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 March 31, 1996
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: 1-2207
TRIARC COMPANIES, INC.
(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.)
900 Third Avenue, New York, New York 10022
(Address of principal executive offices) (Zip code)
(212) 230-3000
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year,
if it 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
There were 23,920,052 shares of the registrant's Class A Common Stock
and 5,997,622 shares of the registrant's Class B Common Stock outstanding
as of April 30, 1996.
<PAGE>
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
TRIARC COMPANIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, March 31,
1995 (A) 1996
-------- -----
(In thousands)
ASSETS (Unaudited)
<C> <S> <S>
Current assets:
Cash and cash equivalents $ 64,205 $ 41,000
Restricted cash and cash equivalents 34,033 2,994
Marketable securities 7,397 444
Receivables, net 168,534 184,740
Inventories 118,549 125,737
Deferred income tax benefit 8,848 9,003
Prepaid expenses and other current assets 11,262 11,193
----------- -----------
Total current assets 412,828 375,111
Properties, net 331,589 326,570
Unamortized costs in excess of net assets of acquired
companies 227,825 225,528
Trademarks 57,146 56,146
Deferred costs and other assets 56,578 53,837
----------- -----------
$1,085,966 $1,037,192
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 83,531 $ 44,255
Accounts payable 61,908 60,050
Accrued expenses 109,119 107,075
----------- -----------
Total current liabilities 254,558 211,380
Long-term debt 763,346 757,387
Deferred income taxes 24,013 23,417
Deferred income and other liabilities 23,399 24,210
Stockholders' equity (deficit):
Common stock 3,398 3,398
Additional paid-in capital 162,020 161,464
Accumulated deficit (97,923) (97,525)
Treasury stock (45,931) (45,911)
Other (914) (628)
----------- -----------
Total stockholders' equity 20,650 20,798
----------- -----------
$1,085,966 $1,037,192
=========== ===========
(A)Derived from the audited consolidated financial statements as of December 31, 1995.
</TABLE>
<TABLE>
<CAPTION>
TRIARC COMPANIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED INCOME STATEMENTS
Three months ended
March 31,
----------------------
1995 1996
(In thousands except per share amounts)
(Unaudited)
<S> <C> <C>
Revenues:
Net sales $ 285,811 $ 316,441
Royalties, franchise fees and other revenues 12,182 12,452
----------- -----------
297,993 328,893
----------- -----------
Costs and expenses:
Cost of sales 212,947 235,923
Advertising, selling and distribution 27,962 32,508
General and administrative 32,343 35,042
----------- -----------
273,252 303,473
----------- -----------
Operating profit 24,741 25,420
Interest expense (18,757) (22,141)
Other income, net 6,814 1,238
----------- -----------
Income before income taxes and extraordinary
charge 12,798 4,517
Provision for income taxes (6,079) (2,732)
----------- -----------
Income before extraordinary charge 6,719 1,785
Extraordinary charge -- (1,387)
----------- -----------
Net income $ 6,719 $ 398
=========== ===========
Income per share:
Primary:
Income before extraordinary charge $ .23 $ .06
Extraordinary charge -- (.05)
----------- -----------
Net income $ .23 $ .01
=========== ===========
Fully diluted:
Income before extraordinary charge and net
income $ .22
===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TRIARC COMPANIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended
March 31,
---------------------
1995 1996
----- -----
(In thousands)
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 6,719 $ 398
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization of properties 9,099 9,951
Amortization of costs in excess of net assets
of acquired companies 1,841 2,297
Amortization of original issue discount and
deferred financing costs 1,763 2,023
Amortization of trademarks, unearned
compensation and other 2,699 1,322
Write-off of deferred financing costs and
original issue discount -- 2,134
Provision for doubtful accounts 784 1,392
Deferred income tax provision (benefit) 1,267 (751)
Gain on sales of non-core businesses and
properties (2,230) (199)
Other, net (303) 769
Changes in operating assets and liabilities:
Decrease (increase) in:
Restricted cash and cash equivalents 292 31,039
Receivables (23,335) (17,598)
Inventories 778 (7,188)
Prepaid expenses and other current assets 1,390 69
Decrease in accounts payable and accrued
expenses (15,303) (3,592)
----------- -----------
Net cash provided by (used in) operating
activities (14,539) 22,066
----------- -----------
Cash flows from investing activities:
Capital expenditures (15,969) (4,956)
Acquisitions (9,352) --
Purchase of marketable securities (2,289) (2,984)
Proceeds from sales of marketable securities 2,449 9,946
Proceeds from sales of non-core businesses and
properties 2,969 387
Other -- (17)
----------- -----------
Net cash provided by (used in) investing
activities (22,192) 2,376
----------- -----------
Cash flows from financing activities:
Repayments of long-term debt (15,483) (51,354)
Proceeds from long-term debt -- 3,959
Other (1,319) --
----------- -----------
Net cash used in financing activities (16,802) (47,395)
----------- -----------
Net cash used in continuing operations (53,533) (22,953)
Net cash used in discontinued operations (1,239) (252)
----------- -----------
Net decrease in cash and cash equivalents (54,772) (23,205)
Cash and cash equivalents at beginning of
period 80,064 64,205
----------- -----------
Cash and cash equivalents at end of period $ 25,292 $ 41,000
=========== ===========
</TABLE>
</PAGE>
TRIARC COMPANIES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
March 31, 1996
(Unaudited)
(1)Basis of Presentation
The accompanying unaudited condensed consolidated financial
statements of Triarc Companies, Inc. ("Triarc" and, together with its
subsidiaries, the "Company") have been prepared in accordance with Rule
10-01 of Regulation S-X promulgated by the Securities and Exchange
Commission 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 December 31,
1995 and March 31, 1996 and its results of operations and cash flows for
the three-month periods ended March 31, 1995 and 1996. 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 year ended December 31, 1995 ("Form 10-K").
Certain amounts included in the prior period's condensed consolidated
financial statements have been reclassified to conform with the current
period's presentation.
(2)Inventories
The following is a summary of the components of inventories:
<TABLE>
<CAPTION>
December 31, March 31,
1995 1996
---- ----
(In thousands)
<S> <C> <C>
Raw materials $ 40,195 $ 42,476
Work in process 6,976 7,979
Finished goods 71,378 75,282
----------- ----------
$ 118,549 $ 125,737
=========== ==========
</TABLE>
(3)Properties
The following is a summary of the components of properties, net:
<TABLE>
<CAPTION>
December 31, March 31,
1995 1996
---- ----
(In thousands)
<S> <C> <C>
Properties, at cost $ 556,390 $ 560,135
Less accumulated depreciation and amortization 224,801 233,565
---------- ----------
$ 331,589 $ 326,570
========== ==========
</TABLE>
(4)Extraordinary Charge
In connection with the February 22, 1996 early extinguishment of
the Company's 11 7/8% senior subordinated debentures due February 1,
1998, the Company recognized an extraordinary charge of $1,387,000
consisting of the write-off of $358,000 of unamortized deferred
financing costs and $1,776,000 of unamortized original issue discount,
net of income tax benefit of $747,000.
(5)Income Per Share
The number of common shares used in the calculations of primary and
fully diluted income per share were as follows:
<TABLE>
<CAPTION>
Three months ended
March 31,
1995 1996
----- -----
(In thousands)
<S> <C> <C>
Weighted average number of common shares
outstanding 29,318 29,916
Common equivalent shares - effect of
dilutive stock options 14 368
--------------------------
Common and common equivalent shares for
primary per share purposes 29,467 30,284
--------------------------
Contingent issuances of common shares:
Effect of common shares issued upon the
conversion of preferred stock assuming
conversion as of the beginning of the
period 499 --
Additional effect of dilutive stock
options 26 --
--------------------------
525 --
--------------------------
Common, common equivalent and contingent
shares for fully diluted per share
purposes 29,992 30,284
==========================
</TABLE>
Fully diluted income per share is not applicable for the three months
ended March 31, 1996 since there are no contingent shares.
(6)Transactions with Related Parties
The Company continues to have related party transactions of the
same nature and general magnitude as those described in Note 29 to the
consolidated financial statements contained in the Form 10-K.
(7)Contingencies
The Company continues to have legal and environmental contingencies
of the same nature and general magnitude as those described in Note 26
to the consolidated financial statements contained in the Form 10-K.
After considering amounts provided in previous periods, the Company does
not believe that these contingencies, as well as ordinary routine
litigation, will have a material adverse effect on its consolidated
financial position or results of operations.
(8)Business Acquisitions
On August 9, 1995 Mistic Brands, Inc. ("Mistic"), a wholly-owned
subsidiary of Triarc, acquired (the "Mistic Acquisition") substantially
all of the assets and operations, subject to related operating
liabilities, as defined, of certain companies (the "Acquired Business")
which develop, market and sell carbonated and non-carbonated fruit
drinks, ready-to-drink brewed iced teas and naturally flavored sparkling
water. See Note 28 to the consolidated financial statements contained
in the Form 10-K for a more complete discussion of the Mistic
Acquisition.
The results of operations of the Acquired Business have been
included in the accompanying condensed consolidated income statements
from the date of acquisition. The following unaudited supplemental pro
forma information of the Company for the three months ended March 31,
1995 gives effect to the Mistic Acquisition and related financing as if
the transactions had been consummated on January 1, 1995. The unaudited
supplemental pro forma condensed financial information is presented for
comparative purposes only and does not purport to be indicative of the
actual results of operations had the Mistic Acquisition actually been
consummated on January 1, 1995 or of the future results of operations of
the combined company and are as follows (in thousands except per share
amount):
Revenues $ 326,853
Operating profit 26,138
Net income 5,993
Fully diluted net income per share .20
(9)Business Dispositions
Textile Business
On April 29, 1996, the Company and Graniteville Company
("Graniteville"), a wholly-owned subsidiary of the Company, closed an
asset purchase agreement with Avondale Mills, Inc. and Avondale
Incorporated (collectively, "Avondale"), pursuant to which Triarc and
Graniteville sold to Avondale (the "Graniteville Sale") the Company's
textiles business segment other than the assets and operations of C.H.
Patrick & Co., Inc. ("C.H. Patrick"), Graniteville's wholly-owned
subsidiary, and certain other excluded assets and liabilities (the
"Textile Business"), for $257,269,000 in cash, subject to certain post-
closing adjustments. Avondale assumed all liabilities relating to the
Textile Business, other than income taxes, long-term debt of
($207,110,000 as of March 31, 1996) which was repaid at the closing and
certain other specified liabilities. In connection with the
Graniteville Sale, Avondale and C.H. Patrick have entered into a 10-year
supply agreement pursuant to which C.H. Patrick has an opportunity to
supply textile dyes and chemicals to the combined Graniteville/Avondale
business. Due to changes in the balances of assets and liabilities sold
or assumed through the April 29, 1996 closing date, and since such
amounts are subject to post-closing adjustments, the actual impact of
the sale cannot be determined. Based on current estimates, however, the
impact of this sale is expected to result in earnings effects ranging
from breakeven to a pre-tax loss of less than $10,873,000 (the estimated
pre-tax loss based on December 31, 1995 balances as reported in a Form
8-K filed on May 14, 1996). The early prepayment of Graniteville's
long-term debt, including the Graniteville credit facility, will result
in an extraordinary charge for the writeoff of unamortized deferred
financing costs, payment of minimum commissions through April 1999 under
the Graniteville credit facility, prepayment penalties and certain other
costs, net of income tax benefit, of $7,400,000 which will be recorded
in the second quarter of 1996.
The results of operations of the Textile Business have been
included in the accompanying condensed consolidated income statements
for the three-month periods ended March 31, 1995 and 1996 and will
continue to be reported in the Company's results of operations through
the April 29, 1996 date of sale. The following unaudited supplemental
pro forma condensed consolidated summary operating data of the Company
for the three-month period ended March 31, 1996 gives effect to the sale
of the Textile Business and the repayment of related debt as if such
transactions had been consummated as of January 1, 1996. Such pro forma
information does not purport to be indicative of the Company's actual
results of operations had such transactions actually been consummated on
January 1, 1996 or of the Company's future financial position or results
of operations and are as follows (in thousands except per share amount):
Revenues $ 202,697
Operating profit 21,070
Income before extraordinary charge 2,691
Income before extraordinary charge per share .09
Propane
On March 13, 1996 National Propane Partners, L.P. (the
"Partnership") was organized to acquire, own and operate the Company's
propane business. On May 14, 1996, the Partnership filed Amendment No.
1 to a Registration Statement on Form S-1 with the Securities and
Exchange Commission with respect to an initial public offering of
6,190,476 of its limited partner interest common units, representing
51.8% of the Partnership, for an aggregate offering price, net of
expenses, of $118,200,000 (the "Offering"). The sale of such limited
partner interests, if consummated, is expected to result in a gain to
the Company, the amount of which cannot presently be determined. The
Partnership will concurrently issue 5,283,809 subordinated units,
representing 44.2% of the Partnership, as well as an aggregate 4%
unsubordinated general partner interest in the Partnership to wholly-
owned subsidiaries of the Company. Assuming consummation of the
Offering, the Company will transfer substantially all of its propane-
related assets and liabilities (other than a receivable from Triarc,
deferred financing costs and net deferred income tax liabilities of
$81,392,000, $4,410,000 and $21,416,000, respectively, at March 31,
1996) to the Partnership. In connection therewith, the Partnership will
issue $120,000,000 of first mortgage notes to institutional investors
and repay all of its outstanding borrowings under the existing National
Propane bank facility ($127,312,000 as of March 31, 1996). The early
prepayment of the existing National Propane bank facility will result in
an extraordinary charge for the writeoff of unamortized deferred
financing costs, net of income tax benefit, which as of March 31, 1996
would have amounted to approximately $2,666,000. There can be no
assurances, however, that the Company will be able to consummate these
transactions.
<PAGE>
TRIARC COMPANIES, INC. 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 "Item 7. -
Management's Discussion and Analysis of Financial Condition and Results
of Operations" in the Annual Report on Form 10-K for the year ended
December 31, 1995 ("Form 10-K") of Triarc Companies, Inc. ("Triarc" or,
collectively with its subsidiaries, the "Company"). The recent trends
affecting the Company's four business segments are described therein.
Certain statements under this caption constitute "forward-looking
statements" under the Private Securities Litigation Reform Act of 1995.
See "Item 5- Other Information".
RESULTS OF OPERATIONS
Three Months Ended March 31, 1996 Compared with Three Months Ended March
31, 1995
<TABLE>
Revenues Operating Profit
Three months ended Three months ended
March 31, March 31,
1995 1996 1995 1996
----- ----- ----- -----
(In thousands)
<S> <C> <C> <C> <C>
Restaurants $ 57,114 $ 67,096 $2,022 $ 2,176
Beverages 45,516 70,322 4,681 5,474
Propane 50,307 59,981 10,521 12,224
Textiles 145,056 131,494 8,932 5,544
Unallocated general
corporate expenses -- -- (1,415)(a) 2
---------- ------------------- ---------
$297,993 $328,893 $24,741 $25,420
========== =================== =========
</TABLE>
(a) Includes a $1,691,000 charge for accelerated
vesting of restricted stock of three
directors who did not stand for re-election
in 1995.
Revenues increased $30.9 millon to $328.9 million in the three
months ended March 31, 1996.
Restaurants - Revenues increased $10.0 million
(17.5%) principally due to an average net increase of
68 (22.5%) additional company-owned restaurants and a
2.2% increase in company-owned same-store sales.
Beverages - Revenues increased $24.8 million (54.5%)
due to (i) $25.9 million of revenues from Mistic
Brands, Inc. ("Mistic"), the Company's new
age/premium beverage business acquired August 9, 1995
and (ii) a $2.0 million increase in finished beverage
product sales (as opposed to concentrate) due to the
inclusion of a full quarter's sales in the 1996
period from Tribev Corporation ("Tribev"), which was
acquired in January 1995 (collectively, the "Acquired
Beverage Operations"), both partially offset by a
$2.9 million volume decrease in private label
concentrate sales as the Company's private label
customer reduced its worldwide inventories.
Propane - Revenues increased $9.7 million (19.2%) due
to higher volume primarily resulting from the
significantly colder winter in virtually all markets
where the propane segment has operations and, to a
lesser extent, the pass-through of higher propane
costs.
Textiles - As discussed further below in "Liquidity
and Capital Resources", on April 29, 1996 the Company
and Graniteville Company ("Graniteville"), a wholly-
owned subsidiary of the Company, sold the textile
business segment other than the assets and operations
of C.H. Patrick & Co., Inc. ("C.H. Patrick"),
Graniteville's wholly-owned subsidiary, and certain
other excluded assets and liabilities (the "Textile
Business"). Revenues of the Textile Business
decreased $13.4 million (9.9%) principally reflecting
lower sales of utility wear ($14.6 million),
specialty products ($6.0 million) and piece-dyed
sportswear ($2.3 million), all partially offset by
higher sales of indigo-dyed sportswear ($9.5
million). The decreases overall reflect lower volume
due to (i) weak demand for utility wear and piece-
dyed sportswear and (ii) cutbacks in government
purchases of tents for which the textile segment
manufactures fabric. Revenues of C.H. Patrick to
third parties decreased $0.2 million (1.9%) to $10.5
million in the three months ended March 31, 1996.
Gross profit (total revenues less cost of sales) increased $7.9
million to $93.0 million in the three months ended March 31, 1996 due to
the inclusion of (i) Mistic ($10.0 million) and (ii) Tribev for a full
quarter in 1996 ($0.6 million) partially offset by lower overall gross
margins in the existing businesses.
Restaurants - Margins decreased to 30.5% from 33.9%
due primarily to (i) higher lease costs related to a
new point-of-sale register system installed in
domestic company-owned restaurants in the latter half
of 1995, (ii) increased payroll costs as a percentage
of net sales resulting from higher fringe benefit
costs and training of personnel in connection with
Roast Town and multi-brand store conversions and
(iii) the lower percentage of royalties, franchise
fees and other revenues to total revenues, all
partially offset by a reduction in food costs as a
percentage of net sales.
Beverages - Margins decreased to 54.2% from 67.3% due
to the inclusion in the 1996 period of the lower-
margin finished product sales associated with Mistic
(38.6%) and Tribev (7.9%).
Propane - Margins decreased to 31.4% from 32.7% due
to a shift in customer mix toward lower-margin
commercial accounts.
Textiles - Margins decreased to 11.8% from 12.8%
principally due to (i) competitive pricing pressures
at C.H. Patrick, (ii) the effects at the Textile
Business of a one-week plant shutdown in the first
quarter of 1996 for inventory reduction purposes and
(iii) general inflationary cost increases.
Advertising, selling and distribution expenses increased $4.5
million to $32.5 million in the three months ended March 31, 1996 due to
$5.5 million of expenses related to the Acquired Beverage Operations.
General and administrative expenses increased $2.7 million to $35.0
million in the three months ended March 31, 1996 due to $3.9 million of
expenses related to the Acquired Beverage Operations.
Interest expense increased $3.4 million to $22.1 million in the
three months ended March 31, 1996 due to higher average levels of debt
reflecting the Mistic acquisition and financing for higher capital
spending at the restaurant segment partially offset by slightly lower
interest rates on certain of the Company's floating-rate debt.
Other income, net decreased $5.6 million to $1.2 million in the
three months ended March 31, 1996. Such decrease principally resulted
from non-recurring income in the 1995 quarter including (i) $2.3 million
related to a January 1995 settlement agreement with Victor Posner, (ii)
a $1.9 million gain on insurance recovery relating to fire-damaged
equipment and (iii) a $1.2 million gain on the sale of timberland.
The provisions for income taxes in the three months represent the
annual effective tax rates of 60% and 47% estimated as of March 31, 1996
and 1995, respectively, which are higher than the Federal income tax
statutory rate of 35% principally due to the effects of amortization of
nondeductible costs in excess of net assets of acquired companies. Such
effect is significantly lower in the 1995 quarter due to 1995 full year
pretax income estimates as of March 31, 1995 being greater than the
actual results for the full year 1995 or which are anticipated for 1996.
The extraordinary charge in the 1996 period results from the early
extinguishment of debt in February 1996 comprised of the writeoff of
unamortized deferred financing costs of $0.4 million and original issue
discount of $1.8 million, both net of income tax benefit of $0.8
million.
LIQUIDITY AND CAPITAL RESOURCES
Consolidated cash and cash equivalents (collectively, "cash")
decreased $23.2 million during the three months ended March 31, 1996 to
$41.0 million primarily reflecting cash provided by (i) operating
activities of $22.1 million and (ii) investing activities of $2.4
million more than offset by cash used in financing activities of $47.4
million. The net cash provided by operating activities principally
reflects net income of $0.4 million, non-cash charges for (i)
depreciation and amortization of $15.6 million and (ii) the write-off of
deferred financing costs and original issue discount of $2.1 million
(see below) and changes in operating assets and liabilities of $3.4
million. The changes in operating assets and liabilities reflected a
decrease in restricted cash and cash equivalents of $31.0 million (see
below) partially offset by increases in receivables of $17.6 million and
inventories of $7.2 million. The increase in receivables reflected
increased consolidated revenues in the first quarter of 1996 compared
with the last quarter of 1995 and slower collections at Royal Crown
Company, Inc. ("Royal Crown"), a wholly-owned subsidiary of RC/Arby's
Corporation ("RCAC"), a wholly-owned subsidiary of Triarc, in the 1996
quarter. The increase in inventories reflected higher textile
inventories resulting from lower sales in the first quarter of 1996
compared with the last quarter of 1995. The Company expects continued
positive cash flows from operations during the remainder of 1996. The
net cash provided by investing activities principally reflected net
proceeds from sales of marketable securities of $7.0 million (see below)
partially offset by capital expenditures of $5.0 million. The net cash
used in financing activities consists of long-term debt repayments of
$51.4 million partially offset by borrowings of $4.0 million.
On February 22, 1996 the Company repaid its 11 7/8% senior
subordinated debentures due February 1, 1998 (the "11 7/8% Debentures")
which had outstanding principal at that date of $36.0 million (carrying
value of $34.2 million net of original issue discount of $1.8 million).
The cash for such redemption came from (i) $30.0 million of borrowings
in December 1995 under the bank facility of National Propane Corporation
("National Propane"), an indirect wholly-owned subsidiary of Triarc, the
proceeds of which had been classified as restricted cash at December 31,
1995 as they were restricted to the redemption of the 11 7/8%
Debentures, (ii) liquidation of $7.0 million of marketable securities
and (iii) existing cash balances. In connection therewith, the Company
wrote off an aggregate $2.2 million of unamortized deferred financing
costs and unamortized original issue discount (net of income tax benefit
of $0.8 million).
On April 29, 1996, the Company and Graniteville closed an asset
purchase agreement with Avondale Mills, Inc. and Avondale Incorporated
(collectively, "Avondale"), pursuant to which Triarc and Graniteville
sold to Avondale (the "Graniteville Sale") the Textile Business for
$257.3 million in cash, subject to certain post-closing adjustments.
Avondale assumed all liabilities relating to the Textile Business, other
than income taxes, long-term debt ($207.1 million as of March 31, 1996)
which was repaid at the closing and certain other specified liabilities.
Pending the finalization of post-closing adjustments, the Graniteville
Sale is expected to result in net cash proceeds of between $35.0 million
and $45.0 million after expenses and income taxes to be paid in cash.
The discussion below sets forth the liquidity and capital resources of
the remaining operations of the Company excluding the Textile Business.
Consolidated capital expenditures, including capital leases,
amounted to $5.2 million for the first quarter of 1996. The Company
expects that capital expenditures during the remainder of 1996 will
approximate $27.0 million. These anticipated expenditures are
principally in the restaurant segment in furtherance of its business
strategies, principally for the conversion of existing company-owned
restaurants to Roast Town and multi-brand concept restaurants and, to a
lesser extent, construction of new restaurants. As of March 31, 1996
there were approximately $4.9 million of outstanding commitments for
capital expenditures including amounts required to be reinvested in
"core business assets" at RCAC on or before May 31, 1996. The Company
anticipates that it will meet its capital expenditure requirements
through existing cash, cash flows from operations, leasing arrangements
and, to the extent such capital expenditures relate to the restaurant
segment, also through borrowings under mortgage and equipment note
financing agreements (the "FFCA Loan Agreements") entered into by Arby's
Restaurant Development Corporation ("ARDC") and Arby's Restaurant
Holding Company ("ARHC"), wholly-owned subsidiaries of RCAC.
Under the Company's various credit arrangements, which are described
in detail in Note 15 to the consolidated financial statements contained
in the Form 10-K, the Company has the following availability. At March
31, 1996 Mistic had $14.2 million available under its bank facility and
National Propane had $13.9 million available under its bank facility but
such amount was restricted to acquisitions. In addition, ARDC and ARHC
had $27.6 million available to finance new company-owned restaurants
whose sites are identified to the lender by April 30, 1996 on terms
similar to those of outstanding borrowings. However, as of April 30,
1996, only three additional restaurant sites had been identified for
future funding estimated to aggregate approximately $2.3 million. In
addition to the above, the Company is in the process of finalizing a
$50.0 million revolving and term loan facility at C.H. Patrick, of which
approximately $36.0 million is expected to be initially borrowed. See
"Proposed Transactions" below.
Under the Company's various debt agreements substantially all of
Triarc's and its subsidiaries' assets are pledged as security. In
addition, obligations under the 9 3/4% Senior Notes have been guaranteed
by RCAC's wholly-owned subsidiaries, Royal Crown and Arby's, Inc.
("Arby's") and obligations under National Propane's bank facility,
Mistic's bank facility and $22.1 million of borrowings under the FFCA
Loan Agreements have been guaranteed by Triarc. As collateral for such
guarantees, all of the stock of Royal Crown, Arby's, National Propane
and Mistic is pledged.
The Company's remaining debt instruments require aggregate principal
payments of $28.5 million during the remainder of 1996, consisting of
$9.6 million of payments under National Propane's bank facility, $8.6
million of payments under Mistic's bank facility, and $5.3 million under
Triarc's 9 1/2% note payable (see below) and $5.0 million of payments of
other debt.
In furtherance of the Company's growth strategy, the Company will
consider selective acquisitions, as appropriate, to build and strengthen
its existing businesses to the extent it has available resources to do
so. In January 1996, Arby's and T.J. Cinnamons, Inc., an operator and
franchisor of retail bakeries specializing in gourmet cinnamon rolls and
related products, reached an agreement in principle through which Arby's
will purchase the trademarks, service marks, recipes and secret formulas
of T.J. Cinnamons for a purchase price of $3.5 million, consisting of an
initial cash outlay of approximately $1.8 million and the balance in the
form of a note. Closing is expected to occur later in the second or in
the third quarter of 1996, subject to execution of a definitive
agreement and other customary closing conditions. There can be no
assurance, however, that the purchase will be consummated.
The Federal income tax returns of the Company have been examined by
the Internal Revenue Service ("IRS") for the tax years 1985 through
1988. The Company has resolved all but one issue related to such audit
which it is contesting at the Appellate Division of the IRS and expects
to resolve in 1996 for an amount not to exceed $5.0 million. The IRS is
currently finalizing its examination of the Company's Federal income tax
returns for the tax years from 1989 through 1992 and has issued notices
of proposed adjustments increasing taxable income by approximately
$145.0 million, the tax effect of which has not yet been determined.
The Company is contesting the majority of the proposed adjustments and,
accordingly, the amount and timing of any payments required as a result
thereof cannot presently be determined. However, management of the
Company does not believe the resolution of the 1989 through 1992
examination will be finalized in 1996 and, accordingly no tax payments
will be required in 1996.
As of March 31, 1996 the Company's principal cash requirements for
the remainder of 1996 consist principally of capital expenditures of
approximately $27.0 million and debt principal payments aggregating
$28.5 million. The Company anticipates meeting such requirements
through existing cash, restricted cash and marketable securities, net
cash proceeds from the Graniteville Sale, cash flows from operations,
borrowings available under Mistic's credit facility, borrowings under
the FFCA Loan Agreements (restricted to financing new company-owned
restaurants), financing a portion of its capital expenditures through
capital lease arrangements. Further, as a result of the Graniteville
Sale and the "Proposed Transactions" (see subsequent discussion), if
consummated, the Company would have adequate cash resources to meet its
cash requirements for 1996.
Triarc
Triarc is a holding company whose ability to meet its cash
requirements is primarily dependent upon cash flows from its
subsidiaries including loans and cash dividends and reimbursement by
subsidiaries to Triarc in connection with the providing of certain
management services and payments under certain tax sharing agreements
with certain subsidiaries.
Under the terms of the various indentures and credit arrangements,
Triarc's principal subsidiaries, other than C.H. Patrick after the April
29, 1996 sale of the Textile Business, are unable to pay any dividends
or make any loans or advances to Triarc in 1996.
As of December 31, 1995 Triarc had outstanding external indebtedness
consisting of a $37.7 million 9 1/2% note. In addition, Triarc owed
subsidiaries an aggregate principal amount of $219.9 million of which
$112.4 million payable to Graniteville will be cancelled effective April
29, 1996. In connection with all of such debt, the only principal
payments required during the remainder of 1996 are $5.3 million on the 9
1/2% note referred to above. As of December 31, 1995 Triarc had notes
receivable from RCAC and its subsidiaries in the aggregate amount of
$26.3 million of which $19.6 million are due on demand and $6.7 million
are due in 1998.
Triarc expects its significant cash requirements for 1996 will be
limited to general corporate expenses including cash used in operations,
$5.3 million of principal payments on the 9 1/2% note referred to above,
cash requirements for its facilities relocation and corporate
restructuring accruals of $2.2 million, up to $3.9 million of advances
to affiliates under loan agreements and loans to RCAC as necessary.
Triarc believes that its expected sources of cash, principally cash on
hand of $16.7 million as of March 31, 1996, advances of net cash
proceeds from the Graniteville Sale, reimbursement of general corporate
expenses from subsidiaries in connection with management services
agreements and net payments received under tax sharing agreements with
certain subsidiaries, will be sufficient to enable it to meet its short-
term cash needs.
As a result of the consummation of the Graniteville Sale and
subsequent to the consummation of the offering to sell 51.8% of a
partnership formed to acquire, own and operate the Company's propane
business (see "Proposed Transactions" below), payments received under
tax sharing agreements and the reimbursement of general corporate
expenses by the Textile Business will be eliminated and by National
Propane and the partnership will be limited. Triarc expects to
compensate for such lower cash availability through the proceeds of such
transactions, reductions in corporate expenses, management fees and
tax-sharing payments from C.H. Patrick (which heretofore were a
component of the payments from the Textile Business), distributions, if
any, from the Partnership (see "Proposed Transactions" below) and other
financing sources to the extent obtainable.
RCAC
As of March 31, 1996, RCAC's cash requirements for the remainder of
1996, consist principally of capital expenditures of approximately $22.0
million, funds for the pending acquisition of certain assets of T.J.
Cinnamons and additional acquisitions, if any, principal payments on
debt to third parties of $5.2 million and any requirement to pay Triarc
under a $19.6 million note due on demand. RCAC anticipates meeting such
requirements through existing cash and/or cash flows from operations,
borrowings under the FFCA Loan Agreements, capital lease arrangements,
and borrowings from Triarc, to the extent available. RCAC may seek
additional borrowings in the event that cash generated from the above
sources is not sufficient to fund its capital expenditure requirements.
Mistic
As of March 31, 1996, Mistic's principal cash requirements for the
remainder of 1996, consist principally of $8.6 million of payments under
its bank facility, a payment of approximately $3.3 million in settlement
of certain distributor litigation in April 1996 and $0.4 million of
capital expenditures. Mistic anticipates meeting such requirements
through cash flows from operations and, if necessary, borrowings of up
to $14.2 million availability under its bank facility.
National Propane
As of March 31, 1996, National Propane's principal cash requirements
for the remainder of 1996 consist principally of capital expenditures of
approximately $1.8 million, debt principal repayments of $9.6 million
and funding for acquisitions, if any. National Propane anticipates
meeting such requirements through cash flows from operations and
available borrowings, if any, under its bank facility. Should National
Propane's cash resources be insufficient to meet its cash requirements,
National Propane may need to reduce its capital expenditures, negotiate
relief under its bank facility or arrange for alternative financing from
Triarc. (See "Proposed Transactions" below).
Proposed Transactions
On March 13, 1996 National Propane Partners, L.P. (the
"Partnership") was organized to acquire, own and operate the Company's
propane business which, prior thereto, was operated by National Propane,
an indirect wholly-owned subsidiary of the Company. On May 14, 1996 the
Partnership filed Amendment No. 1 to a Registration Statement on Form S-
1 with the Securities and Exchange Commission with respect to an initial
public offering of 6.2 million of its limited partner interest common
units, representing 51.8% of the Partnership, for an aggregate offering
price, net of expenses, of $118.2 million (the "Offering"). The sale of
such limited partner interests, if consummated, is expected to result in
a gain to the Company, the amount of which cannot presently be
determined. The Partnership will concurrently issue 5.3 million
subordinated units, representing approximately 44.2% of the Partnership,
as well as an aggregate 4% unsubordinated general partner interest in
the Partnership to wholly-owned subsidiaries of the Company. Assuming
consummation of the Offering, the Company will transfer substantially
all of its propane-related assets and liabilities (other than a
receivable from Triarc, deferred financing costs and net deferred income
tax liabilities of $81.4 million, $4.4 million and $21.4 million,
respectively, at March 31, 1996) to the Partnership. In connection
therewith the Partnership will issue $120.0 million of first mortgage
notes to institutional investors and repay all of the outstanding
borrowings under the existing National Propane bank facility ($127.3
million as of March 31, 1996). The early repayment of the existing
National Propane bank facility will result in an extraordinary charge
for the write-off of unamortized deferred financing costs, net of income
tax benefit, which as of March 31, 1996 would have amounted to
approximately $2.7 million. There can be no assurances, however, that
the Company will be able to consummate these transactions.
As noted above, the Company is in the process of finalizing a $50.0
million revolving and term loan facility at C.H. Patrick (the "Patrick
Facility"). The Patrick Facility will consist of a $15.0 million
revolving credit facility and two term loans aggregating $35.0 million.
It is expected that approximately $1.0 million of the revolving credit
facility will be borrowed at the closing for certain fees and expenses
with the remainder to be used for C.H. Patrick's working capital
requirements. The proceeds of the term loan borrowings are intended to
be distributed to Triarc.
Assuming consummation of the above proposed transactions as of March
31, 1996, the Company would realize net cash proceeds, after repayment
of debt, income taxes and transaction related expenses, of approximately
$140.0 million. Accordingly, the Company would have adequate cash
resources to meet all of its 1996 cash requirements. The excess over
1996 cash requirements will be available for general corporate purposes,
including acquisitions and/or additional investments in certain of
Triarc's subsidiaries.
Contingencies
The Company continues to have legal and environmental contingencies
of the same nature and general magnitude as those described in "Item 7 -
Management's Discussion and Analysis of Financial Condition and Results
of Operations" contained in the Form 10-K. After considering amounts
provided in prior periods, the Company does not believe that such
contingencies, as well as ordinary routine litigation, will have a
material adverse effect on its consolidated financial position or
results of operations.
</PAGE>
Part II.Other Information
The statements in this Quarterly Report on Form 10-Q (this "Form 10-
Q") that are not historical facts constitute "forward-looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995 (the "Reform Act"), that involve risks, uncertainties
and other factors which may cause the actual results, performance or
achievements of Triarc and its subsidiaries to be materially different
from any future results, performance or achievements express or implied
by such forward-looking statements. Such factors include, but are not
limited to, the following: general economic and business conditions;
competition; success of operating initiatives; development and operating
costs; advertising and promotional efforts; brand awareness; the
existence or absence of adverse publicity; acceptance of new product
offerings; changing trends in customer tastes; the success of multi-
branding; availability, locations and terms of sites for restaurant
development; 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 and supplies; changes in, or failure to comply with,
government regulations; regional weather conditions; construction
schedules; the costs and other effects of legal and administrative
proceedings; and other risks and uncertainties detailed in Triarc's
Annual Report on Form 10-K for the year ended December 31, 1995.
Item 1. Legal Proceedings
Legal Proceedings
-----------------
In November, 1995, Triarc commenced an action in New York State
court alleging that the three former court-appointed directors violated
the release/agreements they executed in March 1995 by seeking additional
fees of $3.0 million. The action has been removed to federal court in
New York, and Triarc has requested leave to move for summary judgement.
The motion is pending. The defendants have filed a third-party
complaint against Nelson Peltz, a Director and Chairman and Chief
Executive Officer of Triarc, seeking judgement against him for any
amounts received by Triarc against them, and an order stating that the
defendants must be returned to Triarc's Board of Directors and that
Nelson Peltz must honor all provisions of a February 9, 1993 undertaking
given by DWG Acquisition Group, L.P.
On December 11, 1995, Triarc and Chesapeake commenced a proceeding
in the Bankruptcy Court under section 1144 of the Bankruptcy Code,
naming Victor Posner, SMC and APL as defendants, and naming the official
committee of unsecured creditors of APL as a nominal defendant (the
"1144 Proceeding"). Triarc commenced the 1144 proceeding because of
motions pending on December 11, 1995 (the final date on which such a
proceeding could be commenced under the Bankruptcy Code), in which APL
and SMC sought to continue prosecuting the APL Litigation against Triarc
and Chesapeake notwithstanding that the Plan required the dismissal of
the APL Litigation with prejudice. In the event APL and SMC were to
prevail in such attempts, Triarc would seek to have the confirmation
order revoked or modified in certain respects, including to prevent the
prosecution of the APL Litigation against Triarc and Chesapeake. On
January 25, 1996, SMC and APL filed a motion to dismiss the 1144
Proceeding on the grounds that (i) the Bankruptcy Court is unable to
grant effective relief since the Plan has been substantially
consummated, (ii) Triarc and Chesapeake are estopped from seeking relief
under section 1144 and (iii) the complaint in the 1144 Proceeding fails
to state a claim upon which relief can be granted. On February 12,
1996, Triarc and Chesapeake filed a response to the motion to dismiss
and on February 16, 1996, SMC and APL filed a reply. On February 26,
1996, the committee of unsecured creditors of APL filed an answer and
affirmative defenses to the complaint in the 1144 Proceeding, denying
that the Plan required the dismissal of the APL Litigation and asserting
as an affirmative defense that the complaint in the 1144 Proceeding
fails to state a claim upon which relief can be granted. On April 15,
1996, the court granted the motion and dismissed the 1144 Proceeding.
The Company has moved for rehearing.
Environmental Matters
---------------------
In 1987 Graniteville was notified by the South Carolina Department
of Health and Environmental Control (the "DHEC") that it discovered
certain contamination of Langley Pond ("Langley Pond") near
Graniteville, South Carolina and DHEC asserted that Graniteville may be
one of the parties responsible for such contamination. In 1990 and 1991,
Graniteville provided reports to DHEC summarizing its required study and
investigation of the alleged pollution and its sources which concluded
that pond sediments should be left undisturbed and in place and that
other less passive remediation alternatives either provided no
significant additional benefits or themselves involved adverse effects
(i) on human health, (ii) to existing recreational uses or (iii) to the
existing biological communities. In March 1994 DHEC appeared to
conclude that while environmental monitoring at Langley Pond should be
continued, based on currently available information, the most reasonable
alternative is to leave the pond sediments undisturbed and in place.
Subsequently, DHEC requested Graniteville to submit a proposal by mid-
April 1995 concerning periodic monitoring of sediment deposition in the
pond. Graniteville submitted a proposed protocol for monitoring
sediment deposition in Langley Pond on April 26, 1995. DHEC responded
to this proposal on October 30, 1995 requesting some additional
information. This information was provided to DHEC in February 1996.
Graniteville is unable to predict at this time what further actions, if
any, may be required in connection with Langley Pond or what the cost
thereof may be. However, given DHEC's apparent conclusion in March 1994
and the absence of reasonable remediation alternatives, and the
assumption of Graniteville's liability with respect to this matter by
the purchaser in the Graniteville Sale (as defined in Item 5 below),
subject to certain indemnification obligations of the Company for
liabilities incurred by the purchaser in excess of certain specified
minimums, Triarc believes the ultimate outcome of this matter will not
have a material adverse effect on Triarc's consolidated results of
operations or financial position. See "Item 2. Management's Discussion
and Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources" and "Item 5. Other Information."
Graniteville owns a nine acre property in Aiken County, South
Carolina (the "Vaucluse Landfill"), which was used as a landfill from
approximately 1950 to 1973. The Vaucluse Landfill was operated jointly
by Graniteville and Aiken County and may have received municipal waste
and possibly industrial waste from Graniteville and sources other than
Graniteville. In March 1990, a "Site Screening Investigation" was
conducted by DHEC. Graniteville conducted an initial investigation in
June 1992 which included the installation and testing of two ground
water monitoring wells. The United States Environmental Protection
Agency conducted an Expanded Site Inspection (an "ESI") in January 1994
and Graniteville conducted a supplemental investigation in February
1994. In response to the ESI, DHEC has indicated its desire to have an
investigation of the Vaucluse Landfill. On April 7, 1995 Graniteville
submitted a conceptual investigation approach to DHEC. On August 22,
1995 DHEC requested that Graniteville enter into a consent agreement to
conduct an investigation. Graniteville has responded to DHEC that a
consent agreement is inappropriate considering Graniteville's
demonstrated willingness to cooperate with DHEC requests and asked DHEC
to approve Graniteville's April 7, 1995 conceptual investigation
approach. The cost of the study proposed by Graniteville is estimated
to be between $125,000 and $150,000. Since an investigation has not yet
commenced, Graniteville is currently unable to estimate the cost, if
any, to remediate the landfill. Such cost could vary based on the
actual parameters of the study. Based on currently available
information, and the assumption of Graniteville's liability with respect
to this matter by the purchaser in the Graniteville Sale, subject to
certain indemnification obligations of the Company for liabilities
incurred by the purchaser in excess of certain specified minimums,
Triarc does not believe that the outcome of this matter will have a
material adverse effect on Triarc's consolidated results of operations
or financial position. See "Item 2. Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity
and Capital Resources" and "Item 5. Other Information."
In May 1994, National Propane was informed of coal tar contamination
which was discovered at its properties in Marshfield, Wisconsin.
National Propane purchased the property from a company which had
purchased the assets of a utility which had previously owned the
property. National Propane believes that the contamination occurred
during the use of the property as a coal gasification plant by such
utility. In order to assess the extent of the problem, National Propane
engaged environmental consultants who began work in August 1994. In
December 1994, the environmental consultants issued a report to National
Propane which estimated the range of potential remediation costs to be
between approximately $0.4 million and $0.9 million, depending upon the
actual extent of impacted soils, the presence and extent, if any, of
impacted ground water and the remediation method actually required to be
implemented. In February 1996, based upon new information, National
Propane's environmental consultants issued a second report which
presented the two most likely remediation methods and revised estimates
of the costs of such methods. The range of estimated costs for the
first method, which involves treatment of ground water and excavation,
treatment and disposal of contaminated soil, is from $1.6 million to
$3.3 million. The range for the second method, which involves building
a containment wall and treatment of ground water, is between $0.4
million and $0.8 million. Based on discussions with National Propane's
environmental consultants, both methods are acceptable remediation
plans. National Propane will have to agree upon the final plan with the
State of Wisconsin. Since receiving notice of the contamination,
National Propane has engaged in discussion of a general nature
concerning remediation with the State of Wisconsin. Those discussions
are ongoing and there is no indication as yet of the time frame for a
decision by the State of Wisconsin on the method of remediation.
National Propane is also engaged in ongoing discussions of a general
nature with the Successor. There is as yet no indication that the
Successor will share the costs of remediation. National Propane is in
the process of notifying its insurance carriers of the contamination and
the likely incurrence of costs to undertake remediation. If National
Propane is found liable for any of such costs, it will attempt to
recover such costs from a successor owner (the "Successor"). Based on
currently available information and since (i) the extent of the alleged
contamination is not known, (ii) the preferable remediation method is
not known and the estimate of the costs thereof are only preliminary,
and (iii) even if National Propane were deemed liable for remediation
costs, it could possibly recover such costs from the Successor, Triarc
does not believe that the outcome of this matter will have a material
adverse effect on Triarc's consolidated results of operations or
financial position. See "Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Liquidity and
Capital Resources." National Propane's liability with respect to this
matter is expected to be assumed by a master limited partnership being
formed by National Propane. See "Item 1. Business -- Strategic
Alternatives" and "Business Segments -- Liquefied Petroleum Gas" in
Triarc's Annual Report on Form 10-K for the year ended December 31,
1995.
As a result of certain environmental audits in 1991, SEPSCO became
aware of possible contamination by hydrocarbons and metals at certain
sites of SEPSCO's ice and cold storage operations of the refrigeration
business and has filed appropriate notifications with state
environmental authorities and in 1994 completed a study of remediation
at such sites. SEPSCO has removed certain underground storage and other
tanks at certain facilities of its refrigeration operations and has
engaged in certain remediation in connection therewith. Such removal and
environmental remediation involved a variety of remediation actions at
various facilities of SEPSCO located in a number of jurisdictions. Such
remediation varied from site to site, ranging from testing of soil and
ground water for contamination, development of remediation plans and
removal in certain instances of certain contaminated soils. Remediation
is required at thirteen sites which were sold to or leased for the
purchaser of the ice operations. Remediation has been completed on four
of these sites and is ongoing at the others. Such remediation is being
made in conjunction with the purchaser who is responsible for payments
of up to $1,000,000 of such remediation costs, consisting of the first
and third payments of $500,000. Remediation is also required at seven
cold storage sites which were sold to the purchaser of the cold storage
operations. Remediation has been completed at one site, and is ongoing
at three other sites. Remediation is expected to commence on the
remaining three sites in 1996 and 1997. Such remediation is being made
in conjunction with such purchaser who is responsible for the first
$1,250,000 of such costs. In addition, there are fifteen additional
inactive properties of the former refrigeration business where
remediation has been completed or is ongoing and which have either been
sold or are held for sale separate from the sales of the ice and cold
storage operation. Of these, eight have been remediated through March
31, 1996 and remediation is ongoing at one site. Remediation has not
yet commenced at the remaining six sites. In addition, during the
environmental remediation efforts on idle properties, SEPSCO became
aware of two sites which may in the future require demolition. Based on
consultations with, and certain reports of, environmental consultants
and others, SEPSCO presently estimates that its cost of all such
remediation and/or removal and demolition will approximate $5,350,000,
of which $1,500,000, $2,700,000 (including a 1994 reclassification of
$500,000) and $1,150,000 were provided prior to Fiscal 1993, in Fiscal
1993 and in 1994, respectively. In connection therewith, SEPSCO has
incurred actual costs of $4,166,000 through March 31, 1996 and has a
remaining accrual of $1,184,000. Based on currently available
information and the current reserve levels, Triarc does not believe that
the ultimate outcome of the remediation and/or removal and demolition
will have a material adverse effect on its consolidated financial
position or results of operations. See "Item 2. Management's
Discussion and Analysis of Financial Condition and Results of Operations
- -- Liquidity and Capital Resources."
<PAGE>
Item 5. Other Information
On April 29, 1996, Graniteville Company, a South Carolina
corporation ("Graniteville") and an indirect wholly-owned subsidiary of
Triarc, sold (the "Graniteville Sale") substantially all of
Graniteville's textile business (the "Graniteville Business"), other
than the assets and operations of C.H. Patrick & Co., Inc. ("Patrick")
and certain other excluded assets, to Avondale Mills, Inc. ("Avondale"),
a wholly-owned subsidiary of Avondale Incorporated. The purchase price
for the Graniteville Business was $255 million in cash, subject to
certain post-closing adjustments. As part of the Graniteville Sale,
Avondale assumed all liabilities relating to the Graniteville Business,
other than income taxes, long-term debt (which was repaid by
Graniteville on April 29, 1996 as part of the Graniteville Sale) and
certain other specified liabilities.
In connection with the Graniteville Sale, Avondale and Patrick
entered into a 10-year supply agreement (the "Supply Agreement")
pursuant to which Patrick has the right to supply to the combined
Graniteville/Avondale textile operations certain of its dyes and
chemicals.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
2.1 - Asset Purchase Agreement dated as of March
31, 1996 by and among Avondale Mills, Inc.,
Avondale Incorporated, Graniteville Company
and Triarc Companies, Inc. incorporated
herein by reference to Exhibit 2 to Triarc's
Current Report on Form 8-K dated April 18,
1996 (SEC File No. 1-2207).
27.1 - Financial Data Schedule for the fiscal
quarter ended March 31, 1996, submitted to
the Securities and Exchange Commission in
electronic format.
(b) Reports on Form 8-K
The Registrant filed a report on Form 8-K on January
31, 1996 with respect to (i) a letter of intent
entered into by the Registrant and Avondale
Incorporated ("Avondale") pursuant to which
Registrant agreed, subject to completion of
definitive documentation, receipt of regulatory
approvals, and other customary closing conditions, to
sell the business of its subsidiary, Graniteville
Company (excluding C.H. Patrick & Co., Inc. and
certain other non-textile related assets), to
Avondale and (ii) the Registrant's plan to file a
registration statement with the Securities and
Exchange Commission with respect to an underwritten
initial public offering of common units of a master
limited partnership to be formed by National Propane
Corporation, a subsidiary of the Registrant.
The Registrant filed a report on Form 8-K on February
22, 1996 with respect to the redemption by
Southeastern Public Service Company, a subsidiary of
the Registrant, of all of its outstanding 11 7/8%
Senior Subordinated Debentures due February 1, 1998.
The Registrant filed a report on Form 8-K on March
27, 1996 with respect to the issuance by the
Registrant of a press release relating to the filing
of a registration statement with respect to an
underwritten initial public offering of common units
of a master limited partnership formed by National
Propane Corporation, a subsidiary of the Registrant.
<PAGE>
TRIARC COMPANIES, INC. 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 COMPANIES, INC.
Date: May 15, 1996 By: /S/ JOSEPH A. LEVATO
------------------------
Joseph A. Levato
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)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
condensed consolidated financial statements included in the accompanying Form
10-Q of Triarc Companies, Inc. for the three-month period ended March 31, 1996
and is qualified in its entirety by reference to such Form 10-Q.
</LEGEND>
<CIK> 0000030697
<NAME> TRIARC COMPANIES, INC.
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 41,000
<SECURITIES> 444
<RECEIVABLES> 184,740
<ALLOWANCES> 0
<INVENTORY> 125,737
<CURRENT-ASSETS> 375,111
<PP&E> 560,135
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0
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</TABLE>
