiaries. Effective May
17, 1999, Triarc Consumer Products Group contributed the stock of Stewart's to
Snapple Beverage Group. Snapple Beverage Group, 99.9% owned, has as its
principally wholly-owned subsidiaries Snapple Beverage Corp. ("Snapple"), Mistic
Brands, Inc. ("Mistic") and, effective May 17, 1999, Stewart's. RC/Arby's has as
its principal wholly-owned subsidiaries Royal Crown Company, Inc. ("Royal
Crown") and Arby's, Inc. ("Arby's"). The accompanying condensed consolidated
statements of operations and cash flows for the six-month period ended July 4,
1999 present the consolidated results of operations and cash flows of Triarc
Consumer Products Group as if it had been formed prior to January 4, 1999. The
consolidated results of operations and cash flows of each of RC/Arby's, Snapple
Beverage Group and, prior to May 17, 1999, Stewart's and their subsidiaries have
been consolidated with Triarc Consumer Products Group since such entities were
under the common control of Triarc and, accordingly, are presented on an "as-if
pooling" basis prior to the contribution of their capital stock to Triarc
Consumer Products Group.
The accompanying unaudited condensed consolidated financial statements of
Triarc Consumer Products Group have been prepared in accordance with Rule 10-01
of Regulation S-X promulgated by the Securities and Exchange Commission (the
"SEC") and, therefore, do not include all information and footnotes necessary
for a fair presentation of financial position, results of operations and cash
flows in conformity with generally accepted accounting principles. In the
opinion of the Company, however, the accompanying condensed consolidated
financial statements contain all adjustments, consisting only of normal
recurring adjustments, necessary to present fairly the Company's financial
position as of January 2, 2000 and July 2, 2000, its results of operations for
the three-month and six-month periods ended July 4, 1999 and January 2, 2000 and
its cash flows for the six-month periods ended July 4, 1999 and July 2, 2000
(see below). This information should be read in conjunction with the
consolidated financial statements and notes thereto included in the Company's
Annual Report on Form 10-K for the fiscal year ended January 2, 2000 (the
"Form 10-K"). Certain statements in these notes to condensed consolidated
financial statements constitute "forward-looking statements" under the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
involve risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Company to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements. See Part II - "Other Information."
The Company reports on a fiscal year basis consisting of 52 or 53 weeks
ending on the Sunday closest to December 31. In accordance therewith, the
Company's first half of 1999 commenced on January 4, 1999 and ended on July 4,
1999, with its second quarter commencing on April 5, 1999 and the Company's
first half of 2000 commenced on January 3, 2000 and ended on July 2, 2000, with
its second quarter commencing on April 3, 2000. For purposes of these condensed
consolidated financial statements, the periods (1) from January 4, 1999 to July
4, 1999 and April 5, 1999 to July 4, 1999 are referred to below as the six-month
and three-month periods ended July 4, 1999, respectively, and (2) from January
3, 2000 to July 2, 2000 and April 3, 2000 to July 2, 2000 are referred to below
as the six-month and three-month periods ended July 2, 2000, respectively.
(2) Inventories
The following is a summary of the components of inventories (in
thousands):
January 2, July 2,
2000 2000
---- ----
Raw materials............................$ 20,952 $ 27,647
Work in process.......................... 397 426
Finished goods........................... 40,387 56,938
---------- ----------
$ 61,736 $ 85,011
========== ==========
(3) Capital Structure Reorganization Related Charges
The capital structure reorganization related charges of $750,000 and
$3,000,000 recognized during the three-month and six-month periods ended July 4,
1999, respectively, and $204,000 and $408,000 recognized during the three-month
and six-month periods ended July 2, 2000, respectively, resulted from equitable
adjustments made in 1999 to the terms of then outstanding options under the
stock option plan (the "Snapple Beverage Plan") of Snapple Beverage Group to
adjust for the effects of net distributions of $91,342,000, principally
consisting of transfers of cash and deferred tax assets, from Snapple Beverage
Group to Triarc partially offset by the effect of the contribution of Stewart's
to Snapple Beverage Group effective May 17, 1999.
The Snapple Beverage Plan provides for an equitable adjustment of options
in the event of a recapitalization or similar event. As a result of these net
distributions and the terms of the Snapple Beverage Plan, the exercise prices of
the Snapple Beverage Group options granted in 1997 and 1998 were equitably
adjusted in 1999 from $147.30 and $191.00 per share, respectively, to $107.05
and $138.83 per share, respectively, and a cash payment of $51.34 and $39.40 per
share, respectively, is due to the option holder following the exercise of the
stock options and either (1) the sale by the option holder to the Company of
shares of Snapple Beverage Group common stock received upon the exercise of the
stock options or (2) the consummation of an initial public offering of Snapple
Beverage Group common stock (see Note 9). The Company is responsible for the
cash payment to its employees who are option holders and Triarc is responsible
for the cash payment to its employees who are option holders either directly or
through reimbursement to the Company. The Company has accounted for the
equitable adjustment in accordance with the intrinsic value method. Compensation
expense is being recognized for the cash to be paid in connection with the
exercise of the stock options ratably over the vesting period of the stock
options. No compensation expense has been or will be recognized for the changes
in the exercise prices of the outstanding options because such modifications to
the options did not create a new measurement date under the intrinsic value
method.
(4) Income Taxes
The Internal Revenue Service (the "IRS") has completed its examination of
the Federal income tax returns of Triarc and its subsidiaries, including
RC/Arby's, for the fiscal year ended April 30, 1993 and transition period ended
December 31, 1993. In connection therewith, pursuant to the Company's
tax-sharing agreement with Triarc, RC/Arby's owes Triarc additional taxes and
accrued interest aggregating $434,000. Such additional taxes and accrued
interest have been provided for prior to the year ended January 3, 1999.
(5) Comprehensive Income (Loss)
The following is a summary of the components of comprehensive income
(loss) (in thousands):
<TABLE>
<CAPTION>
Three months ended Six months ended
-------------------- -------------------
July 4, July 2, July 4, July 2,
1999 2000 1999 2000
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income (loss) ........................$ 6,629 $ 7,742 $ (3,906) $ 8,484
Net change in currency translation
adjustment......................... (33) (82) (111) (88)
------- -------- -------- --------
Comprehensive income (loss).............$ 6,596 $ 7,660 $ (4,017) $ 8,396
======== ======== ======== ========
</TABLE>
(6) Transactions with Related Parties
On March 31, 2000 Triarc acquired certain assets, principally distribution
rights, of California Beverage Company ("California Beverage"), a distributor of
the Company's premium beverage products in the City and County of San Francisco,
California, for cash of $1,620,000 including expenses of $20,000. On April 19,
2000 Triarc acquired certain inventories of California Beverage for cash of
$146,000. Triarc in turn contributed the assets of California Beverage it
acquired as a capital contribution to the Company.
On May 16, 2000 Triarc acquired certain assets, principally distribution
rights, of Northern Glacier Ltd. ("Northern Glacier"), a distributor of the
Company's Mistic premium beverage products in five counties in New Jersey who
will continue as the Company's sub-distributor in two of those counties, for an
aggregate purchase price of $2,200,000, subject to post-closing adjustments. Of
the purchase price, $1,870,000 was paid through offset of accounts receivable
and a note receivable otherwise owed to the Company by the seller, which were
reimbursed to the Company by Triarc, $275,000 is to be paid by Triarc or the
Company to the seller following the conclusion of the seller's
sub-distributorship arrangement and $55,000 was paid by Triarc in cash. Triarc
contributed the acquired assets of Northern Glacier, to the extent paid for by
Triarc, as a capital contribution to the Company. Such assets paid for by Triarc
excluded those related to the $275,000 deferred payment, the liability for which
was recognized by the Company.
The Company continues to have certain related party transactions with
Triarc of the same nature and general magnitude as those described in Note 18 to
the consolidated financial statements in the Form 10-K. In addition, see Notes 3
and 4 above for discussion of certain other related party transactions for the
six-month period ended July 2, 2000.
(7) Legal and Environmental Matters
The Company is involved in litigation, claims and environmental matters
incidental to its businesses. The Company has reserves for legal and
environmental matters aggregating $1,667,000 as of July 2, 2000. Although the
outcome of such matters cannot be predicted with certainty and some of these
matters may be disposed of unfavorably to the Company, based on currently
available information and given the Company's aforementioned reserves, the
Company does not believe that such legal and environmental matters will have a
material adverse effect on its consolidated financial position or results of
operations.
(8) Business Segments
The following is a summary of the Company's segment information (in
thousands):
<TABLE>
<CAPTION>
Three months ended Six months ended
--------------------------- ----------------------------
July 4, July 2, July 4, July 2,
1999 2000 1999 2000
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Premium beverages.................................$ 196,370 $ 208,780 $ 325,532 $ 349,411
Soft drink concentrates........................... 34,344 36,104 65,284 66,098
Restaurant franchising............................ 20,112 21,285 38,201 40,678
---------- ---------- --------- -----------
Consolidated revenues.........................$ 250,826 $ 266,169 $ 429,017 $ 456,187
========== ========== ========= ===========
Earnings before interest, taxes, depreciation and
amortization:
Premium beverages (a).............................$ 22,724 $ 25,792 $ 31,630 $ 39,643
Soft drink concentrates........................... 5,293 5,777 10,508 11,178
Restaurant franchising............................ 12,012 12,537 21,674 22,747
General corporate................................. (21) (10) (42) (27)
---------- ---------- --------- -----------
Consolidated earnings before interest,
taxes, depreciation and amortization........ 40,008 44,096 63,770 73,541
---------- ---------- --------- -----------
Less depreciation and amortization:
Premium beverages................................. 5,662 6,459 11,047 12,743
Soft drink concentrates........................... 1,791 1,508 3,709 3,008
Restaurant franchising............................ 533 541 1,082 1,080
---------- ---------- --------- -----------
Consolidated depreciation and amortization.... 7,986 8,508 15,838 16,831
---------- ---------- --------- -----------
Operating profit:
Premium beverages (a)............................. 17,062 19,333 20,583 26,900
Soft drink concentrates........................... 3,502 4,269 6,799 8,170
Restaurant franchising............................ 11,479 11,996 20,592 21,667
General corporate................................. (21) (10) (42) (27)
---------- ---------- --------- -----------
Consolidated operating profit................. 32,022 35,588 47,932 56,710
Interest expense...................................... (19,861) (21,163) (36,562) (41,896)
Other income, net..................................... 1,096 751 4,337 1,813
---------- ---------- --------- -----------
Consolidated income before income taxes
and extraordinary charges...................$ 13,257 $ 15,176 $ 15,707 $ 16,627
========== ========== ========= ===========
------------
</TABLE>
(a) Reflects the capital restructure reorganization related charge of $750,000
and $3,000,000 recognized during the three-month and six-month periods
ended July 4, 1999, respectively, and $204,000 and $408,000 recognized
during the three-month and six-month periods ended July 2, 2000,
respectively, discussed in Note 3.
(9) Snapple Beverage Group Initial Public Offering
Snapple Beverage Group, as restructured (see below), currently intends to
issue an estimated $100,000,000 of its common stock in an initial public
offering (the "Offering"). These shares will be registered pursuant to a
registration statement on Form S-1 that has been filed with the SEC but which
has not yet been declared effective.
Assuming the successful completion of the Offering, the Company will be
restructured (the "Restructuring"). In accordance with the restructuring
transactions, Snapple Beverage Group will be transferred to RC/Arby's, the
restaurant franchising business will be reclassified as discontinued operations,
RC/Arby's (parent company) and the restaurant franchising business will then be
effectively distributed from Triarc Consumer Products Group to Triarc and, as
a result of a series of transactions, Triarc Consumer Products Group will then
effectively merge into Snapple Beverage Group.
Also assuming the successful completion of the Offering, Snapple Beverage
Group will receive an estimated $178,000,000 capital contribution from
RC/Arby's, representing the net proceeds of a financing of its restaurant
business. Snapple Beverage Group is also expected to enter into a new credit
facility consisting of up to $195,000,000 of term loans and a $50,000,000
revolving credit facility. No borrowings under the new revolving credit facility
are expected to occur at the time of the completion of the Offering. The net
proceeds of the Offering and the term loan borrowings under the new credit
facility, together with all of the cash and cash equivalents of RC/Arby's and
the restaurant business and all but $2,000,000 of the cash and cash equivalents
of Snapple Beverage Group, as restructured, are expected to be used to (1) repay
prior to maturity all outstanding borrowings under the Company's existing credit
facility and accrued interest thereon and (2) pay (a) prepayment penalties
resulting from the prepayment of certain of the outstanding term loans and (b)
fees and expenses relating to the Offering and the consummation of the new
credit facility. The early extinguishment of the borrowings under the existing
credit facility will result in an extraordinary charge at the time the
borrowings under the existing credit facility are repaid prior to maturity for
the write-off of previously unamortized deferred financing costs and the payment
of the aforementioned prepayment penalties, less income tax benefit, which, as
of July 2, 2000, would have amounted to $11,567,000.
(10) Condensed Consolidating Financial Information
The following condensed consolidating financial statements of the Company
depict, in separate columns, the parent companies of each of the issuers of the
$300,000,000 aggregate principal amount of 10 1/4% senior subordinated notes due
2009 (Triarc Consumer Products Group and Snapple Beverage Group - collectively,
the "Parent Companies") on a consolidated basis, those subsidiaries which are
guarantors, those subsidiaries which are non-guarantors, elimination adjustments
and the consolidated total.
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATING BALANCE SHEETS
January 2, 2000
-----------------------------------------------------------------------
Parent Non-
Companies Guarantors Guarantors Eliminations Consolidated
--------- ---------- ---------- ------------ ------------
(In thousands)
ASSETS
<S> <C> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents.................... $ 104 $ 58,779 $ 1,290 $ -- $ 60,173
Receivables.................................. -- 76,522 954 -- 77,476
Inventories.................................. -- 61,131 605 -- 61,736
Deferred income tax benefit.................. -- 16,422 -- -- 16,422
Prepaid expenses and other
current assets............................. -- 6,342 20 -- 6,362
----------- ----------- ---------- ----------- -----------
Total current assets.................... 104 219,196 2,869 -- 222,169
Investment in subsidiaries....................... -- 2,072 -- (2,072) --
Intercompany receivables......................... 7,549 5,033 -- (12,582) --
Properties....................................... -- 24,513 748 -- 25,261
Note receivable from RC/Arby's................... 300,000 (300,000) -- -- --
Unamortized costs in excess of net
assets of acquired companies................. -- 261,666 -- -- 261,666
Trademarks....................................... -- 251,117 -- -- 251,117
Other intangible assets.......................... -- 31,511 -- -- 31,511
Deferred costs and other assets.................. 12,368 24,111 12 -- 36,491
----------- ----------- ---------- ----------- -----------
$ 320,021 $ 519,219 $ 3,629 $ (14,654) $ 828,215
=========== =========== ========== =========== ===========
LIABILITIES AND MEMBER'S/STOCKHOLDERS'
EQUITY (DEFICIT)
Current liabilities:
Current portion of long-term debt............ $ -- $ 41,894 $ -- $ -- $ 41,894
Accounts payable............................. 45 34,937 415 -- 35,397
Accrued expenses............................. 12,368 77,777 428 -- 90,573
Due to Triarc Companies, Inc................. 72 22,519 -- -- 22,591
----------- ----------- ---------- ----------- -----------
Total current liabilities............... 12,485 177,127 843 -- 190,455
Long-term debt................................... 300,000 436,866 -- -- 736,866
Intercompany payables............................ 4,357 7,549 676 (12,582) --
Accumulated reductions in stockholders'
equity of subsidiaries in excess of
investments.................................. 177,010 -- -- (177,010) --
Deferred income taxes............................ -- 56,642 38 -- 56,680
Deferred income and other liabilities............ 54 18,045 -- -- 18,099
Member's/stockholders' equity (deficit):
Common stock................................. -- 4 526 (530) --
Contributed/additional paid-in capital....... -- 43,744 3,807 (47,551) --
Accumulated deficit.......................... (173,533) (220,406) (1,919) 222,325 (173,533)
Accumulated other comprehensive
deficit.................................... (352) (352) (342) 694 (352)
----------- ----------- ---------- ----------- -----------
Total member's/stockholders'
equity (deficit)................... (173,885) (177,010) 2,072 174,938 (173,885)
----------- ----------- ---------- ----------- -----------
$ 320,021 $ 519,219 $ 3,629 $ (14,654) $ 828,215
=========== =========== ========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
July 2, 2000
----------------------------------------------------------------------
Parent Non-
Companies Guarantors Guarantors Eliminations Consolidated
--------- ---------- ---------- ------------ ------------
(In thousands)
ASSETS
<S> <C> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents.................... $ 233 $ 21,029 $ 1,059 $ -- $ 22,321
Receivables.................................. -- 120,585 1,725 -- 122,310
Inventories.................................. -- 84,433 578 -- 85,011
Deferred income tax benefit.................. -- 16,422 -- -- 16,422
Prepaid expenses and other
current assets............................. -- 7,561 134 -- 7,695
----------- ----------- ---------- ----------- -----------
Total current assets.................... 233 250,030 3,496 -- 253,759
Investment in subsidiaries....................... -- 1,517 -- (1,517) --
Intercompany receivables......................... 3,188 953 -- (4,141) --
Properties....................................... -- 30,922 758 31,680
Note receivable from RC/Arby's................... 300,000 (300,000) -- -- --
Unamortized costs in excess of net
assets of acquired companies................. -- 256,067 -- -- 256,067
Trademarks....................................... -- 245,817 -- -- 245,817
Other intangible assets.......................... -- 33,208 -- -- 33,208
Deferred costs and other assets.................. 11,683 21,771 10 -- 33,464
----------- ----------- ---------- ----------- -----------
$ 315,104 $ 540,285 $ 4,264 $ (5,658) $ 853,995
=========== =========== ========== =========== ===========
LIABILITIES AND MEMBER'S/STOCKHOLDERS'
EQUITY (DEFICIT)
Current liabilities:
Current portion of long-term debt............ $ -- $ 41,064 $ -- $ -- $ 41,064
Accounts payable............................. -- 55,773 1,195 -- 56,968
Accrued expenses............................. 10,980 88,705 600 -- 100,285
Due to Triarc Companies, Inc................. 144 18,784 -- -- 18,928
----------- ----------- ---------- ----------- -----------
Total current liabilities............... 11,124 204,326 1,795 -- 217,245
Long-term debt................................... 300,000 423,336 -- -- 723,336
Intercompany payables............................ 38 3,188 915 (4,141) --
Accumulated reductions in stockholders'
equity of subsidiaries in excess of
investments.................................. 165,687 -- -- (165,687) --
Deferred income taxes............................ -- 56,643 37 -- 56,680
Deferred income and other liabilities............ 53 18,479 -- -- 18,532
Member's/stockholders' equity (deficit):
Common stock................................. -- 4 526 (530) --
Contributed/additional paid-in capital....... 3,691 47,435 3,807 (51,242) 3,691
Accumulated deficit.......................... (165,049) (212,686) (2,369) 215,055 (165,049)
Accumulated other comprehensive
deficit.................................... (440) (440) (447) 887 (440)
----------- ----------- ---------- ----------- -----------
Total member's/stockholders'
equity (deficit)................... (161,798) (165,687) 1,517 164,170 (161,798)
----------- ----------- ---------- ----------- -----------
$ 315,104 $ 540,285 $ 4,264 $ (5,658) $ 853,995
=========== =========== ========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
Six Months Ended July 4, 1999
----------------------------------------------------------------------
Parent Non-
Companies Guarantors Guarantors Eliminations Consolidated
--------- ---------- ---------- ------------ ------------
(In thousands)
<S> <C> <C> <C> <C> <C>
Revenues:
Net sales.................................... $ -- $ 387,682 $ 2,585 $ -- $ 390,267
Royalties, franchise fees and
other revenues............................. -- 38,749 1 -- 38,750
----------- ----------- ---------- ----------- -----------
-- 426,431 2,586 -- 429,017
----------- ----------- ---------- ----------- -----------
Costs and expenses:
Cost of sales, excluding depreciation
and amortization........................... -- 201,115 1,778 -- 202,893
Advertising, selling and distribution........ -- 113,632 414 -- 114,046
General and administrative................... -- 44,694 614 -- 45,308
Depreciation and amortization, excluding
amortization of deferred financing
costs...................................... -- 15,819 19 -- 15,838
Capital structure reorganization related
charges.................................... -- 3,000 -- -- 3,000
----------- ----------- ---------- ----------- -----------
-- 378,260 2,825 -- 381,085
----------- ----------- ---------- ----------- -----------
Operating profit........................... -- 48,171 (239) -- 47,932
Interest expense................................. (11,351) (25,211) -- -- (36,562)
Interest income from RC/Arby's................... 8,157 (8,157) -- -- --
Other income, net................................ 1,116 2,870 351 -- 4,337
Equity in net income of subsidiaries before
extraordinary charges........................ 9,646 112 -- (9,758) --
----------- ----------- ---------- ----------- ----------
Income before income taxes and
extraordinary charges................... 7,568 17,785 112 (9,758) 15,707
(Provision for) benefit from income taxes........ 298 (8,139) -- -- (7,841)
----------- ----------- ---------- ----------- -----------
Income before extraordinary
charges................................. 7,866 9,646 112 (9,758) 7,866
Extraordinary charges............................ (11,772) (11,772) -- 11,772 (11,772)
----------- ----------- ---------- ----------- -----------
Net income (loss).......................... $ (3,906) $ (2,126) $ 112 $ 2,014 $ (3,906)
=========== =========== ========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended July 2, 2000
----------------------------------------------------------------------
Parent Non-
Companies Guarantors Guarantors Eliminations Consolidated
--------- ---------- ---------- ------------ ------------
(In thousands)
<S> <C> <C> <C> <C> <C>
Revenues:
Net sales.................................... $ -- $ 412,357 $ 2,510 $ -- $ 414,867
Royalties, franchise fees and
other revenues............................. -- 41,320 -- -- 41,320
----------- ----------- ---------- ----------- -----------
-- 453,677 2,510 -- 456,187
----------- ----------- ---------- ----------- -----------
Costs and expenses:
Cost of sales, excluding depreciation
and amortization........................... -- 215,711 1,856 -- 217,567
Advertising, selling and distribution........ -- 114,102 516 -- 114,618
General and administrative................... 22 49,385 646 -- 50,053
Depreciation and amortization, excluding
amortization of deferred financing
costs...................................... -- 16,829 2 -- 16,831
Capital structure reorganization related
charges.................................... -- 408 -- -- 408
----------- ----------- ---------- ----------- -----------
22 396,435 3,020 -- 399,477
----------- ----------- ---------- ----------- -----------
Operating profit (loss).................... (22) 57,242 (510) -- 56,710
Interest expense................................. (16,122) (25,774) -- -- (41,896)
Interest income from RC/Arby's................... 15,453 (15,453) -- -- --
Other income, net................................ 6 1,741 66 -- 1,813
Equity in net income (loss) of subsidiaries...... 8,364 (444) -- (7,920) --
----------- ----------- ---------- ----------- ----------
Income (loss) before income taxes.......... 7,679 17,312 (444) (7,920) 16,627
(Provision for) benefit from income taxes........ 805 (8,948) -- -- (8,143)
----------- ----------- ---------- ----------- -----------
Net income (loss).......................... $ 8,484 $ 8,364 $ (444) $ (7,920) $ 8,484
=========== =========== ========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
Six Months Ended July 4, 1999
----------------------------------------------------------------------
Parent Non-
Companies Guarantors Guarantors Eliminations Consolidated
--------- ---------- ---------- ------------ ------------
(In thousands)
<S> <C> <C> <C> <C> <C>
Net cash provided by (used in) operating
activities................................... $ 1,181 $ (8,710) $ (959) $ -- $ (8,488)
----------- ----------- ---------- ----------- -----------
Cash flows from investing activities:
Business acquisition......................... -- (17,376) -- -- (17,376)
Capital expenditures......................... -- (3,686) (2) -- (3,688)
Loan to RC/Arby's............................ (300,000) -- -- 300,000 --
Dividends from subsidiaries.................. 215,208 -- -- (215,208) --
Other........................................ -- 428 -- -- 428
----------- ----------- ---------- ----------- -----------
Net cash used in investing
activities................................... (84,792) (20,634) (2) 84,792 (20,636)
----------- ----------- ---------- ----------- -----------
Cash flows from financing activities:
Proceeds from long-term debt................. 300,000 475,000 -- -- 775,000
Repayments of long-term debt................. -- (563,143) -- -- (563,143)
Dividends.................................... (204,746) (215,208) -- 215,208 (204,746)
Deferred financing costs..................... (11,636) (16,822) -- -- (28,458)
Loan from Triarc Consumer Products
Group...................................... -- 300,000 -- (300,000) --
----------- ----------- ---------- ----------- ----------
Net cash provided by (used in) financing
activities................................... 83,618 (20,173) -- (84,792) (21,347)
----------- ----------- ---------- ----------- -----------
Net increase (decrease) in cash and cash
equivalents.................................. 7 (49,517) (961) -- (50,471)
Cash and cash equivalents at beginning
of period.................................... 1 71,335 1,456 -- 72,792
----------- ----------- ---------- ----------- -----------
Cash and cash equivalents at end of period ...... $ 8 $ 21,818 $ 495 $ -- $ 22,321
=========== =========== ========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended July 2, 2000
---------------------------------------------------------------------
Parent Non-
Companies Guarantors Guarantors Eliminations Consolidated
--------- ---------- ---------- ------------ ------------
(In thousands)
<S> <C> <C> <C> <C> <C>
Net cash provided by (used in) operating
activities................................... $ 129 $ (11,992) $ (219) $ (645) $ (12,727)
----------- ----------- ---------- ----------- -----------
Cash flows from investing activities:
Capital expenditures......................... -- (10,247) (12) -- (10,259)
Business acquisition......................... -- (177) -- -- (177)
Other........................................ -- (329) -- -- (329)
----------- ----------- ---------- ----------- -----------
Net cash used in investing activities............ -- (10,753) (12) -- (10,765)
----------- ----------- ---------- ----------- -----------
Cash flows from financing activities:
Repayments of long-term debt................. -- (42,360) -- -- (42,360)
Proceeds from long-term debt................. -- 28,000 -- -- 28,000
Intercompany dividends....................... -- (645) -- 645 --
----------- ------------ ---------- ----------- ----------
Net cash used in financing activities............ -- (15,005) -- 645 (14,360)
----------- ----------- ---------- ----------- -----------
Net increase (decrease) in cash and
cash equivalents............................. 129 (37,750) (231) -- (37,852)
Cash and cash equivalents at beginning
of period.................................... 104 58,779 1,290 -- 60,173
----------- ----------- ---------- ----------- -----------
Cash and cash equivalents at end of period ...... $ 233 $ 21,029 $ 1,059 $ -- $ 22,321
=========== =========== ========== =========== ===========
</TABLE>
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Introduction
This "Management's Discussion and Analysis of Financial Condition and
Results of Operations" should be read in conjunction with the accompanying
condensed consolidated financial statements and "Item 7. Management's Discussion
and Analysis of Financial Condition and Results of Operations" in the Annual
Report on Form 10-K for the fiscal year ended January 2, 2000 of Triarc Consumer
Products Group, LLC, a wholly-owned subsidiary of Triarc Companies, Inc. When we
refer to "Triarc," we mean Triarc Companies, Inc. Triarc Consumer Products Group
was formed on January 15, 1999 and commenced operations on February 23, 1999
with the acquisition through a capital contribution of all of the capital stock
of RC/Arby's Corporation, Snapple Beverage Group, Inc. (formerly Triarc Beverage
Holdings Corp.) and Stewart's Beverages, Inc. and their subsidiaries. These
companies previously had been held directly or indirectly by Triarc. Effective
May 17, 1999 Triarc Consumer Products Group contributed the stock of Stewart's
to Snapple Beverage Group. Snapple Beverage Group, 99.9% owned, is the parent of
Snapple Beverage Corp., Mistic Brands, Inc. and, effective May 17, 1999,
Stewart's. RC/Arby's is the parent of Royal Crown Company, Inc. and Arby's, Inc.
This "Management's Discussion and Analysis of Financial Condition and Results of
Operations" reflects the consolidated results of operations for the six months
and three months ended July 4, 1999 of Triarc Consumer Products Group as if it
had been formed prior to January 4, 1999. The consolidated results of operations
of each of RC/Arby's, Snapple Beverage Group and, prior to May 17, 1999,
Stewart's and their subsidiaries have been consolidated with Triarc Consumer
Products Group since these entities were under the common control of Triarc and,
accordingly, are presented on an "as-if pooling" basis prior to the contribution
of their capital stock to Triarc Consumer Products Group.
The recent trends affecting our premium beverage, soft drink concentrate
and restaurant franchising segments are described in Item 7 of our Form 10-K.
Certain statements under this caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations" constitute
"forward-looking statements" under the Private Securities Litigation Reform Act.
Such forward-looking statements involve risks, uncertainties and other factors
which may cause our actual results, performance or achievements to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements. For these statements, we claim the
protection of the safe harbor for forward-looking statements contained in the
Reform Act. See "Part II - Other Information."
Our fiscal year consists of 52 or 53 weeks ending on the Sunday closest to
December 31. Our first half of fiscal 1999 commenced on January 4, 1999 and
ended on July 4, 1999, with our second quarter commencing on April 5, 1999 and
our first half of fiscal 2000 commenced on January 3, 2000 and ended on July 2,
2000, with our second quarter commencing on April 3, 2000. When we refer to the
"six months ended July 4, 1999," or the "1999 first half," and the "three months
ended July 4, 1999," or the "1999 second quarter," we mean the periods from
January 4, 1999 to July 4, 1999 and April 5, 1999 to July 4, 1999; and when we
refer to the "six months ended July 2, 2000," or the "2000 first half," and the
"three months ended July 2, 2000," or the "2000 second quarter," we mean the
periods from January 3, 2000 to July 2, 2000 and April 3, 2000 to July 2, 2000.
Results of Operations
Six Months Ended July 2, 2000 Compared with Six Months Ended July 4, 1999
Revenues
Our revenues increased $27.2 million, or 6.3% to $456.2 million for the
six months ended July 2, 2000 from $429.0 million for the six months ended July
4, 1999. A discussion of the changes in revenues by segment is as follows:
Premium Beverages -- Premium beverage revenues increased $23.9 million, or
7.3%, to $349.4 million for the six months ended July 2, 2000 from $325.5
million for the six months ended July 4, 1999. The increase, which relates
entirely to sales of finished product, reflects higher volume and, to a
lesser extent, higher average selling prices in the first half of 2000.
The increase in volume principally reflects (1) higher sales in the 2000
first half of Snapple Elements(TM), a new product platform of herbally
enhanced drinks introduced in April 1999, (2) 2000 sales of Mistic
Zotics(TM) and Stewart's "S" line of diet premium beverages introduced in
April 2000 and March 2000, respectively, (3) higher sales of diet teas and
other diet beverages and juice drinks, (4) higher sales of Stewart's
products as a result of increased distribution in existing and new markets
and (5) increased cases sold to retailers through Snapple Distributors of
Long Island, Inc. and Millrose Distributors, Inc. principally reflecting
the effect of an increased focus on our products as a result of our
ownership of these distributors since their acquisitions on January 2,
2000 and February 25, 1999, respectively. The effect with respect to
Millrose was for the full first half in 2000 compared with only the period
from February 26 to July 4 in the 1999 first half. Those increases were
partially offset by lower sales of WhipperSnapple(TM) in the 2000 first
half. The higher average selling prices principally reflect (1) the effect
of the Long Island Snapple and Millrose acquisitions whereby we now sell
product at higher prices directly to retailers subsequent to these
acquisitions compared with sales at lower prices to distributors such as
Long Island Snapple and Millrose and, to a much lesser extent, (2) the
full period effect in the 2000 first half of selective price increases in
April 1999.
Soft Drink Concentrates -- Soft drink concentrate revenues increased $.8
million, or 1.2%, to $66.1 million for the six months ended July 2, 2000
from $65.3 million for the six months ended July 4, 1999. The increase
reflects the $2.8 million effect of higher average selling prices,
partially offset by the $2.0 million effect of lower volume in the first
half of 2000. The higher average selling prices principally reflect (1)
price increases in most domestic concentrates effective November 1999 and
(2) a shift of our private label sales to sales of higher priced flavor
concentrates from sales of lower priced cola concentrates. The decrease in
volume principally reflects lower Royal Crown sales of concentrates
reflecting a decline in branded sales, primarily due to lower domestic
volume reflecting continued competitive pricing pressures experienced by
our bottlers. Those pressures began to lessen commencing in late 1999 and
have continued that trend into the third quarter of 2000.
Restaurant Franchising -- Restaurant franchising revenues increased $2.5
million, or 6.5%, to $40.7 million for the six months ended July 2, 2000
from $38.2 million for the six months ended July 4, 1999. This increase
principally reflects higher royalty revenues and slightly higher franchise
fee revenues. The increase in royalty revenues resulted from an average
net increase of 89, or 2.8%, in the number of franchised restaurants and a
1.9% increase in same-store sales of franchised restaurants.
Gross Profit
We calculate gross profit as total revenues less (1) costs of sales,
excluding depreciation and amortization and (2) that portion of depreciation and
amortization related to sales. Our gross profit increased $12.4 million, or
5.5%, to $237.6 million for the six months ended July 2, 2000 from $225.2
million for the six months ended July 4, 1999. This increase was principally due
to the effect of the higher sales volumes discussed above. Our aggregate gross
margins, which we compute as gross profit divided by total revenues, were
unchanged at 52%. A discussion of the changes in gross margins by segment is as
follows:
Premium Beverages -- Gross margins were unchanged at 42% for both the six
months ended July 2, 2000 and the six months ended July 4, 1999. The
positive effect on gross margins from (1) the effect of the higher selling
prices resulting from the Millrose acquisition for the full 2000 first
half compared with only a portion of the 1999 first half and the Long
Island Snapple acquisition and (2) the selective price increases, both as
referred to above, were fully offset by the negative effects of (1) a
shift in product mix to lower-margin products in the 2000 first half, (2)
increased freight and handling costs in the 2000 first half as a result of
beginning the use of warehousing for our finished products during the
second half of 1999, (3) $1.1 million of increased provisions for obsolete
inventory resulting from higher levels of raw materials and finished goods
inventories that passed their shelf lives during the 2000 first half and
that were not timely used and (4) increased production costs in the 2000
first half resulting from higher fees charged to us by our co-packers.
Soft Drink Concentrates -- Gross margins increased 1% to 77% for the six
months ended July 2, 2000 from 76% for the six months ended July 4, 1999.
This increase was due to the conversion, commencing in December 1999, from
our use of the raw material aspartame to the less costly Ace-K/sucralose
blend in our diet products.
Restaurant Franchising -- Gross margins for each period are 100% because
royalties and franchise fees constitute the total revenues of the segment
with no associated cost of sales.
Advertising, Selling and Distribution Expenses
Our advertising, selling and distribution expenses increased $.5 million,
or 0.5%, to $114.6 million for the six months ended July 2, 2000 from $114.1
million for the six months ended July 4, 1999. As a percentage of revenues, our
advertising, selling and distribution expenses decreased to 25% for the six
months ended July 2, 2000 from 27% for the six months ended July 4, 1999. A
discussion of the changes in advertising, selling and distribution expenses by
segment is as follows:
Premium Beverages -- Advertising, selling and distribution expenses
decreased $.2 million, or 0.2%, to $83.1 million for the six months ended
July 2, 2000 from $83.3 million for the six months ended July 4, 1999. As
a percentage of premium beverage revenues, advertising, selling and
distribution expenses decreased to 24% for the six months ended July 2,
2000 from 26% for the six months ended July 4, 1999. The decrease in
advertising, selling and distribution expenses was principally due to an
overall decrease in promotional spending principally reflecting a decrease
in discounts offered to distributors participating in our cold drink
equipment purchasing program and a shift to shorter, less costly radio
advertising as well as a shift from more expensive network to less costly
cable television advertising, partially offset by (1) higher employee
compensation and related benefit costs reflecting an increase in the
number of sales and distribution employees and (2) higher costs resulting
from our acquisition of certain assets, principally distribution rights,
of California Beverage Company in March 2000, a distributor of our premium
beverage products in the city and county of San Francisco, California.
Soft Drink Concentrates -- Advertising, selling and distribution expenses
increased $.9 million, or 3.1%, to $31.3 million for the six months ended
July 2, 2000 from $30.4 million for the six months ended July 4, 1999. As
a percentage of soft drink concentrate revenues, advertising, selling and
distribution expenses were unchanged at 47% for both the six months ended
July 2, 2000 and the six months ended July 4, 1999. The increase in
advertising, selling and distribution expenses is principally due to a
large scale coupon promotional program introduced in March 2000, partially
offset by continued lower bottler promotional reimbursements resulting
from the decline in branded concentrate sales volume.
Restaurant Franchising -- Advertising, selling and distribution expenses
decreased $.2 million, or 47.0%, to $.2 million for the six months ended
July 2, 2000 from $.4 million for the six months ended July 4, 1999
reflecting a decrease in the provision for doubtful accounts. Advertising,
selling and distribution expenses are less than one percent of restaurant
franchising revenues in both the six months ended July 2, 2000 and the six
months ended July 4, 1999.
General and Administrative Expenses
Our general and administrative expenses increased $4.8 million, or 10.5%,
to $50.1 million for the six months ended July 2, 2000 from $45.3 million for
the six months ended July 4, 1999. As a percentage of revenues, our general and
administrative expenses were unchanged at 11% for both the six months ended July
2, 2000 and the six months ended July 4, 1999. A discussion of the changes in
general and administrative expenses by segment is as follows:
Premium Beverages -- General and administrative expenses increased $3.6
million, or 17.8%, to $23.6 million for the six months ended July 2, 2000
from $20.0 million for the six months ended July 4, 1999. As a percentage
of premium beverage revenues, general and administrative expenses
increased to 7% for the six months ended July 2, 2000 from 6% for the six
months ended July 4, 1999. The increase in general and administrative
expenses reflects (1) increased expenses as a result of the full effect in
the 2000 first half of the Millrose acquisition and the effect of the Long
Island Snapple acquisition and (2) increases in compensation and related
benefit costs primarily due to an increased number of employees.
Soft Drink Concentrates -- General and administrative expenses decreased
$.4 million, or 4.4%, to $8.7 million for the six months ended July 2,
2000 from $9.1 million for the six months ended July 4, 1999. As a
percentage of soft drink concentrate revenues, general and administrative
expenses decreased to 13% for the six months ended July 2, 2000 from 14%
for the six months ended July 4, 1999. The decrease in general and
administrative expenses primarily reflects (1) a decrease in travel
expenses in the 2000 first half and (2) lower expenses for marketing
supplies resulting from cost savings measures in the 2000 first half.
Restaurant Franchising -- General and administrative expenses increased
$1.6 million, or 9.6%, to $17.8 million for the six months ended July 2,
2000 from $16.2 million for six months ended July 4, 1999. As a percentage
of restaurant franchising revenues, general and administrative expenses
increased to 44% for the six months ended July 2, 2000 from 42% for the
six months ended July 4, 1999. The increase in general and administrative
expenses principally reflects (1) an increase in compensation and related
benefit costs due to an increased number of employees and (2) provisions
in the 2000 first half.
Depreciation and Amortization, Excluding Amortization of Deferred Financing
Costs
Our depreciation and amortization, excluding amortization of deferred
financing costs, increased $1.0 million to $16.8 million, or 6.3%, for the six
months ended July 2, 2000 from $15.8 million for the six months ended July 4,
1999. As a percentage of revenues, our depreciation and amortization was
unchanged at 4% for both the six months ended July 2, 2000 and the six months
ended July 4, 1999. A discussion of the changes in depreciation and
amortization, excluding amortization of deferred financing costs, by segment is
as follows:
Premium Beverages -- Depreciation and amortization, excluding amortization
of deferred financing costs, increased $1.7 million, or 15.4%, to $12.7
million for the six months ended July 2, 2000 from $11.0 million for the
six months ended July 4, 1999. As a percentage of premium beverage
revenues, depreciation and amortization increased to 4% for the six months
ended July 2, 2000 from 3% for the six months ended July 4, 1999. The
increase in depreciation and amortization principally reflects an increase
in amortization of costs in excess of net assets acquired, which we refer
to as goodwill, trademarks and other intangibles, as a result of the full
effect in the 2000 first half of the Millrose acquisition, the effect of
the Long Island Snapple acquisition and, to a much lesser extent, the
California Beverage acquisition.
Soft Drink Concentrates -- Depreciation and amortization, excluding
amortization of deferred financing costs, decreased $.7 million, or 18.8%
to $3.0 million for the six months ended July 2, 2000 from $3.7 million
for the six months ended July 4, 1999. As a percentage of soft drink
concentrate revenues, depreciation and amortization decreased to 5% for
the six months ended July 2, 2000 from 6% for the six months ended July 4,
1999. The decrease in depreciation and amortization was primarily due to
the effect of nonrecurring 1999 depreciation on $3.7 million of soft drink
vending machines purchased in January 1998 becoming fully depreciated over
periods throughout 1999.
Restaurant Franchising -- Depreciation and amortization, excluding
amortization of deferred financing costs, was unchanged at $1.1 million in
both the six months ended July 2, 2000 and the six months ended July 4,
1999, representing 3% of restaurant franchising revenues in both those
periods.
Capital Structure Reorganization Related Charges
The capital structure reorganization related charges of $.4 million for
the six months ended July 2, 2000 and $3.0 million for the six months ended July
4, 1999 reflect equitable adjustments that were made to the terms of outstanding
options under the stock option plan of Snapple Beverage Group.
The Snapple Beverage Group stock option plan provides for an equitable
adjustment of options in the event of a recapitalization or similar event. The
exercise prices of then outstanding options under the Snapple Beverage Group
plan were equitably adjusted in 1999 to adjust for the effects of net
distributions of $91.3 million, principally consisting of transfers of cash and
deferred tax assets from Snapple Beverage Group to Triarc partially offset by
the effect of the contribution of Stewart's to Snapple Beverage Group effective
May 17, 1999.
The exercise prices of the Snapple Beverage Group options granted in 1997
were equitably adjusted in 1999 from $147.30 per share to $107.05 per share and
the exercise prices of the options granted in 1998 were equitably adjusted in
1999 from $191.00 per share to $138.83 per share. A cash payment of $51.34 per
share for the options granted in 1997 and $39.40 per share for the options
granted in 1998 is due to the option holder following the exercise of the stock
options and either:
(1) the sale by the option holder to us of shares of Snapple Beverage
Group common stock received upon the exercise of the stock options or
(2) the consummation of an initial public offering of Snapple Beverage
Group common stock (see below under "Snapple Beverage Group Initial Public
Offering").
Snapple Beverage Group is responsible for the cash payment to its
employees who are option holders and Triarc is responsible for the cash payment
to its employees who are option holders either directly or through reimbursement
to Snapple Beverage Group.
We have accounted for the equitable adjustment in accordance with the
intrinsic value method. Beginning with the first quarter of 1999 we are
recognizing compensation expense for the aggregate maximum $4.1 million of cash
to be paid in connection with the exercise of the stock options, net of credits
for forfeitures of non-vested stock options of terminated employees, assuming
all remaining Snapple Beverage Group stock options held by Snapple Beverage
Group employees either have vested or will become vested, ratably over the
vesting period.
The initial charge relating to these equitable adjustments was recorded in
the 1999 first quarter and, therefore, the charge of $3.0 million recognized for
the six months ended July 4, 1999 includes the portion of the aggregate cash to
be paid to the extent of the vesting of the options held by employees of Snapple
Beverage Group through July 4, 1999. The $.4 million charge recognized for the
six months ended July 2, 2000 represents the portion of the cash to be paid in
connection with the exercise of the stock options to the extent of the vesting
of the options held by employees of Snapple Beverage Group during that period.
We expect to recognize additional pre-tax charges relating to this
equitable adjustment of $.2 million during the second half of 2000 and $.2
million in 2001 as the affected stock options held by employees of Snapple
Beverage Group continue to vest. No compensation expense has been or will be
recognized for the changes in the exercise prices of the outstanding options
because those modifications to the options did not create a new measurement date
under the intrinsic value method.
Operating Profit
Our operating profit increased $8.8 million, or 18.3%, to $56.7 million
for the six months ended July 2, 2000 from $47.9 million for the six months
ended July 4, 1999 as a result of the changes discussed above. As a percentage
of revenues, our operating profit increased to 12% for the six months ended July
2, 2000 from 11% for the six months ended July 4, 1999. The changes in operating
profit by segment are as follows:
Premium Beverages -- Operating profit increased $6.3 million, or 30.7%, to
$26.9 million for the six months ended July 2, 2000 from $20.6 million for
the six months ended July 4, 1999. As a percentage of premium beverage
revenues, operating profit increased to 8% for the six months ended July
2, 2000 from 6% for the six months ended July 4, 1999.
Soft Drink Concentrates -- Operating profit increased $1.4 million, or
20.2%, to $8.2 million for the six months ended July 2, 2000 from $6.8
million for the six months ended July 4, 1999. As a percentage of soft
drink concentrate revenues, operating profit increased to 12% for the six
months ended July 2, 2000 from 10% for the six months ended July 4, 1999.
Restaurant Franchising -- Operating profit increased $1.1 million, or
5.2%, to $21.6 million for the six months ended July 2, 2000 from $20.5
million for the six months ended July 4, 1999. As a percentage of
restaurant franchising revenues, operating profit decreased to 53% for the
six months ended July 2, 2000 from 54% for the six months ended July 4,
1999.
Interest Expense
Interest expense increased $5.3 million, or 14.6%, to $41.9 million for
the six months ended July 2, 2000 from $36.6 million for the six months ended
July 4, 1999. This increase reflects higher average interest rates in the 2000
period and, to a lesser extent, higher average levels of debt during the 2000
first half due to the full six month effect of increases from a February 25,
1999 debt refinancing. The refinancing consisted of
(1) the issuance of $300.0 million of 10 1/4% senior subordinated notes
due 2009 and
(2) $475.0 million borrowed under a senior bank credit
facility
and the repayment of
(1) $284.3 million under a former credit facility of Snapple Beverage
Group and
(2) $275.0 million of 9 3/4% senior secured notes due 2000 of RC/Arby's.
Other Income, Net
Other income, net decreased $2.5 million, or 58.2%, to $1.8 million for
the six months ended July 2, 2000 from $4.3 million for the six months ended
July 4, 1999. This decrease was principally due to
(1) a $1.6 million decrease in interest income on cash equivalents in the
2000 first half as a result of lower average amounts of cash equivalents in the
2000 first half compared with the 1999 first half,
(2) a $.3 million decrease in our gains on lease terminations recognized
by the restaurant franchising segment in the 2000 first half which result from
the settlement of lease obligations related to the restaurants that were sold in
1997 which were not assumed by the purchaser and
(3) a non-recurring $.3 million gain on the sale of warrants received in
connection with the 1997 sale of all of our previously owned restaurants in the
1999 second quarter.
Income Taxes
The provision for income taxes represented effective rates of 49% for the
six months ended July 2, 2000 and 50% for the six months ended July 4, 1999. The
effective tax rate is lower in the 2000 first half principally due to the impact
of the amortization of non-deductible goodwill, the effect of which is lower in
the 2000 first half due to higher projected 2000 full-year pre-tax income
compared with the then projected 1999 full-year pre-tax income as of the end of
the 1999 first half.
Income Before Extraordinary Charges
Our income before extraordinary charges increased $.6 million, or 7.9%, to
$8.5 million for the six months ended July 2, 2000 from $7.9 million for the six
months ended July 4, 1999.
Extraordinary Charges
The extraordinary charges of $11.8 million for the six months ended July
4, 1999 resulted from the early extinguishment of borrowings under the former
credit facility of Snapple Beverage Group and the RC/Arby's 9 3/4% notes and
consisted of:
(1) the write-off of previously unamortized
(a) deferred financing costs of $10.8 million and
(b) interest rate cap agreement costs of $.1 million and
(2) the payment of a $7.7 million redemption premium on the RC/Arby's 9
3/4% notes, less income tax benefit of $6.8 million.
Three Months Ended July 2, 2000 Compared with Three Months Ended July 4, 1999
Revenues
Our revenues increased $15.4 million, or 6.1%, to $266.2 million for the
three months ended July 2, 2000 from $250.8 million for the three months ended
July 4, 1999. A discussion of the changes in revenues by segment is as follows:
Premium Beverages -- Premium beverage revenues increased $12.4 million, or
6.3%, to $208.8 million for the three months ended July 2, 2000 from $196.4
million for the three months ended July 4, 1999. The increase, which relates
entirely to sales of finished product, reflects higher volume and, to a
lesser extent, higher average selling prices in the second quarter of 2000.
The increase in volume principally reflects (1) higher sales of Snapple
Elements which was introduced in April 1999, (2) 2000 sales of Mistic Zotics
and Stewart's "S" line of diet premium beverages introduced in April and
March 2000, respectively, (3) higher sales of diet teas and other diet
beverages and juice drinks and (4) increased cases sold to retailers through
Long Island Snapple principally reflecting an increased focus on our
products as a result of our ownership of this distributor since January 2,
2000. Those increases were partially offset by lower sales of WhipperSnapple
in the 2000 second quarter. The higher average selling prices reflect the
effect of the higher selling prices in connection with the Long Island
Snapple acquisition whereby we now sell directly to retailers rather than to
Long Island Snapple as a distributor.
Soft Drink Concentrates -- Soft drink concentrate revenues increased $1.8
million, or 5.1%, to $36.1 million for the three months ended July 4, 2000
from $34.3 million for the three months ended July 4, 1999. This increase
reflects the $1.9 million effect of higher average selling prices, partially
offset by the $.1 million effect of lower volume in the second quarter of
2000. The higher average selling prices reflect (1) price increases in most
domestic concentrates effective November 1999 and (2) a shift of our private
label sales to sales of higher priced flavor concentrates from sales of
lower priced cola concentrates. The decrease in volume principally reflects
a decrease in Royal Crown sales of concentrates reflecting a decline in
branded sales, primarily due to lower domestic volume as previously
discussed in the comparison of the six-month periods, partially offset by an
increase in private label sales.
Restaurant Franchising -- Restaurant franchising revenues increased $1.2
million, or 5.8%, to $21.3 million for the three months ended July 2, 2000
from $20.1 million for the three months ended July 4, 1999 entirely due to
an increase in royalty revenue resulting from an average net increase of 88,
or 2.8%, in the number of franchised restaurants and a 0.4% increase in
same-store sales of franchised restaurants.
Gross Profit
Our gross profit increased $7.7 million, or 6.0%, to $137.3 million for the
three months ended July 2, 2000 from $129.6 million for the three months ended
July 4, 1999 due to the effect of higher sales volumes discussed above. Our
aggregate gross margins were unchanged at 52%. A discussion of the changes in
gross margins by segment is as follows:
Premium Beverages -- Gross margins remained unchanged at 42% for both the
2000 second quarter and the 1999 second quarter. The positive effect on
gross margins from the higher selling prices resulting from the Long Island
Snapple acquisition, as referred to above, was fully offset by the negative
effects of (1) a shift in product mix to lower-margin products in the 2000
second quarter, (2) increased freight and handling costs in the 2000 second
quarter, (3) $.4 million of increased provisions for obsolete inventory
resulting from higher levels of raw materials and finished goods inventories
that passed their shelf lives during the 2000 second quarter and (4)
increased production costs in the 2000 second quarter resulting from higher
fees charged to us by our co-packers.
Soft Drink Concentrates -- Gross margins increased 1% to 78% for the 2000
second quarter from 77% for the 1999 second quarter. This increase was due
to the conversion, commencing in December 1999, from our use of the raw
material aspartame to the less costly Ace-K/sucralose blend in our diet
products.
Restaurant Franchising -- Gross margins during each period are 100% because
royalties and franchise fees constitute the total revenues of the segment
with no associated cost of sales.
Advertising, Selling and Distribution Expenses
Our advertising, selling and distribution expenses increased $1.9 million,
or 3.0%, to $68.2 million for the three months ended July 2, 2000 from $66.3
million for the three months ended July 4, 1999. As a percentage of revenues,
our advertising, selling and distribution expenses remained constant at 26% for
both the three months ended July 2, 2000 and the three months ended July 4,
1999. A discussion of the changes in advertising, selling and distribution
expenses by segment is as follows:
Premium Beverages -- Advertising, selling and distribution expenses
increased $.8 million, or 1.5%, to $50.5 million for the three months ended
July 2, 2000 from $49.7 million for the three months ended July 4, 1999. As
a percentage of premium beverage revenues, advertising, selling and
distribution expenses decreased to 24% for the three months ended July 2,
2000 from 25% for the three months ended July 4, 1999. The increase in
advertising, selling and distribution expenses was principally due to (1)
higher employee compensation and related benefit costs and (2) higher costs
resulting from our California Beverage acquisition in March 2000, partially
offset by an overall decrease in promotional spending, all as previously
discussed in the comparison of the six-month periods.
Soft Drink Concentrates -- Advertising, selling and distribution expenses
increased $1.2 million, or 7.7%, to $17.6 million for the three months ended
July 2, 2000 from $16.4 million for the three months ended July 4, 1999. As
a percentage of soft drink concentrate revenues, advertising, selling and
distribution expenses increased to 49% for the three months ended July 2,
2000 from 48% for the three months ended July 4, 1999. The increase in
advertising, selling and distribution expenses was principally due to a
large scale coupon promotional program introduced in March 2000, partially
offset by lower bottler promotional reimbursements resulting from the
decline in branded concentrate sales volume.
Restaurant Franchising -- Advertising, selling and distribution expenses
decreased $.1 million, or 47.3%, to $.1 million for the three months ended
July 2, 2000 from $.2 million for the three months ended July 4, 1999
reflecting a decrease in the provision for doubtful accounts. Advertising,
selling and distribution expenses are less than one percent of restaurant
franchising revenues in both the three months ended July 2, 2000 and the
three months ended July 4, 1999.
General and Administrative Expenses
Our general and administrative expenses increased $2.3 million, or 10.0%, to
$25.3 million for the three months ended July 2, 2000 from $23.0 for the three
months ended July 4, 1999. As a percentage of revenues, our general and
administrative expenses increased to 10% for the three months ended July 2, 2000
from 9% for the three months ended July 4, 1999. A discussion of the changes in
general and administrative expense by segment is as follows:
Premium Beverages -- General and administrative expenses increased $1.7
million, or 16.7%, to $12.0 million for the three months ended July 2, 2000
from $10.3 million for the three months ended July 4, 1999. As a percentage
of premium beverage revenues, general and administrative expenses increased
to 6% for the three months ended July 2, 2000 from 5% for the three months
ended July 4, 1999. The increase in general and administrative expenses
reflects (1) increased expenses as a result of the effect of the Long Island
Snapple acquisition and (2) increases in compensation and related benefit
costs primarily due to an increased number of employees.
Soft Drink Concentrates -- General and administrative expenses decreased $.2
million, or 3.3%, to $4.6 million for the three months ended July 2, 2000
from $4.8 million for the three months ended July 4, 1999. As a percentage
of soft drink concentrate revenues, general and administrative expenses
decreased to 13% for the three months ended July 2, 2000 from 14% for the
three months ended July 4, 1999. The decrease in general and administrative
expenses primarily reflects a decrease in travel expenses in the 2000 second
quarter.
Restaurant Franchising -- General and administrative expenses increased $.8
million, or 9.1%, to $8.7 million for the three months ended July 2, 2000
from $7.9 million for the three months ended July 4, 1999. As a percentage
of restaurant franchising revenues, general and administrative expenses
increased to 41% for the three months ended July 2, 2000 from 39% for the
three months ended July 4, 1999. The increase in general and administrative
expenses was primarily due to increases in compensation and related benefit
costs.
Depreciation and Amortization, Excluding Amortization of Deferred Financing
Costs
Our depreciation and amortization, excluding amortization of deferred
financing costs, increased $.5 million, or 6.6%, to $8.5 million for the three
months ended July 2, 2000 from $8.0 million for the three months ended July 4,
1999. As a percentage of revenues, our depreciation and amortization was
unchanged at 3% for both the three months ended July 2, 2000 and the three
months ended July 4, 1999. A discussion of the changes in depreciation and
amortization, excluding amortization of deferred financing costs, by segment is
as follows:
Premium Beverages -- Depreciation and amortization, excluding amortization
of deferred financing costs, increased $.8 million, or 14.1%, to $6.5
million for the three months ended July 2, 2000 from $5.7 million for the
three months ended July 4, 1999. As a percentage of premium beverage
revenues, depreciation and amortization was unchanged at 3% for both the
three months ended July 2, 2000 and the three months ended July 4, 1999. The
increase in depreciation and amortization principally reflects an increase
in amortization of goodwill, trademarks and other intangibles as a result of
the effect of the Long Island Snapple acquisition and, to a much lesser
extent, the acquisition of California Beverage in March 2000.
Soft Drink Concentrates -- Depreciation and amortization, excluding
amortization of deferred financing costs, decreased $.3 million, or 15.8%,
to $1.5 million for the three months ended July 2, 2000 from $1.8 million
for the three months ended July 4, 1999. As a percentage of soft drink
concentrate revenues, depreciation and amortization decreased to 4% for the
three months ended July 2, 2000 from 5% for the three months ended July 4,
1999. The decrease in depreciation and amortization was primarily due to the
effect of nonrecurring 1999 depreciation on $3.7 million of soft drink
vending machines purchased in January 1998 becoming fully depreciated over
periods throughout 1999.
Restaurant Franchising -- Depreciation and amortization, excluding
amortization of deferred financing costs, was unchanged at $.5 million in
both the three months ended July 2, 2000 and the three months ended July 4,
1999, representing 3% of restaurant franchising revenues in both periods.
Capital Structure Reorganization Related Charges
The capital structure reorganization related charges of $.2 million for the
three months ended July 2, 2000 and $.8 million for the three months ended July
4, 1999 reflect the effect of equitable adjustments that were made to the terms
of outstanding options under the stock option plan of Snapple Beverage Group, as
discussed above in the comparison of the six-month periods, as the affected
stock options continue to vest. The decrease in the capital structure
reorganization related charge is a result of a portion of the options becoming
fully vested in July 1999. We will continue to incur additional charges through
2001, also as previously discussed.
Operating Profit
Our operating profit increased $3.6 million, or 11.1%, to $35.6 million for
the three months ended July 2, 2000 from $32.0 million for the three months
ended July 4, 1999 as a result of the changes discussed above. As a percentage
of revenues, our operating profit was unchanged at 13% for both the three months
ended July 2, 2000 and the three months ended July 4, 1999. The changes in
operating profit by segment are as follows:
Premium Beverages -- Operating profit increased $2.3 million, or 13.2%, to
$19.3 million for the three months ended July 2, 2000 from $17.0 million for
the three months ended July 4, 1999. As a percentage of premium beverage
revenues, operating profit remained constant at 9% for both the three months
ended July 2, 2000 and the three months ended July 4, 1999.
Soft Drink Concentrates -- Operating profit increased $.8 million, or 21.9%,
to $4.3 million for the three months ended July 2, 2000 from $3.5 million
for the three months ended July 4, 1999. As a percentage of soft drink
concentrate revenues, operating profit increased to 12% for the three months
ended July 2, 2000 from 10% for the three months ended July 4, 1999.
Restaurant Franchising -- Operating profit increased $.5 million, or 4.5%,
to $12.0 million for the three months ended July 2, 2000 from $11.5 million
for the three months ended July 4, 1999. As a percentage of restaurant
franchising revenues, operating profit decreased to 56% for the three months
ended July 2, 2000 from 57% for the three months ended July 4, 1999.
Interest Expense
Interest expense increased $1.3 million, or 6.6%, to $21.2 million for the
three months ended July 2, 2000 from $19.9 million for the three months ended
July 4, 1999 primarily reflecting higher average interest rates in the 2000
second quarter.
Other Income, Net
Other income, net decreased $.3 million, or 31.5%, to $.8 million for the
three months ended July 2, 2000 from $1.1 million for the three months ended
July 4, 1999. This decrease was due to a non-recurring $0.3 million gain on the
sale of warrants received in connection with our 1997 sale of all of our
previously owned restaurants in the 1999 second quarter.
Income Taxes
The provision for income taxes represented effective rates of 49% for the
three months ended July 2, 2000 and 50% for the three months ended July 4, 1999.
The effective rate is lower in the 2000 second quarter principally due to the
impact of the amortization of non-deductible goodwill, the effect of which is
lower in the 2000 second quarter due to higher projected 2000 full-year pre-tax
income compared with the then projected 1999 full-year pre-tax income as of the
end of the 1999 second quarter.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows From Operations
Our consolidated operating activities used cash and cash equivalents,
which we refer to in this discussion as cash, of $12.7 million during the six
months ended July 2, 2000 reflecting cash used by changes in operating assets
and liabilities of $42.3 million partially offset by (1) net income of $8.5
million and (2) net non-cash charges, principally depreciation and amortization,
of $21.1 million.
The cash used by changes in operating assets and liabilities of $42.3
million reflects increases in receivables of $45.5 million, inventories of $23.1
million and prepaid expenses and other current assets of $1.2 million and a
decrease in due to Triarc of $3.7 million, all partially offset by an increase
in accounts payable and accrued expenses of $31.2 million. The increase in
receivables principally resulted from seasonally higher sales in June 2000
compared with December 1999. The increase in inventories was due to seasonal
buildups in anticipation of the peak summer selling season in our beverage
businesses. The increase in accounts payable and accrued expenses principally
reflects (1) the increased inventory purchases, (2) $4.5 million of seasonally
higher accruals for advertising and promotions and (3) a $6.3 million increase
in accrued income taxes resulting from the excess of our provision for income
taxes over our tax payments during the 2000 first half, all partially offset by
a $6.3 million reduction in accrued compensation and related benefits due to the
first quarter payment of previously accrued incentive compensation. The decrease
in due to Triarc principally resulted from the timing of payments for raw
material purchases made by our beverage businesses from Triarc.
Despite the $12.7 million of cash used in operating activities in the
2000 first half, we had $12.8 million of cash provided by operating activities
in the 2000 second quarter and we expect positive cash flows from operations
during the remainder of 2000 due to (1) the expectation of profitable operations
for the remainder of the year due to the seasonality of the beverage business
with the summer months as the peak season and (2) the significant seasonal
factors impacting the cash used in the 2000 first half for operating assets
which should not recur during the remainder of 2000 and should substantially
reverse.
Working Capital and Capitalization
Working capital, which equals current assets less current liabilities,
was $36.5 million at July 2, 2000, reflecting a current ratio, which equals
current assets divided by current liabilities, of 1.2:1. Our working capital
increased $4.8 million from $31.7 million at January 2, 2000 principally due to
working capital provided by operations in excess of both capital expenditures
and reclassifications of long-term debt to current liabilities.
Our capitalization at July 2, 2000 aggregated $602.6 million consisting
of $764.4 million of long-term debt, including current portion, less $161.8
million of member's deficit. Our total capitalization decreased $2.4 million
from $605.0 million at January 2, 2000 principally due to net repayments of
long-term debt of $14.4 million partially offset by (1) the $3.7 million of
capital contributions to us from Triarc of certain assets it acquired of
California Beverage Company and Northern Glacier Ltd. discussed below under
"Acquisitions" and (2) our net income of $8.5 million.
Debt Agreements
We maintain a $535.0 million senior bank credit facility entered into by
Snapple, Mistic, Stewart's, Royal Crown and RC/Arby's which consists of a $475.0
million term facility under which there were $438.3 million of term loans
outstanding as of July 2, 2000 and a $60.0 million revolving credit facility
under which there were $20.0 million of revolving credit loans outstanding as of
July 2, 2000. At July 2, 2000 there was $39.9 million of borrowing availability
under the revolving credit facility.
Revolving loans will be due in full in 2005. Maturities of the term loans
are $3.7 million for the second half of 2000 representing two quarterly
installments, increasing annually through 2006 with a final payment in 2007. In
addition to scheduled maturities of the term loans, we are also required to make
mandatory annual prepayments in an amount, if any, currently equal to 75% of
excess cash flow as defined in the credit agreement. The mandatory prepayments
will be applied on a pro rata basis to the remaining outstanding balances of
each of the three classes of the term loans except that any lender that has term
B or term C loans outstanding may elect not to have its pro rata share of the
loans repaid. Any amount prepaid and not applied to term B loans or term C loans
as a result of the election would be applied first to the outstanding balance of
term A loans and second to any outstanding balance of revolving loans, with any
remaining amount being returned to us. In that connection, we made a $28.3
million prepayment on May 4, 2000 in respect of the year ended January 2, 2000,
of which $25.7 million was the pro rata share applicable to the term B and
term C loans. Certain lenders of term B and term C loans elected not to accept
an aggregate $8.8 million of the prepayment and, accordingly, this amount was
applied to term A loans. The application of the excess cash flow prepayment
had the effect of reducing the scheduled maturities of the term loans during the
second half of 2000 by $.7 million to $3.7 million. We currently expect that an
additional prepayment will be required to be made in the second quarter of 2001
in respect of the year ending December 31, 2000, the amount of which we
currently estimate at $10.0 million.
Under our credit agreement, we can make voluntary prepayments of the term
loans, although as of July 2, 2000, we have not made any voluntary prepayments.
However, if we make voluntary prepayments of term B and term C loans, which have
$118.7 million and $289.0 million outstanding as of July 2, 2000, we will incur
prepayment penalties of 1.0% and 1.5%, respectively, of any future amounts of
those term loans prepaid through February 25, 2001.
We have $300.0 million of 10 1/4% senior subordinated notes due 2009
which do not require any amortization of principal prior to their maturity
in 2009.
We have a note payable to a beverage co-packer with $1.7 million
outstanding as of July 2, 2000 which is due during the second half of 2000.
Our scheduled long-term debt repayments during the second half of 2000
are $6.3 million, including $3.7 million under the term loans and $1.7 million
under the note payable to a beverage co-packer, both as discussed above. In
addition, we expect to repay the $20.0 million of outstanding revolving loans
during the second half of 2000; however any such payment would increase our
borrowing availability under the revolving credit facility.
Debt Agreement Guarantees and Restrictions
Under our credit facility substantially all of our assets, other than
cash and cash equivalents, are pledged as security. In addition, our obligations
relating to (1) the 10 1/4% notes are guaranteed by Snapple, Mistic, Stewart's,
Arby's, Royal Crown and RC/Arby's and all of their domestic subsidiaries and (2)
the credit facility are guaranteed by Triarc Consumer Products Group, Snapple
Beverage Group and substantially all of the domestic subsidiaries of Snapple,
Mistic, Stewart's, Arby's, Royal Crown and RC/Arby's. As collateral for the
guarantees under the credit facility, all of the stock of Snapple, Mistic,
Stewart's, Arby's, Royal Crown and RC/Arby's and all of their domestic
subsidiaries and 65% of the stock of each of their directly-owned foreign
subsidiaries is pledged. The guarantees under the 10 1/4% notes are full and
unconditional, are on a joint and several basis and are unsecured.
Our debt agreements contain various covenants which (1) require periodic
financial reporting, (2) require meeting financial amount and ratio tests, (3)
limit, among other matters, (a) the incurrence of indebtedness, (b) the
retirement of debt prior to maturity, with exceptions, (c) investments, (d)
asset dispositions and (e) affiliate transactions other than on an arms-length
basis and (4) restrict the payment of dividends, loans or advances to Triarc.
Under the most restrictive of these covenants, as of July 2, 2000 we cannot pay
any dividends or make any loans or advances to Triarc. We were in compliance
with all of these covenants as of July 2, 2000.
Arby's remains contingently responsible for operating and capitalized
lease payments, if the purchaser of the Arby's restaurants does not make the
required lease payments, assumed by the purchaser in connection with the
restaurants sale of approximately $117.0 million as of May 1997 when the Arby's
restaurants were sold and $85.0 million as of July 2, 2000, assuming the
purchaser of the Arby's restaurants has made all scheduled payments through that
date.
Further, Triarc has guaranteed mortgage notes and equipment notes payable
to FFCA Mortgage Corporation assumed by the purchaser in connection with the
restaurants sale of $54.7 million as of May 1997 and $47.8 million as of July 2,
2000, assuming the purchaser of the Arby's restaurants has made all scheduled
repayments through that date.
In addition, a subsidiary of ours is a co-obligor with the purchaser of
the Arby's restaurants and Triarc is a guarantor under a loan, the repayments of
which are being made by the purchaser, with an aggregate principal amount of $.5
million as of July 2, 2000.
Capital Expenditures
Cash capital expenditures amounted to $10.3 million during the 2000 first
half. We expect that cash capital expenditures will approximate $4.8 million for
the second half of 2000 for which there were $1.0 million of outstanding
commitments as of July 2, 2000. Our planned capital expenditures include amounts
for remaining expenditures for a premium beverage packing line at one of our
company-owned distributors and co-packing equipment.
Acquisitions
On March 31, 2000 Triarc acquired, and contributed to us, certain assets,
principally distribution rights, of California Beverage Company, a distributor
of our premium beverage products in the City and County of San Francisco,
California, for cash of $1.6 million. On April 19, 2000 Triarc acquired, and
contributed to us, certain inventories of California Beverage for cash of $.1
million.
On May 16, 2000 Triarc acquired, and contributed to us, certain assets,
principally distribution rights, of Northern Glacier Ltd., a distributor of our
Mistic premium beverage products in five counties in New Jersey and who will
continue as our sub-distributor in two of those counties, for an aggregate
purchase price of $2.2 million, subject to post-closing adjustments. The
purchase price principally consisted of $1.9 million paid through offset of
accounts receivable and a note receivable otherwise owed to us by the seller,
which were reimbursed to us by Triarc, and $.3 million to be paid by Triarc or
us to the seller following the conclusion of the seller's sub-distributorship
arrangement.
To further our growth strategy, we will consider additional selective
business acquisitions, as appropriate, to grow strategically and explore other
alternatives to the extent we have available resources to do so.
Management Services Fees
We receive from Triarc various management services, including legal,
accounting, tax, insurance and financial, under two management services
agreements with our combined beverage businesses and Arby's. Under these
agreements we pay Triarc fixed fees on a quarterly basis in arrears, including
annual cost of living adjustments. The total with respect to fiscal year 2000
will be $10.8 million, of which $6.9 million relates to our combined beverage
businesses and $3.9 million relates to Arby's. We expect to pay a total of $5.4
million of these management fees during the second half of 2000.
Income Taxes
We are included in the consolidated Federal income tax return and some
combined state income tax returns of Triarc. Under a tax-sharing agreement with
Triarc, we are required to pay to Triarc amounts relating to income taxes based
on our consolidated taxable income on a stand-alone basis. A tax-sharing payment
of $1.4 million was made during the second quarter of 2000. We expect to make
additional tax-sharing payments, including a $1.4 million payment made in July
2000, during the remainder of 2000 pursuant to the tax-sharing agreement.
The Internal Revenue Service has completed its examination of the Federal
income tax returns of Triarc and its subsidiaries, including RC/Arby's, for the
fiscal year ended April 30, 1993 and transition period ended December 31, 1993.
In connection with this examination and under our tax-sharing agreement with
Triarc, RC/Arby's owes Triarc additional taxes and accrued interest totaling $.4
million.
Cash Requirements
As of July 2, 2000, our consolidated cash requirements for the remainder
of 2000, exclusive of operating cash flow requirements which include tax-sharing
payments and management services fees to Triarc as discussed above, consist
principally of (1) scheduled debt principal repayments aggregating $6.3 million,
(2) capital expenditures of approximately $4.8 million and (3) business
acquisitions by us, if any. We anticipate meeting all of these requirements
through (1) $22.3 million of existing cash and cash equivalents, (2) cash
flows from operations and (3) the $39.9 million of availability as of July 2,
2000 under our $60.0 million revolving credit facility. We expect to repay
the $20.0 million of outstanding revolving credit loans during the second half
of 2000; however, any such payment would increase our borrowing availability
under the revolving credit facility.
Triarc Consumer Products Group
Triarc Consumer Products Group is a holding company whose primary asset
is a $300.0 million unsecured promissory note receivable from RC/Arby's and
whose primary liability consists of the $300.0 million principal amount of 10
1/4% notes. The RC/Arby's note has a stated interest rate of 10.33% and is due
in 2009. The cash requirements of Triarc Consumer Products Group are semi-annual
interest on the 10 1/4% notes and any general corporate expenses. Triarc
Consumer Products Group's principal source of cash is semi-annual interest on
the RC/Arby's note. Triarc Consumer Products Group's subsidiaries can pay
dividends or advances to Triarc Consumer Products Group to the extent interest
on the 10 1/4% notes and up to $.2 million of general corporate expenses exceed
the interest income on the RC/Arby's note, but cannot currently pay any other
dividends or advances under the terms of our credit facility.
Triarc Consumer Products Group's cash requirements for the second half of
2000 consist of the August 2000 semi- annual interest payment of $15.4 million
under the 10 1/4% notes and, to a much lesser extent, any general corporate
expenses. Triarc Consumer Products Group expects to meet its cash requirements
for the second half of 2000 through the $15.5 million of interest to be received
in August 2000 on the RC/Arby's note and existing cash of $.1 million.
Snapple Beverage Group Initial Public Offering
Snapple Beverage Group, as restructured (see below), currently intends to
issue an estimated $100.0 million of its common stock in an initial public
offering. These shares will be registered pursuant to a registration statement
on Form S-1 that has been filed with the Securities and Exchange Commission but
which has not yet been declared effective.
Assuming the successful completion of this initial public offering, we
will be restructured. In accordance with the restructuring transactions, Snapple
Beverage Group will be transferred to RC/Arby's, the restaurant franchising
business owned by RC/Arby's will be reclassified as discontinued operations,
RC/Arby's (parent company) and the restaurant franchising business will then be
effectively distributed from Triarc Consumer Products Group to Triarc and, as a
result of a series of transactions, Triarc Consumer Products Group will then
effectively merge into Snapple Beverage Group.
Also assuming the successful completion of the initial public offering,
Snapple Beverage Group will receive an estimated $178.0 million capital
contribution from RC/Arby's, representing the net proceeds of a financing of its
restaurant business. Snapple Beverage Group is also expected to enter into a new
credit facility consisting of up to $195.0 million of term loans and a $50.0
million revolving credit facility. No borrowings under the new revolving credit
facility are expected to occur at the time of the completion of the initial
public offering.
The net proceeds of the initial public offering and the term loan
borrowings under the new credit facility, together with all of the cash and cash
equivalents of RC/Arby's and the restaurant business and all but $2.0 million of
the cash and cash equivalents of Snapple Beverage Group, as restructured, are
expected to be used to (1) repay prior to maturity all outstanding borrowings
under our existing credit facility and accrued interest thereon and (2) pay (a)
prepayment penalties resulting from the prepayment of certain of the outstanding
term loans and (b) fees and expenses relating to the initial public offering and
the consummation of the new credit facility.
The early extinguishment of the borrowings under the existing credit
facility will result in an extraordinary charge at the time the borrowings under
our existing credit facility are repaid prior to maturity for the write-off of
previously unamortized deferred financing costs and the payment of the
aforementioned prepayment penalties, less income tax benefit, which, as of July
2, 2000, would have amounted to $11.6 million.
Legal and Environmental Matters
We are involved in litigation, claims and environmental matters
incidental to our businesses. We have reserves for legal and environmental
matters of $1.7 million as of July 2, 2000. Although the outcome of these
matters cannot be predicted with certainty and some of these matters may be
disposed of unfavorably to us, based on currently available information and
given our reserves, we do not believe that these legal and environmental matters
will have a material adverse effect on our consolidated financial position or
results of operations.
Seasonality
Our beverage and restaurant franchising businesses are seasonal. In our
beverage businesses, the highest revenues occur during the spring and summer,
between April and September. Accordingly, our second and third quarters reflect
the highest revenues and our first and fourth quarters have lower revenues from
the beverage businesses. The royalty revenues of our restaurant franchising
business are somewhat higher in our fourth quarter and somewhat lower in our
first quarter. Accordingly, consolidated revenues will generally be highest
during the second and third fiscal quarters of each year.
Our earnings before interest, taxes, depreciation and amortization and
operating profit are also highest during the second and third fiscal quarters of
each year and lowest in the first fiscal quarter. This principally results from
the higher beverage revenues in the second and third fiscal quarters while
general and administrative expenses and depreciation and amortization, excluding
amortization of deferred financing costs, are generally recorded ratably in each
quarter either as incurred or allocated to quarters based on time expired.
Recently Issued Accounting Pronouncements
In June 1998 the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 "Accounting for Derivative Instruments
and Hedging Activities." Statement 133 provides a comprehensive standard for the
recognition and measurement of derivatives and hedging activities. The standard
requires derivatives be recorded on the balance sheet at fair value and
establishes more restrictive criteria for hedge accounting. Statement 133, as
amended by Statements of Financial Accounting Standards Nos. 137 and 138, is
effective for our fiscal year beginning January 1, 2001.
Although we have not yet completed the process of identifying all of our
derivative instruments, the only derivative which we have currently identified
is an interest rate cap agreement on some of our long-term debt. We historically
have not had transactions to which hedge accounting applied and, accordingly,
the more restrictive criteria for hedge accounting in Statement 133 should have
no effect on our consolidated financial position or results of operations.
However, the provisions of Statement 133 are complex and, accordingly, we are
unable to determine at this time the impact it will have on our consolidated
financial position and results of operations.
In December 1999 the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements."
Bulletin 101 states that revenues generally are realized when (1) persuasive
evidence of an arrangement exists, (2) delivery has occurred or services have
been rendered, (3) the seller's price to the buyer is fixed or determinable, and
(4) collectibility is reasonably assured. Bulletin 101, as amended, must be
implemented no later than our fourth fiscal quarter of 2000. We believe that, in
our beverage businesses, we have historically recognized revenues in accordance
with the criteria set forth in Bulletin 101. As disclosed in the notes to
consolidated financial statements included in our Form 10-K, we record sales
when inventory is shipped or delivered and sales terms generally do not allow a
right of return. In our restaurant franchise business, we record revenues in
accordance with Statement of Financial Accounting Standards No. 45, "Accounting
for Franchise Fee Revenue," which is excluded from the guidance under Bulletin
101. Accordingly, we do not expect that the implementation of Bulletin 101 will
have a material impact on our consolidated financial position or results of
operations.
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
Item 3. Quantitative and Qualitative Disclosures about Market Risk
We are exposed to the impact of interest rate changes and, to a much
lesser extent, foreign currency fluctuations.
Policies and Procedures -- In the normal course of business, we employ
established policies and procedures to manage our exposure to changes in
interest rates and fluctuations in the value of foreign currencies using
financial instruments we deem appropriate.
Interest Rate Risk
Our objective in managing our exposure to interest rate changes is to
limit the impact of interest rate changes on earnings and cash flows. To achieve
our objectives, we assess the relative proportions of our debt under fixed
versus variable rates. We generally use purchased interest rate caps on a
portion of our variable-rate debt to limit our exposure to increases in
short-term interest rates. These cap agreements usually are at significantly
higher than market interest rates prevailing at the time the cap agreements are
entered into and are intended to protect against very significant increases in
short-term interest rates. We currently have one interest rate cap agreement
relating to interest on $233.1 million of our aggregate $438.3 million of
variable-rate term loans under our senior bank credit facility which provides
for a cap which was approximately 1% higher than the prevailing interest rate at
July 2, 2000.
Foreign Currency Risk
Our objective in managing our exposure to foreign currency fluctuations is
also to limit the impact of such fluctuations on earnings and cash flows. We
have a relatively limited amount of exposure to (1) export sales revenues and
related receivables denominated in foreign currencies and (2) investments in
foreign subsidiaries which are subject to foreign currency fluctuations. Our
primary export sales exposures relate to sales in Canada, the Caribbean and
Europe. We monitor these exposures and periodically determine our need for use
of strategies intended to lessen or limit our exposure to these fluctuations.
However, foreign export sales and foreign operations for our most recent full
fiscal year ended January 2, 2000 represented only 5% of our revenues and an
immediate 10% change in foreign currency exchange rates versus the United States
dollar from their levels at January 2, 2000 would not have had a material effect
on our consolidated financial position or results of operations. At the present
time, we do not hedge our foreign currency exposures as we do not believe this
exposure to be material.
Overall Market Risk
With regard to overall market risk, we attempt to mitigate our exposure to
such risks by assessing the relative proportion of our investments in cash and
cash equivalents and the relatively stable and risk-minimized returns available
on such investments. At July 2, 2000, our excess cash was primarily invested in
commercial paper with maturities of less than 90 days and money market funds
which, due to their short-term nature, minimizes our overall market risk.
Sensitivity Analysis
All of our market risk sensitive instruments are instruments entered into
for purposes other than trading. Our measure of market risk exposure represents
an estimate of the potential change in fair value of our financial instruments.
Market risk exposure is presented for each class of financial instruments held
by us at July 2, 2000 for which an immediate adverse market movement represents
a potential material impact on our financial position or results of operations.
We believe that the rates of adverse market movements described below represent
the hypothetical loss to future earnings and do not represent the maximum
possible loss nor any expected actual loss, even under adverse conditions,
because actual adverse fluctuations would likely differ.
The following table reflects the estimated effects on the market value of
our financial instruments as of July 2, 2000 based upon assumed immediate
adverse effects as noted below (in thousands):
July 2, 2000
----------------------
Carrying Interest
Value Rate Risk
----- ---------
Cash equivalents..................................$ 15,411 $ --
Long-term debt.................................... 764,400 4,583
The cash equivalents are short-term in nature with a maturity of three
months or less when acquired and, as such, a change in interest rates of one
percentage point would not have a material impact on our consolidated financial
position or results of operations.
The sensitivity analysis of long-term debt assumes an instantaneous
increase in market interest rates of one percentage point from their levels at
July 2, 2000, with all other variables held constant. The increase of one
percentage point with respect to our long-term debt (1) represents an assumed
average 10% decline in earnings as the weighted average interest rate of our
variable-rate debt at July 2, 2000 approximated 10% and (2) relates only to our
variable-rate debt since a change in interest rates would not affect interest
expense on our fixed-rate debt. Our variable rate debt consists of $438.3
million of our term loans and $20.0 million of revolving loans. The interest
rate risk presented with respect to long-term debt represents the potential
impact the indicated change in interest rates would have on our consolidated
results of operations and not our consolidated financial position.
<PAGE>
Part II. Other Information
This Quarterly Report on Form 10-Q contains or incorporates by
reference certain statements that are not historical facts, including, most
importantly, information concerning possible or assumed future results of
operations of Triarc Consumer Products Group, LLC and its subsidiaries
(collectively, "TCPG" or "the Company") and statements preceded by, followed by
or that include the words "may," "believes," "expects," "anticipates," or the
negation thereof, or similar expressions, which constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995 (the "Reform Act"). All statements which address operating performance,
events or developments that are expected or anticipated to occur in the future,
including statements relating to volume and revenue growth or statements
expressing general optimism about future operating results, are forward-looking
statements within the meaning of the Reform Act. These forward-looking
statements are based on our expectations and are susceptible to a number of
risks, uncertainties and other factors and our actual results, performance or
achievements may differ materially from any future results, performance or
achievements expressed or implied by such forward-looking statements. For those
statements, we claim the protection of the safe harbor for forward-looking
statements contained in the Reform Act. Many important factors could affect our
future results and could cause those results to differ materially from those
expressed in the forward-looking statements contained herein. Such factors
include, but are not limited to, the following: competition, including product
and pricing pressures; success of operating initiatives; the ability to attract
and retain customers; development and operating costs; advertising and
promotional efforts; brand awareness; the existence or absence of positive or
adverse publicity; market acceptance of new product offerings; new product and
concept development by competitors; changing trends in consumer tastes and
demographic patterns; the success of multi-branding; availability, location and
terms of sites for restaurant development by franchisees; the ability of
franchisees to open new restaurants in accordance with their development
commitments, including the ability of franchisees to finance restaurant
development; the performance by material customers of their obligations under
their purchase agreements; changes in business strategy or development plans;
quality of management; availability, terms and deployment of capital; business
abilities and judgment of personnel; availability of qualified personnel; labor
and employee benefit costs; availability and cost of raw materials, ingredients
and supplies; the potential impact on franchisees' store level sales and
resulting royalty revenues that could arise from interruptions in the
distribution of supplies of food and other products to franchisees; general
economic, business and political conditions in the countries and territories
where the Company operates, including the ability to form successful strategic
business alliances with local participants; changes in, or failure to comply
with, government regulations, including franchising laws, accounting standards,
environmental laws and taxation requirements; the costs, uncertainties and other
effects of legal and administrative proceedings; the impact of general economic
conditions on consumer spending; and other risks and uncertainties affecting the
Company and its subsidiaries detailed in our other current and periodic reports
filed with the Securities and Exchange Commission, all of which are difficult or
impossible to predict accurately and many of which are beyond our control. We
will not undertake and specifically decline any obligation to publicly release
the results of any revisions which may be made to any forward-looking statements
to reflect events or circumstances after the date of such statements or to
reflect the occurrence of anticipated or unanticipated events. In addition, it
is our policy generally not to make any specific projections as to future
earnings, and we do not endorse any projections regarding future performance
that may be made by third parties.
Item 5. Other Information
On June 27, 2000 the Company's subsidiary, Snapple Beverage Group,
Inc., filed with the Securities and Exchange Commission a registration statement
for an initial public offering ("IPO") of its common stock. Snapple Beverage
Group will own the Company's premium beverage business (Snapple(R), Mistic(R),
and Stewart's(R)) and its soft drink concentrates business (Royal Crown(R), Diet
Rite(R), RC Edge(TM), and Nehi(R)). Snapple Beverage Group plans to list its
shares on the New York Stock Exchange under the symbol "SNP" and expects to
complete the offering during the third quarter of 2000, subject to market
conditions and other factors. Net proceeds from the offering are expected to be
used to repay debt under an existing credit facility.
The offering which will be made only by a prospectus, will be
underwritten by a syndicate to be lead-managed by Morgan Stanley Dean Witter and
co-managed by Donaldson, Lufkin & Jenrette, ING Barings and Lehman Brothers.
A registration statement relating to these securities has been filed
with the Securities and Exchange Commission, but has not yet become effective.
These securities may not be sold nor may offers to buy be accepted prior to the
time the registration statement becomes effective. This Quarterly Report on Form
10-Q shall not constitute an offer to sell or the solicitation of an offer to
buy nor shall there be any sale of these securities in any state in which such
offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such state.
There can be no assurance that the Securities and Exchange Commission
will declare the registration statement effective or that the proposed IPO will
be consummated.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 - Amendment No. 2 to Triarc Beverage Holdings Corp. 1997 Stock
Option Plan.
27.1 - Financial Data Schedule for the six-month period ended
July 2, 2000, submitted to the Securities and Exchange
Commission in electronic format.
27.2 - Financial Data Schedule for the six-month period ended
July 4, 1999, on a restated basis, submitted to the
Securities and Exchange Commission in electronic format.
(b) Reports on Form 8-K
None
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements 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.
TRIARC CONSUMER PRODUCTS GROUP, LLC
(Registrant)
Date: August 16, 2000 By: /S/ JOHN L. BARNES, JR.
---------------------------
John L. Barnes, Jr.
Executive Vice President and
Chief Financial Officer
(On behalf of the Company)
By: /S/ FRED H. SCHAEFER
------------------------
Fred H. Schaefer
Vice President and
Chief Accounting Officer
(Principal accounting officer)
<PAGE>
Exhibit Index
Exhibit
No. Description Page No.
--------- ----------- --------
10.1 - Amendment No. 2 to Triarc Beverage Holdings
Corp. 1997 Stock Option Plan.
27.1 - Financial Data Schedule for the six-month
period ended July 2, 2000, submitted to the
Securities and Exchange Commission in electronic
format.
27.2 - Financial Data Schedule for the six-month period
ended July 4, 1999, on a restated basis, submitted
to the Securities and Exchange Commission in
electronic format.
