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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 March 29, 1998
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
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
280 Park Avenue, New York, New York 10017
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(Address of principal executive offices) (Zip Code)
(212) 451-3000
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(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 ( )
There were 24,663,251 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, 1998.
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<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
<TABLE>
<CAPTION>
TRIARC COMPANIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
DECEMBER 28, MARCH 29,
1997 (A) 1998
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(IN THOUSANDS)
ASSETS (UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents.............................................................$ 129,480 $ 180,285
Short-term investments................................................................ 46,165 41,775
Receivables, net...................................................................... 77,882 84,675
Inventories........................................................................... 57,394 51,471
Deferred income tax benefit .......................................................... 38,120 37,204
Prepaid expenses and other current assets ............................................ 6,718 8,258
------------ -----------
Total current assets................................................................ 355,759 403,668
Investments............................................................................... 31,449 32,357
Properties, net........................................................................... 33,833 34,506
Unamortized costs in excess of net assets of acquired companies........................... 279,225 276,476
Trademarks................................................................................ 269,201 266,522
Deferred costs and other assets........................................................... 35,406 40,425
------------ -----------
$ 1,004,873 $ 1,053,954
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt.....................................................$ 14,182 $ 16,087
Accounts payable...................................................................... 63,237 70,358
Accrued expenses...................................................................... 148,254 115,175
----------- -----------
Total current liabilities........................................................... 225,673 201,620
Long-term debt............................................................................ 604,830 709,066
Deferred income taxes..................................................................... 92,577 89,425
Deferred income and other liabilities..................................................... 37,805 28,888
Stockholders' equity (deficit):
Common stock.......................................................................... 3,555 3,555
Additional paid-in capital............................................................ 204,291 204,759
Accumulated deficit................................................................... (115,440) (111,245)
Treasury stock........................................................................ (45,456) (71,319)
Other ............................................................................... (2,962) (795)
------------ -----------
Total stockholders' equity ......................................................... 43,988 24,955
------------ -----------
$ 1,004,873 $ 1,053,954
============ ===========
</TABLE>
(A) Derived from the audited consolidated financial statements as of December
28, 1997
See accompanying notes to condensed consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
TRIARC COMPANIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED
---------------------------------
MARCH 30, MARCH 29,
1997 1998
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(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<S> <C> <C>
Revenues:
Net sales..........................................................................$ 175,841 $ 153,881
Royalties, franchise fees and other revenues....................................... 13,315 18,172
----------- ----------
189,156 172,053
----------- ----------
Costs and expenses:
Cost of sales...................................................................... 110,855 79,758
Advertising, selling and distribution.............................................. 30,577 48,759
General and administrative ........................................................ 29,857 33,640
Facilities relocation and corporate restructuring.................................. 1,883 --
----------- ----------
173,172 162,157
----------- ----------
Operating profit ................................................................ 15,984 9,896
Interest expense....................................................................... (14,838) (16,638)
Investment income, net................................................................. 2,702 7,585
Other income, net...................................................................... 1,390 2,347
----------- ----------
Income from continuing operations before income taxes and minority interests..... 5,238 3,190
Provision for income taxes............................................................. (2,766) (1,595)
Minority interests in income of consolidated subsidiary................................ (4,110) --
----------- ----------
Income (loss) from continuing operations......................................... (1,638) 1,595
Income from discontinued operations.................................................... 461 2,600
----------- ----------
Net income (loss)................................................................$ (1,177) $ 4,195
=========== ==========
Basic and diluted income (loss) per share:
Income (loss) from continuing operations.........................................$ (.06) $ .05
Income from discontinued operations.............................................. .02 .08
----------- ----------
Net income (loss)................................................................$ (.04) $ .13
=========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
TRIARC COMPANIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED
------------------------------
MARCH 30, MARCH 29,
1997 1998
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(IN THOUSANDS)
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income (loss)........................................................................$ (1,177) $ 4,195
Adjustments to reconcile net income (loss) to net cash provided by (used in)
operating activities:
Amortization of costs in excess of net assets of acquired companies,
trademarks and other amortization ................................................ 3,573 6,422
Depreciation and amortization of properties......................................... 3,395 2,790
Amortization of original issue discount and deferred financing costs ............... 995 2,046
Payment resulting from Federal income tax return examination........................ -- (8,136)
Realized gain on short-term investments............................................. (279) (5,169)
Income from discontinued operations................................................. (461) (2,600)
Provision for doubtful accounts..................................................... 666 1,219
Equity in earnings of affiliates ................................................... -- (1,046)
Minority interests in income of consolidated subsidiary ............................ 4,110 --
Other, net.......................................................................... 477 (161)
Changes in operating assets and liabilities:
Increase in receivables........................................................... (4,502) (8,012)
Decrease in inventories........................................................... 639 5,923
Decrease (increase) in prepaid expenses and other current assets.................. 1,377 (1,540)
Decrease in accounts payable and accrued expenses ............................... (6,480) (17,963)
--------- ---------
Net cash provided by (used in) operating activities.......................... 2,333 (22,032)
--------- ---------
Cash flows from investing activities:
Cost of short-term investments purchased ................................................ (13,623) (21,764)
Proceeds from short-term investments sold................................................ 7,080 33,907
Cost of non-current investments.......................................................... -- (2,413)
Capital expenditures..................................................................... (2,390) (6,168)
Purchase of ownership interests in aircraft.............................................. -- (3,754)
Distributions received on general partner interest in propane partnership................ -- 2,625
Deposit for acquisition of Snapple Beverage Corp......................................... (20,000) --
Other.................................................................................... 938 52
--------- ---------
Net cash provided by (used in) investing activities.......................... (27,995) 2,485
--------- ---------
Cash flows from financing activities:
Proceeds from long-term debt............................................................. -- 100,163
Repayments of long-term debt............................................................. (5,755) (2,684)
Repurchase of common stock .............................................................. -- (27,500)
Deferred financing costs................................................................. -- (3,406)
Distributions paid on partnership units of propane subsidiary............................ (3,518) --
Proceeds from stock option exercises .................................................... 477 1,327
--------- ---------
Net cash provided by (used in) financing activities.......................... (8,796) 67,900
--------- ---------
Net cash provided by (used in) continuing operations......................................... (34,458) 48,353
Net cash provided by discontinued operations................................................. 426 2,452
--------- ---------
Net increase (decrease) in cash and cash equivalents......................................... (34,032) 50,805
Cash and cash equivalents at beginning of period............................................. 154,190 129,480
--------- ---------
Cash and cash equivalents at end of period...................................................$ 120,158 $ 180,285
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
TRIARC COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 29, 1998
(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 (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 December 28,
1997 and March 29, 1998 and its results of operations and cash flows for the
three-month periods ended March 30, 1997 and March 29, 1998 (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 year ended December 28, 1997 (the "Form 10-K").
Effective January 1, 1997 the Company changed its fiscal year from a
calendar year to a year consisting of 52 or 53 weeks ending on the Sunday
closest to December 31. In accordance therewith, the Company's first quarter of
1997 commenced on January 1, 1997 and ended on March 30, 1997 and the Company's
first quarter of 1998 commenced on December 29, 1997 and ended on March 29,
1998. For the purposes of these consolidated financial statements, such periods
are referred to herein as the three-month periods ended March 30, 1997 and March
29, 1998, respectively.
The Company owns a combined 42.7% interest in National Propane Partners,
L.P. and a subpartnership (collectively, the "Partnership"). As discussed
further in Notes 3 and 7 to the consolidated financial statements in the Form
10-K, effective December 28, 1997 the Company no longer consolidates the
Partnership (the "Deconsolidation"). Since December 28, 1997 the Company's 42.7%
interest in the Partnership is accounted for using the equity method of
accounting in accordance with the Deconsolidation.
Certain amounts included in the prior comparable period's condensed
consolidated financial statements have been reclassified (i) to reflect the
results of C.H. Patrick & Co., Inc. ("C.H. Patrick"), which was sold on December
23, 1997, as a discontinued operation and (ii) to conform with the current
period's presentation.
(2) SIGNIFICANT 1997 TRANSACTIONS
In addition to the sale of C.H. Patrick discussed above, which is reported
as a discontinued operation, the Company consummated the following significant
transactions in 1997. On May 22, 1997 Triarc acquired (the "Snapple
Acquisition") Snapple Beverage Corp. ("Snapple"), a producer and seller of
premium beverages, from The Quaker Oats Company for $311,915,000 consisting of
cash of $300,126,000, $9,260,000 of fees and expenses and $2,529,000 of deferred
purchase price. The purchase price for the Snapple Acquisition was funded from
(i) $75,000,000 of cash and cash equivalents on hand and (ii) $250,000,000 of
borrowings by Snapple on May 22, 1997. On November 25, 1997 the Company acquired
(the "Stewart's Acquisition") Cable Car Beverage Corporation ("Cable Car"), a
marketer of premium soft drinks in the United States and Canada, primarily under
the Stewart's(R) brand. Pursuant to the Stewart's Acquisition, Triarc issued (i)
1,566,858 shares of its class A common stock (the "Class A Common Stock") with a
value of $37,409,000 as of November 25, 1997 in exchange for all of the
outstanding stock of Cable Car and (ii) options to acquire 154,931 shares of
Class A Common Stock with a value of $2,788,000 as of November 25, 1997 in
exchange for all of the outstanding stock options of Cable Car. On May 5, 1997
certain subsidiaries of the Company sold to an affiliate of RTM, Inc. ("RTM"),
the largest franchisee in the Arby's system, all of the 355 company-owned Arby's
restaurants (the "RTM Sale"). The sales price consisted of cash and a promissory
note (discounted value) aggregating $3,471,000 and the assumption by RTM of an
aggregate $69,637,000 of mortgage and equipment notes payable and capitalized
lease obligations. On July 18, 1997 the Company completed the sale (the "C&C
Sale") of its rights to the C&C beverage line of mixers, colas and flavors,
including the C&C trademark and equipment related to the operation of the C&C
beverage line, to Kelco Sales & Marketing Inc. for $750,000 in cash and an
$8,650,000 note with a discounted value of $6,003,000 consisting of $3,623,000
relating to the C&C Sale and $2,380,000 relating to future revenues. See Note 3
to the consolidated financial statements in the Form 10-K for a further
discussion of the transactions described above.
Due to the significant effects of the above transactions, the following
supplemental pro forma condensed consolidated summary operating data (the "Pro
Forma Data") of the Company for the three months ended March 30, 1997 is
presented for comparative purposes. Such Pro Forma Data has been prepared by
adjusting the historical data as set forth in the accompanying consolidated
statement of operations for such period to give effect to the Snapple
Acquisition and related transactions, the RTM Sale, the Stewart's Acquisition
and the C&C Sale, as if all of such transactions had been consummated on January
1, 1997. Such Pro Forma Data is presented for comparative purposes only and does
not purport to be indicative of the Company's actual results of operations had
such transactions actually been consummated on January 1, 1997 or of the
Company's future results of operations and is as follows (in thousands except
per share amounts):
AS PRO
REPORTED FORMA
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Revenues...........................................$ 189,156 $ 237,960
Operating profit................................... 15,984 9,919
Loss from continuing operations.................... (1,638) (8,721)
Loss from continuing operations per share.......... (.06) (.29)
(3) COMPREHENSIVE INCOME (LOSS)
In June 1997 the Financial Accounting Standards Board issued SFAS No. 130
("SFAS 130") "Reporting Comprehensive Income". SFAS 130 requires the disclosure
of comprehensive income which is defined as the change in stockholders' equity
during a period exclusive of stockholder investments and distributions to
stockholders. For the Company, in addition to net income (loss), comprehensive
income (loss) includes any changes in (i) unrealized gain or loss on
"available-for-sale" marketable securities and (ii) currency translation
adjustment. The following is a summary of the components of comprehensive income
(loss) (in thousands):
THREE MONTHS ENDED
-----------------------
MARCH 30, MARCH 29,
1997 1998
---- ----
Net income (loss) ..................................$ (1,177) $ 4,195
Change in unrealized gain or loss on
"available-for-sale" marketable securities....... (49) 1,715
Change in currency translation adjustment........... (37) 5
-------- -------
Comprehensive income (loss).....................$ (1,263) $ 5,915
======== =======
(4) INVENTORIES
The following is a summary of the components of inventories (in thousands):
DECEMBER 28, MARCH 29,
1997 1998
---- ----
Raw materials....................................$ 22,573 $ 23,666
Work in process.................................. 214 386
Finished goods................................... 34,607 27,419
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$ 57,394 $ 51,471
========== ==========
(5) LONG-TERM DEBT AND STOCKHOLDERS' EQUITY
On February 9, 1998 the Company sold (the "Offering") zero coupon
convertible subordinated debentures due 2018 (the "Debentures") with an
aggregate principal amount at maturity of $360,000,000 to Morgan Stanley & Co.
Incorporated ("Morgan Stanley") as the initial purchaser for an offering to
"qualified institutional buyers". The Debentures were issued at a discount of
72.177% from principal resulting in proceeds to the Company of $100,163,000
before placement fees and other related fees and expenses aggregating
approximately $4,000,000. The issue price represents an annual yield to maturity
of 6.5%. The Debentures are convertible into Class A Common Stock at a
conversion rate of 9.465 shares per $1,000 principal amount at maturity, which
represents an initial conversion price of approximately $29.40 per share of
Class A Common Stock. The conversion price will increase over the life of the
Debentures at an annual rate of 6.5%. As of March 29, 1998 the conversion of all
of the Debentures into Class A Common Stock would result in the issuance of
approximately 3,407,000 shares of Class A Common Stock. The Debentures are
redeemable by the Company commencing February 9, 2003 at the original issue
price plus accrued original issue discount to the date of any such redemption.
The Company filed an initial registration statement (the "Registration
Statement") under the Securities Act of 1933 on Form S-3 with the SEC on May 5,
1998 to register resales of Debentures and the Class A Common Stock issuable
upon any conversion of the Debentures. The Registration Statement is pending and
has not yet been declared effective.
The Company used a portion of the proceeds from the sale of the Debentures
to purchase 1,000,000 shares of Class A Common Stock for treasury for
$25,563,000 from Morgan Stanley (the "Equity Repurchase"). The balance of the
net proceeds from the sale of Debentures are being used by Triarc for general
corporate purposes, which include or may include working capital requirements,
repayment or refinancing of indebtedness, acquisitions and investments.
The results of operations as reported for the three months ended March 29,
1998 reflect $888,000 of interest expense on the Debentures (including
amortization of deferred financing costs) or $568,000 net of income tax benefit.
The weighted average number of common shares used for the calculation of diluted
income from continuing operations per share as reported reflects a 538,000 share
effect of the Equity Repurchase. The following pro forma information of the
Company for the three months ended March 29, 1998 has been prepared by adjusting
the historical information reflected in the accompanying statement of operations
for such period to reflect the remaining effects of the Offering and the Equity
Repurchase (which affects only the weighted average number of common shares and
net income per share) as if such transactions had been consummated on December
29, 1997. Such pro forma information does not reflect incremental interest
income or any other benefit of the excess proceeds of the Offering (in thousands
except per share amounts):
AS PRO
REPORTED FORMA
-------- -----
Interest expense.......................................$ 16,638 $ 17,393
Income from continuing operations...................... 1,595 1,112
Diluted income from continuing operations per share.... .05 .03
Weighted average number of common shares used for
calculation of diluted income from continuing
operations per share............................... 32,919 32,457
(6) INCOME TAXES
The Internal Revenue Service (the "IRS") has completed its examination of
the Company's Federal income tax returns for the tax years from 1989 through
1992 and, in connection therewith, the Company paid $5,298,000, including
interest, during 1997, paid an additional $8,136,000, including interest, during
the first quarter of 1998 and paid an additional $324,000, including interest,
during the second quarter of 1998. The Company is contesting at the appellate
division of the IRS the remaining proposed adjustments of approximately
$43,000,000, the tax effect of which has not yet been determined. The IRS has
recently commenced its examination of the Company's Federal income tax returns
for the tax year ended April 30, 1993 and transition period ended December 31,
1993. The Company believes that adequate aggregate provisions have been made
principally in years prior to 1997 for any tax liabilities, including interest,
that may result from the resolution of the contested adjustments and the
recently commenced examination.
(7) INCOME (LOSS) PER SHARE
The weighted average number of common shares outstanding used in the
calculations of basic income (loss) per share for the three-month periods ended
March 30, 1997 and March 29, 1998 were 29,899,000 and 31,086,000, respectively.
The shares used in the calculations of diluted income (loss) per share for the
three-month periods ended March 30, 1997 and March 29, 1998 were 29,899,000 and
32,919,000, respectively. The shares used in the calculations of basic and
diluted income (loss) per share are the same in the 1997 period since all
potentially dilutive securities (stock options) would have had an antidilutive
effect. The shares for diluted earnings per share for the 1998 period include
the effect (1,833,000 shares) of stock options but exclude the effect of the
assumed conversion of the Debentures since the effect thereof would have been
antidilutive.
(8) TRANSACTIONS WITH RELATED PARTIES
The Company continues to lease aircraft owned by Triangle Aircraft
Services Corporation ("TASCO"), a company owned by the Chairman and Chief
Executive Officer and the President and Chief Operating Officer of the Company
for annual rent of $3,310,000 as of January 1, 1998. In connection with such
lease and the amortization over a five-year period of a $2,500,000 May 1997
payment made by the Company to TASCO for (i) an option to continue the lease for
an additional five years effective September 30, 1997 and (ii) the agreement by
TASCO to replace one of the aircraft covered under the lease, the Company had
rent expense of $984,000 for the three-month period ended March 29, 1998.
Pursuant to this arrangement, the Company also pays the operating expenses of
the aircraft directly to third parties.
(9) LEGAL AND ENVIRONMENTAL MATTERS
The Company is involved in litigation, claims and environmental matters
incidental to its businesses. The Company has reserves for such legal and
environmental matters aggregating approximately $3,068,000 as of March 29, 1998.
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 results of operations or financial
position.
(10) SUBSEQUENT EVENT
On May 1, 1998 the Company sold its 20% interest in Select Beverages, Inc.
("Select") acquired as part of the Snapple Acquisition for $28,345,000, subject
to certain post-closing adjustments. The sales price exceeded the Company's
$24,150,000 carrying value of the investment in Select by $4,195,000. The
Company expects that such excess amount will be recorded as gain on sale of
business in the second quarter of 1998.
<PAGE>
TRIARC COMPANIES, INC. AND SUBSIDIARIES
Item 7. 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 28, 1997 (the "Form
10-K") of Triarc Companies, Inc. ("Triarc" or, collectively with its
subsidiaries, the "Company"). The recent trends affecting the Company's three
business segments, beverages, restaurants and propane, are described therein.
However, following the deconsolidation of National Propane Partners, L.P. (the
"Partnership"), the Company's 42.7%-owned investment representing its propane
business, effective December 28, 1997 (the "Deconsolidation" see Note 1 to the
accompanying condensed consolidated financial statements and Notes 3 and 7 to
the consolidated financial statements in the Form 10-K for further discussion),
the effects of the trends on the propane segment are limited to their impact on
the Company's equity in earnings or loss of the Partnership. 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 of 1995. See "Part II - Other
Information".
Effective January 1, 1997 the Company changed its fiscal year from a
calendar year to a year consisting of 52 or 53 weeks ending on the Sunday
closest to December 31. In accordance therewith, the Company's first quarter of
1997 commenced on January 1, 1997 and ended on March 30, 1997 and the Company's
first quarter of 1998 commenced on December 29, 1997 and ended on March 29,
1998. For the purposes of this management's discussion and analysis, such
periods are referred to herein as the three months ended March 30, 1997 and
March 29, 1998 or the 1997 and 1998 first quarters, respectively.
The discussion below reflects the operations of C.H. Patrick & Co., Inc.
("C.H. Patrick") as discontinued operations as the result of the sale of C.H.
Patrick on December 23, 1997.
RESULTS OF OPERATIONS
Revenues decreased $17.1 million to $172.1 million in the three months
ended March 29, 1998 principally reflecting the $59.2 million of nonrecurring
reported sales in the 1997 first quarter of the propane segment due to the
Deconsolidation and $52.1 million of nonrecurring sales in the 1997 first
quarter for the then company-owned Arby's restaurants, all 355 of which were
sold on May 5, 1997 (the "RTM Sale") to an affiliate of RTM, Inc. ("RTM"), the
largest franchisee in the Arby's system. The reduction in revenues as a result
of these factors was partially offset by aggregate sales of $97.7 million in the
1998 first quarter associated with (i) Snapple Beverage Corp. ("Snapple"), a
producer and seller of premium beverages acquired by the Company from The Quaker
Oats Company on May 22, 1997 (the "Snapple Acquisition"), and (ii) Cable Car
Beverage Corporation ("Cable Car"), a marketer of premium soft drinks acquired
by the Company on November 25, 1997 (the "Stewart's Acquisition"). Aside from
the effects of these transactions, revenues decreased $3.5 million. A discussion
of such change in revenues by segment is as follows:
Beverages - Aside from the effects in the three months ended
March 29, 1998 of the Snapple Acquisition and the Stewart's
Acquisition, revenues decreased $8.2 million (12.7%) due to
decreases in Royal Crown, the Company's soft drink concentrate
company ($5.1 million or 13.8%), and premium beverages ($3.1
million or 11.3%). Such decrease in Royal Crown sales was due to
decreases in sales of finished goods ($2.9 million) and
concentrate ($2.2 million). The decrease in sales of finished
goods is principally due to the absence in the 1998 period of
1997 sales of the C&C beverage line, the rights to which were
sold in July 1997. The Company now sells concentrate to the
purchaser of the C&C beverage line rather than finished goods.
The decrease in sales of concentrate reflects a decrease in
branded sales principally due to domestic volume declines,
despite the resulting shift in sales of the C&C beverage line to
concentrate from finished goods, partially offset by a volume
increase in private label sales. Such decrease in premium
beverages sales was due to decreases in sales of finished goods
($2.0 million) and concentrate ($1.1 million). The decrease in
sales of finished goods principally reflects both lower volume
($1.1 million) and lower average prices ($0.9 million) due to
changes in product mix. The decrease in sales of concentrate
resulted from reduced purchases by an international customer.
Restaurants - Aside from the effect on sales of the RTM Sale,
revenues increased $4.7 million (35.9%) to $18.1 million due
to (i) incremental royalties of $2.3 million during the 1998
first quarter from the aforementioned 355 restaurants sold to
RTM, (ii) a 3.9% increase in same-store sales of franchised
restaurants other than those sold to RTM in the RTM Sale and
(iii)an average net increase of 68(2.5%) franchised restaurants.
Gross profit (total revenues less cost of sales) increased $14.0 million to
$92.3 million in the three months ended March 29, 1998 reflecting in part gross
profit in the 1998 first quarter associated with Snapple and Cable Car,
partially offset by the effect of the Deconsolidation and the company-owned
Arby's restaurants sold to RTM. Aside from the effects of these transactions,
gross profit decreased $1.4 million as the effect of the lower overall revenues
discussed above were partially offset by higher overall gross margins reflecting
a revenue mix shift to a higher proportion of restaurant franchise and royalty
revenues (with no associated cost of sales) in the 1998 first quarter. A
discussion of the changes in gross margins by segment, which aside from the
effects of the transactions noted above, increased slightly in the aggregate to
68% from 67% as a result of the shift in revenue mix, is as follows:
Beverages - Aside from the effects in the 1998 first quarter of
the Snapple Acquisition and Stewart's Acquisition, gross margins
decreased from 60% to 58% due to decreases in premium beverages
from 40% to 36% while Royal Crown gross margins were relatively
unchanged at 75%. Such decrease in premium beverage gross
margins was due to a shift in product mix in premium beverages
to lower- margin products such as 100% fruit juices. Royal
Crown's gross margins were relatively unchanged as the shift in
product mix to higher-margin concentrate sales was offset by the
recognition of a nonrecurring 1997 first quarter reduction to
cost of sales of $1.5 million resulting from the guarantee to
the Company of certain minimum gross profit levels on sales to
the Company's private label customer. The Company has no similar
contract guaranteeing minimum gross profit levels in 1998.
Restaurants - After adjusting for the effects of the RTM Sale,
gross margins are 100% due to the fact that royalties and
franchise fees (with no associated cost of sales) constitute the
total revenues of the segment.
Advertising, selling and distribution expenses increased $18.2 million to
$48.8 million in the three months ended March 29, 1998 reflecting the expenses
of Snapple and Cable Car, partially offset by (a) a decrease in the expenses of
the restaurant segment principally due to the cessation of local restaurant
advertising and marketing expenses resulting from the RTM Sale, (b) a decrease
in the expenses of the beverage segment exclusive of Snapple and Cable Car
principally due to (i) lower bottler promotional reimbursements resulting from
the decline in branded concentrate sales volume and (ii) planned reductions in
connection with the aforementioned decrease in sales of C&C products, and (c)
the effect of the Deconsolidation.
General and administrative expenses increased $3.8 million to $33.6 million
in the three months ended March 29, 1998 due to (i) the expenses of Snapple and
Cable Car and (ii) other inflationary increases, all partially offset by (i) the
effect of the Deconsolidation and (ii) reduced restaurant segment spending
levels related to administrative support, principally payroll, no longer
required for the sold restaurants as a result of the RTM Sale and other cost
reduction measures.
The nonrecurring facilities relocation and corporate restructuring charge
of $1.9 million in the 1997 first quarter principally consisted of employee
severance costs incurred through March 30, 1997 associated with restructuring
the restaurant segment in connection with the RTM Sale and, to a lesser extent,
costs associated with the relocation of the Fort Lauderdale, Florida
headquarters of Royal Crown Company Inc. ("Royal Crown"), which was centralized
in the White Plains, New York headquarters of the Triarc Beverage Group
(consisting of Mistic Brands, Inc. ("Mistic"), a wholly-owned subsidiary of the
Company, and Snapple).
Interest expense increased $1.8 million to $16.6 million in the three
months ended March 29, 1998 reflecting higher average levels of debt due to
increases from (i) borrowings by Snapple in connection with the May 22, 1997
Snapple Acquisition ($221.1 million outstanding as of March 29, 1998) and (ii)
the February 9, 1998 sale by Triarc of zero coupon convertible subordinated
debentures due 2018 (the "Debentures") ($101.0 million net of unamortized
original issue discount at March 29, 1998) less $69.6 million of mortgage and
equipment notes payable and capitalized lease obligations assumed by RTM in
connection with the RTM Sale, partially offset by a net $2.2 million decrease as
a result of the Deconsolidation of the Partnership.
Investment income, net increased $4.9 million to $7.6 million in the three
months ended March 29, 1998 reflecting a $4.9 million increase in realized gains
on the sales of short-term investments in the 1998 quarter which may not recur
in future periods.
Other income, net increased $1.0 million to $2.3 million in the three
months ended March 29, 1998 principally due to the Company's equity in the
earnings of the Partnership recognized as a result of the Deconsolidation
partially offset by Snapple's 20% equity interest in the loss of Select
Beverages, Inc. ("Select").
The Company's provisions for income taxes for the three months ended March
29, 1998 and March 30, 1997 represented effective rates of 50% and 53%,
respectively. Such rate was higher in the 1997 first quarter due to the greater
effect in the 1997 quarter of the amortization of nondeductible costs in excess
of net assets of acquired companies since the projected pre-tax income for the
1998 full year upon which the rate was based was higher than such income for
1997 partially offset by the inclusion in pre-tax income of non-taxable minority
interests in the net income of the Partnership in the 1997 first quarter.
The minority interests in net income of a consolidated subsidiary (the
Partnership) of $4.1 million in the three months ended March 30, 1997 represent
the limited partners' 57.3% interests in the net income of the Partnership. As a
result of the Deconsolidation, effective with the 1998 first quarter minority
interests are effectively netted against the equity in the earnings of the
Partnership included in "Other income, net."
Income from discontinued operations increased $2.1 million to $2.6 million
in the three months ended March 29, 1998. The amount in the 1998 first quarter
represents an adjustment to amounts provided in prior years for the estimated
loss on disposal of certain discontinued operations of Southeastern Public
Service Company, a subsidiary of the Company. The amount in the 1997 period
represents the net income of C.H. Patrick which, as noted above, was sold in
December 1997.
LIQUIDITY AND CAPITAL RESOURCES
The Company's operating activities required cash and cash equivalents
(collectively "cash") of $22.0 million during the first quarter of 1998
principally reflecting cash used for operating assets and liabilities of $21.6
million, reclassifications (to investing activities and discontinued operations)
of $7.8 million and the payment of $8.1 million in connection with a Federal
income tax settlement described below, less net income of $4.2 million and net
non-cash charges of $11.3 million. The cash used for operating assets and
liabilities of $21.6 million principally reflects (i) a decrease in accounts
payable and accrued expenses of $18.0 million primarily due to (a) the payment
of $8.2 million in connection with the settlement of a pre-acquisition lawsuit
involving Snapple which had been previously accrued, (b) the $6.7 million effect
on the 1998 first quarter of the semi-annual interest payment made during such
quarter on the $275.0 million of 9 3/4% senior secured notes due 2000 (the "9
3/4% Senior Notes") of RC/Arby's Corporation ("RCAC"), a wholly-owned subsidiary
of Triarc, and (c) the payment of previously accrued acquisition related costs
of $4.7 million associated with the Snapple Acquisition and (ii) an increase in
receivables of $8.0 million principally due to seasonality of sales at Snapple
and Mistic, both partially offset by a decrease in inventories of $5.9 million
during the 1998 first quarter. Such decrease reflects the reduction of (a)
higher than normal year-end inventory levels of aspartame reflecting purchases,
and resulting inventory build-ups, during the latter part of 1997 by Royal Crown
in order to take advantage of a 1997 promotional incentive and (b) premium
beverage inventories as a result of improved inventory controls. The Company
expects positive operating cash flows for the remainder of 1998 due to (i) the
positive effect on net income for the remainder of the year from the seasonality
of the beverage business with the summer months as the peak season and (ii) the
significant non-recurring or seasonal factors impacting the cash required in the
1998 first quarter for operating assets and liabilities which should not recur
during the remainder of 1998 and should, to some extent, reverse.
Working capital (current assets less current liabilities) was $202.0
million at March 29, 1998, reflecting a current ratio (current assets divided by
current liabilities) of 2.0:1. Such amount represents an increase in working
capital of $72.0 million from December 28, 1997 principally reflecting proceeds
of $100.2 million from the sale of the Debentures less repurchases of stock for
treasury of $27.5 million, both described below.
The Company maintains a credit agreement (the "Credit Agreement") entered
into by Snapple, Mistic and Triarc Beverage Holdings Corp. ("TBHC"), the parent
of Snapple and Mistic, (collectively, the "Borrowers") consisting of a $300.0
million term facility of which there were $294.8 million of loans (the "Term
Loans") outstanding as of March 29, 1998 and an $80.0 million revolving credit
line (the "Revolving Credit Line") providing for revolving credit loans (the
"Revolving Loans") by Snapple, Mistic or TBHC of which there were no outstanding
borrowings as of March 29, 1998. The borrowing base for Revolving Loans is the
sum of 80% of eligible accounts receivable and 50% of eligible inventory. As of
March 29, 1998, borrowing availability under the Revolving Credit Line was $40.1
million in accordance with limitations due to such borrowing base. The Term
Loans are due in increasing annual amounts through 2004 with a final payment in
2005. The Borrowers must also make mandatory prepayments in an amount, if any,
equal to 75% of excess cash flow, as defined. Under the definition of excess
cash flow, as amended by an amendment to the Credit Agreement dated March 23,
1998, the excess cash flow for the period May 22, 1997 through December 28, 1997
resulted in a required prepayment of $2.8 million which was made in May 1998.
Aggregate principal payments of $10.6 million, including the aforementioned $2.8
million prepayment, are required on the Term Loans during the remainder of 1998.
The 9 3/4% Senior Notes mature on August 1, 2000 and do not require any
amortization of the principal amount thereof prior to such date. The 9 3/4%
Senior Notes are, however, redeemable at the option of RCAC commencing on August
1, 1998. Triarc and RCAC are currently evaluating refinancing alternatives with
respect to the 9 3/4% Senior Notes. No decision has been made to pursue any
particular refinancing alternative and there can be no assurance that any such
refinancing will be effected.
As of March 29, 1998 the Company has $3.8 million and $0.5 million,
respectively, of remaining mortgage notes and equipment notes payable to FFCA
Mortgage Corporation ("FFCA") not assumed by RTM in connection with the RTM
Sale. Such mortgage and equipment notes are repayable in equal monthly
installments, including interest, over twenty years and seven years, through
2016 and 2003, respectively. Amounts due under these notes during the remainder
of 1998 aggregate $0.7 million consisting of $0.6 million to be assumed by RTM
(and offset against a receivable from RTM for an equal amount) and $0.1 million
to be paid in cash.
The Company has a $40.7 million loan due to the Partnership (the
"Partnership Loan"), bearing interest at 13 1/2% payable in cash and which is
due in annual installments of approximately $5.1 million commencing 2003 through
2010 and, accordingly, does not require any principal payments in 1998.
On February 9, 1998 the Company sold the Debentures with an aggregate
principal amount at maturity of $360.0 million to Morgan Stanley & Co.
Incorporated ("Morgan Stanley") as the initial purchaser for an offering to
"qualified institutional buyers", which are due 2018 without any amortization of
the principal amount required prior thereto. The Debentures were issued at a
discount of 72.177% from principal and resulted in proceeds to the Company of
$100.2 million, before placement fees and other related fees and expenses
aggregating approximately $4.0 million. The Company utilized $25.6 million of
the net proceeds from the sale of Debentures to purchase 1.0 million shares for
treasury and will use the remainder, which is principally held in cash
equivalents as of March 29, 1998, for general corporate purposes, including
working capital requirements, repayment or refinancing of indebtedness,
acquisitions and investments. The Debentures are convertible into Class A Common
Stock at a conversion rate of 9.465 shares per $1,000 principal amount at
maturity, which represents an initial conversion price of approximately $29.40
per share of Class A Common Stock. The conversion price will increase over the
life of the Debentures at an annual rate of 6.5%. As of March 29, 1998 the
conversion of all of the Debentures into Class A Common Stock would result in
the issuance of 3.4 million shares of Class A Common Stock. The Company filed an
initial registration statement (the "Registration Statement") under the
Securities Act of 1933 on Form S-3 with the Securities and Exchange Commission
on May 5, 1998 to register resales of Debentures and the Class A Common Stock
issuable upon any conversion of the Debentures. The Registration Statement is
pending and has not yet been declared effective.
Neither the Debentures nor the Class A Common Stock issuable upon
conversion were initially registered under the Securities Act, and may not be
offered or sold within the United States, unless so registered, except pursuant
to an exemption from the Securities Act, or in a transaction not subject to the
registration requirements of the Securities Act. This Form 10-Q shall not
constitute an offer to sell or a solicitation of an offer to buy the Debentures
or the Class A Common Stock.
Under the Company's various debt agreements, substantially all of Triarc's
and its subsidiaries' assets other than cash, short-term investments and the
assets of Cable Car are pledged as security. In addition, obligations under (i)
the 9 3/4% Senior Notes have been guaranteed by RCAC's wholly-owned
subsidiaries, Royal Crown and Arby's, Inc. (d/b/a Triarc Restaurant Group -
"TRG"), (ii) the $125.0 million of 8.54% first mortgage notes due June 30, 2010
of the Partnership and $14.8 million outstanding under a $55.0 million bank
credit facility maintained by National Propane, L.P., a subpartnership of the
Partnership, have been guaranteed by National Propane Corporation ("National
Propane"), a general partner of the Partnership and subsidiary of the Company
and (iii) borrowings under loan agreements with FFCA consisting of (a) the
mortgage notes and equipment notes assumed by RTM in connection with the RTM
Sale (approximately $52.7 million outstanding as of March 29, 1998) and (b) the
$4.3 million of remaining debt retained by the Company, have been guaranteed by
Triarc. As collateral for the guarantees, all of the stock of Royal Crown and
TRG is pledged as well as National Propane's 2% unsubordinated general partner
interest in the Partnership (see below). Although Triarc has not guaranteed the
obligations under the Credit Agreement, all of the stock of Snapple, Mistic and
TBHC is pledged as security for payment of such obligations. Although the stock
of National Propane is not pledged in connection with any guarantee of debt
obligations, the 75.7% of such stock owned by Triarc directly is pledged as
security for obligations under the Partnership Loan.
Consolidated capital expenditures amounted to $6.2 million for the three
months ended March 29, 1998, including $4.6 million which RCAC was required to
reinvest in core business assets under the indenture pursuant to which the 9
3/4% Senior Notes were issued as a result of the sale of the C&C beverage line
and certain other asset disposals in the latter half of 1997 in lieu of RCAC
utilizing the net proceeds to purchase 9 3/4% Senior Notes. In addition to
capital expenditures, the Company completed its purchases of two ownership
interests in corporate aircraft in the 1998 first quarter for $3.7 million. The
Company expects that capital expenditures will approximate $6.3 million during
the remainder of 1998. As of March 29, 1998 there were no outstanding
commitments for such estimated capital expenditures.
Although the Company made no business acquisitions during the 1998 first
quarter, the Company considers selective business acquisitions, as appropriate,
to grow strategically and explores other alternatives to the extent it has
available resources to do so.
The Internal Revenue Service (the "IRS") has completed its examination of
the Company's Federal income tax returns for the tax years from 1989 through
1992 and, in connection therewith, the Company paid $5.3 million, including
interest, during 1997, paid an additional $8.1 million, including interest,
during the 1998 first quarter and paid an additional $0.3 million, including
interest, during the 1998 second quarter. The Company is contesting at the
appellate division of the IRS the remaining proposed adjustments of
approximately $43.0 million, the tax effect of which has not yet been
determined. Accordingly, the amount of any payments required as a result thereof
cannot presently be determined.
Under a program originally announced in October 1997 and amended in March
1998, the Company is currently authorized, when and if market conditions
warrant, to repurchase until November 1998, up to $30.0 million of its Class A
Common Stock. Through March 29, 1998 the Company had repurchased 138,700 shares
of its Class A Common Stock at an aggregate cost of $3.5 million under this
program, of which 71,500 shares at an aggregate cost of $1.9 million were
purchased during the 1998 first quarter. Subsequent to March 29, 1998 the
Company repurchased an additional 40,000 shares at an aggregate cost of $1.0
million in April 1998. There can be no assurance that the Company will
repurchase the full $30.0 million of its Class A Common Stock authorized under
this program. In addition to this program and as disclosed above, during the
1998 first quarter the Company used a portion of the proceeds from the sale of
the Debentures to purchase 1.0 million shares of Class A Common Stock for an
aggregate price of $25.6 million from Morgan Stanley.
The Company owns, through National Propane, 4.5 million subordinated units
(the "Subordinated Units") representing an approximate 38.7% subordinated
general partnership interest in the Partnership. The Company also owns, through
National Propane and a subsidiary, an aggregate 4.0% unsubordinated general
partner interest (the "Unsubordinated General Partners' Interest" in the
Partnership and a subpartnership. The Company received quarterly distributions
on the Subordinated Units (the "Subordinated Distributions") from the
Partnership and quarterly distributions on the Unsubordinated General Partners'
Interest (the "General Partner Distributions") of $2.4 million and $0.2 million,
respectively, in February 1998 with respect to the fourth quarter of 1997.
However, the Company has agreed to forego any additional Subordinated
Distributions in order to facilitate the Partnership's compliance with a
covenant restriction contained in its bank facility agreement. Accordingly, the
Company does not expect to receive any additional Subordinated Distributions for
the remainder of 1998. Such Subordinated Distributions will be resumed when
their payment will not impact compliance with such covenant. General Partner
Distributions are expected to continue but at a reduced amount and should amount
to $0.4 million for the remainder of 1998.
On May 1, 1998 the Company sold its 20% non-current investment in Select
for cash of $28.3 million, subject to certain post-closing adjustments.
As of March 29, 1998, the Company's cash requirements for the remainder of
1998, exclusive of operating cash flow requirements, consist principally of (i)
debt principal repayments currently aggregating $11.2 million (including $7.8
million of scheduled repayments under the Term Loans, the $2.8 million required
prepayment under the Credit Agreement discussed above and $0.1 million under the
FFCA mortgage and equipment notes), (ii) capital expenditures of approximately
$6.3 million, (iii) the federal income tax payment of $0.3 million made in April
1998 and additional payments, if any, related to the $43.0 million of contested
adjustments both from the IRS examination of the Company's 1989 through 1992
income tax returns, (iv) the treasury stock repurchase of $1.0 million in April
1998 and additional repurchases, if any and (v) the cost of business
acquisitions, if any. The Company anticipates meeting all of such requirements
through existing cash and cash equivalents and short-term investments
(aggregating $222.1 million as of March 29, 1998), the $28.3 million received
from the May 1998 sale of its investment in Select, cash flows from operations
and availability under the Revolving Credit Line.
TRIARC
Triarc is a holding company whose ability to meet its cash requirements is
primarily dependent upon its (i) cash and cash equivalents and short-term
investments (aggregating $188.0 million as of March 29, 1998), (ii) investment
income on its cash equivalents and short-term investments and (iii) cash flows
from its subsidiaries including loans, distributions and dividends (see
limitations below) and reimbursement by certain subsidiaries to Triarc in
connection with the (a) providing of certain management services and (b)
payments under tax-sharing agreements with certain subsidiaries.
Triarc's principal subsidiaries, other than Cable Car, CFC Holdings Corp.
("CFC Holdings"), the parent of RCAC, and National Propane, are unable to pay
any dividends or make any loans or advances to Triarc during 1998 under the
terms of the various indentures and credit arrangements. While there are no
restrictions applicable to National Propane, National Propane is dependent upon
cash flows from the Partnership, principally quarterly Subordinated
Distributions and General Partner Distributions from the Partnership. As set
forth above Triarc has received $2.4 million and $0.2 million of Subordinated
Distributions and General Partner Distributions, respectively, in February 1998
but does not anticipate any additional Subordinated Distributions for the
remainder of 1998. While there are no restrictions applicable to CFC Holdings,
CFC Holdings is dependent upon cash flows from RCAC to pay dividends and, as of
March 29, 1998, RCAC was unable to pay any dividends or make any loans or
advances to CFC Holdings.
Triarc's indebtedness to consolidated subsidiaries aggregated $33.6 million
as of March 29, 1998. Such indebtedness consists of a $30.0 million demand note
payable to National Propane bearing interest at 13 1/2% payable in cash (the
"$30 Million Note"), a $2.0 million demand note to a subsidiary of RCAC and a
$1.6 million note due to Chesapeake Insurance Company Limited ("Chesapeake
Insurance"), a wholly-owned subsidiary of the Company. While the $30 Million
Note requires the payment of interest in cash, Triarc currently expects to
receive dividends from National Propane equal to such cash interest. Triarc must
pay $0.4 million of principal on the note due to Chesapeake Insurance during the
remainder of 1998; Triarc's other intercompany indebtedness requires no
principal payments during 1998, assuming no demand is made under the $30 Million
Note, and none is anticipated, or the $2.0 million note payable to a subsidiary
of RCAC. As described above, Triarc also has indebtedness of $40.7 million under
the Partnership Loan, which requires no principal payments during 1998.
Triarc's principal cash requirements for the remainder of 1998 are (i)
payments of general corporate expenses, (ii) interest due on the Partnership
Loan, (iii) additional payments, if any, related to the $43.0 million of
proposed adjustments from the IRS examination of the Company's 1989 through 1992
income tax returns being contested, (iv) the treasury stock repurchase of $1.0
million in April 1998 and additional repurchases, if any, and (v) the cost of
business acquisitions, if any. Triarc expects to be able to meet all of such
cash requirements for the remainder of 1998 through existing cash and cash
equivalents and short-term investments.
LEGAL AND ENVIRONMENTAL MATTERS
The Company is involved in litigation, claims and environmental matters
incidental to its businesses. The Company has reserves for such legal and
environmental matters aggregating approximately $3.1 million as of March 29,
1998. 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 results of operations or
financial position.
YEAR 2000
The Company has undertaken a study of its functional application systems to
determine their compliance with year 2000 issues and, to the extent of
noncompliance, the required remediation. An assessment of the readiness of third
party entities with which the Company has relationships, such as its suppliers,
customers and payroll processor and others, is ongoing. As a result of such
study, the Company believes the majority of its systems are year 2000 compliant.
However, certain systems, which are significant to the Company, require
remediation. The Company currently estimates it will complete the required
remediation by the end of the first half of 1999. The current estimated cost of
such remediation is approximately $2.0 million, including computer software
costs. Such costs, other than software, will be expensed as incurred.
<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 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, earnings per share growth or statements expressing
general optimism about future operating results, are forward-looking statements
within the meaning of the Reform Act. Such forward-looking statements involve
risks, uncertainties and other factors which may cause the actual 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. For those statements, the Company claims the protection of the safe
harbor for forward-looking statements contained in the Reform Act. Several
important factors could affect the future results of the Company 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; development and operating costs; advertising and
promotional efforts; brand awareness; the existence or absence of adverse
publicity; market acceptance of new product offerings; new product and concept
development by competitors; changing trends in customer tastes; 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; 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 and supplies; 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 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 competitors detailed in Triarc's other current and periodic filings with the
Securities and Exchange Commission, all of which are difficult or impossible to
predict accurately and many of which are beyond the control of the Company. The
Company will not undertake and specifically declines any obligation to publicly
release the result 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.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
On May 6, 1998, Triarc held its Annual Meeting of Stockholders. At the
Annual Meeting, Nelson Peltz, Peter W. May, Hugh L. Carey, Clive Chajet,
Stanley R. Jaffe, Joseph A. Levato, David E. Schwab II, Raymond S. Troubh and
Gerald Tsai, Jr. were elected to serve as Directors. At the Annual Meeting, the
stockholders also approved proposal 2, approving Triarc's 1998 Equity
Participation Plan, and proposal 3, ratifying the appointment of Deloitte &
Touche, LLP as Triarc's independent certified public accountants.
The voting on the above matters is set forth below:
NOMINEE VOTES FOR VOTES WITHHELD
Nelson Peltz 21,979,041 338,635
Peter W. May 21,978,859 338,817
Hugh L. Carey 21,780,558 537,118
Clive Chajet 21,871,826 445,850
Stanley R. Jaffe 21,874,728 442,948
Joseph A. Levato 21,969,054 348,622
David E. Schwab II 21,979,523 338,153
Raymond S. Troubh 21,978,656 339,020
Gerald Tsai, Jr. 21,975,336 342,340
Proposal 2 - There were 14,185,156 votes for, 3,039,864 votes against,
101,877 abstentions and 4,990,779 broker non-votes.
Proposal 3 - There were 21,927,111 votes for, 346,691 votes against and 101,877
abstentions.
ITEM 5. OTHER INFORMATION
On May 1, 1998, Triarc sold its minority interest in Select Beverages,
Inc. for approximately $28.3 million, in cash, subject to certain post-closing
adjustments.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.1 - By-laws of Triarc, as currently in effect, incorporated herein by
reference to Exhibit 3.1 to Triarc's Current Report on Form 8-K
dated May 4, 1998 (SEC File No. 1-2207).
4.1 - Indenture dated as of February 9, 1998 between Triarc
Companies, Inc. and The Bank of New York, as Trustee,
incorporated herein by reference to Exhibit 4.1 to Triarc's
Current Report on Form 8-K/A dated March 6, 1998 (SEC File No. 1-
2207).
4.2 - Registration Rights Agreement dated as of February 4, 1998 by
and among Triarc Companies, Inc. and Morgan Stanley & Co.
Incorporated, incorporated herein by reference to Exhibit 4.2 to
Triarc's Current Report on Form 8-K/A dated March 6, 1998 (SEC
File No. 1-2207).
4.3 - Third Amendment dated as of March 23, 1998 to the Credit
Agreement dated as of June 26, 1996, among National Propane,
L.P., the Lenders (as defined therein), BankBoston, N.A. as
administrative agent and a Lender, and BancAmerica Robertson
Stephens, as syndication agent, incorporated herein by reference
to Exhibit 10.1 to National Propane Partners, L.P.'s Current
Report on Form 8-K dated March 25, 1998 (SEC File No. 1-11867).
4.4 - Fourth Amendment dated as of March 30, 1998 to the Credit
Agreement dated as of June 26, 1996, among National Propane
Partners, L.P., BankBoston, N.A., as administrative agent and a
Lender, and BancAmerica Robertson Stephens, as syndication agent,
incorporated herein by reference to Exhibit 10.27 to National
Propane Partners, L.P.'s Annual Report on Form 10-K for the year
ended December 31, 1997 (SEC File No. 1-11867)
4.5 - First Amendment to Credit Agreement dated as of March 23, 1998
among Mistic Brands, Inc., Snapple Beverage Corp., Triarc
Beverage Holdings Corp., the Lendors (as defined therein), DLJ
Capital Funding, Inc., as syndication agent, Morgan Stanley
Senior Funding, Inc., as documentation agent, and The Bank of New
York, as administrative agent, incorporated herein by reference
to Exhibit 4.1 to Triarc's Current Report on Form 8-K dated
March 26, 1998 (SEC File No. 1-2207).
10.1 - Agreement dated as of March 23, 1998, by and among National
Propane Partners, L.P., National Propane Corporation, Triarc
Companies, Inc., the Lenders (as therein defined), BankBoston,
N.A. as administrative agent, and BancAmerica Robertson Stephens,
as syndication agent, incorporated herein by reference to Exhibit
10.2 to National Propane Partners, L.P.'s Current Report on Form
8-K dated March 25, 1998 (SEC File No. 1-11867).
10.2 - Triarc's 1998 Equity Participation Plan, as currently in
effect, incorporated herein by reference to Exhibit 10.1 to
Triarc's Current Report on Form 8-K dated May 13, 1998 (SEC File
No. 1-2207).
10.3 - Form of Non-Incentive Stock Option Agreement under Triarc's
1998 Equity Participation Plan, incorporated herein by reference
to Exhibit 10.2 to Triarc's Current Report on Form 8-K dated May
13, 1998 (SEC File No. 1-2207).
10.4 - Letter agreement, dated as of March 10, 1998, between Triarc and
John L. Barnes, Jr., incorporated herein by reference to Exhibit
10.3 to Triarc's Current Report on Form 8-K dated May 13,
1998 (SEC File No. 1-2207).
27.1 - Financial Data Schedule for the fiscal quarter ended March 29,
1998, 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/A (Amendment No. 1) on January
7, 1998 with respect to the completion by Triarc of the sale of all of the
outstanding capital stock of C.H. Patrick & Co., Inc., its dyes and specialty
chemicals subsidiary, to The B.F. Goodrich Company for $72 million in cash,
subject to certain post-closing adjustments. Such report also included certain
pro forma financial information required to be filed in connection therewith.
The Registrant filed a report on Form 8-K/A (Amendment No. 2) on
February 3, 1998 which corrected certain pro forma adjustment amounts contained
in the pro forma condensed statements of operations included in Item 7(b) of the
report filed on Form 8-K/A on January 7, 1998 (described above).
The Registrant filed a report on Form 8-K/A (Amendment No. 1) on
February 4, 1998 which contained certain financial information required to be
filed in connection with the acquisition by the Registrant of Cable Car Beverage
Corporation in November 1997.
The Registrant filed a report on Form 8-K/A on February 9, 1998 with
respect to the completion by the Registrant of the sale of $360 million
principal amount at maturity of Zero Coupon Convertible Subordinated Debentures
due 2018 (the "Debentures") in a private placement and the purchase by the
Registrant of one million shares of its Class A Common Stock for an aggregate
purchase price of approximately $25. 6 million.
The Registrant filed a report on Form 8-K/A (Amendment No. 1) on March
6, 1998 with respect to the completion by the Registrant of the sale of the
Debentures. Such report also included certain agreements entered into by the
Registrant in connection therewith.
The Registrant filed a report on Form 8-K on March 12, 1998 which
contained certain agreements and documents entered into or otherwise relating to
the Registrant and its subsidiaries.
The Registrant filed a report on Form 8-K on March 26, 1998 which
contained an agreement entered into by or otherwise relating to the Registrant
and its subsidiaries.
<PAGE>
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.
(Registrant)
Date: May 13, 1998 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.
3.1 - By-laws of Triarc, as currently in effect,
incorporated herein by reference to Exhibit 3.1
to Triarc's Current Report on Form 8-K dated
March 31, 1997 (SEC File No. 1-2207).
4.1 - Indenture dated as of February 9, 1998 between
Triarc Companies, Inc. and The Bank of New York,
as Trustee, incorporated herein by reference to
Exhibit 4.1 to Triarc's Current Report on Form 8-K/A
dated March 6, 1998 (SEC File No. 1-2207).
4.2 - Registration Rights Agreement dated as of February 4,
1998 by and among Triarc Companies, Inc. and Morgan
Stanley & Co. Incorporated, incorporated herein by
reference to Exhibit 4.2 to Triarc's Current Report on
Form 8-K/A dated March 6, 1998 (SEC File No. 1-2207).
4.3 - Third Amendment dated as of March 23, 1998 to the
Credit Agreement dated as of June 26, 1996, among
National Propane, L.P. , the Lenders (as defined
therein), BankBoston, N.A. as administrative agent
and a Lender, and BancAmerica Robertson Stephens,
as syndication agent, incorporated herein by
reference to Exhibit 10.1 to National Propane Partners,
L.P.'s Current Report on Form 8-K dated March 25, 1998
(SEC File No. 1-11867).
4.4 - Fourth Amendment dated as of March 30, 1998 to the
Credit Agreement dated as of June 26, 1996, among
National Propane Partners, L.P., BankBoston, N.A., as
administrative agent and a Lender, and BancAmerica
Robertson Stephens, as syndication agent, incorporated
herein by reference to Exhibit 10.27 to National Propane
Partners, L.P.'s Annual Report on Form 10-K for the year
ended December 31, 1997 (SEC File No. 1-11867)
4.5 - First Amendment to Credit Agreement dated as of March
23, 1998 among Mistic Brands, Inc., Snapple Beverage
Corp., Triarc Beverage Holdings Corp., the Lendors (as
defined therein), DLJ Capital Funding, Inc., as
syndication agent, Morgan Stanley Senior Funding, Inc.,
as documentation agent, and The Bank of New York, as
administrative agent, incorporated herein by reference
to Exhibit 4.1 to Triarc's's Current Report on Form 8-K
dated March 26, 1998 (SEC File No. 1-2207).
10.1 - Agreement dated as of March 23, 1998, by and among
National Propane Partners, L.P., National Propane
Corporation, Triarc Companies, Inc., the Lenders (as
therein defined), BankBoston, N.A. as administrative
agent, and BancAmerica Robertson and Stephens, as
syndication agent, incorporated herein by reference to
Exhibit 10.2 to National Propane Partners, L.P.'s
Current Report on Form 8-K dated March 25, 1998 (SEC
File No. 1-11867).
10.2 - Triarc's 1998 Equity Participation Plan, as currently
in effect, incorporated herein by reference to Exhibit
10.1 to Triarc's Current Report on Form 8-K dated
May 13, 1998 (SEC File No. 1-2207).
10.3 - Form of Non-Incentive Stock Option Agreement under
Triarc's 1998 Equity Participation Plan, incorporated
herein by reference to Exhibit 10.2 to Triarc's Current
Report on Form 8-K dated May 13, 1998 (SEC File No.
1-2207).
10.4 - Letter agreement, dated as of March 10, 1998, between
Triarc and John L. Barnes, Jr., incorporated herein by
reference to Exhibit 10.3 to Triarc's Current Report on
Form 8-K dated May 13, 1998 (SEC File No. 1-2207).
27.1 - Financial Data Schedule for the fiscal quarter ended
March 30, 1997, submitted to the Securities and
Exchange Commission in electronic format.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INCOME STATEMENT INFORMATION FOR THE THREE-MONTH
PERIODS ENDED MARCH 30, 1997 (RESTATED) AND MARCH 29, 1998 AND SUMMARY BALANCE
SHEET INFORMATION AS OF MARCH 29, 1998 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 29, 1998 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FORM 10-Q. THIS SCHEDULE ALSO CONTAINS SUMMARY
HISTORICAL BALANCE SHEET INFORMATION AS OF MARCH 30, 1997 EXTRACTED FROM THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS INCLUDED IN THE FORM 10-Q OF TRIARC
COMPANIES, INC. FOR THE THREE-MONTH PERIOD THEN ENDED AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FORM 10-Q.
</LEGEND>
<CIK> 0000030697
<NAME> TRIARC COMPANIES, INC.
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-28-1997 JAN-03-1999
<PERIOD-START> JAN-01-1997 DEC-29-1997
<PERIOD-END> MAR-30-1997 MAR-29-1998
<EXCHANGE-RATE> 1 1
<CASH> 120,516 180,285
<SECURITIES> 58,460 41,775
<RECEIVABLES> 85,088 84,675
<ALLOWANCES> 0 0
<INVENTORY> 55,914 51,471
<CURRENT-ASSETS> 422,194 403,668
<PP&E> 105,995 34,506
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 844,557 1,053,954
<CURRENT-LIABILITIES> 254,117 201,620
<BONDS> 487,612 709,066
0 0
0 0
<COMMON> 3,398 3,555
<OTHER-SE> 2,370 21,400
<TOTAL-LIABILITY-AND-EQUITY> 844,557 1,053,954
<SALES> 175,841 153,881
<TOTAL-REVENUES> 189,156 172,053
<CGS> 110,855 79,758
<TOTAL-COSTS> 110,855 79,758
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 666 1,219
<INTEREST-EXPENSE> 14,838 16,638
<INCOME-PRETAX> 5,238 3,190
<INCOME-TAX> (2,766) (1,595)
<INCOME-CONTINUING> (1,638) 1,595
<DISCONTINUED> 461 2,600
<EXTRAORDINARY> 0 0
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